While I can appreciate the desire on behalf of the UFC to control all aspects of its company – whether it be information flow, contracts, or the production of its events – ultimately I see the need for a little give on one, if not all of these areas. Obviously, the topic of discussion for today is going to focus on the UFC’s questionable use of stipulative and obligatory clauses and provisions within its contracts in order to facilitate even more control over its product.
As a result of the fact that the UFC is currently the only organization in MMA to be bringing in sizeable revenues and profits, they have a tremendous amount of negotiating leverage when it comes to contracts. In particular, their bargaining position is so strong that they’re able to get away with signing fighters to contracts with exclusivity provisions, multi-year terms, and early release clauses if certain negative performance markers are met. All of this in addition to weighting their payouts in favour of discretionary or performance bonuses rather than guaranteed money, so that they have control over which fighters get the bulk of the money.
Don’t get me wrong though, I am not here to argue for non-exclusive contracts; if I were in the UFC’s position I wouldn’t offer them either. And, multi-year terms really don’t bother me, as they provide security for both the organization and the fighter. Although if life were fair, I suppose the fighters should have the option to renegotiate their contract after successive wins, just the same as the UFC has the option to release a fighter after successive losses.
Rather, I am here to argue how the latest merchandising contract that Josh Gross recently shed some light on is an example of how too much control is likely going to bite the UFC in the ass. The organization is currently walking a fine line between being controlling and downright over-bearing. Contracts like the latest for merchandising are only going to push more fighters like Matt Lindland to challenge the legality of the entire business model, forget the contract.
No one can blame the UFC for taking advantage of the alternative revenue streams and wanting to share them with the fighters. This is a great first step in securing a future for the fighters beyond their fighting days, but the stipulations and obligations of this contract need to be revised.
It’s tough to argue one way or another against the percentage offered to the fighters, because of the difficulty involved with fairly valuing exactly how much the fighters deserve to make. Again, we run into the same problem as linking fighter salaries to revenue: is 10% of the revenue stream fair if the UFC is bringing home 5%? Similarly, while 10% might be fair now, what happens in 8 years from now if the UFC blows up like Dana White believes and the revenues exceed the costs of administration by such a great margin that the UFC rakes in 70% of the gross revenues as net?
This leads me to the real problem that I have, the same as Robert Joyner has mentioned, with the contract clause that specifically pertains to the UFC retaining the fighter’s merchandising rights, the world over, in perpetuity with no opt-out provision afforded to the fighter. A clause such as this, effectively controlling a great deal of the image and likeness of the fighter for the rest of his career, cuts off the fighter from the extremely bright and lucrative future of MMA that is still to come. Futhermore, considering the number of sour fighter relationships the UFC has had in the past (Ortiz, Lindland, Barnett, Couture, Diaz, etc.), is this contract an additional something to hang over a fighter’s head if he decides to leave the company?
The Solution
First and foremost, revise the merchandising contract.
Secondly, if Dana White and the UFC plan on becoming the NFL of the MMA world, the relationship they establish with the fighters will need to be built as a partnership – one that values trust and transparency. Whether they like it or not, the UFC needs the fighters just as much as the fighters need them. So, does it really make sense to form an adversarial relationship with a key component of their organization? What is there to gain by trying to take every last penny on the table with provisions such as the merchandising rights “in perpetuity?”
“I haven’t done a single contract that I couldn’t have gotten more money on. I always leave money on the table… because it’s possible to push the price so far, create such antagonism, that the extra 10% isn’t really worth it. If someone feels you held them up, they’re going to take it out on your business or on you. You have to give the other people a profit margin and let them live. You want them to thrive and grow…You can’t play tricks, because you’ll probably be going back to these people again – or to someone they know.“
The MMA community is so interconnected that one relationship gone sour can burn not one, but many bridges. That’s why it’s important for Dana White and the UFC to go about their fighter relationship management correctly. And to be fair, it looks as though with this and the addition of Lorenzo Fertitta, they might finally be onto something.
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