MMA Junkie reports on the obstacles companies have in sponsoring UFC fighters. Hans Molenkamp talked about his company, Triumph United, and the sponsorship market.
Molenkamp talked about the evolution of sponsoring fighters and the reason why fighters like Cole Miller are finding it harder to earn money on sponsors.
He also addressed the UFC’s role including the sponsor tax:
“We pay them [UFC] a lot of money just to be in the game, and just to have our logo seen. It’s almost like an advertising cost. But at the same time, we’re expendable. If we’re not there, it doesn’t really make a difference, and that’s just something I’m not used to.
Molenkamp indicated that he believes that there are some brands that don’t even pay the sponsor tax and that it the enforcement of the tax appears to be arbitrary.
Payout Perspective:
It’s an interesting perspective from the sponsor side as we received a view from the fighter side last week. The opposing views are interesting and reveal the realities of the sponsorship market in lieu of the UFC’s success. As the company has graduated to a mainstream appeal, the once laid-back, easy-entry into the marketplace way of dealing with the promoter has given way to the more corporate business side of the sport. An interesting takeaway from the article is that Molenkamp alludes to a fighter’s representation as being a key asset or burden in securing sponsorships for the fighter.
One other takeaway here is that the article is based on how a clothing brand focusing on action sports (including MMA) is affected by the UFC sponsorship rules and this may differ from a bigger company not affiliated with MMA attempting to sponsor a UFC fighter. The difference is that the clothing brand that is inextricably tied to MMA may see a smaller market share whereas a company not tied to MMA may not be in a position where it’s market is shrinking.
Cant say I understand where this guy is coming from. Granted I know he doesn’t like paying the sponsor tax but even he says it is worth it to his company. But then he goes on to complain and act like it is a good thing there was so many brands in the past sponsoring fighters. Does he want to be one of a handful of brands in the UFC or does he want to be one of 25 clothing brands in the UFC? Many of those clothing brands were fly by night t shirt companies that went under with no help from the sponsor tax. They were sucking up much needed revenue from the real companies. The tax weeded those fly by night brands out so the real committed brands can do business. Every fighter had a different clothing sponsor. You couldn’t keep up with them all. Now when someone pays the Tax they sponsor many more fighters than they normally would. This is good for the sponsor and it raises the prestige of a fighter sponsor which will bring in more money in time at the bottom end. We already see it bring more in the top end.
Market forces will weed out fly-by-night companies with no help from the tax. And as long as those FBNs are putting money into the sport, then it’s a good thing.
“Now when someone pays the Tax they sponsor many more fighters than they normally would. ”
How do you know this? Even if true, they don’t have to pay the fighters as much, since there are fewer sponsors available for the fighter to choose from. It’s not necessarily good for the fighters that the UFC limits the number of sponsors.
“This is good for the sponsor and it raises the prestige of a fighter sponsor which will bring in more money in time at the bottom end. ”
That is conjecture and very hard to support. I don’t see the link between the sponsor tax and how it raises the prestige of the sponsor. To move the needle, the sponsors need to improve their share of voice (meaning how many eyes they are getting on their brand relative to the other brands in the market) which they could have done without the sponsor tax just by sponsoring more fighters. If they weren’t doing it before, why would they do it after? The tax just cuts into their marketing budgets and limits how much they have left over to pay fighters.
External forces (to the market) that limit the # of entrants do not generally lead to a better deal for the consumer (in this case the fighters). This case could be an exception, but I doubt it will be and there is no evidence to suggest it.
Fundamentally, by forcing sponsors to pay-to-play the UFC has taken some of the income that would have gone to the fighters and put it in its own pocket. Companies have limited budgets, so money they pay the UFC is not somehow then paid again to fighters. And the tax also creates a dynamic where it may make sense for the sponsors to pay the tax since they know that they will gain entry into a less open marketplace where they subsequently both pay the fighters less (since the fighters are limited as to who they can go to for sponsorship they are losing bargaining power) and pay fewer fighters (since there are fewer players in the market, it is easier to maintain the same share of voice with fewer views). None of that adds up to more money at the bottom.
But yes, I agree that it is bringing in more money at the top end.
At least we agree at the top end. Lol
So you don’t think it helps the image of the fighters looking more professional having Gatorade and Nike in the mix? This shows the fighters to be higher quality and gets interest from other big companies. This big brands would not be there or at least no proof they would be there before the tax. Fighters were taking to many local cheap sponsors for anyone to want to pay big money to be a part of it.
I disagree about the tax taking money from the fighters sponsorships. Granted I can’t prove a specific company now sponsors more fighters. But you can look and see that these ones who pay the tax usually throw some money at other fighters since the tax is already paid. The lower brands have many more fighters than they used to. The reason the tax isn’t coming out of the fighters pockets is the tax is creating more revenue for the sponsors by having less sponsors in the cage and being on more fighters. So it ends up being Bout the same as before even worst case for the small brands. But the brands with a real product are getting much more attention. After all these brands are paying the tax for a reason. If it wasn’t a good deL . No one would do it. It is just bring in more sponsors with bigger budgets.
Even the numbers released by Miller point to there being no difference in his sponsorships. His only decreased 1500 per fight from when he was on the main card and a contender compared to on Facebook on a losing streak. His sponsors dropped 20%. That shows the market hasn’t changed but has gotten better. To drop only 20% in the last 3 years with the poor run he has been on he should consider a blessing. The loss wasn’t the sponsorship market but die to his performance. I doubt anyone was getting $3500+ for Facebook fights before the tax unless they were a potential star.
Plus it never looked good for the sport to have guys sponsored by their local tire wholesaler. This tax hasn’t hurt any of the fighters. If it has it isn’t a big difference. But it has raised the image of the UFC to what they want to look like. Considering the tax has been around a very short time. I think it has worked great. It wasn’t supposed to be an over night success. But it has made some great changed I just a couple years.
For jones to wear Huge Gatorade logo and not get paid is pathetic…lol…..just so he can say he’s sponsored by a big company hahahaha….and after the fact that they announced publicly that there was no money involved ….
This was the best interview i have read on the subject. i love how it calls out the ufc for potential favoritism in sponsors. possible collusion is afooot.
Sorry Nick, no more Chase Chevrolet.
“Considering the tax has been around a very short time. ” “But it has made some great changed I just a couple years.”
the tax has been around for 4.5 to 5 years…. news of the sponsor tax was reported around ufc 100, and i heard rumblings from managers of it vaguely for 9 months to a yr b4 that….
That is still a very short time. Lets remember that the UFC was getting better ratings and PPV sales back then which is what sponsors are paying for. That said all evidence shows fighters are getting more now than they were then. Sponsorships are rising from top to bottom even when the UFC isn’t.
Bs admits to ufc ratings being down in the last five years.
” That said all evidence shows fighters are getting more now than they were then. Sponsorships are rising from top to bottom even when the UFC isn’t.”
That’s not true. Everyone who has reported on it, every fighter who’s discussed it, with the exception of the very top fighters, have made it clear that sponsor revenue has gone down substantially since 2010, a year after the tax was implimented.
Everyone of them were guys who were comparing their sponsors as a contender to when they were a washed up bum. Show me one guy whose sponsors decline while his career didn’t? Show me a GSP saying his has decline. How about a Koscheck? He has had a rough time the last few years. But he has been pretty stable for the most part. Show me his sponsors taking a plummet? Showing sponsors who refuse to pay guys the same when they haven’t strung 2 wins together in years. Is not proof. The loss of sponsor money has seemed to make the decline they have had in the cage. Every single time!
This from Fighter Agent Dean Albrecht:
“The tax may have shrunken the pool of sponsors, but the increasing popularity of MMA and the UFC has led to higher payouts from those that are still in the game.”
Most guys won’t say anything because they fear the wrath of White and his spiteful behavior.