Five ways UFC's new owners can improve fighters' earning power

In a little over 15 years, Lorenzo Fertitta, Frank Fertitta and Dana White turned a $2 million investment in the UFC into a $4 billion windfall.

On the night earlier this month that the sale of the UFC to a group headed by WME/IMG broke, improbable as it might be, White insisted that things would be even better in the years to come.

“It’s going to the next level,” said White, the UFC president.

The new ownership group is going to have a difficult time matching the previous regime’s achievements because the Fertitta-White UFC was on death’s door when they took over and grew under them to become one of the great business success stories of the 21st century.

But if WME/IMG co-CEOs Ari Emanuel and Patrick Whitesell are serious about further improving the UFC, the obvious way to do so is by making it more lucrative for the athletes.

In the UFC’s 15-plus years of Fertitta-White ownership, there was much criticism of the pay scale, some of it legitimate, much of it unfounded.

Life for athletes in the UFC is, without question, better than it has ever been. Salaries have increased dramatically over time. The fighters have accident injury insurance that reimburses them for expenses they incur if they get hurt in training and cannot fight.

The UFC contracted with the United States Anti-Doping Agency, and, despite some early growing pains, it’s the best testing program in professional sports and makes a dangerous sport safer.

It is building a new campus with an athlete health and performance facility that will feature state-of-the-art equipment and training programs.

Medical care has been strengthened considerably.

There have been many other advancements that make life for a UFC fighter far better in 2016 than it was in 2001.

That said, there is still much to be done.

One primary area that should be addressed is the way UFC athletes are paid for sponsorships. The UFC’s endorsement deal with Reebok hasn’t worked out as planned, according to fighters and managers.

The fighters and their camps are forced to wear Reebok gear whenever they are in public at an event in which they’re competing. They’re not allowed to wear logos of any other company at official UFC events, so in the vast majority of cases, they are limited to what they’re paid by Reebok.

Payouts from Reebok for fighters range from $2,500 to $40,000 per fight, depending upon UFC experience and whether or not one holds a title. Assuming three fights a year, that caps sponsorship pay at $120,000 a year.

Scores of fighters have complained about the deal and insist it has cost them money. The current owners have responded by saying the fighters can still have sponsors. Given that they can’t wear any other logos at UFC events, where they’re most likely to be seen, however, the outside sponsorship market is certainly not robust.

Every dollar is important to the fighters, who are independent contractors, not employees, and thus aren’t eligible for company-provided health insurance.

Careers are also notoriously short, and it’s hard in today’s extraordinarily competitive environment for fighters to be part-time. They need to train year-round to be able to compete at the highest level, so it is hard for them to supplement their fighting income with another job given the training demands they face.

Take a midlevel fighter with a wife and two children, for example. If that fighter competes four times a year and wins three and loses one, he or she will make well more than the average American’s annual salary, though that is misleading.

Let’s call our fictional fighter John Doe, who begins the year with five UFC bouts to his credit and has a deal that starts at $20,000 to show and another $20,000 to win.

As with most fighters in that range, Doe will increase his salary by $2,000 per fight if he wins and stay the same with a loss.

We’ll assume in this scenario that Doe goes 3-1, winning his first two fights, losing his third and winning his fourth. He’d make $40,000 for Fight 1 ($20,000 to show and $20,000 to win); $44,000 for Fight 2 ($22,000 to show and $22,000 to win); $24,000 for Fight 3 ($24,000 to show) and then $48,000 in Fight 4 ($24,000 to show and $24,000 to win).

That is an income strictly from fights of $156,000. Beginning the year with five bouts UFC experience, Doe will also make an additional $17,500 in bonuses ($2,500 for the first fight and $5,000 for each of the last three, based on the sliding scale the UFC announced last year).

In that scenario, the fighter would make $173,500 for a year of work.

That is a terrific salary that millions of working Americans would be thrilled to earn.

There are, though, several deductions that make the real salary far less appealing than it appears.
First, fighters have to pay their trainers and managers out of their purses. It’s typical to pay the manager 10 percent of the purse, though some managers charge more. But out of a $173,500 gross for the year, the fighter has to pay the manager $17,350. That drops John Doe’s gross take to $156,150, and remember, this is before Doe has paid taxes.

Then, given that UFC fighters have multiple coaches, they tend to count for 25 or 30 percent of total salary. So if we assume that John Doe pays his various coaches a total of 30 percent, that is $52,050.

That cut drops the fighter’s gross to $104,100.

The fighter is also responsible for paying for travel expenses for his team. Fighters at this level get two flights and one room per fight. So that means that there are two extra flights and two extra hotel rooms for five or six days per fight.
That’s difficult to figure a total cost, but if we assume a $300 cost per ticket per flight, that is eight flights total over the course of four fights that equals $2,400. If we assume the hotel room costs $200 per night, at two rooms times five nights times four total fights, that comes to $4,000.

Thus, with airfare and hotels, that is another $6,400.

With those deductions, the salary is now down to $97,700.

Fighters are responsible for their medicals and licensing, as well. Add in miscellaneous expenses, and that could total another $4,000.

Thus, John Doe will gross $93,700 while at the end of the year being a nine-fight UFC veteran.

So, it is not such a windfall.

Few fighters get rich fighting in the UFC, though it certainly has happened. Forbes had Ronda Rousey ranked fourth among all female athletes in 2016, measuring from July 1, 2015, to June 30, 2016, in total income.

Per Forbes, Rousey’s total income in that span was $14 million, with $10 million coming from fight purses and $4 million from endorsements. Conor McGregor made $22 million, including $18 million from his fights, Forbes reported.

Rousey, for all she earns in endorsements, is far below the top female athletes in sponsorships. Tennis stars Serena Williams and Maria Sharapova each earn $20 million in endorsements and outside income.

Tennis players usually have longer careers than fighters, so they can earn those higher sponsorship dollars over a greater period of time.

To take things to the next level and make a career as a UFC fighter more appealing, the incoming owners could do five things for fighters that would have huge benefits, both immediate and long-term.

First, provide company-paid health care to all fighters who are under contract with the company for at least one year. Thus, things such as pregnancies, the typical illnesses a child might suffer or something as common as an appendicitis won’t be such financial killers.

Second, set up a pension plan for the fighters who reach a predefined number of years and/or fights. That would guarantee those athletes who batter their bodies in competition income long beyond their competitive days.

Third, open the sponsorship market again. Allow each fighter to sell two logos, one on the fight night shorts and one on the T-shirts, to mutually agreeable companies.

Fourth, add two more bonuses. The UFC pays out four $50,000 bonuses to fighters each night. Two go to those selected to be in the Fight of the Night and two others go to what are judged to be Performance of the Night.

It makes a huge different for someone at the low end of the pay scale. Expand it by two by bringing back Knockout of the Night and Submission of the Night. That gives more fighters a chance to earn those bonuses and thus supplement their incomes.

And fifth, commit to increasing the overall fighter compensation at the start and then agree to an increase at the entry level annually.

That will continue the progress that Fertitta and White have put in place of slowly making the UFC a much better place for athletes to work, and should attract better athletes to the sport in the first place.

That’s a win-win for everyone.