Bloodyanus presents: A Closer Look At ESPN's Story on zuffa pay

On Thursday January 12, 2012, ESPN released an article authored by Josh Gross about the economics of the UFC in conjunction with an upcoming episode of Outside the Lines. Gross has been a harsh critic of the UFC for several years. Now he's got a big platform from which to address the very controversial issue of fighter pay in the UFC and whether or not its comparable to rates in other major sports.

To sum up the article for those that have not taken the time to read it, Gross spoke with several fighters who chose to remain anonymous when addressing the issue of fighter pay. Not because they had nothing to say but because they fear backlash from the UFC if they spoke "on the record" about such a hotbed issue. The one person that did speak on the record with Gross is Rob Masey, the founder of the MMA Fighters Association whose website has not been updated in months.

The first point of contention is that MMA fighters are not paid the same as other major sport athletes. It's a valid point and on the surface one that is pretty much impossible to argue against. A deeper look at the UFC's value and structure though will reveals that Zuffa is worth roughly the same as the average NFL team ($1billion). The $350 million in gross PPV sales cited in Gross' article fails to take into account for the 50% split the UFC shares with the cable provider. So the $350 million PPV is actually closer to $175 million. This $175 million accounts for roughly 75% of the UFC's net yearly revenue. The other 25% is comprised of TV licenses, site fees, gate revenue and merchandise meaning the UFC makes roughly $218 million in net revenue each year.

So looking at the initial numbers, Zuffa has more in common financially with an NFL team than the NFL which brings in $9 billion in revenue annually. However, Zuffa has 300 fighters under contract instead of the 46 players that are on the active roster of an NFL team. Even the comparisons to an individual team don't quite hold up given revenue sharing from all teams across the league, athletes who are unionized, set salary guidelines..etc. So the comparison to the big five sports (football, basketball, baseball, hockey, soccer) is not quite apples to apples almost any way you choose to look at it.

However, that isn't the case when Rob Masey gives an unverified number stating that the median pay of UFC fighters is between $17,000 and $23,000 a year.

That number is not only unverified, it's highly questionable. In fact, the MMA website MMA Manifesto ran an ongoing tally for 2011 and based on their report, 89 fighters broke the six-figure mark and 169 roughly earned above $36,000 in 2011. The average is dragged down by the "one-and-done" guys who earn roughly $6,000 to show and another $6,000 to win.

But what about those guys, right? The low-tiered guys should definitely be making more, right? Well the base for those debuting fighters is not only higher than they make on the regional scene, it actually encourages the UFC to sign prospects. A fighter such as Paulo Thiago would never have been given the chance to fight in the UFC if he came with a $30,000 price tag. Those that perform well are rewarded with better follow up contract. Those that don't return to the regional scene with the ability to earn more because they are "former-UFC fighters."

The other comparison drawn by Josh Gross and Rob Masey is to the boxing model. The chosen representative is Lou DiBella, an upper-mid-tier boxing promoter. DiBella explains that in boxing it is common for a 70-30 split with 70% of revenue going to the boxer and 30% going to the promoter. This again sounds great on the surface; but in many cases the revenue split heavily favors the main event fighters over the prelim boxers, not that differently from the UFC model.

The UFC is far from perfect. They actively compete in a market and make it difficult for competition to gain a foothold in the sport and discussion of fighter pay will without a doubt lead to opponents arguing for a fighters union. Unfortunately, the article and story that could been a great first step down that path was sullied with inaccuracies and fact-checking failures which ruined the message. MMA is still young and going through the awkward phase to find its niche in a competitive market. Until the UFC's yearly revenue is that of the other major sports, fighter pay will continue to grow slowly. If low level guys are still making $6,000 to show then it may be time to investigate the business practices. Until then, it's time to give the promotion time to mature.

It should be very easy for zuffa to clear this issue.

Just do an IRS audit and lets see how much the ufc makes from live gate, PPV,
tv deals, sponsors, merchandise etc. etc. and how much of that ufc fighters get.

I'm sure they will do it, not wanting to tarnish their good name.

Muhammad Ali act is needed to clean this sport up.

rezin wrote:It should be very easy for zuffa to clear this issue.

Just do an IRS audit and lets see how much the ufc makes from live gate, PPV,
tv deals, sponsors, merchandise etc. etc. and how much of that ufc fighters get.

I'm sure they will do it, not wanting to tarnish their good name.

I agree. Without concrete numbers, everything is only estimates and speculations at this point. How do we know Zuffa has a 50% split with cable? How do we know anything?