Executive Summary Fairness in athlete pay is increasingly a topical issue with player’s unions often making headlines in the

Big Four sports. On account of the gruesome violence of MMA, the thought of these fighters being underpaid on top of the damage their bodies take is a story that we are emotionally susceptible to. I attempt to answer the question of whether UFC fighters are underpaid, which has become a major concern as a result of an ESPN article. I establish a comprehensive structure in order to answer the highly subjective question in an effort to make the process more scientific. I analyze UFC fighter pay relative to the income they earn for the UFC as well as fighter pay relative to comparable sports with similar pay structures. Additionally, I use basic economic and market theory to determine the fairness of UFC fighter pay. The UFC has room to distribute more revenue towards fighter incomes and I believe that fighters are underpaid, although only slightly. I do not believe that fighters will be able to negotiate increases in their incomes without the formation of a collective bargaining association or union.

Table of Contents
Are UFC Fighters Underpaid? ………………………………………………………………3 What Does It Mean To Be Underpaid? ……………………………………………………...3 How Are UFC Fighters Paid? – UFC Payment Structure …………………………………...5 How Else Do UFC Fighters Earn Money? ..………………………………………...…........6 Which Sports Have Comparable Payment Structures? ……………………………………...8 How Much Do UFC Fighters Get Paid? …………………………………………………….9 How Does the UFC Distribute Its Revenues To Fighters? ………………………………...11 How Does The UFC’s Distribution of Revenue Compare to Tennis & Golf? …………….12 Are UFC Fighters Actually Underpaid? – Decision ……………………………………….13 Exhibits/Appendices ……………………………………………………………………….15 Footnotes …………………………………………………………………………………..19 Bibliography……………………………………………………...……...……..……..........21

 

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Are UFC Fighters Underpaid? As a result of an article authored by ESPN’s Josh Gross, the possibility of UFCi fighters being underpaid has become a rather topical issue.1 This paper will discuss and consider whether MMAii fighters, specifically those under UFC contracts are, in fact, underpaid. The UFC largely remains a very controversial sport because of its gruesome rules, gore, and bloodied-and-beaten fighters. The UFC has experienced a meteoric rise in mainstream sports coverage since being recently founded in 1993, and mainstream society remains uncomfortable with the sport of MMA. Fighters expose their bodies to gruesome violence and the extent of long-term health consequences are still unknown because the sport is still nascent. This harsh reality coupled with the possibility that fighters can barely make a living as fighters raises the question – how could fighters be sacrificing their bodies and welfare to such extremes while not earning a reasonable living? What Does It Mean To Be Underpaid?iii In order to determine whether UFC fighters are in fact underpaid, it is first necessary to define what it means to be underpaid. Some might argue that unless a fighter receives an adequate income in order to support himself financially, that he is in fact underpaid. I do not believe that this is an effective metric to determine the fairness of a UFC fighter’s pay. Each individual requires a different level of income to support themselves and their unique lifestyles; some may be frugal while others are extravagant in spending their income. Further, if a profession/career does not provide enough income to support oneself financially, it cannot be stated that these professionals are underpaid, but rather that they should find a supplemental job or choose a different career path. Even if one were to assess the return on investment from each fight independently, it would not be representative of the population. Each fighter has varying cost and time investments for their individual fights, while incremental earnings from each fight is fixed and therefore does not change with the total cost of investment. An interesting way to resolve the fairness of fighter pay is to assess the career earnings of UFC fighters and whether that dollar amount is sufficient to                                                                                                                
i  Ultimate  Fighting  Championship   ii  Mixed  Martial  Arts   iii  See  Exhibit  1  

 

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support themselves well into their retirement. Unfortunately, this method holds many of the same flaws as mentioned above and is highly subjective. Another way of looking at the question is to assess whether these athletes are earning a proportionate amount of what they earn for their employer. This seems to be a realistic method of assessment because of its similarity to the payment structure in the corporate world. In most corporations, salary is based off individual performance thus, the more one earns for the company, the more he will receive in annual compensation. Since MMA is an individual, as opposed to a team sport, it is easy to judge individual performance along with the incremental revenue that one provides for the promotion company. Thus, it would seem reasonable to judge the fairness of fighter pay based on their incomes proportionate to their performance, i.e. how much they are earning for the organization. Another method of assessment is to compare UFC fighter income to athletes of comparable sports with similar payment structures. Thus if fighter pay were relatively lower to other athletes’ income, it could be deemed that they are in fact underpaid. As long as the sports selected to be a part of the comparison matrix are in fact comparable in terms of the structure of how athletes make a living, this too is a reasonable metric of determination. The reality is that the market determines what is fair and what is not. When society feels that the market is not efficiently allocating capital it is expected that the government stepsin to ensure fairness in the market. A vivid example of this is the general consensus across the globe that a wage floor is necessary in our labour markets and virtually all first world governments have responded by enacting a minimum wage law in their domestic labour markets. In sports, player associations take the place of governments as they speak up for their players (citizens) and negotiate what they believe is a just allocation of revenues. Believers in the efficient markets hypothesis will argue that at any moment in time a free market will be in equilibrium and therefore efficient – in the case of the market, what is fair is efficient. Thus, any form of government intervention is frowned upon as it creates inefficiency in the marketplace. Even a radical believer of free and efficient markets will understand that unless the market is perfectly competitive then the market can’t be perfectly efficient or fair. In the instance of the UFC as well as most mainstream sports, the competition is far from perfect and can be considered closer to oligopolistic and even   3  

monopolistic environment making their allocation of capital far from efficient. One could easily make the argument that without intervention from a labour union (government) in the UFC’s near monopolistic labour market, fighters’ earnings are and will remain unjust. How Are UFC Fighters Paid? – UFC Payment Structureiv In order to assess the fairness of UFC fighter pay, it is important to understand the payment structure that fighters agree to under contract, as well as the other sources of income that fighters earn. The above-mentioned article focuses on the comparison between UFC fighter salaries and the salaries of athletes in the major North American team sport leagues of the NBA, NFL, MLB, and NHL (the “Big Four”). The UFC is an individual sport with payment structures much more comparable to those of PGA golfers, ATP tennis players, and professional boxers. Additionally, all of the Big Four leagues have existed for several decades longer than the UFC and have had a substantially longer time period to establish proper governance and fairness in their operations. The Big Four all have players’ associations to represent their respective athletes in order to ensure fairness in revenue sharing agreements amongst the league, team owners, and players.2 The players’ associations of the NBA, NHL, and NFL have all made noise in recent years and their demand for higher player salaries has led to lock outs, season start delays and cancellations.3 As a result of these immediately apparent differences between the UFC and the Big Four sports, I would argue that comparisons between the two in order to determine fairness in pay is flawed despite Josh Gross’ efforts to prove that UFC fighters are ‘underpaid’. When a fighter signs a new contract with the UFC, they agree to fight a number of times for payments subject to a plethora of conditions. These clauses establish the minimum amount per fight; usually between $3,000 - $6,000v for new or relatively unknown fighters as well as increases for future fights if the fighter were to win his past fights and/or build-up a larger fan base – thus increasing viewership for the UFC.4 Additionally, fighters receive win bonuses which are equal to their base salary per fight meaning that lower tier winning fighters would receive a minimum of $6,000 - $12,000 per fight. At each UFC event,                                                                                                                
iv  See  Exhibit  2   v  USD  used  throughout  paper  

 

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performance bonuses are given out for FOTNvi, KOTNvii, and SOTNviii that have ranged from $60,000 - $135,000. Top-tier fighters who have developed personal brand power and a large fan-base are also given a portion of each PPVix buy (average cost of $55.00/buy) in recognition of the promotional work expected from each fighter for the event. For example, top-tier fighter, Alistair Overeem signed a contract to receive $2.00 for each PPV buy for his December 30, 2011 fight with Brock Lesnar at UFC 141. This netted Mr. Overeem an additional $1,560,000 in unreported pay for his fight. The UFC also gives many of its newly signed fighters signing bonuses, which go unrecorded, in the case of Alistair Overeem he received a $1,000,000 signing bonus which gets paid out over the course of his three-fight contract ($333,333/fight).x The UFC also hands out undisclosed discretionary bonuses, but UFC management has cited an instance where they awarded Frank Mir an additional $1,000,000 bonus on top of his $200,000 salary for his superb performance during a fight.5 These discretionary bonuses are unofficial and do not get published, thus it is impossible for us to know how much fighters really earn. How Else Do UFC Fighters Earn Money? As a promotion company, the UFC does a great job of promoting their athletes, helping them to create a personal brand and open doorways to secondary income-generating opportunities. Similar to the individual sports of Boxing, Golf, and Tennis, most athletes rely heavily on income from sponsorships. UFC fighters receive personal sponsorship income for each fight in which their agents work to find sponsors for that particular event. Personal sponsorship earnings for individual events can range from a low of $5,000 for Matt Mitrione to a high of $100,000 for Georges St-Pierre.6,7 Additionally, top-tier UFC fighters sign multi-year multi-million dollar sponsorship deals with some of the biggest sports brands including, Nike, Gatorade and Under Armour along with other major global brands such as Coca-Cola and Google.8,9,10 Fighters including Quinton Jackson, Randy                                                                                                                
vi  Fight  of  the  Night  –  Awarded  to  two  fighters     vii  Knockout  of  the  Night  –  Awarded  to  one  fighter   viii  Submission  of  the  Night  –  Awarded  to  one  fighter   ix  Pay-­‐per-­‐view   x  This  information  is  only  available  because  of  a  lawsuit  between  Alistair  Overeem  and  his  former  

management  team,  Golden  Glory,  and  otherwise  would  not  be  available  to  the  public.  

 

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Couture, Georges St. Pierre, and Gina Carano have all been casted into premier movie roles which have netted these fighters/actors undisclosed sums of money. There is natural path for many MMA fighters to be cast into major film and television roles, which provides an income stream that requires much less physical strain. Many fighters are also contracted to appear in commercials and receive endorsements from various consumer product companies. Many UFC fighters find it necessary to pursue other income generating activities and business ventures in order to supplement their UFC pay. Fighters often sign-up for local martial arts competitions including BJJxi and Wrestling tournaments, which can provide fighters with supplemental income while training and touching up on their skills. Seminars at several local gyms are coordinated where ‘average joes’ pay to train with elite UFC fighters. Many UFC fighters have started their own MMA gyms, often teaming up with other fighters, to generate an additional source of income. By leveraging their brand power and industry expertise, they often find these ventures to generate favourable returns. Many fighters have written books, started new clothing lines and/or performance equipment brands, appeared in public, and have been creative in pursuing many other methods of generating tertiary income.11 The reality is that UFC fighters find many other sources of income to help support themselves financially whatever their needs may be, and by fighting for the UFC they are better able to capitalize on these opportunities. The ESPN article has ignored these secondary income opportunities by claiming that fighters are severely underpaid without acknowledging that fighters can and do earn much more money than their fight salaries suggest. Further, since a fighter usually only fights every 3-4 months, which require training camps of 6-8 weeks before each fight, they have a significant amount of free time throughout the year to earn income from other sources, even in the face of arduous training schedules.12

                                                                                                               
xi  Brazilian  Jiu-­‐Jitsu  

 

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Which Sports Have Comparable Payment Structures?xii After analyzing the payment structure of UFC fighters, it becomes easily apparent that fighter’s pay structure is more comparable to the individual sports of Tennis, Golf, and Boxing as opposed to the Big Four team sports. Traditionally Big Four athletes receive collectively approximately 50% of league revenues each year as a result of periodic negotiations between the parties. The Big Four’s revenue streams are much more steady and consistent than any individual sport, as ticket and merchandising sales, and broadcasting revenues are fairly easy to predict year over year. There is an added element of risk for the UFC and all other individual sports as a few major events each year largely determine the organization’s revenues, which can negatively be impacted by uncontrollable factors. Many smaller and upcoming promotions have paid their athletes larger upfront payments, which have led to continual net income losses and in some cases bankruptcy.13,14 Team sport athletes have much heavier commitments to their respective leagues and teams, as they are held to strenuous time constraints, and thus have far less time throughout the year to earn supplemental income. It is true that many of the top athletes of these leagues get signed to multi-million dollar endorsement contracts but these athletes represent a very small percentage of the total league.15 These leagues have lengthy histories that have led to the development of comprehensive labour unions, insurance programs/policies and even pension funds to benefit athletes.16,17,18,19,20,21,22 As an organization only in an embryonic stage of growth, the UFC recently created its own insurance program out of concern for the well being of its fighters, but attempts at creating a labour union have fallen short.23,24 The major individual sports’ pay structures are much more similar to that of the UFC. Athletes are paid appearance fees just to show up to a tournament – similar to how UFC fighters received a guaranteed minimum amount for each fight they complete. All athletes are also awarded incentive based compensation that is directly correlated to better performance. Endorsement deals are a major component of each athlete’s income particularly for the top-tier athletes. Despite having to keep their skills sharp, athletes don’t have much more flexibility in their schedules, allowing them to find supplemental sources of income similar to those of UFC fighters. Athletes are able to compete for a different                                                                                                                
xii  See  Exhibit  3  

 

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organization/promotion company if they are unhappy with the terms received from the league they currently compete in. Note that in Golf, Tennis, and the UFC this option is not feasible for most athletes as the exposure and pay received from the largest organization of each respective sport (PGA – Golf, ATP – Tennis, UFC – MMA) declines exponentially as you drop to lower leagues. In contrast, boxing has turned into a sport dominated by its largest athletes as opposed to its largest organizations, and once a fighter builds a name for himself, he can generate the same level of income and exposure with a variety of promotion companies. Additionally, promoters in boxing are expected to pay for fighter training expenses whereas UFC fighter training expenses are solely the fighter’s responsibility.25 Athletes in individual sports face much higher uncertainty with regards to their income. If an athlete were to get injured or if his/her event were to be cancelled for reasons beyond their control, they will not earn any income. In the Big Four, athletes sign multi-year contracts and unless the season is cancelled, they will generally earn their fixed salary base amount each year. The differences in the fundamental structures between individual and team sport make a comparison of their respective athlete’s salaries (directly related to competition) illogical. Despite the close similarities between Boxing and MMA – both being individual combat sports, the fine details of each sport reveal major inconsistencies in how fighters are paid, making boxing a poor comparable. How Much Do UFC Fighters Get Paid?xiii,26,27,28 Over the period of 2010 – 2012, the UFC fighter average salary has actually declined each year. In 2010 the average salary was $100,849 and has since dropped to $81,418 in 2012 (Median; $45,000 and $40,000 in 2010 and 2012, respectively) – representing a 19.27% decline. The distribution of income across the whole fighter population has remained relatively stable with 18.31% of fighters earning below $10,000, 55.65% of fighters earning between $10,000 and $100,000, and 26.04% of fighters earning above $100,000 on average. Over the three-year period, disclosed fighter salaries ranged from a low of $3,000 to a high of $1,495,000. There is a clear trend that a decreasing                                                                                                                
xiii  Due  to  limited  publicly  available  data,  I  was  only  able  to  get  data  for  UFC  salary  pay  from  2010-­‐2012  –  

these  numbers  only  represent  base  fighter  salaries  plus  any  publicly  disclosed  performance  bonuses.    

 

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proportion of fighters are earning above $100,000/year with an increasing percentage falling into the middle range. The income from the highest earning fighters represents a disproportionately large percentage of the total income earned by all fighters. This has statistic has held relatively steady over the three year period and on average the top 20% of income earners represent 65.15% of the total earnings by all fighters. If the undisclosed payments and other sources of income of fighters were also available, this statistic would likely be more severely disproportionate. This is an unfortunate reality in all sports and in fact most professions suffer from this disproportionate allocation of income to individuals. There will always be star athletes and the marginal benefit of breaking into this upperechelon of athletes will lead to exponential growth in annual income. If we look at a histogram of UFC fighter pay – the gap between the top and bottom athletes is further emphasized.xiv The histograms indicate that fighter incomes are heavily skewed to the lower end and that a large proportion of fighters earn very low incomes. The data reveals that the bottom 75% of earners received an average of 28.74% of the total earnings over the threeyear period. It is apparent that distribution of income amongst fighters in the UFC is highly disproportionate, unfair and top-heavy. This does not mean that the UFC is underpaying its fighters overall but rather it might be more just to help those at the bottom. The data suggests that as the UFC grows – as seen in the increase of bankrolled fighters each year, they are better able to negotiate lower average salaries for entry-level fighters as a result of improved negotiation power, market dominance, and growth of the sport’s popularity. In order to assess the fairness of UFC fighter pay, we must also look at the costs that fighters incur to prepare for their fights. MMA Journalist, Jonathan Snowden approximates that training expenses for a top-tier fighter can reach $127,025 per fight – quite a large sum.29 An anonymous UFC fighter estimates that training expenses average $22,000 per year. This same fighter indicated that he made $80,000 in salaries in one year, which would leave him with $58,000 in net income before taxes for the year.30 For a fighter earning the 2012 median disclosed salary of $40,000, they would net $18,000 per annum. This salary is in line with the average US Per Capita Personal Income figure of $42,693.31 Using the median income per fight range of $17,000 - $23,000 multiplied by the average three fights                                                                                                                
xiv  See  Exhibit  4  

 

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per year, suggests an average annual fighter income of $51,000 - $69,000 – a figure well above the median personal income.xv,32 How Does the UFC Distribute Its Revenues To Fighters?xvi,xvii The UFC’s value can be estimated in the range of $1.2 billion based off a 10% company stake purchased by Flash Entertainment in 2010.33 Industry expert, Rob Maysey, estimates that UFC annual revenue is between $350 – 450 million.34 A 2010 report from S&P indicates that 75% of the UFC’s revenues are generated from live PPV events.35 An article recently published by Bloomberg estimates that UFC annual revenues were approximately $500 million in fiscal year 2011.36 Using these estimates an approximation can be made regarding the proportionality of the UFC’s distributions to fighters, but only based on the disclosed amounts. These estimates range widely, suggesting that the UFC paid a mere 6.19% of total revenues to a high of 10.14% of total revenues in 2011. Estimates for revenues explicitly from live gate and PPV sales indicate that the UFC paid out 9.55% and 13.52% of these revenues in 2010 and 2011, respectively. The reality is that this limited data does not do the UFC justice since, as previously discussed, the UFC pays its fighters substantial undisclosed amounts. As a result of a lawsuit involving UFC fighter Alistair Overeem, we have additional data specifically relating to UFC 141 held on December 30, 2011.37 After making a small assumption that Brock Lesnar’s PPV share contract was similar to that of Mr. Overeem there is an estimated additional $4,290,000 in undisclosed distributions to fighters – dwarfing the $1,594,714 in disclosed distributions. This meteoric 269% rise in fighter distributions for UFC 141 indicates that the UFC paid a minimum of 25.47% of its revenues to its fighters for that specific event. It is likely that further undisclosed payments were given to fighters than night as goes for every other event the UFC has ever promoted. These numbers are much more reliable than any other previous estimates and establish an absolute minimum of the company’s proportionate payments to fighters. Undermining the importance of this figure is the fact that it is unreasonable to extrapolate this percentage to represent all of the UFC’s past events. Simultaneously, the estimates from disclosed payments only are understated and the percentage allocations of                                                                                                                
xv  ESPN  Estimates   xvi  See  Exhibit  5   xvii  See  Exhibit  6  

 

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the UFC’s revenues to fighters are undoubtedly higher. How Does The UFC’s Distribution of Revenue Compare to Tennis & Golf? Similarities between the pay structure of the UFC and those of Tennis and Golf have become apparent after thorough analysis. Thus, it would be logical to compare the relative distribution of organization revenues to its respective athletes. Further, comparing athlete pay as a percentage of league revenues was established as an effective metric to determine fairness. Within each league (ATP, PGA, and UFC), distribution amongst athletes is very similar as the top-tier athletes’ incomes account for a disproportionately large amount of total athlete income.38,39 The stars of each sport are paid handsomely and endorsements deals account for a large portion of their total incomes.40,41 Data is scarce for the sport of golfing but 2008 figures for the PGA Tour put prize money at approximately 28.81% of revenues.42,43 Historically, the growth in prize money held steady with the rapid growth of tour revenues, but these growth levels have begun to taper as a result of ‘The Tiger Effect’.44,45,46 The median PGA Tour prize money earnings for 2012 was $286,089 – significantly higher than the $40,000 for UFC fighters.47 It is obvious that there is much more money to be made in the sport of golf, but the distribution of prize money, as a proportion of revenue is quite comparable to that of the UFC when including undisclosed income. The average annual income for men’s ATP athletes was $260,000 in 2012, belittling the UFC’s 2012 average income of $81,418.48 Regular ATP tour events allocate approximately 30% of revenue directly to prize money, while the four major tournaments allocate a miniscule 10-13% of tournament revenues.49,50 Recently, athletes have taken increasingly activist steps to increase the proportion of revenues directed to athletes with a focus on the lower ranked players who earn unbearably low amounts.51 The 30% allocation is comparable to the PGA’s percentage distribution along with that of the UFC when considering undisclosed salaries. In terms of relative growth rates between athlete salaries and revenue growth, Lorenzo Fertitta, CEO of Zuffa LLC – the UFC’s parent company, is quick to point out that “since 2005 (the UFC’s first profitable year), fighter pay has grown at twice the rate of revenue growth.”52 This can be explained by the rapid growth the UFC has experienced over recent years as it remains a young sport, while

 

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the sports of tennis and golf have saturated their mature markets and experience relatively small and stable growth rates year over year. Are UFC Fighters Actually Underpaid? – Decision It has become apparent that there is no easy answer to this question. Depending upon how the question is framed, and dependent on what methods of determination are used, one can arrive at a variety of answers. I strongly believe that the ESPN article fails to make a comprehensive argument to prove that UFC fighters are underpaid. The authors fail to acknowledge the striking differences between the pay structures and environments of the Big Four and the UFC. Additionally, little is mentioned regarding the disparity between disclosed and undisclosed income for UFC fighters – we have seen that this can skew the data and its results drastically. Many figures have been taken and extrapolated to represent the population of all fighters when the data is truly representative of only one fighter’s experiences or one expert’s opinion. Using established metrics/methods of determining the fairness of UFC fighter pay, we are left with a contradictory and somewhat subjective answer. In terms of judging fairness based off a fighter’s income relative to how much he earns for the UFC, there is insufficient data because the UFC privately owned. Only UFC management would be able to determine the correlation between fighter pay and fighter revenue. In order to be just and thus paid the proper amount, fighters’ income and promotional efforts to sell the fight should be closely tied. We know this does exist at least partially with PPV share contract agreements and performance bonuses, but whether the percentage of these generated revenues returned back to the fighter is reasonable cannot be determined. The lack of transparency is a major issue and advances the case for introduction of an act similar to the Muhammad Ali Reform Act in boxing, which would force the UFC to disclose how much each fighter earns for the UFC each event.53 After eliminating the Big Four and Boxing as comparables to the UFC, and focusing on Tennis and Golf because of intrinsic similarities, we are better able to judge whether fighters are underpaid. Although the data remains incomplete to properly determine how much of the UFC’s revenues are distributed to fighter pay, I tend to favour the statistics that include undisclosed payments such as the UFC 141 numbers. These numbers set an absolute minimum for the events’ allocation of revenues and the percentage is likely higher   12  

with possibility of further undisclosed payments to fighters. If the lower percentages were to represent reality I would be shocked to not see uproar from the fighters. When using the higher and more realistic figures for comparison, the UFC’s relative distribution to its fighters is on par with both the PGA and ATP. In fact, the UFC’s numbers are actually more favourable than the ATP’s as the bulk of potential earnings are made in the four major tournaments, which only distribute 10-13% of revenues to athletes. The UFC is a new sport with short history and its future is uncertain. As a result, the UFC should be able to underpay its fighters slightly relative to the PGA and ATP. Many small promotions run at a loss in an attempt to rise to prominence by bringing in big names at hefty costs that only exacerbates their profitability issues. The business model will not be sustainable if the UFC overpays its athletes and fails to manage its cash flows. A great example is provided by Affliction Entertainment who attempted to bring in the biggest names and paid excessive fighter salaries only to throw two events and subsequently file for bankruptcy.54 Market theory suggests that fighters are underpaid since the competitive environment is near monopolistic in MMA. The UFC having no serious competitors can provide better pay and exposure for athletes, which is why fighters will continue to agree to the organization’s terms. As a result, it would appear that the markets allocation of money is inefficient and a union should be created in order to level the playing field and increase the fighters’ negotiation power. In conclusion, I must side with market and economic theory and conclude that UFC fighters are underpaid. I believe that there is ample room for the UFC to increase its distributions to fighters as a percentage of revenues while still being able to run a sustainable business. Only a fighters union will be capable of achieving this desired outcome either through the successful formation of a union or UFC management’s reaction to the threat of a union.

 

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Exhibits/Appendices Exhibit 1: Metrics for Fairness Assessment Metrics for Fairness Assessment Controversial Ineffective Economic & Market Sufficiency of income to support Theory oneself Sufficiency of career earnings to support oneself Return on investment Exhibit 2: UFC Fighters’ Sources of Income UFC Fighter’s Income Sources Supplemental / Indirect Endorsements Seminars MMA Gym Clothing Line/Performance Equipment Competitions Guest Appearances Part-Time Job Movies/Commercials/TV Books

Effective Proportionate to revenue generated for company Comparison to sports with similar pay structures

Direct Base Salary per Fight Performance Bonuses Discretionary Bonuses Cut of PPV Sales

Exhibit  3:  Comparison  of  Sport  Pay  Structures  &  Environments   Comparable Sports Matrix
Unions Oligopolistic / Monopolistic Yes Yes Yes No Yes Extreme Time Commitments No No No No Yes Most Athletes Rely on Endorsements Heavily Yes Yes Yes Yes No High Income Uncertainty Yes Yes Yes Yes No Performance Incentives Yes Yes Yes Yes Yes

MMA Tennis Golf Boxing Big Four

No No No No Yes

              14  

Exhibit  4:  Histograms  of  UFC  Income  Distribution     2012    
100   80   60   40   20   0  

  2011    
70   60   50   40   30   20   10   0  

  2010    
50   40   30   20   10   0  

 

 

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  Exhibit  5:  UFC  Revenues  &  Disclosed  Payments  to  Fighters  

                            16  

Exhibit  6:  UFC  141  Revenues  &  Payments  to  Fighters  (includes  undisclosed  estimates)    

   

 

 

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1  http://espn.go.com/espn/otl/story/_/page/UFCpay/ufc-­‐fighters-­‐say-­‐low-­‐pay-­‐most-­‐painful-­‐hit-­‐all   2  http://libguides.rutgers.edu/content.php?pid=148775&sid=1276918   3  http://www.investopedia.com/financial-­‐edge/0711/the-­‐rise-­‐of-­‐labor-­‐unions-­‐in-­‐pro-­‐sports.aspx   4  http://www.mmafighting.com/2012/01/15/outside-­‐the-­‐lines-­‐investigates-­‐ufc-­‐pay-­‐but-­‐questions-­‐

remain   5  http://espn.go.com/espn/otl/story/_/page/UFCpay/ufc-­‐fighters-­‐say-­‐low-­‐pay-­‐most-­‐painful-­‐hit-­‐all   6  http://www.csub.edu/kej/documents/economic_rsch/2011-­‐09-­‐06.pdf   7  http://www.mmajunkie.com/news/2010/09/fired-­‐by-­‐ufc-­‐119-­‐matt-­‐mitrione-­‐agent-­‐malki-­‐kawa-­‐ believes-­‐miscommunication-­‐to-­‐blame   8  http://www.inc.com/magazine/201206/issie-­‐lapowsky/sports-­‐marketing-­‐cant-­‐afford-­‐the-­‐nfl.html   9  http://www.bloodyelbow.com/2012/8/8/3228539/nike-­‐ufc-­‐jon-­‐jones-­‐global-­‐sponsorship-­‐deal-­‐ mma-­‐news   10  http://www.usatoday.com/story/sports/mma/2012/11/16/georges-­‐st-­‐pierre-­‐business-­‐ufc-­‐ 154/1710747/   11  http://themmacorner.com/2012/10/26/go-­‐for-­‐broke-­‐can-­‐fighters-­‐buck-­‐the-­‐trend-­‐of-­‐financial-­‐ruin-­‐ among-­‐athletes/   12  http://www.csub.edu/kej/documents/economic_rsch/2011-­‐09-­‐06.pdf   13  http://www.sportingintelligence.com/2012/01/09/tennis-­‐players-­‐underpaid-­‐why-­‐djokovic-­‐beats-­‐ barca-­‐and-­‐kvitova-­‐is-­‐manchester-­‐united-­‐090101/   14  http://ca.sports.yahoo.com/mma/news?slug=ki-­‐afflictiondone072409   15  http://hbswk.hbs.edu/item/5607.html   16  http://www.nhlfa.com/CBA/cba_agreement23.asp   17  http://www.nbpa.org/about-­‐nbpa   18  https://www.nflplayercare.com/Default.aspx   19  http://nfllifeline.org/resources/programs-­‐and-­‐benefits/   20  http://www.sportsbusinessdaily.com/Daily/Issues/2008/05/Issue-­‐162/Leagues-­‐Governing-­‐ Bodies/MLB-­‐Teams-­‐Insure-­‐Long-­‐Term-­‐Deals-­‐To-­‐Protect-­‐From-­‐Player-­‐Injury.aspx   21  http://mlb.mlb.com/careers/index.jsp?loc=benefits   22  http://business.illinois.edu/d-­‐sinow/fin434/docs/MLB%20Pension%20Plan%20-­‐%20Final.ppt   23  http://www.ufc.com/news/UFC-­‐Announces-­‐Accident-­‐Insurance-­‐Coverage-­‐For-­‐Athletes   24  http://espn.go.com/espn/otl/story/_/page/UFCpay/ufc-­‐fighters-­‐say-­‐low-­‐pay-­‐most-­‐painful-­‐hit-­‐all   25  http://mma.sbnation.com/2011/8/18/2161891/the-­‐economics-­‐of-­‐mma-­‐how-­‐much-­‐does-­‐it-­‐cost-­‐to-­‐ be-­‐a-­‐fighter   26  http://www.mma-­‐manifesto.com/ufc-­‐fighter-­‐salary-­‐database/salary-­‐main/2010-­‐year-­‐in-­‐review-­‐ufc-­‐ salaries.html   27  http://www.mma-­‐manifesto.com/ufc-­‐fighter-­‐salary-­‐database/salary-­‐main/2011-­‐year-­‐in-­‐review-­‐ufc-­‐ fighter-­‐salaries.html   28  http://www.mma-­‐manifesto.com/ufc-­‐fighter-­‐salary-­‐database/2012-­‐year-­‐in-­‐review-­‐ufc-­‐fighter-­‐ salaries.html   29  http://mma.sbnation.com/2011/8/18/2161891/the-­‐economics-­‐of-­‐mma-­‐how-­‐much-­‐does-­‐it-­‐cost-­‐to-­‐ be-­‐a-­‐fighter   30  http://espn.go.com/espn/otl/story/_/page/UFCpay/ufc-­‐fighters-­‐say-­‐low-­‐pay-­‐most-­‐painful-­‐hit-­‐all   31  http://bber.unm.edu/econ/us-­‐pci.htm   32  http://www.mmafighting.com/2012/01/15/outside-­‐the-­‐lines-­‐investigates-­‐ufc-­‐pay-­‐but-­‐questions-­‐ remain   33  http://sports.yahoo.com/mma/news?slug=dm-­‐ufcsale011210   34  http://espn.go.com/espn/otl/story/_/page/UFCpay/ufc-­‐fighters-­‐say-­‐low-­‐pay-­‐most-­‐painful-­‐hit-­‐all   35  http://www.davemanuel.com/a-­‐look-­‐at-­‐the-­‐ufc-­‐debt-­‐finances-­‐and-­‐future-­‐growth-­‐133/   36  http://www.bloomberg.com/news/2012-­‐08-­‐01/fertittas-­‐made-­‐billionaires-­‐by-­‐head-­‐blows-­‐with-­‐ chokeholds.html   37  http://espn.go.com/espn/otl/story/_/page/UFCpay/ufc-­‐fighters-­‐say-­‐low-­‐pay-­‐most-­‐painful-­‐hit-­‐all   38  http://jse.sagepub.com/content/3/3/235.short   39  http://usatoday30.usatoday.com/sports/tennis/story/2012-­‐03-­‐14/bnp-­‐paribas-­‐open-­‐indian-­‐wells-­‐ pay-­‐disparity-­‐on-­‐the-­‐atp-­‐tour/53538094/1  

 

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40  http://www.sportingintelligence.com/2012/01/09/tennis-­‐players-­‐underpaid-­‐why-­‐djokovic-­‐beats-­‐

barca-­‐and-­‐kvitova-­‐is-­‐manchester-­‐united-­‐090101/   41  http://articles.dailypress.com/1994-­‐07-­‐10/sports/9407100136_1_tour-­‐commissioner-­‐tim-­‐finchem-­‐ senior-­‐tour-­‐pga-­‐tour   42  http://www.sportsbusinessdaily.com/Journal/Issues/2008/05/20080512/This-­‐Weeks-­‐ News/Tours-­‐Produce-­‐9-­‐Rise-­‐In-­‐Revenue.aspx   43  http://www.golfdigest.com/golf-­‐tours-­‐news/2009-­‐09/golf_finchem_economic_growth   44  http://online.wsj.com/article/SB10001424052748703699204575017550261245506.html   45  http://www.forbes.com/sites/sportsmoney/2011/04/07/has-­‐the-­‐pga-­‐tour-­‐reached-­‐its-­‐financial-­‐ apex/2/   46  http://www.economist.com/node/18805531   47  http://espn.go.com/golf/moneylist/_/page/1/year/2012   48  http://www.therichest.org/sports/the-­‐average-­‐pay-­‐in-­‐professional-­‐sports/   49  http://usatoday30.usatoday.com/sports/tennis/story/2012-­‐03-­‐14/bnp-­‐paribas-­‐open-­‐indian-­‐wells-­‐ pay-­‐disparity-­‐on-­‐the-­‐atp-­‐tour/53538094/1   50  http://www.sportingintelligence.com/2012/01/09/tennis-­‐players-­‐underpaid-­‐why-­‐djokovic-­‐beats-­‐ barca-­‐and-­‐kvitova-­‐is-­‐manchester-­‐united-­‐090101/   51  http://www.nytimes.com/2012/06/03/sports/tennis/grand-­‐slam-­‐purses-­‐sore-­‐point-­‐for-­‐ players.html?pagewanted=all&_r=0   52  http://espn.go.com/espn/otl/story/_/page/UFCpay/ufc-­‐fighters-­‐say-­‐low-­‐pay-­‐most-­‐painful-­‐hit-­‐all   53  Ibid   54  http://www.scoresreport.com/2009/07/24/affliction-­‐trilogy-­‐try-­‐affliction-­‐out-­‐of-­‐business/          

 

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