UFC defends fighter pay, by accidentally revealing their low fighter pay?

During Endeavor’s Q1 2022 investor earnings call, the company discussed how their Owned Sports and Properties segment — which is primarily driven by the…

By: Anton Tabuena | 1 year ago
UFC defends fighter pay, by accidentally revealing their low fighter pay?
Bloody Elbow 2.0 | Anton Tabuena

During Endeavor’s Q1 2022 investor earnings call, the company discussed how their Owned Sports and Properties segment — which is primarily driven by the UFC — continued its financial success. According to CFO Jason Lubin, the segment generated $296.7 million in revenue and had an adjusted EBITDA of $148.7 million, which is up from Q1 of the year prior by $13.2 million and $3.2 million, respectively.

They cited “greater sponsorship licensing” for the UFC, along with new international media deal rights in the Netherlands, Spain and South Korea.

Apart from talking about their financial gains, CFO Jason Lublin also again defended the controversial issue of low UFC fighter pay. He claimed that UFC shouldn’t be likened to other major league sports — a comparison UFC bosses themselves routinely made — and said they should instead be compared to individual sports.

“We think the right comparison is to other individual sports such as PGA Tour, F1, NASCAR and ATP,” the Endeavor CFO argued. “And if you look at those athletes and what they’re paid, as a relative percentage of revenue for those leagues, it’s right in line where the UFC is with their athlete compensation. I would also point out that the fighter comp CAGR (compound annual growth rate) since 2005 has been 26%, while the revenue CAGR for that period has been 21%.”

The year chosen, 2005, happens to be the year that fighter pay as a share of revenue was the lowest in Zuffa’s history, being around 9%. We know this thanks to disclosures in the Le v Zuffa antirust lawsuit. We also know, thanks to this case, that the UFC had $48.3 million in revenue in 2005 and paid the fighters $4.43 million total that year. If Lubin had used 2004 or 2006 as his starting year then the CAGR for both fighter pay and revenues would have been nearly identical.

If we apply the CAGR that Lubin provided, we see that revenues would be around $1.020 billion today, while fighter pay would be around $178.8 million, or approximately 17.5% of the revenue. UFC’s own presentations in 2016 had them projecting to have fighter pay remain at 17% for years going forward.

(Of course, the 21% CAGR for revenue could have been rounded up from 20.5% or down from 21.4%. The same with the 26% CAGR for fighter pay. In which case, for 2021 revenue would be from $954.42 million to $1.075 billion and fighter pay would be from $164.36 million to $184.27 million.)

When choosing to compare that revenue share from 17 years ago, it’s also worth noting how that percentage is being split between far more fighters today as their current roster of over 600 athletes is around 400% more than 2005. Using our $178 million figure for 2021, individual fighter pay has risen from a fighter-bout average of approximately $27,000 to $174,000. A CAGR of only 12%.

With regards to their comparisons with other sports, you’ll notice that one glaringly obvious sport is absent. Boxing, which is also based on the business of selling tickets, broadcast rights, and/or pay-per-views in order to watch two people fight each other, would seem like the most obvious comparison.

Its absence might be because where the UFC is thought to pay less than 20% of their revenue to the fighters, boxing pays much, much more. For example, Canelo Alvarez this year might earn close to what the entire UFC roster of over 600 fighters did last year.

As part of the Le v Zuffa lawsuit, Top Rank’s CFO, David Lopez, declared under penalty of perjury, that the promotion’s paid the following share of revenue to boxers for each of these select years:

2013 67%

2014 68%

2015 69%

2016 80%

Declaration of David Lopez, Exhibit in Le et al v Zuffa, filed 9/12/19

Meanwhile, financials submitted in Golden Boy’s lawsuit versus Al Haymon showed Oscar De La Hoya’s company paying the following amounts:

2014 64%

2015 62%

1st 6 months of 2016 56%

As for the sports he did offer, neither the PGA Tour nor the Association of Tennis Professions seem like much better comparisons. While the ATP is currently thought to pay only 17.5% of their revenue to their players, this is expected to change as the ATP has made a commitment to split 50-50 all new revenues with the players.

In addition, the ATP is not a for profit company. It’s an association made up both players and representatives of the many tournaments that make up the ATP Tour. Most of these tournaments are themselves non profits. For example the US Open is run by the United States Tennis Association. The USTA is a non-profit that uses the revenues generated by the US Open and other major events to fund operations that include promoting and growing the sport, including hosting grass roots to professional events.

Meanwhile, the PGA Tour says it will distribute $838 million to the players from projected 2022 revenues of $1.522 billion. This would be 55% for the players.

This does not include the four major championships, like the Masters or US Open, which are not run by the PGA Tour and pay much less of their revenues as a percentage to the players, perhaps as low as 10%. But those four events generate just around 40% of the revenue the other Tour events do, so even with the lower revenue share for those events players can expect to receive around 45% of the revenue from all the events.

There is also one other major difference between golf and tennis as opposed to MMA: players do not have to sign an exclusive deal in order to compete at a major event. Wimbledon does not demand players sign exclusive long term deals in order to appear and compete on their courts. If a player is feuding with the officials for that event they are free to play at on of the many other tournaments held every year.

This scenario was actually noted during hearings to implement the Muhammad Ali Boxing Reform Act, with the comparison being to made practices then in boxing:

“Despite the fact that top-rated challengers have clearly earned the right to compete for a title, sanctioning organizations have abetted restrictive contracting practices by allowing promoters of championship bouts to require options from them. As one hearing witness noted, this is akin to forcing a professional tennis player or golfer to sign an exclusive, long term contract with the promoter of whatever event they were seeking to win. The athlete would then only be able to compete when the promoter approved, against only those opponents who also were forced to agree to terms with that promoter. In self-governed and well organized sports industries such as tennis and golf, such a business practice would be strongly challenged as an unreasonable restraint of trade. In professional boxing, it is business as usual.”

Not only are these protections not in place for mixed martial artists, these fighters also haven’t been getting a comparable wage share across a lot of sports and various leagues the UFC likes to compare themselves to.

Figures from years past already showed these immensely low revenue share UFC fighters get. In this attempt to defend themselves, Endeavor may have just given even further confirmation that the same split and issue is very much prevalent today.

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About the author
Anton Tabuena
Anton Tabuena

Anton Tabuena is the Managing Editor for Bloody Elbow. He’s been covering MMA and combat sports since 2009, and has also fought in MMA, Muay Thai and kickboxing.

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