Josh Gross has an excellent piece on Zuffa's current merchandising. Some snippets:
On June 10, Zuffa jumped into the merchandise market when it announced a four-year deal with JAKKS Pacific to create a line of action figures based on current UFC stars. By fall 2009, Brock Lesnar, Michael Bisping, Forrest Griffin, Anderson Silva, Chuck Liddell and others will have action figures in their image for sale from K-Mart to Toys R Us. (Each, presumably, will have signed some sort of merchandise rights deal in order to be part of the initial campaign.)
But the company's claim has raised concerns by mixed martial artists and their managers over issues such as undefined terms of compensation, the loss of likeness rights in perpetuity and the inability to audit how much Zuffa is making in individual licensing agreements.
"I thought it was a good deal for the UFC," Gracie said. "I thought, financially, it was not a good deal for the fighters. Making a few dollars is better than making no dollars, and that would be the only reason to making a deal like this happen, but there are too many negatives right now, too many ways to get screwed, where it's not worth it in my opinion."
According to the standard agreement, which was obtained by SI.com, clause 1.2 states:
The Merchandise Rights shall be ZUFFA's sole property in perpetuity throughout the world, which ZUFFA shall hold free and clear from any and all claimes of Fighter or anyone claiming through Fighter.
Per Article III about compensation, fighters are entitled to "10 percent of the Gross Revenues and 20 percent of the Gross Royalty Revenues" from all licensed merchandise created by third parties, not the UFC.
A soft spot for some fighters and their managers centered on the UFC's refusal to divulge monetary details of their licensing agreements with companies like JAKKS, making it impossible to know just how much fighters stand to profit from licensed merchandise sales.
For the guys at the top, the merchandise push should be nothing but cash hand over first.
It's the young, up-and-coming fighters that potentially have a difficult decision to make. On one hand, any amount of money, especially money earned without having to fight, is nothing but a good thing. On the other, a young fighter without a big name does not have the bargaining leverage as the guys at the top of the mountain.
For instance, someone like Chuck Liddell probably doesn't have clause 1.2 in his contract. A fighter like Tyson Griffin does not have the same luxury to make demands. He can agree to the clause and essentially put his likeness rights into the hands of Zuffa for the duration of the contract (and maybe longer?) or he can try and pursue merchandising projects on his own without the Zuffa machine behind him.
Not the worst decision someone has to make, but combined with Zuffa's usual secrecy over its financial dealings, one that can be quite perilous.