Minimum Wage in the UFC?

by Michael Rome on Jul 2, 2008 2:07 PM EDT in News

Kelsey Philpott has a thoughtful series of posts over at MMA Payout on fighter salaries. The latest installment, which suggests a $10,000 flat minimum wage for fighters, is here:

The Solution

Get rid of the show/win contracts altogether by moving to a flat-fee and institute a minimum fight payout for all UFC contracts at $10,000/fight.

How does this meet the interests of the fighters?

First and foremost, a UFC contracted fighter entering the octagon four times per year will earn $40,000 before tax and have sufficient funds to cover most of his living expenses. This minimum payout will allow the lower echelon fighters to improve their standard of living and hopefully help them committ to fighting as a full-time occupation.

I think the question of whether this actually helps fighters is a much more complicated question than the article suggests. It obviously helps the fighters currently in the UFC that are fighting under contracts like the one Goran Reljic was signed to, which paid $3,000 to show and $3,000 to win. However, it hurts people outside the UFC that have not been signed yet, and offer no value to the company outside of a competent body on the card. This is the classic minimum wage problem: You help the people already making the wage, which is an exceedingly small group, but you do it at the expense of a larger group of fighters that would simply love an opportunity to fight on a UFC card for little pay for a chance to make a name for themselves.

Houston Alexander, for example, came in on a $4,000 to fight and $4,000 to win contract. He was almost completely unknown prior to his first fight, and the UFC probably expected to pay him $4,000 to get his ass kicked. Knowing ahead of time they'd have to pay $10,000 may have convinced them to use a can already on their roster, and he would have never got the chance that changed his life. I don't think I'm being controversial when I suggest there are a *lot* more fighters in Houston's old position than there are fighters in Goran Reljic's position.

Further, very few fighters remain on the 4k/4k type tracks for long. They are usually signed to two or three fight deals when they are unknown, and if they win a couple fights they make more pretty quickly. Raising the minimum wage for UFC fighters to $10,000 would help a very small number of people for a very short period of their career. The conclusion that it would improve the quality of life for the fighters it applies to depends on the assumption that the UFC would not cut down on the number of fights they offer those minimum wage fighters as well. Even if we assume that, it would almost certainly hurt the quality of life for the many fighters that never get a chance as a result of such a proposal.

In the broader economy, raising the minimum wage does result in a slight increase of the wages that are a bit above the minimum, but the competitive pressures that create that effect just don't exist in the MMA market. The UFC has too much market share, there's no reason to believe that under this proposal fighters currently making $7,000 to show and $7,000 to win would be bumped hire than those on Goran's deal. They'd probably all be bumped to $10,000 flat.

Finally, the classic counter to the economic arguments about minimum wage in the broader economy are basic quality of life issues. Even though most people making it are teenagers, we are concerned with impoverished people without the skills to really get out of their situation, and we know how hard it is to live on such low wages. The situation just doesn't apply to the MMA world, where a few great performances can get you on TV pretty quickly, and skill really is rewarded pretty directly in the form of bigger fights and higher payouts.

If the Nevada state legislature proposed a law that would apply this minimum wage to the UFC, I would oppose it. It would hurt new fighters trying to break in, as well as the current fighters the UFC decides to fire instead of give the raise. Even if this was done by the UFC on its own accord, there would still be similarly damaging unintended consequences.

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Great post.

by Luke Thomas on Jul 2, 2008 2:45 PM EDT 0 recs

Lets not forget the money that these fighters get for Endorsments. The fighter salaries are all you ever hear about. Its not like this is there sole income and they are starving. I bet even bottom teir guys are making close to 10000 reguardless if they win or lose.

by WhiteyBarrington on Jul 2, 2008 3:13 PM EDT 0 recs

We only really know one side of the story, the published wages (if even reported depending on the fight location).
I’ve read storys that the UFC pays more outside of what is published depending on the fighter and what they accomplish.

Boetch was paid $6000 (+6k to win) at UFC81 to fight Heath yet his comments about the pay:

Boetsch, though, did indicate he got additional pay on top of his normal salary, confirming the UFC “takes care of you if you put on an exciting fight.”

by pr0cs on Jul 2, 2008 3:46 PM EDT 0 recs

Supply and demand

Sorry to be cold about this, but no one buys a ticket to see the guy in the opening match. For any fighter who doesn’t want to work for 3/3, there’s got to be 100 willing to take the spot. It’s no different than getting an entry-level spot in any business in which competition for said spots is fierce.

by andherewego on Jul 2, 2008 3:47 PM EDT 0 recs

Great points Michael

I completely agree with your analysis.

As far as the comment from andherewego, I have to disagree. When I buy a ticket to see a fight, I but it to watch every fight and will be one of the first guys in the arena. Often times, the guys at the bottom of the card put on a fantastic show.

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by Brandon Jones on Jul 2, 2008 5:38 PM EDT 0 recs

Right...

...but no one is buying a ticket FOR those guys. There are tons of people that buy tickets FOR someone like Chuck Liddell.

Contributing Editor - BloodyElbow.com - SBNation's mixed martial arts headquarters.

"The reason a lot of people do not recognize opportunity is because it usually goes around wearing overalls and looking like hard work." -- Thomas Edison

by Brent Brookhouse on Jul 2, 2008 5:50 PM EDT up 0 recs

Awesome Analysis

I couldn’t agree more with this post. A minimum wage would only work in a vacuum. By that, I mean that the UFC would have to continue to operate just as they did before the institution of a minimum wage. We know that wouldn’t happen. Unsigned, lesser known fighters probably wouldn’t get the number of opportunities they get now.

Another assertion made in the MMA Payout piece that I don’t agree with is that the win bonus is basically “obsolete.” Incentives, no matter what the size or situation, are normally very powerful. Whether someone works overtime, because their rate of pay is increased, or someone gives to charity to lower their taxable income, economic incentives work. Just because a competitor is already fighting hard to keep their job, that doesn’t diminish the value of a win bonus. The guys in the potential minimum wage category are the guys who are going to be most responsive to extra money offered for a winning performance.

by Cannon Jacques on Jul 2, 2008 6:55 PM EDT 0 recs

Excellent Points

You should write for MMAPayout instead. Another flawed post by the guys at MMAPayout. For MBA students, these guys are terribly flawed in their business logic.

Kelsey needs to remember that fighting is an occupation, and like most occupations, success is not guaranteed. The world would be great if everyone can earn a living wage, but that is not how the world works. The talent floats to the top. Supply and demand as well as competition pushes up wages. As long as the bottom of the barrel pay in the UFC is higher than the bottom of the barrel in pay for all other organizations, the UFC still has market power and the pay structure is fine. In business, you don’t over pay unless there is a reason for it. Corporations are not charities for a reason.

There are also intangibles associated with the UFC. One is exposure and the other is endorsements. Exposure = endorsements = money. Money can come from many areas other than straight to contract money.

The 40k number he got is ridiculous as well. First, not all fighters live in a city in America. Not all costs of living are the same. 40k is very good living in rural areas of the United States or in other countries such as Brazil. The number is incredibly inflated as well. 250 for savings? 211 for miscellaneous? If you don’t make much money, you don’t save and you don’t go to the movies. Do most starving actors and musicians save 250 per month or spend 211 on entertainment? Undercard fighters obviously don’t make enough to earn a standard living; however, if after a few fights and they’re not earning more, then obviously being an MMA fighter isn’t for them. Move over for the new kids on the block and get a real job.

I’m not even go into his suggestion of removing the win bonus. His reasoning is awful on that as well.

by cyph on Jul 2, 2008 7:01 PM EDT 0 recs