Competition and Salaries in Professional Sports
by Mike Fagan on Mar 16, 2010 4:21 PM EDT
in MMA News
213 comments
Time and time again fans have uttered the old "competition is great for everyone" argument, and we all know where that comes from. No one is stupid enough to suggest that a second major pro football league or pro basketball league would be great for anyone (or that they should even be attempted). No, the "competition is great for everyone" concept comes from the world of professional wrestling, and there is a very special reason for that.
Jason Amadi made this statement (emphasis mine) in a recent piece at MMA Torch critiquing the analogy between pro wrestling's Monday Night Wars in the 90's and the current situation between the UFC and Strikeforce.
History shows, however, that competition proves lucrative for at least one segment of the sports world - the players. In a piece at the baseball blog Sabernomics, JC Bradbury looked at the professional baseball salaries during the Federal League years. (Check out the link for a line graph of this data.)
Before the Federal League became a major league, the AL and NL showed healthy salary growth, which is consistent with their average annual attendance growth of 4.5% from 1901–1913. During the FL’s inaugural season in 1914, there was a drastic spike in salary growth. 1915 also showed a 27% rise in salaries, which is the third-greatest change in the sample. In 1916, after the league disbanded, salaries rose only a paltry 7%; and in 1917, salaries fell by 3%—the only negative year in the sample. In 1918 and 1919, salary growth was 16% and 11%, muted compared to what it was before and after the entrance of the FL.
At the basketball blog Hoops Hype, David Friedman led with this little tidbit when he detailed the competition between the ABA and NBA:
The economics of pro basketball exploded in the 1970s. The average player salary rose from $35,000 in 1970 to $180,000 a decade later and franchise values went up more than 600% in the same period. The major cause of the skyrocketing salaries was the competition between the NBA and the ABA for star players.
The competition between the leagues was so lucrative that Oscar Robertson filed a class action antitrust lawsuit when the NBA and ABA agreed to merge in 1970.
Hall of Fame linebacker Willie Lanier lamented the NFL-AFL merger of 1966:
Lanier wishes they had waited a year to strike a deal — or that there had been a filibuster on Capitol Hill as the agreement worked its way through congressional approval.
"The merger bill was tied to a tax bill as a rider," Lanier says. "I was just hoping that there would be a long enough delay that it wouldn't happen that year."
...
When the leagues merged, Lanier, who starred for the Chiefs from 1967-77, lost the chance to negotiate with AFL and NFL teams because there was just one draft.
"Timing," Lanier says with a chuckle, "is everything."
The comparison of MMA to stick-and-ball sports is always a tenuous one, and this topic is no different. An argument could be made that the talent that makes up the NFL, MLB, NBA, and NHL benefited from the structure and sustainability of one monolithic organization than the fractured talent pools of an alternative universe. However, the spectacular rise in player salaries, while correlated with the success of the respective organization, would not have been possible without the emergence of powerful unions, who established a pseudo-market on the basis of a player's right to free agency.
Individual sports like tennis, golf, and bowling offer no better comparison either. Athletes don't sign contracts to play for the ATP or the PGA; they become members of the tour and compete for predetermined prize pools. And even that didn't stop tennis players from wrestling control of the world tour from directors in 1988.
When it comes to collective bargaining, to the chagrin of Mr. Amadi, pro wrestling provides the best, if imperfect, comparison. Vince McMahon has thwarted the unionization of wrestlers since the 80's with a very simple strategy: keep the top names happy. Hulk Hogan wasn't just the top star in pro wrestling for a decade. He became McMahon's de facto strikebreaker.
The same strategy will (and has) worked for the UFC. A fighters union will never have teeth without the likes of Brock Lesnar and Georges St-Pierre, and losing marginal talent like Sam Stout or Rory Markham over labor disputes will have little, if any, effect on Zuffa's bottom line. Just ask Jon Fitch.
Without collective bargaining, an alternate destination for employment with proper funding and exposure provides a fighter with negotiating leverage normally reserved for those with possession of shiny gold belts. With network and premium cable TV deals and a proven willingness to splash money on talent, Strikeforce has provided a viable venture for those outside of House Zuffa.
Read the rest in the full entry.
One of the under appreciated aspects of the James Toney circus is the effect Strikeforce had on negotiations. Toney was a side show in the MMA world after he stalked Dana White following UFC 108. It surprised many that White had any interest - let alone began negotiations, but when Toney complained about a lowball offer, most thought the issue was put to rest.
Six weeks later, Toney has a contract. What changed? In an interview with Yahoo's Kevin Iole, Dana White said, "We were sitting around finishing the deal and talking and he told me that he’d been talking to Strikeforce. He said they were talking to him about a fight with Herschel Walker. James said to me, ‘Do you know what I’d do to that [expletive]?’"
Was Toney actually in talks with Scott Coker and company? The answer is irrelevant. All Toney had to do was put the idea of Toney fighting on CBS for his Rival of the Month and immediately increased his value to the UFC.
Ultimately, Strikeforce will be joined with Zuffa in some way within the next five years, whether it be merging, co-promotion, or picking the meat from a dead skeleton. Combat sports cannot afford two large, competing organizations isolated from each other. In the meantime, fighters should take advantage of the current business climate. Once the dust has settled, it's not bound to be riled up again.
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This may be off topic but...
Team sports are and SHOULD be structured much differently than individual ones, especially when it involves 1 vs. 1.
We don’t root for the Nevada Lions or the Podunk AlleyCats…we root for individuals and that is what combat sports is about. It’s completely different
Is there room for two elite organizations to co-exist in a thriving sporting climate? I believe so. But it will take some small measure of intermingling so that fans don’t lose interest. And yes, in that case, everyone succeeds, though maybe the top dog has to drive a Mercedes instead of a Rolls Royce. That would also mean more people driving luxury cars.
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I disagree
If all the mma organizations folded and the UFC were the Last man standing". I believe it would would be great for the sport. Here’s why: 1) No more whinning about who is the best. 2) No more half hearted fights. Since the UFC is the dominant company. Its where every fighter would aspire to fight. 3) The chance for collective bargining would help increase pay and benefits to fighters. 4) All MMA would be under the same rules. No more Pride rules, UFC rules, Hawaiian rules. 5) There wouldnt be any need to promote freak show fights. Strikeforce and others, promote these fights because they lack the roster depth necessary to provide quality fights. 6)The cost of pay per view cards would be easier to swallow. And finally, 7) Easier for the fans to follow. One network, or channel carrying the fights, makes it easier to find.
1) Correct
2) Eh…that’s not something provable. In a discussion like this we should attempt to refrain from presenting “knowledge” of behavior. There are plenty of guys who don’t “try” in sports where there is only one league.
3) The UFC has taken a lot of steps to prevent any sort of fighter unionization to this point. I think this point may actually be the UFC’s nightmare.
4) State athletic commissions would still have some say over rules. i.e. if North Dakota were to say that fights held there could not contain kicks to the head…that would have to be followed in the state. It’d probably mean less major variation but some minor variation would still exist.
5) Depends on the ratings/buyrates.
6) maybe. maybe not.
7) true
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by Brent Brookhouse on Mar 17, 2010 8:38 AM EDT up reply actions
in my opinion the future of mma will be the ufc as the one dominant organization
for this to help the fighters though the creation of a UFC fighters union needs to happen, this system would be much different than the situations in the other major sports but a union is needed so the fighters can protect their own rights
As for the Monday Night Wars, one of the things that sunk WCW was overpaying for past-their-prime talent that didn’t draw.
by MMAEruption on Mar 16, 2010 4:41 PM EDT reply actions 3 recs
The talent was past their prime but they did draw. They beat Raw for like 2 years. WCW just didn’t develop new talent of their own, so the product got stale. While the WWF was making stars out of The Rock and Stone Cold. The lesson from that isn’t overpaying talent it is keeping your product fresh with your audience.
"Will Rogers never met Barry Switzer."
Oh, I was too. But I thought the quality went WAY down after the Attitude era and I can’t stand it these days. I did go to a Raw show a couple years ago and it was pretty awesome.
Must read books about pro wrestling:
http://www.amazon.com/WrestleCrap-Very-Worst-Pro-Wrestling/dp/1550225847
http://www.amazon.com/Death-WCW-WrestleCrap-Figure-Present/dp/1550226614/ref=sr_1_1?ie=UTF8&s=books&qid=1268776718&sr=1-1
According to the Death of WCW book, the WCW gave Hogan creative control which apparently mucked everything up.
I want to add
http://www.amazon.com/Eric-Bischoff-Controversy-Creates-Cash/dp/141652729X
I haven’t been a wrestling fan since I was younger, and I totally missed the WWF WCW thing, but I enjoyed this book.
They drew ratings for two years but WCW PPV’s tanked even when their show were ratings winners and their house show circuits were sub-par due to all those older expensive guys not wanting to travel. The only reason the Monday Night Wars happened at all was because Ted Turner decided to bank roll the whole thing, WCW never made any real money, even when they were winning they were spending by the truckload. It wasn’t long after Turner was out at Time Warner that the WCW was gone. The Monday night wars only lasted for 5 years and it destroyed one of the companies.
That situation is what MMA faces now, to really challenge the UFC on that level someone is going to have to come in and bankroll a effort destined to lose tens of millions of dollars in order to gain market share and even then there is no way to guarantee success. Strikeforce is doing a better job than the last couple of challengers have done but they don’t spend enough on trying to steal fighters away to really change incomes that much either.
If your losing tons of money you can’t stay in the fight. I think the lesson in that war was you can’t overpay talent and have much hope of sustaining yourself.
The WCW talent did draw enough to beat RAW for like 2 years but that was unsustainable because of all the bloated salaries. The WCW was losing boatloads of money every year and that is what eventually led them to selling. So the WWE would probably have won that war whether the Rock or Stone Cold got huge or not simply because of WCW’s bad business practices.
Just BE.
Yeah, while throwing money around like they did certainly hurt, WCW had a laundry list of problems that contributed to their downfall.
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Since I don’t follow wrestling the question I would like answered is even though the WCW went under did the wrestlers pay go up enough that it was worthwhile? We can sit here and bemoan the fact that the WCW went out of business, but for a wrester the question will be were they making more because there was a WCW than if there wasn’t one?
Well 80% of WCW’s wrestlers income went straight to 0 and for the ones who did get picked up by the WWE they had no future contract negotiation leverage at all. In the big picture the Monday night wars gained them very little (lets face it the younger guys didn’t really make much more even during it’s peak, only the mega-star’s wages went out of control) and gave us the pro wrestling world that we have had for the last decade.
It won’t because it’s just not sustainable long term.
The best hope is that Strikeforce hollows itself out a niche and stays out of bidding wars for stars as much as possible. What is best for driving up fighter pay works against the organizations because they have to pay more to compete in the same market. Strikeforce has been smart about controlling cost and ensuring that events make money but when you start competing in the top tier mega-star market then it takes a lot more money just to keep going. Look at Fedor’s cost and then imagine if they had to pay ten guys at that level. Once Strikeforce tries to move to a sustainable PPV business plan then all bets are off.
Niche
Youre right. By Strikeforce getting away from bidding wars for top talent and concentrating on a niche. It will allow fighters to get in where they fit in. The top fighters will fight for UFC or whoever else is #1 and the rest in the minor leagues. I agree with who me. Strikeforce is gonna crash and burn when they approach the PPV market.
The fact that they provide free content
Is why I want them to stay forever. I honestly resent the fact that I have to shell out 50 bucks a month to watch UFC content.
" Tell me something Steve, How does a guy from Puerto Rico loose a ball in the Sun? "
$50 a month
I would like to have free content too. I will have over friends and we all pitch in to cover the price. The UFC and Strikeforce are providing free content to appease the networks.
This is not true. When WCW went under, their contracts were still paid out by Time Warner. 24 contracts were purchased by WWE, but the rest of the contracts were still honored by their former company. It’s part of the reason there was no Flair/Goldberg/Sting right away in the WWE, because each individual guy had to come to a buyout agreement of their original contract before they could sign with WWE. Flair took something like 40 cents on the dollar to get out of it and come over. Some guys just rode it out and came over after. It’s one of the things that killed the entire Invasion angle.
Overall, the competition from WCW was great for pro wrestlers money-wise. Guaranteed contracts were introduced, big money became bigger, and mid-carders were suddenly more important. Since WCW died, Vince has been able to rein in spending, but it was great at the time.
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by Beer Monster on Mar 16, 2010 8:41 PM EDT up reply actions
Only the guaranteed contracts were paid out till the end(shouldn’t have to point out which guys could get guaranteed contracts) and even for many of those guys it was the end of their careers for all practical purposes. A bit of severance pay (which is all finishing those contracts for certain guys was)doesn’t make up for losing your job. Stars stay stars but those mid card guys became superfluous in the industry.
When you point out that Vince McMahon was able to rein in things after it was over you have to remember that there was an afterwards due to the fact that they went into such a heated competition to start with. 5 years of good in pro wrestling is balanced against the 10 years that we got due to one organization burning itself out for the sake of competition. The WCW was in business in one form or the other for a long time but when they went into direct competition with the WWE they only lasted 5 years and then were gone. Was that 5 years of crazy competition worth the aftermath that it caused in the industry?
I remember watching Georgia Championship wrestling in the 70’s when I was young, that was a company that employed a hell of a lot of wrestlers for a very long time. Heck it was always the company I preferred to watch from 1975 to 2001. Now they are employing no one and doing nothing at all for the sport and it’s because they decided to go directly after WWE market share. Yea it may of done a lot for guys during those five years but was it worth destroying the company over? Was it worth them not providing jobs for anyone at all now?
A LOT of guys had guaranteed contracts. Even guys like Stevie Ray were making a million dollars a year at the time. And it was only the end of their careers because of the death of WCW and a lack of prime time spots in the aftermath. It was hardly “a bit of severance pay” for a lot of guys. Scott Steiner was paid for what, 2 years after WCW died, and still had to negotiate a release to go to WWE? Time Warner paid out the ass for ATM Eric.
I absolutely believe those 5 years were worth the aftermath, because it didn’t have to end like that. It was a multitude of failures that led to the competition only lasting 5 (and by 5 you’re referring to the monday night wars…there was competition before that, it just wasn’t as heated). I won’t go into the what if’s, but even with the way it went down, wrestlers were much better off for those 5 years than they would have been without it. Guaranteed. Is the entire business better? That’s where it gets iffy.
And your last paragraph is somewhat misguided. GCW, Crockett, WCW, whatever lineage you want to use…they went under because the territorial divides of pro wrestling had been ripped to shreds by McMahon going national. It was either go national along with them and compete, or die like every other regional organization did (except Memphis). You wouldn’t have been watching until 2001 if they hadn’t decided to compete…they would have had all their talent raided and they would have gone under in the late 80’s. Later than everyone else due to their standing in the region, but it was only a matter of time. Similar to the AWA.
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by Beer Monster on Mar 16, 2010 9:47 PM EDT up reply actions
And it was only the end of their careers because of the death of WCW and a lack of prime time spots in the aftermath
Yes exactly how many hundreds of pro wrestlers would of loved to have a spot in the sport that WCW was providing since the 1970’s? You keep talking about a couple of huge stars that made some crazy money at the end (and those crazy big paydays was one of the main things that killed the company) but what happened to the mid-level guys who weren’t getting millions off Time Warner in the end? How many guys never got the change to get to be stars and make that kind of money due to the lack of spots in the aftermath?
there was competition before that, it just wasn’t as heated
Exactly, there was room for two companies, just not two fighting for that top slot. In terms of a career 5 years is just pissing in a barrel, particularly for the vast majority of guys who weren’t making a million a year. Yes for 5 years it was a crazy boom town in pro wrestling(before the Monday night wars the competition existed but wasn’t that wild with Turner overpaying guys just to get them to leave the WWE) but after that it was gone. You think McMahon makes contracts like the WCW used to do (even for stars)? Do you think the sport is better for it now? All the what if’s in the world don’t matter as the company is long gone now and hasn’t done anything to help anyone get a paycheck in a decade.
As far as Georgia Championship wrestling goes, they were already going national when McMahon bought them out in ‘83 and then later sold them to Jim Crockett in 1985 when his show tanked on WTBS. With the exception of those two years when Vince McMahon was bleeding viewers (and pissing off Turner) on TBS WCW Saturday Night was on for two hours as the flagship show for WCW. It ran from 1972 till 2000 (although at the end it was a recap show for the live Monday events). It wasn’t till 1995 that WCW tried to directly go against WWE on Monday nights, a decade after Crockett had bought the company back from McMahon. It existed and being on TBS wasn’t because they were forced to compete it was because McMahon couldn’t get viewers on TBS in the early 80’s. They didn’t have to go crazy and start throwing huge money at guys to lure them away from the WWE in 1995 to of been a successful company in the long term and in the end that is one of the main things that killed them off.
Once again, I’m not just referring to a few stars. Every guy in both those companies (and half of ECW) benefitted from the competition. You say that they’ve done nothing to earn them a paycheck in ten years, but the stigma of being a “former WCW” or “former WWE” wrestler still gets guys paychecks on the independent circuit nowadays. Without that opportunity back then, these guys would have no careers today.
McMahon’s show actually didn’t tank on TBS, Turner wanted him off the air because he wasn’t living up to his agreement of putting up a studio show every week, he was just showing recycled tapes. Jim Barnett was friends with all of them and came up with a solution that benefited all parties involved. But McMahon was getting good ratings on TBS…not Saturday Night ratings, but still very good ratings. That’s documented all over hte place. And they weren’t going national yet…being on a UHF station did not qualify as going national. They never promoted shows outside their region.
Like you, I watched WCW Saturday Night as a kid. But it was the flagship show for the NWA, not WCW. WCW didn’t exist as a promotion until 1993. But Crockett most definitely competed with McMahon before 1995, to a large degree. He ran events in NY and Chicago, he ran competition Clash shows directly against WWF PPV’s (sound eerily familar to today), signed many guys away, fought over PPV, and all that stuff. It was more heated when Bischoff came around because they were head to head on cable, but it had been heated and personal for a very, very long time between NWA and WWE. Long before WCW even existed in that form.
Fascinating discussion by the way. Thank you very much for engaging in this, even if it’s only barely tying in with the theme of the thread.
http://www.twitter.com/TB_Money
by Beer Monster on Mar 16, 2010 10:51 PM EDT up reply actions
Actually, I effed that up. WCW was created in 88, not 93. When Turner bought Crockett back out. Forgot that tidbit.
http://www.twitter.com/TB_Money
by Beer Monster on Mar 16, 2010 10:54 PM EDT up reply actions
Love to see high level pro wrestling discourse on an MMA blog. Good stuff.
Twitter: @Mike_Fagan_13
http://www.sackmikegoldberg.com
You say that they’ve done nothing to earn them a paycheck in ten years, but the stigma of being a "former WCW" or "former WWE" wrestler still gets guys paychecks on the independent circuit nowadays.
That’s like saying “I used to have a high paying job but now I work at Wal Mart thanks to the experience I got”. Scrounging a living on the independant circuit isn’t some kind of boon for guys who used to have tv exposure. I’m sure all those guys would rather have a regular WCW paycheck as opposed to being able to work in high school gyms for next to nothing.
Jim Barnett is the guy who got screwed in the Vince McMahon deal to buy Georgia Championship wrestling. Georgia Championship wrestling was the first NWA affiliate to be broadcast nationally and they ran shows in other states too. They were making that move before McMahon did, McMahon bought out the Briscoes and pushed out Barnett to try and take over what they had. The entire ratings issue was that WWF ratings weren’t as good as what TBS was getting before, that’s the whole point of ratings, if they go down it’s bad.
WCW Saturday night was the flagship show for Georgia championship wrestling, when Crockett bought the company from McMahon he didn’t get the rights to the name Georgia chamionship wrestling so they called the company World Championship wrestling after the show. It was still a direct line from the same company it’s just that the company had to change names. Turner was always in cohoots with Crockett, his network had been showing wrestling since it started in the 70’s and he was still mad at McMahon.
Great discussion, sorry I don’t have more time :D
You have saved me a lot of needless typing, Mr. Fagan
Now, instead of debating anymore about why I am for competition I can merely link to this because you have condensed all of the arguments I have been making for these many months into one concise article.
by nottheface on Mar 16, 2010 4:41 PM EDT reply actions 1 recs
It makes a real point as to how competition on that level isn’t really sustainable. History has shown in sports (and sports entertainment for that matter) that it ends up with one company in the end. Competition is a temporary thing in the sports world and doesn’t help the fighters long term. Heck look at the example of the monday night wars, sure they propped up wrestler pay for 5 years but they also brought the sport into a defacto monopoly setting for the last 10 too. In the end it didn’t do much at all to help pro wrestlers have better careers it just gave them a couple of years of negotiation leverage before it all fell through to worse than it was before.
Competition isn’t the fix, some kind of fighter protection or union type organization is and even that is a mixed bag of effects on the sport.
I think the straight statement about what history has shown is a very shallow analysis, history is very mixed, especially when it comes to niche entertainment. There are also a number of different modes of competition, it hardly has to be major direct competition for others to exist in the market and sustain themselves.
The current model can’t sustain the growth in athletes in the sport. The fact that Bellator has such a loaded roster of prospects speaks to the limitations of the UFC model.
I want to write more about this, but a lot of the analysis of where Strikeforce is has been so misguided. A lot of people were so freaking clueless to the obvious deaths of Affliction and Pro Elite that they’ve decided Strikeforce must be the same, and the analysis is conclusory at best for the most part. With the rights fee they have on Showtime, if they get renewals they can be profitable for a very long time.
by Michael Rome on Mar 16, 2010 6:07 PM EDT up reply actions
i disagree.
The current business model Strikeforce is using isnt gonna sustain long term growth. In my opinion, there are too many fingers in the cookie jar. The fact is, M-1 Global, Showtime, CBS and Strikeforce are all Vying for the same pool of money. Next, the fact that there are too many chiefs and not enough indians, makes it almost impossible for Scott Coker to do his job. I see the internal and external conflict similiar to what Gary Shaw had to deal with during Elite XC. Finally, There isn’t enough talent in Strikeforce to keep fans coming back for more. This is why, “fighters” Herschal walker and Now Jose Conseco are getting a chance.
M-1 only has their fingers in the jar for Fedor fights, which is 2 cards a year max. He’s being used as loss leader to bring them attention and legitimacy.
As for their Showtime cards they get a $700,000 license fee plus $650,00 gate (their average for the 4 reported events last year) minus $500,000 purses and estimated tv production costs of $200,000 means they have $650,000 left to work with. Is it UFC money? No, not even close, but I think they’ll survive at least through the current contract with Showtime/CBS.
The issue with Strikeforce is just what are they trying to accomplish, there will be room in the sport for a dedicated secondary promotion but it really looks like they are trying to grow into direct competition with the UFC and that will drive the cost for them up exponentially. Finding a niche is very possible in MMA but taking market share from the top company is an entirely different situation. Strikeforce has shown itself to be a much smarter company that the duds that came before them but lately Strikeforce has been acting very un-Strikeforce-like and that sort of scares me.
I suspect you’re projecting this goal onto them. A real business analysis of what they’re doing and how they operate suggests they are looking to find a successful place in the market without growing too fast.
by Michael Rome on Mar 16, 2010 6:40 PM EDT up reply actions
Normally I would agree with that as it’s always been how Strikeforce has operated. I’m not projecting goals on them I am worrying about the things I hear coming from them (and Showtime). They are talking about moving into the PPV market and that changes everything and brings them directly into market share competition with the UFC. Competing for viewers is one thing but competing for paying customers is a very different concern. I get the feeling that Coker would be happy to find a niche and not directly compete against the UFC but it is starting to look as if Showtime is calling the shots not Coker now and that is what worries me.
Success
I have a problem with your assertion that Strikeforce is not trying to grow too fast. Long term success isn’t accomplished by freakshows. I really believe, CBS is pressuring Strikeforce to produce ratings. Otherwise, there would be no talk of Jose Conseco or Herschel Walker. I see this as desperate measures by Scott Coker. Why else would he deviate so far away from his traditional business model.
you are right
Strikeforce is walking outside it’s comfort zone. But, what do you expect when you are in bed with CBS/ Showtime and M-1 Global. The facts are. Strikeforce has declined. The pressure to produce ratings was to driving force behind Herschal Walker. And, driving ratings will be the same reason Jose Conseco fights for Strikeforce.
I don't think they are competing with the UFC
since the only weight classes with depth of top fighters are HW and LW (through DREAM). Every other weight class in SF is very shallow and there aren’t compelling contenders clearly emerging. I feel like the “compete with the UFC” mentality is more a projection by fans, or an impression we gather from how Dana treats them.
Shit, and Michael Rome just beat me to my point before I posted. Oh well.
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They are competing with the UFC for viewers and that will become much more heated if they move into the PPV market as they are talking about. Just because they don’t have the same talent in the same divisions doesn’t mean that both companies aren’t trying to put their hands in the same pockets. How many successful PPV’s are possible every month? Just how much money are fans willing to shell out every month and if they have a choice between multiple shows what is the chance that they will only pick one to buy? That is direct competition with the UFC at the very highest level, the market share level.
Rome makes a great point about limitations that I thought about delving into, but decided against because it was already so long. There will always be a place for other organizations because I’m not sure Zuffa can handle the immense amount of talent that will be pouring in to the sport over the next 10, 20, 50 years. Bellator’s doing a great job (outside of the length between “seasons”) carving out a niche for themselves.
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It’s not impossible, but it’s unprecedented. That would require a massive amount of logistical work.
Twitter: @Mike_Fagan_13
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Let’s not forget Soccer, which has multiple elite leagues, and that doesn’t look to change anytime soon. The best play the best only in the context of the World Cup, etc.
Even in England with it’s multiple leagues they are all tied to the same league system, they aren’t really separate leagues. League systems exist in multiple sports around the world but they aren’t really separate leagues they are interrelated and using the pyramid system for structure.
Soccer also crosses international boarders in that sense too. What Strikeforce and the UFC and Bellator do in the US isn’t going to affect what Dream does in Japan. I doubt there will even be a true monopoly in MMA just because the world is a very big place.
Another point I didn’t have space to discuss. Soccer has multiple big leagues (EPL, Serie A, La Liga, Bundesliga) that handle the deep pools of talent in that sport.
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But MMA has no where near as deep a talent pool right now
So bringing this up seems unnecessary.
Should MMA ever reach such a level, let distinctive areas of competition develop organically. Don’t force it now when there’s no need.
by The Flying Gentleman on Mar 16, 2010 7:34 PM EDT up reply actions
I’m not suggesting it be forced. Zuffa, right now, can’t handle the current talent pool, so I’m not sure why we should believe they will be able to in the future.
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Dana has said before that they need the second tier organizations. There will always be room for multiple players in the sport but having multiple competing organizations at the top is a different issue.
If what we're talking about is second tier organizations
Then i agree as well.
by The Flying Gentleman on Mar 16, 2010 7:54 PM EDT up reply actions
Bellator, for example
Is an organization that is doing exactly what i think is right and needed outside of the umbrella of the main MMA entity. Strikeforce, not so much.
by The Flying Gentleman on Mar 16, 2010 8:02 PM EDT up reply actions
They can't handle the current pool?
I’m not sure i agree with that.
With relatively very few exceptions every meaningful fighter or prospect is tied to Zuffa.
And we should be discussing Zuffa’s ability in the future because if they’re allowed to grow in step wit the sport, all of this will be that much easier for them as time goes on,
by The Flying Gentleman on Mar 16, 2010 7:52 PM EDT up reply actions
Huh? Fedor, Mousasi, Lawal, Shields, Henderson, Aoki, Melendez, Diaz, Overeem, Barnett, Arlovski…
I could go on. Zuffa could not contract the entirety of relevant pro fighters and handle the load right now.
Twitter: @Mike_Fagan_13
http://www.sackmikegoldberg.com
Yeah
That’s relatively very few exceptions.
Many of those fighters are of the old guard from a time when Zuffa wasn’t so established, will probably end up in the UFC at some point in the future, are damaged goods, or have had their shot already. Or are Fedor.
None of that makes me think Zuffa is incapable of handling the talent pool.
by The Flying Gentleman on Mar 16, 2010 7:57 PM EDT up reply actions
however there is cross over between the leagues with the best club teams playing each other in the Champions League, FIFA Club World Cup, etc etc
i dont think anyone would have a problem with strikeforce being in competition if it meant the strikeforce champ could fight the UFC champ regulalry like the top league teams do in soccer
I like competition too
I think it’s good overall. What was the alternative for Fitch at the time his contract was canceled? I think that if Strikeforce, or even Affliction, had emerged at that time, the UFC might not have been able to take as hard a line with him.
Also, wasn’t there a world war that started to pick up steam in 1916-17? That may have had an effect on player salaries as well (accounting for the drop off). Did the USFL have any effect on NFL salaries?
Use all ten points.
Let’s see. The UFC has over a billion in revenues a year ,is enormously profitable in a sport that is growing like crazy but there isn’t room for 2 competing organizations? There may not be room for two 50$ PPV’s per month but there’s gotta be room for a strong # 2 promotion particualry since ZUFFA isn’t particualry interested in dealing with major networks. I think there is a lot fo room for a promotion between the ZUFFA level and KOTC or MFC or whatever. SF is proving that as we speak.
That’s all fine and good, but SF isn’t positioning themselves to fill a gap, they are positioning themselves to run neck and neck with the UFC. As well, you make a lot of assumptions about how much money Zuffa makes and where that money goes. I’m not saying you’re wrong but I’m also not saying you’re right.
As a fan, my only real input on this issue is that at the end of the day I want to see the best talent all under one umbrella. I don’t buy it when another supposed fan tells me it’s good for me that I don’t get to see fights I want to see because the talent in the sport is divided into two pools. While I wish them the best, a fighters salary and a fighters options aren’t really high on my list of criteria for what I like about the sport.
It’s not what they’ve said, it’s what they’ve done in terms of talent acquisition (Fedor, Dan Henderson) and talent accessibility (alliance with Dream). You don’t gain access to the fighters that Strikeforce has without positioning yourself as a viable big league alternative in North America.
So you are saying you don’t want Strikeforce to sign as good of fighters as possible or work with other promotions to get fights that fans want to see? Would you prefer that they put on bad fights with fighters no one wants to see? Doesn’t seem like that would be a very good business plan.
I understand that Strikeforce is doing what they have to do. If I were them I would to. But I’m not and as a fan I’d rather see Fedor, Dan Henderson, Nick Diaz and Gilbert Melendez plying their trade under the same roof as Brock Lesnar, Anderson Silva, GSP and BJ Penn. Maybe I’m an idealist
It just frustrates me when I hear arguments that don’t lead to the best fighting the best as the end result. If that makes me selfish and douchey as PDL put it, than so be it but I’m not going to apologize for that.
Yeah, I do that sometimes.
Or, most times rather.
"Someone is WRONG on the internet. What do you want me to do? LEAVE? Then they'll keep being wrong!"
-Randall Munroe
In all sincerity
I think you really lift the level of discourse ( and putdowns) here on the Elbow.
by nottheface on Mar 16, 2010 5:50 PM EDT up reply actions 1 recs
Thank you, sir.
I appreciate it.
"Someone is WRONG on the internet. What do you want me to do? LEAVE? Then they'll keep being wrong!"
-Randall Munroe
I think you do get to see the best fighters in the world in the UFC but there is always going to be some exceptions. Aoki, Fedor , Gegard, Barnett. Some of these guys may not want to be in the UFC for various reasons or it just may take a while to get it done. The fact that all of the top 10 in every weight class isn’t in the UFC is small price to pay for the benefits of having competing organizatins. I think we have gooten some free product form Zuffa that we otherwise would not have got and it creates mroe of a demand for high quality full time fighters.
What are the benefits to ME of not being able to see a fight like Fedor vs. Brock? Where in this equation am I THE FAN benefiting. I mean look, all the more power to the fighters if they want more money, but they aren’t going on message boards advocating that I get a raise and they aren’t paying my bills with the money they make so I don’t really buy fighters salaries as an argument of multiple high end promotions being a benefit. Not to me anyway.
by Worldisart on Mar 16, 2010 5:18 PM EDT up reply actions 2 recs
This is the most selfish, douchey thing I've read on BE. I'll respond within your logic anyways.
The benefit to you is that they can afford high level training camps as opposed to training in their time off while working a full time job. This raises the bar on talent and provides you with a superior product.
"Someone is WRONG on the internet. What do you want me to do? LEAVE? Then they'll keep being wrong!"
-Randall Munroe
Selfish? Fucking right I’m selfish. When I shell out my $55 a month that entitles me to an opinion.
Look I don’t disagree that better pay leads to better fighters, but it doesn’t make a goddamn difference to ME, the person opening my check book and spending my money, of which nobody advocates that I make more except me, if I can’t see the best fight the best.
Your logic is backwards. You’re not forced to spend $55 per month. You’re not forced to buy every PPV. You’re entitled to NOT spend your money and exercise your economic vote.
Twitter: @Mike_Fagan_13
http://www.sackmikegoldberg.com
Well. You have to pay for food and drink at BWW, in addition to the time you need to spend there to get a table. Maybe it’s different around you, but you’ll need to buffer at least an hour prior to the PPV to ensure a table in most of the Chicago area.
Twitter: @Mike_Fagan_13
http://www.sackmikegoldberg.com
But the mere threat of unionizing (if you buy Fagan’s argument) should be enough to keep the top fighters well-paid. Certainly well-paid enough to afford high-level training camps.
I think competition mostly gives the Fans extra UFC events that are aired on cable. You’d think this was a good thing, but most people (on interwebs message boards) mostly just bitch about oversaturation, and UFC running too many events.
TEH SKY IS FALLING
While I think there is a point where they can run “too many” PPV’s, I don’t think they’ve reached it. The 1/month (roughly) seems like the sweet spot to me.
Twitter: @Mike_Fagan_13
http://www.sackmikegoldberg.com
I agree with your selfish douchey comments!
Seriously, there are two sides that I consider when it comes to stuff like this. The human in me wants everything to be nice and pretty and everyone to get what they deserve, financially, emotionally, etc. But the fan in me wants to see Aoki vs Penn. The fan in me wants to see Fedor vs the UFC HW division. It’s also the fan in me that pays $55 for the PPV, and this is the same fan who justifies it to his girlfriend why he has to pay for it, and have a big party with all my buddies over so they can be turned onto MMA as much as I am. The fan in me has to go out and work every day to bring home the bacon. As a result, the fan in me wants everyone under the same umbrella, with the best fighting the best. At one point the fan in me thought differently, but as the financial realities and responsibilities pile on, I want to stretch that $55 as much as possible. Yes, it’s better if fighters get paid more and have better training camps and can feed their families, etc. But that’s still not going to help me see Aoki vs Penn or Fedor vs Brock.
It’s completely butt fucking selfish, but hey, so sue me. I want to see those fucking fights.
I don't want to lick any butt. - GSP
Another hoser here who agrees. We’re just superior is all.
Where’s Ubernoober at?
by The Flying Gentleman on Mar 16, 2010 8:38 PM EDT up reply actions
At $49 for 1 ppv buy if the ufc sells 600K ppv they make around 29.5 million.
On ufc 100 which pulled over 1mil ppv buys they would pull about 49 million just on ppv sales on one show.
With money like that & the purported purses being around 1mil, Zuffa is making a killing. They could easily pay each guy on the card 1 million & not bat an eye at the cost.
On Y2K Alex Jones was on the radio yelling that Russian was nuking the USA.
Now is this an indictment of Alex Jones, or an indictment of Jones' fans.
It seems as though people love being lied to & having their money stolen from them.
Viva L' America
& alot of times the total purse is usually said to be around 250K or at most 400K
On Y2K Alex Jones was on the radio yelling that Russian was nuking the USA.
Now is this an indictment of Alex Jones, or an indictment of Jones' fans.
It seems as though people love being lied to & having their money stolen from them.
Viva L' America
No they don't
A large chunk of the $49 goes to the PPV providers. Then you need to include set up costs, salaries of all the employees, and marketing. They make a lot of money but if you think they make pure profit on those ppv buys you’re sadly mistaken.
You also have to factor in what they make at the gate, through advertising, and on merchandising.
Twitter: @Mike_Fagan_13
http://www.sackmikegoldberg.com
The UFC does not bring in over a billion in revenue every year. The whole company is only valued at between 1 to 2 billion.
Let’s look at some numbers. The best estimates have the UFC selling almost 8 million PPV buys last year. I’ll go ahead and make it 8 million for this point. 8 million PPV buys times $50 a buy is $400 million gross. Around half of that goes to the PPV provider. That leaves the UFC with around only $200 million gross revenue from PPVs. Then deduct all the fighter salaries from that $200 million. Then deduct production costs and advertising costs. Then taxes. You get the idea. They make no where close to 1 billion in net revenue every year.
Just BE.
You are missing a lot though. You’re missing video game revenue, international TV revenue, apparel revenue, video on demand revenue, DVD revenue, etc etc.
But you’re right, their revenue is nowhere near 1 billion. It’s likely in the 300-400 million range.
by Michael Rome on Mar 16, 2010 6:09 PM EDT up reply actions
Yea I left a lot out but I thought that was enough to get the point across. I’m confused by your estimate though. Is that what you think their profit is a year or what is that 300-400 million estimate?
Just wondering because when Lorenzo was testifying before Congress he said that PPV buys made up over half their revenue. So my guess would be a whole lot lower than 300-400 million for actual profit.
Just BE.
If they sold 7.6 mil ppv in 2009, and their cut was $25 a ppv, then they would total $190 million in ppv revenue alone.
So the 300-400 million estimate Rome gave is a gross revenue estimate then right? What is the guess on the UFC’s actual profit for the year?
Just BE.
With foreign expansion who knows? But their EBITDA has run anywhere from 20-40% since 2006, so I wouldn’t be surprised if their margins ran around 25-30%. Payroll is the biggest cost for a star driven medium and it is remarkably low at 20% or so of the total revenue. Of course a big chunk of the dividends is going to pay off the owners’ loans.
The problem with the NFL/NBA/MLB analogy
In those leagues you have 30 competing teams trying to lure this guy or that guy.
So for the those analogies to hold water MMA would need 30 leagues out there competing against each other for talent.
" Tell me something Steve, How does a guy from Puerto Rico loose a ball in the Sun? "
Those teams only compete for players because the players force them to do so through collective bargaining.
Recall the MLB collusion scandal where all the teams agreed not to compete with each other for players. Free agents went unsigned for months, and salaries were depressed.
These large leagues operate as a cartel, and desire to drive down salaries as a means to transfer wealth from the labour (players) to the management (teams).
I like using semi-colons; they make me feel smart.
Agreed
One of the reasons Jim Balsille couldn’t get approved as an owner in the NHL is that he wasn’t willing to be a part of the boys club.
What do you think the UFC's objective is in Crushing any competion?
Creating a system where the fighters have zero negotiating leverage is what the UFC has been after all along. That is why the UFC monopoly will ultimately be bad for the sport overall.
Is a top level athlete going to go into a Stick /ball sport and make a great living, or are they going to get into MMA for 3/3 per fight and an Autographed poster of Dana White?
" Tell me something Steve, How does a guy from Puerto Rico loose a ball in the Sun? "
I don’t think it’s presumptuous to assume a business will do most anything to suppress salary as much as possible.
Twitter: @Mike_Fagan_13
http://www.sackmikegoldberg.com
As the sport grows and becomes more visible, the extent to with salary can be lessened will decrease and decrease one way or another.
The best way to ensure fighter treatment is establish their sport more and more, not where the sport takes place.
by The Flying Gentleman on Mar 16, 2010 8:54 PM EDT up reply actions
Whoops
That should read:
The best way to ensure fighter treatment is establish their sport more and more, not provide the more venues for it to take place.
by The Flying Gentleman on Mar 16, 2010 8:56 PM EDT up reply actions
I don’t disagree but to frame it as that being Zuffa’s only goal is increibly misleading.
by Worldisart on Mar 16, 2010 8:54 PM EDT via mobile up reply actions
Well, it’s a logical extension of the goal of making money.
Twitter: @Mike_Fagan_13
http://www.sackmikegoldberg.com
So the UFC conterprograms because????
They love the fans and want to give us free content?
" Tell me something Steve, How does a guy from Puerto Rico loose a ball in the Sun? "
Counterprograms
typo
" Tell me something Steve, How does a guy from Puerto Rico loose a ball in the Sun? "
The networks
Spike tv dictacts what will be on tv. not the UFC. so if, Spike counters a strikeforce program, it’s Spike not the UFC.
Twitter: @Mike_Fagan_13
http://www.sackmikegoldberg.com
by Mike Fagan on Mar 16, 2010 7:42 PM EDT up reply actions 1 recs
Sorry dude. That comment is just all sorts of wrong. With poop on top.
I don't want to lick any butt. - GSP
To add to the list of examples, the WHA was created in the early 70’s to challenge the NHL, and it completely blew everything out of the water. The owners of the WHA successfully had the reserve clause thrown out of NHL contracts, which gave birth to legitimate free agency and million dollar contracts. Before that, NHL teams had could easily control salaries. By the time the NHL absorbed the WHA in 1980, the whole structure was blown wide open. It was, by far, the best thing to ever happen to hockey players.
http://www.twitter.com/TB_Money
by Beer Monster on Mar 16, 2010 5:09 PM EDT reply actions 1 recs
This is a nice piece, but I just think it’s way too early to say whether or not there is room in the market for two combat sports organizations. There’s really not enough historical data on it yet, and the comparisons are not apples to apples.
I do think there are a number of things the UFC does on a daily basis that open the door for competition. Will it be difficult to start a union? Of course. But taking care of the top players is not some unique strategy that can’t be overcome.
It’s always worth stepping back and taking the long view of things in sports. For the entirety of the UFC’s existence (pre and post Zuffa), the company has been successful for about 5 out of 18 years. It is just way too early to say right now what shape the industry will take, but I think there are quite a few indicators that a small (but profitable) number two can exist and thrive.
The competition doesn’t have to be pepsi to the UFC’s coke. It can be Apple to the UFC’s Microsoft.
by Michael Rome on Mar 16, 2010 5:16 PM EDT reply actions 3 recs
There are all kinds of openings as I said above, but the obvious one to flesh out is the obvious limitation of the UFC PPV model. As they look to expand abroad, they’ve run into a big problem: they can only run so many PPV’s before their numbers start dropping, and recent numbers show they can’t dress up a turd and sell it as solid gold.
As more athletes enter the sport and the UFC tries to cover more and more ground, I don’t believe the PPV model can handle the increased capacity. I suspect the number of professional mixed martial artists in their prime will more than double over the next 10 years. I don’t think Zuffa’s current PPV model can sustain the increase, and if Strikeforce stays steady running free network shows, they will get a number of new fighters that end up being the cream of the crop. And as they get these fighters early, they’ll create and sustain relationships with the fighters that will help them keep the fighters on board later.
by Michael Rome on Mar 16, 2010 5:19 PM EDT up reply actions 2 recs
I can see what you’re saying, and if Strikeforce can persevere for ten years you could see a real even split in the top level talent in North America. But I’m fearful of as to whether or not this will be a good or bad thing.
On the one hand it could force Zuffa to co-promote and share talent. On the other, they could keep stonewalling the competition and create a level of disinterest among the fans not getting to see the fights they want.
I think a split is obviously a mixed bag. Let’s be honest here, it’s not like the end of Pride led to some slew of amazing fights between top stars. My suspicion is that splitting the top talent results in each company putting on as many good cards as possible to compete with the other.
by Michael Rome on Mar 16, 2010 5:24 PM EDT up reply actions
I’m kind of idealistic in my views on competition at the high end. I would hope that if the top 10 fighters in every division fought under the same banner, whether it be the UFC, Dream, Strikeforce, whatever, we’d get to see the best fight the best. This is what I want as a combat sports fan.
But to be realistic combat sports at the highest levels don’t have the mechanisms or won’t use the mechanisms of team sports (playoffs) that force the best to rise to the top so maybe it’s wishful thinking that we’d see those fights anyway.
The solution to that would be the end of the championship clause in contracts. If there was enough fans clamoring for a fight (Fedor vs Brock, Penn vs Aoki) then the promotions would either have to co-promote or one of those fighters is jumping ship to cash in on such a major payday. Either way the fans won’t be missing out on the huge fights.
You think a company like Zuffa is about to axe their championship clause anytime soon? I think Zuffa has a very isolationist policy in regards to the rest of the MMA world and that they will hold on to that until they are kings of everything they see or they’re watching the sport pass them by.
I don't think they'll have a choice
Sooner or later someone’s going to challenge it in court, and most likely win. And if it’s not Zuffa’s championship clause it will be Strikeforce’s or Bellator’s, setting the precedent that such a perpetually renewing clause is patently illegal.
I would really like to be able to read the language of the clause just because it’s not really clear to anyone the specifics of how it works. I mean Anderson signed a renegotiated contract while working under the auspices of the clause so it can’t be entirely one sided.
That’s the point of the clause: to get you to resign without having the ability to test the waters of unrestricted free agency.
I understand that, what I’m getting at is what’s the incentive for Zuffa to renegotiate with you if you’re trapped by the clause regardless?
Here how it works:
1) Fighter is champ when his contract runs out. Being the champion, he is theoretically at his most valuable.
2) Fighter can’t declare himself a free agent and test the market because the championship clause has kicked in. And he will not be a free agent until he resigns.
3) To prevent the fighter from taking the case to court the fighter is offered a new contract, which is better than the previous on, and at the same time threatened that if he tries to get out of his contract he will be taken to court and his career will be held up.
Now which fighter is going to want to risk 2 years in the prime of his moneymaking period to sit in a courtroom? In the end the fighter resigns. Sure he will make money, but probably not as much as if he could negotiate as completely free agent.
Could be wrong but, it probably isn’t an open-ended do not compete clause, b/c it wouldn’t take 2 years litigation for that to be struck down by the courts. It probably just restricts competition for some period of time (like a year or so).
if, at the expiration of the Term, Fighter is then UFC champion, the Term shall be automatically extended for a period commencing on the Termination Date and ending on the earlier of (i) one (1) year from the Termination Date; or (ii) the date on which Fighter has participated in three (3) bouts promoted by ZUFFA following the Termination Date ("Extension Term"). Any references to the Term herein shall be deemed to include a reference to the Extension Term, where applicable."
If after a year, if the UFC still declares you the champ does it renew? No one knows yet. And it will hard to test because the UFC doesn’t like to book their champions when they only have one fight left in their contract.
It won’t hold up as a open ended contract. No court is going to allow a contract that doesn’t end. Of course no one has challenged it yet, heck the Champion’s clause has never actually been used yet as they just don’t wait for fighters contracts to be over before they start negotiating to get them re-signed.
My best suspicion is that while it won’t be upheld as open ended, the court will at least hold up a one year extension period (a la the reserve clause).
by Michael Rome on Mar 16, 2010 8:54 PM EDT up reply actions
Oh it is most definitely a 1 year clause and the reasons it exist are well known. It’s the idea that it could be a perpetual clause that just would never hold up (and for all we know perpetual isn’t even the intent to start with).
Doesn’t really matter if it’s perpetual or not, by withholding the last fight on a fighters contract as long as legally possible and then adding the year long champions’ clause they can freeze a fighter out for up to two years. A long period for someone trying to cash in on while they’re holding the belt.
Who hasn’t been able to cash in on holding a belt though? If the UFC froze out a world champion for that long then they would be doing more damage to their reputation and their bottom line in PPV sales than it would be worth to them too. Title fights sell PPVs, those guys still have all sorts of leverage when they hold a belt.
Does anyone know if there are provisions in a UFC contract preventing a fighter from voluntarily relinquishing a title? And/or provisions that protect the fighter from Zuffa unilaterally crowning them a “UFC champion”?
Twitter: @Mike_Fagan_13
http://www.sackmikegoldberg.com
Randy didn’t get away with “resigning” as champion, but that never ended up going to court.
I don’t get why people get all hot and bothered over a contract clause that has never been used.
Maybe the reason it has never been used is because it gives such an advantage during negotiations to the promoter that no champion has ever decided to “finish” his contract before negotiating a new contract?
That in itself is negotiating leverage for the champion too, they know they are going to get a better deal offered and not even have to finish the original one. Yes it doesn’t allow them to hold the UFC hostage but that doesn’t mean that it takes away the leverage the belt gives them. Champions are still very important and there is a real need to keep them happy and fighting in the company.
Co-promotion works in theory ...
But in practice, it can fail, like in boxing, you’d wait years and probably still not get the fight, while the fighters fought a succession of cans.
Putting on the best fights is more often than not, in the UFC’s immediate financial interests. Taking hard fights that they might lose embarrassingly isn’t always in a fighter’s self-interest.
If it ain’t broke, don’t fix it!
Didn’t it lead to at least a few amazing fights?
I mean, Liddell and Wand had to go eff it all up by losing before the faced each-other, but you also have Henderson vs. Silva; Henderson vs. ’Page, Shogun and Big Nog in the UFC, etc.
It lead to a couple. Mostly fights between stars already past their prime. Silva vs. Henderson and Rampage vs. Henderson were great fights. Of course, those 2 fights came from bringing one fighter in, hardly seems even close to the balancing effect of losing an entire major promotion.
by Michael Rome on Mar 16, 2010 6:10 PM EDT up reply actions
Michael
The UFC has evolved their ppv model to now include Movie theatres, bars, closed circuit screenings, internet viewing and at home ppv buys. This is very innovative and forward thinking. The golden turd is a result of extraordinary illness and global economic crisis. I agree that there is a top end limit to ppv as sole income. However, UFC isn’t pigeonholed to this model. With the Versus network and Spike TV deals, UFC is generating residual revenue. Moreover, internation television contracts allow UFC to generate additional income. I really believe UFC is setting the gold standard for others to emulate.
Their price modeling for these things is not forward thinking though. Three friends going checking out the UFC in theaters will cost them more than ordering it from home. They charge the same price for the Yahoo and iPhone PPV as a SD purchase through your cable company, even though the stream is lower quality and much less reliable (and yes, they charge full price to watch the fights live on your iPhone as a regular PPV).
Twitter: @Mike_Fagan_13
http://www.sackmikegoldberg.com
forward thinking
well, if i decide to go watch the fight at my local theatre I pay 20 bucks. If I stay home I $45. It saves me $25.00.
“It can be Apple to the UFC’s Microsoft.”
Is there room for an MMA Linux?
Sergio Non,
MMA writer, USA TODAY
http://mma.usatoday.com
It can be Apple to the UFC’s Microsoft.
Microsoft holds 93% of the market, Apple holds a hair over 5% (I am assuming Linux holds the remaining 2%). I would have to think we are already above that in MMA currently just off Strikeforce being on CBS. Apple lives on it’s products outside of personal computers, Strikeforce doesn’t have a product outside of MMA.
MMA should be compared to NASCAR as far as salaries go......
Think about NASCAR. Back in the day there were a few race leagues and everyone was the “feature racer” for that night at at given track. That’s how Richard Petty racked up so many pro wins. He and all the other good drivers were racing at a different track every Saturday night.
Also, like MMA, much of the cost of running “a team” is paid by sponsors. The money they make from purses isn’t close to what they make in endorsements. This is the trend MMA should follow as well. Like NASCAR you need “a team” to train and corner you etc. Where the NBA is a team of single players playing together to beat another team, like NASCAR MMA is 1 team trying to beat another team where 1 guy is the major player (eg: the driver).
MMA economics has a lot to play out still yet before we see the final result. As long as the sport keeps growing look for more trending to go toward the NASCAR model.
If there’s only one top level MMA promotion where all the greatest fighters gather, that’s what’s best for MMA. If that happens, the greatest possible product will be put out there for the fans, and by putting the greatest possible product out there, the sport will continue to grow, which will in turn allow the pool of talent and thus the product to grow even further as well. And as that happens, as the sport grows, and more eyeballs and dollars fall in line, any of these other problems will naturally be remedied.
It’s the best solution. Competition or a fractured talent pool is fool’s gold for the short sighted.
by The Flying Gentleman on Mar 16, 2010 7:15 PM EDT reply actions
flying gentleman is right
I’d like to add. Pooling together all the high end talent will also, prevent the Fedor is the best or BJ Penn is the best. The more compettion the more MMA will look like Boxing. No thanks.
!!ATTENTION!! Zuffa's impending monarchy is a foregone conclusion...
It’s simply a matter of acquiring product and distributing that product to the buyers — it’s allot like narcotics. Once the market gets saturated, and there are more fights on T.V. that you’re interested in watching, the UFC will enter a war to acquire the rights to the last bits of marketable product (that’s when the guys like Fedor, Aoki, and Mousasi get rich). By this time the UFC will be in a position to crush any opposition in a bidding war.
The guys who choose to hold out will gradually see their popularity disappear because the fans will grow tired of them choosing not to fight the best. This kind of scenario actually seem likely to happen fairly soon.
Faber, Florian, Nick Diaz, 'Mayhem', Mousasi, Fedor
that is...
Once there are so many damn fights on tv that you don’t want to watch them all — Zuffa will just go around to the different organizations and outbid them for their talent.
Faber, Florian, Nick Diaz, 'Mayhem', Mousasi, Fedor
MMA_Dude
That is why the UFC has been so insistent on the UFC brand. A unification of MMA will produce the ultimate prduct for the consumer. I agree UFC is gonna be that brand.
I'm so confused about the debate...
It seems cut and dry — am I missing something? Is someone attempting to place judgement on the fact that the UFC will eventually hold all the market? Do people think it’s wrong for moral reasons? Is this an arguement against capitalism? — I just dont get it.
Faber, Florian, Nick Diaz, 'Mayhem', Mousasi, Fedor
In a capitalist economy, the prices of goods and services are controlled mainly through supply and demand and competition.
What you seem to be arguing for is a monopoly, which would be an imperfect market and, of course, runs counter to true free market capitalism.
In the context of MMA competition sabotages demand
Competition fractures the talent pool and waters down the product. A lesser, watered down product is not going to get you increased demand.
by The Flying Gentleman on Mar 16, 2010 8:51 PM EDT up reply actions
Competition only fractures the talent pool in the absence of cooperation between companies. Soccer has a fracture talent pool at the club level, but organizes a series of inter-league tournaments.
Twitter: @Mike_Fagan_13
http://www.sackmikegoldberg.com
by Mike Fagan on Mar 17, 2010 1:02 AM EDT up reply actions 1 recs
Sorry, a bit of a rant here
I don’t know a lot about soccer so i’ll take your word for it that it’s a suitable analogy.
However, why complicate things like that when there’s no glaring need for co-promotion?
Why not get behind a single brand that can plastered anywhere that anyone can recognize it in a second? Obviously you concede that ONE brand, and therefore the sport and the fighters’ bottom line, would be easier to grow than multiple ones?
Why use an obtuse system with multiple champions and divisions and names and brands that will confuse people when it can all be done under one banner? Confused people don’t like parting with their hard earned money.
Why introduce the politics of a bunch of different people with egos and their own agendas that will SURELY conflict with the best interests of the sport and fighters often enough?
I can go on coming up with probably a hundred other things that become harder and more complicated tasks when a bunch of different LLC’s have to work together to get anything done. You talked about logistics above, but co-promotion is only going to make that issue an even bigger hurdle. It’s hardly a solution at all.
I just don’t understand why someone would find this scenario desirable. There’s a lot of talk about fighter pay and treatment, but i completely disagree with that too. The best way to ensure fighters are better off is to make their sport bigger. The best way to do that is with one streamlined organization that can efficiently put on the best possible cards and put out the best possible product. Not competition. Competition will get certain fighters a relatively small bump in pay here or there sure, but as MMA is right now there’s only so much money in it. Get MMA more money, make it a bigger business, and then that’s when the fighters will really benefit.
by The Flying Gentleman on Mar 17, 2010 1:52 AM EDT up reply actions
I agree w/ you about MMA (if I understand you correctly) – I too want to see the best fight the best, so I want UFC domination in the MMA context.
But I think your arguments are overly broad w/r/t competition.
Not just talking mma now, competition is generally good, b/c it ensures that only the fittest survive. Though there is some waste due to multiple brands fighting for the same dollars, the consumer would be far worse w/o competition — b/c competition forces the competitors to improve constantly or die.
This is kinda Econ 101: Monopolies are bad in almost every area (w/ a few exceptions).
It gets more complex if you look at MMA as a product competing w/ other combat sports, or other entertainment. Is it enough competition that we can flip the channel and watch K-1, or football? Or does MMA need multiple organizations, and if so, how many, etc.
Capitalism isn't the answer
Boxing is full of capitalism, yet falling apart at the seams. The fans want to see the best fight the best. Not jose conseco or herschel walker. I guess the point is, competition has been around MMA, and it hasn’t been the answer.
The media coverage begs to differ on your Walker point.
Twitter: @Mike_Fagan_13
http://www.sackmikegoldberg.com
I'm not sure what your point is.
Can you clarify?
Faber, Florian, Nick Diaz, 'Mayhem', Mousasi, Fedor
my point
The point is boxing and mma are already following the capitalist model. And it’s my belief it’s not working. We have been wanting to see Fedor, Aoki, Mousasi and others fight the best in the UFC. And because competition, we aren’t afforded that luxury. The boxing model is the end result if Strikeforce continues to grow and challenge the UFC. I would rather see the best in one organization. I.E. UFC.
There really is no such thing as a true capitalist economy in North America anymore, what we have now is a regulated market economy(and even that has been shown to not be regulated enough recently). Supply and demand sound great and all but a truly free market is what led to the age of monopoly domination. Smart regulation does a better job of keeping things in check than supply and demand ever did. As far as competition goes that is a lot deeper of an issue than just saying competition is a good thing.
Do we really need to parse my reply so they we can get into some pedantic discussion on why or why not North America is really a true capitalist economy? mma_dude made a comment about how arguing against a UFC monopoly is “an arguement against capitalism”, ergo my response.
I wasn't saying that an arguement against the UFC is an arguement against capitalism...
I am trying to figure out what people are arguing about: clearly the UFC will eventually be hosting all the important MMA fights, if they’re not already. Is there a problem with that?
Faber, Florian, Nick Diaz, 'Mayhem', Mousasi, Fedor
Eh, he already replied to the real issue, I was just pointing out the whole “capitalism” and “supply and demand” arguments were narrow sighted to begin with. We could start posting flags and talking about the American way but we both know that economic theory is much much deeper and more complicated than that so why bring it up at all?
The only arguments I’ve seen on this site against capitalism are coming from the people who say competition is bad.
Ricky Hatton came closer to beating Manny Pacquiao than Marquez did to beating Floyd.
-SC
by The Lethal Haze on Mar 16, 2010 9:51 PM EDT up reply actions
mma_dude
I really think people believe that competition is good for the UFC. I dont agree, I believe that having the top fighters under one banner is great for fans. MMA is like boxing right now. Once all the fighters are in the same organization we will see the fights we have always wanted too.
how can you disagree with that...
who wouldn’t want to see fedor fight someone that could beat him? Is this debate from the fans perspective, the fighter’s perspective, or the promotions perspective? Why would a fan not want to see a singular promotion?
Faber, Florian, Nick Diaz, 'Mayhem', Mousasi, Fedor
Are you kidding?
Dana White and Zuffa are doing an awesome job.
Faber, Florian, Nick Diaz, 'Mayhem', Mousasi, Fedor
Are people making a capitalistic argument here?
“Zuffa is anti-capitalistic because they are actively seeking a monopoly!”
False — In order for Zuffa to have a monopoly they must have exclusive possession of ALL the product (commodity). As we know, the product is not being created by Zuffa, it is being created by the people themselves, the people who are the commodity. Those people can choose to fight for whoever they want, or nobody at all. Therefore, it is impossible for Zuffa to ever be a monopoly — unless they get to determine who fights at your local YMCA (that will never happen).
Faber, Florian, Nick Diaz, 'Mayhem', Mousasi, Fedor
Zuffa is not threatening to be a monopoly, but they are threatening to be a monopsony which is just as much an imperfect market system as a monopoly is.
A monopsony is when there is only one buyer.
Zuffa is a seller. YOU are the buyer!
Faber, Florian, Nick Diaz, 'Mayhem', Mousasi, Fedor
Close but
Zuffa is the buyer. Of elite fighters. The fighters are the sellers.
by nottheface on Mar 16, 2010 10:37 PM EDT via mobile up reply actions
Labor market?
No? Ok.
"Someone is WRONG on the internet. What do you want me to do? LEAVE? Then they'll keep being wrong!"
-Randall Munroe
I hope you are aware that a seller does not always pertain to goods but can also pertain to services.
Britannica Concise Encyclopedia:
In economic theory, market situation in which there is only one buyer. An example of pure monopsony is a firm that is the only buyer of labour in an isolated town; such a firm would be able to pay lower wages to its employees than it would if other firms were present. Though cases of pure monopsony are rare, monopsonistic elements are found wherever there are many sellers and few purchasers.
Zuffa isn’t the only buyer of labor in any town! Even if the only thing you can do is fight — you can get a job fighting, although it won’t be with Zuffa, it will be at your local casino for $300. Zuffa will never have a monopoly, although they may become the BEST employer of mixed martial artists — I think they already are.
Are you telling me that an mma artist would be unqualified to clean toilets at a truck stop — because in order for your argument to make sense, that would have to be the case.
Faber, Florian, Nick Diaz, 'Mayhem', Mousasi, Fedor
Then there is no such thing as a monopoly or monopsony because any alternative would serve as competition. Hey, I have a PHD in chemistry but there’s only a pharmaceutical company left and they only want to pay me $10 an hour. No problem, I can work at McDonalds.
If the UFC had all the top talent and no other promotion had the revenue to offer any competition for the UFC’s fighter, I think you’d have to say at that point the UFC was exhibiting monopsolistic traits.
by nottheface on Mar 17, 2010 12:10 AM EDT via mobile up reply actions
Actually, and with all due respect, I think you’re just an unimaginative, cake eater, who can’t comprehend what a world would be like with no real choices. So, due to your lack of imagination, you project that desperate universe onto this one.
As if the government should be responsible for giving you the pay you THINK you deserve. Try majoring in something else, or should I be responsible for your ludicrous/selfish decisions.
lol — just gaming. But you are wrong on the whole monopsolistic thing.
Faber, Florian, Nick Diaz, 'Mayhem', Mousasi, Fedor
Cutting to the end here...but I think if you want a team sport to use as comparison...
you should be using soccer.
Soccer has an international base and strong enough players can move between leagues, not just between teams within leagues. This alone has increased salary and player trade costs to amazing levels as well as providing a reason why no league will ever have a salary cap.
The UFC’s Premiere League to Dream’s Serie A…so to speak.
I have used the soccer analogy before with regards to co-promotion.
Twitter: @Mike_Fagan_13
http://www.sackmikegoldberg.com
"Zuffa is anti-american"
…I’m starting to get a feel for what these threads are really about. In summary: ‘screw the consumer, screw the product, all I care about is ME.’ After the federal bail-out with my (and your) tax dollars, there are still some lazy red-necks up in detroit who are trying to say that a company who is doing a good job, is anti-american. “Let’s let the labor unions in”, “they’ll fix things”. Guess what — nothing’s broke — if the labor unions get involve shit will get broke. Let the GREEDY unions in and, before you know it, we’ll be waiting up ‘till 2am to catch some japanese dudes blather on about how they’re the best.
Faber, Florian, Nick Diaz, 'Mayhem', Mousasi, Fedor
by mma_dude on Mar 16, 2010 11:51 PM EDT reply actions 1 recs
Go watch Fox news
" Tell me something Steve, How does a guy from Puerto Rico loose a ball in the Sun? "
by aaronb on Mar 16, 2010 11:56 PM EDT via mobile up reply actions
Yeah! Baseball was really awesome when baseball players needed second jobs in the off season and couldn’t focus on training all day. Then the union came in with their “free agency” and ruined everything. Then they had the audacity to sue Major League Baseball when the owners came up with this brilliant idea to not bid in good faith on players. What’s their problem?
Twitter: @Mike_Fagan_13
http://www.sackmikegoldberg.com
Because employers know best!
As far as I can tell, this guy wants fighters born in a Dana White house, fed from the Dana White shops, taught in the Dana White school, catechized in the Dana White Church, and when they die they shall go to the Dana White Hell.
"Someone is WRONG on the internet. What do you want me to do? LEAVE? Then they'll keep being wrong!"
-Randall Munroe
Zuffa is all fucked up… Bring in the labor unions! lmao Which UFC fighters are working second jobs!? Get a grip dude.
Are you one of those assholes that collects a check every month from the blood and sweat of a union worker, while you sit in your ivory tower blogging away without a care in the world. Or are you the other kind of asshole, the one that destroys companies and orgainizes work stoppages so that the company can go bankrupt or get shipped over seas.
You can’t be comparing Zuffa to a coal mine — or can you?
Faber, Florian, Nick Diaz, 'Mayhem', Mousasi, Fedor
mma_dude
You should be glad that unions and minimum wages are in effect. If not for them then you McDonalds job would only pay your 2 bucks and hour as opposed to the 7.50 you probably earn now.
" Tell me something Steve, How does a guy from Puerto Rico loose a ball in the Sun? "
you might be an idiot!
Who the hell is going to buy FOOD from a company that pays their employees $2/hr. You might not know this, but it’s actually difficult for McDonalds to find help, if they lower their wages it ain’t gonna make it easier. Also, if our country is dependant on a MINIMUM WAGE to keep the poverty out of the streets, we are in a bigger world of shit than you can imagine.
Faber, Florian, Nick Diaz, 'Mayhem', Mousasi, Fedor
$35,000 in 1970 is $180,000 in 2010 after adjusting for inflation.
$180,000 in 1980 is $450, 000 in 2010 after adjusting for inflation.
Currently, these players are making in the millions.
Thank god for competition & unions — those poor, struggling, professional athletes were starving to death!
btw — screw hockey — those canadian posers!
Faber, Florian, Nick Diaz, 'Mayhem', Mousasi, Fedor
You can’t be serious. As has been noted, players would be making far less without the destruction of reserve clauses which was the result of competition and/or players’ unions.
Twitter: @Mike_Fagan_13
http://www.sackmikegoldberg.com
by Mike Fagan on Mar 17, 2010 10:59 AM EDT via mobile up reply actions
what kind of 'reserve clause' exists in the UFC?
Of course, if the UFC was trying to keep people in their organization for life, and that they couldn’t fight for someone else after their contract ended, collective bargaining would crush that immediately — hell even GSP would be down for that.
The point I was making, was based on your own numbers, and showed how competition between the ABA and NBA just made the rich, richer.
Faber, Florian, Nick Diaz, 'Mayhem', Mousasi, Fedor
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