UFC's Sponsorship of Jon Jones - Does it Constitute a Bet?

A lot of commenters have called out the UFC for sponsoring Jones - claiming it is a form of bet on Jones. As someone who has spent several years consulting in the sponsorship industry, I'd like to offer an opinion.

"Bet", strictly speaking, implies wagering. Overt wagering by Dana or the UFC on the outcome of one of its own fights would not be well received, to say the least. Any such bet on Jones would mean that there is direct incentive for the UFC to assist Jon Jones in winning. Of course the UFC, in furthering its goal of mainstream acceptability, would never help Jones to cheat, in my humble opinion. I am a big fan of the UFC, Dana White, and everything they have done for the sport, and find it hard to believe they would ever commit such a self-destructive act.

Rather than a "bet", a sponsorship is an investment. The difference is, with an investment, you have, on balance, an expectation of gain. Whereas with a bet, in most cases the expected value is negative because usually the house takes a cut. A friendly bet between friends, on average, has an expected value of zero.

What does the UFC hope to gain by sponsoring Jones? Exposure for its brand, as well as affinity with viewers (both fans and non-fans). The VALUE of a sponsorship is equivalent to the market value of the exposure and affinity generated by the sponsorship. In simplistic terms, if you could achieve the same thing by spending $100 on advertising, then the sponsorship has a value of $100.

Now, the sponsorship contract's value can increase and decrease, depending on the performance and off-field behaviour of the team or athlete being sponsored. A rugby team had a $300,000 per annum sponsorship with a major beer company. The beer company used the team in advertising and community promotions (e.g. visiting pubs, stadiums and public parks and interacting with fans who had been informed of the event's location; all the team members were expected to always drink a specific brand of beer). Then two of the players were involved in accusations of sexual crime. Suddenly the beer company could no longer use the team in its promotions. The value of the sponsorship dropped to near zero. Note that the value of something isn't always what you pay for it!

When an athlete performs well, the sponsorship's value increases. But until the contract expires, he cannot (easily) negotiate a higher price. During this period, the sponsor is receiving excess value for the price paid.

In sponsoring JJ, the UFC does expect (and hope) that JJ wins - there is no point in sponsoring a fighter that you expect to lose, as the value of sponsoring him declines. While sponsoring is not a bet, there definitely are variable VALUE outcomes depending on the outcomes of fights and also fighter behaviour. Therefore incentive remains for the UFC to tilt the playing field. Again, I doubt they would do that. But the perception remains in fans' minds.

Some other thoughts:

- I don't see a legal issue with sponsoring a fighter, but the public perception it can create is potentially negative. Sure, the UFC has a right to clothe any fighters that are not sponsored; and it has the right to pay extra money for the privilege. It might have been better to do it without an overt sponsorship announcement. And if any payments were treated as back room bonuses, who's to know? The company's back room bonus structure is commercial-in-confidence.

- I don't think I've ever seen a similar sponsorship (e.g. where a league sponsors one of its teams)

- I think it's somewhat less of a public relations issue than some commenters think. The UFC is not truly mainstream yet. The impact (i.e. fan or media backlash) of them sponsoring Jones and a few select fighters will ultimately be a lot less than if the NFL did it; and should not affect business too negatively in the long run. If it appears that this experiment is a failure, all they have to do is terminate the sponsorships and it's back to business as usual. No major harm done.

\The FanPosts are solely the subjective opinions of Bloody Elbow readers and do not necessarily reflect the views of Bloody Elbow editors or staff.

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