FanPost

UFC Revenue & Fighter Pay Study

Aims

After interviewing John Cholish I found myself wondering exactly how much of the UFC's revenue actually goes to the fighters. As far as I could see, there was no definitive information out there, so I decided to try to collate it. You can see my methodology at the bottom of the article. Here are the results:

Incoming Event Revenue

Total UFC Gate income for 2011: approx $58.2m
Average Gate: $2.1m
Total UFC PPV income for 2011: approx $202m.
Average PPV income: $7.5m

Salaries/Outgoings

Total announced UFC fighter salaries for 2011: approx $23,642,000
Average Announced Salary Payout per event: approx $875,000
Average Percentage of announced salaries to top 4 fighters on card*: 57.5%
Average Paid out to bottom 18 fighters: $371,875. $20,000 per fighter.
Total announced UFC bonuses for 2011: $7,321,000
Total estimated PPV points pay out for 2011: approx $8,000,000
Total estimated "discretionary bonus"** : $6m
Percentage of total event income (PPV+Gate) Paid to fighters: 17%
Percentage of total income (event+misc) Paid to fighters: 9.5%
Amount of total Salary + PPV Points paid out to top 10% of fighters: $26.29m
Percentage of total Salary + PPV Points paid out to top 10% of fighters***: 83%

Totals

Total live event revenue was approx: $260m
Total estimated revenue was approx: $475m
Total paid out to fighters (salary+PPV+Bonuses): $44.9m

*Not including PPV points, bonuses etc.
**based on average of $10,000 for every fighter, after every fight
***Not including any bonus payments.

Summary & Thoughts

As of 2011 the UFC was paying roughly 9.5% off its overall revenue to the fighters in total. This seems low for such an athlete-driven venture to me, and it seems unlikely that the UFCs expenses run more than 50% of its revenue, given the comments in the Standard & Poor's report about profitability[1].

From my calculations if they paid every guy a minimum of 20/20 it would increase their salary expenses by under $7million per year. 30/30 would be under $12 million per year. One average Pay-per-view brings in roughly that much.

This would allow fighters joining the UFC to train full time without having to worry about the roof over their head or feeding their family. As things stand after taxes a fighter joining the UFC and losing will be guaranteed about $4,000. This $4,000 needs to cover his living expenses for the last 3 months, as well as all of his training, and flights and hotel rooms for 2 of his corner men if he wants to have 3 corner men like his opponent. That's a pretty untenable situation. If the fighter wins, they will have a guarantee of about $9,000 to cover those same expenses.

Assuming a good training camp costs $2,000 for 3 months, and flights/hotels for 2 cornermen costs another $1,000, that leaves $6,000 to live on. If a fighter fights 3 times in a year and goes 2-1, they would be guaranteed roughly $22,000 before expenses, and about $13,000 after expenses. If the UFC matches the fighters "show" money for every fight, that puts on the fighter on about $25,000 per year.

If the starting pay was upped to $20/20 that same fighter would be guaranteed about $75,000 for going 2-1. After expenses he would have roughly $64,000 to live on for the year. The UFC's sliding scale would change to accommodate this, and if we assume the fighters got a raise of 3/3 after every fight, it would cost the UFC approx 2% of their revenue (total) to cover this for the entire roster..

What about things the UFC is doing well? It often pays out more than it makes on non-PPV cards, especially with "of the night" bonuses. These bonuses are very generous and should be applauded. In addition it seems that almost every fighter on most cards will receive a locker room bonus of at least a few thousand dollars. Again, good thing.

The UFC also seems to be becoming more liberal about PPV bonuses – 29 fighters was almost 10% of the roster at the time. Allowing so many fighters to share in the revenue is a good step forward.

Hopefully having this information will make it easier for everyone to discuss the issue and come to their own conclusions. My methodology is below, along with potential flaws in the study and a source list. An event by event breakdown of the numbers is available on MMA Sentinel[4], along with links to sources.

Methodology

Calculating Total Revenue: I chose the year 2011 because there was a Standard & Poor's credit rating report [1] available for that time period which contained information suggesting the UFC's revenue breakdown for the year was 55:45 – 55% came from live event revenue (PPV sales and ticket sales) and 45% from other sources (TV deals etc).

Calculating Event Revenue: I went through every UFC event in 2011 and noted the Gate Receipts and PPV buys for each event. I assumed each PPV buy was worth $30 to the UFC.

Calculating Fighter Salary: The UFC often releases fighter pay information for events. Where this was not available I used sources which had estimated the pay based on the fighters previous pay-scale.

Calculating Bonuses: Discretionary "Of the Night" Bonuses are announced and were collated. "Locker Room" bonuses were more difficult to collate. My own sources and the sources in the ESPN OTL report both stated the majority of these bonuses were in the $5,000-10,000 range. I assumed every fighter received a bonus of $10,000 after every fight.

Calculating PPV Points: Based on the recent Eddie Alvarez contract[2] The PPV cut for fighters is $1 for every buy between 200,000 and 400,000 buys, $2 between $400,000 and $600,000 and $2.50 for every buy over 600,000. Rough calculations suggest this averages out to about $1.50 per PPV buy overall.

On average the UFC sold 425,000 PPVs in 2011 in each of the 16 PPVs, meaning on average fighters would receive an additional $250,000 on top of their announced pay – 29 of them would anyway. In the interests of giving the UFC the benefit of the doubt we will assume that 2 of these fighters fought on every pay-per-view, meaning the UFC paid out an extra $8,000,000 in PPV revenue salary.

Lorenzo Fertitta claimed 29 fighters were receiving PPV points at the end of 2011. [3]

Calculating cost to UFC for fighter minimum increases: On average about 12 fighters on a card will be on less than 20/20. Assuming they are all on the current minimum average ($6k/$6k for an average of $9k) I took the average of 20/20, ($30k) subtracted the current wage ($9k) and multiplied by the number of times that group of fighters will compete in a year (roughly 162 fights, or 324 fighters, assuming 27 events). So $21,000 * 324 = estimated additional cost to UFC

Potential Flaws in Study

PPV point payouts were calculated on an overall average despite being on a sliding scale, meaning there is a potential error margin for overall PPV point payouts.

PPV Point payouts are likely massively over-valued. Generally only champions (or sometimes title contenders) actually RECEIVE PPV points. They are in the contract, but only become active when those conditions are fulfilled. The UFC likely pays out significantly less in PPV points than postulated here.

S&P rating was from Feb 2012, and covered the second half of 2011, not the year as a whole. This means the revenue split could have been different throughout the year. Regardless the information given should still give a very accurate picture of overall revenues for 2011/2012.

Figures are from 2011, which was a "down" year. Real time revenue is much higher now. Salaries are also higher, though minimums have not changed much and there is no reason to believe the overall percentage of revenue paid out as salary has changed in any significant way.

The PPV cut figures were taken from a 2013 contract, and may have been slightly different in 2011.

The PPV cut the UFC receives was estimated. It may be slightly lower or higher.

Number of fighters on a card on <20/20 was estimated. Not all will be on the minimum, meaning the cost to the UFC is likely to be somewhat lower than estimated.

Event Revenue is likely low, as it doesn't take into account site fees, fight night merchandising etc. This means the overall revenue estimate for the UFC is also likely less than in reality. [Thanks to Jon Snowden for pointing this out]

Locker Room Bonuses could be low, there have been a couple of rumored instances of fighters receiving 6 figure bonuses after fights. Sadly it's impossible to verify this or get hard data/figures.

Sources

[1]Standard & Poor's Report - http://mmapayout.com/2012/06/zuffa-maintains-bb-credit-rating-after-50m-add-on/
[2]Eddie Alvarez Contract - http://bleacherreport.com/pages/eddie-alvarez-contract
[3]ESPN OTL piece on fighter pay - http://espn.go.com/espn/otl/story/_/page/UFCpay/ufc-fighters-say-low-pay-most-painful-hit-all
[4]UFC 2011 income/outgoings per event - http://www.mmasentinel.com/2013/05/ufc-payout-data-2011-event/

Originally posted here at MMA Sentinel

\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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