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What Would 30% Look Like?

Tiny by Michael Rome on in News

In today's great interview with Tito Ortiz over at MMA Mania, Tito states that he thinks fighters salaries should total about 30-40% of the revenue made by UFC on each major show.  Using UFC 84, we can predict what this pay scale might look like.

First, I am going to assume the show did 600,000 buys.  There are indications that it may be slightly higher or lower than this, so we'll just assume this even number.  My impression is that they get about $22 per buy, while the rest goes to the cable companies, so this brings us to $13,200,000 in PPV revenue.  The gate was $5,100,000, and if you add in the merchandise sales and other ways they made money on this show in terms of online webcast sales, worldwide buys, and more, you can probably round this up to about $19,000,000.

Thirty percent of this would mean that the combined purse of fighters would be around $5,700,000.  I can guarantee that the actual combined purse of UFC 83 was nowhere close to either of these figures.  Figures were not released, but I would be shocked if the combined purse was over $2,500,000.  GSP probably made about a million after bonuses, Rich made somewhere in the 500-750k range, and after that it is a lot of low numbers.  

As of now combined purses tend to be closer to 10% of total revenue on live events than 30-40%.  I'm not saying Tito's number is inherently fair or anything, this is just the way it is.

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Re: What Would 30% Look Like?
Your numbers are just slightly off.  According to best estimates, the ufc only receives about 60% of ppv income.  that reduces that number down to 9 million.  

by lordschroeder on May 10, 2008 3:39 PM EDT   0 recs

Re: What Would 30% Look Like?
30-40% of revenues or profits? I CERTAINLY think  fighters should be paid more than they are, but you aren't subtracting any of the costs from those numbers. They don't get all of the gate, they have to cover the event center costs, they spend a fortune advertising, they have to cover the salaries of everybody who works the event, not to mention their regular employees back at the main office. It goes on and on...

On top of that, one of the truths of finances is that the people who put up the money for an endeavor get the first cut of the profits. The Fertittas are assuming all of the risk for the show coming off - they get the lion's share of the profits. They aren't doing this out of love, they're doing it to make a profit.

-- Don't believe a word I say, I don't train BJJ

by jemaleddin on May 10, 2008 3:56 PM EDT   0 recs

Re: What Would 30% Look Like?
What your saying makes too much economic sense.  Shut up.

by Dominic on May 10, 2008 5:02 PM EDT to parent up   0 recs

Re: What Would 30% Look Like?
I know, I know, we're all supposed to sit around saying that Dana is a parasite and a thug with a white collar. We're supposed to talk about the Fertittas as soulless goons who are just sucking money out of the sport. But it's so hard to repeat the party line when it's pretty obvious that those guys have probably done more than any 3 fighters you  care to name to bring MMA to where it is today in this country.

I think I'm going to go lay down and read Sherdog until I get over this feeling.

-- Don't believe a word I say, I don't train BJJ

by jemaleddin on May 11, 2008 9:41 AM EDT to parent up   0 recs

Re: What Would 30% Look Like?
Right, I know, he is talking about revenue, not profits.  Personally I think the split should probably be about 50% of profits.  Even then it is not even close to that right now.

I just got an email from a very reliable source that it's 22 dollars a buy, not 25, so the total is slightly lower.  But it's not down to 9 million.

by Michael Rome on May 10, 2008 4:33 PM EDT   0 recs

Re: What Would 30% Look Like?
you're also not factoring in that the UFC ponies up their own cash for pay-per-view production costs, satellite costs, etc., something that boxing promoters don't need to worry about with HBO and Showtime shouldering those costs, site fees, etc.  And its the key factor why so many start-ups put one or two PPV shows and then vanish, even more so than the cost of fighter salaries.

by andherewego on May 10, 2008 4:41 PM EDT   0 recs

Re: What Would 30% Look Like?
that's part of what they used those $300 million worth of bonds for...... They bought multiple production trucks (7 to 8) and other equipment.... that stuff is being expensed out over the 30 year life of the bonds....so it isn't that huge of an item over an event to event basis.

by robnashville on May 10, 2008 4:46 PM EDT to parent up   0 recs

Re: What Would 30% Look Like?
Fixed assets (such as production trucks and equipment) are expensed over their useful life which is likely much less than 30 years (10-15?).

by !claw on May 10, 2008 10:13 PM EDT to parent up   0 recs

Re: What Would 30% Look Like?
I know all the expenses, and Rob is right in that what a lot of the bonds are for.  This is about event to event, and is honestly excluding a shit-ton of revenue from DVD's, merch, etc that they sell at these events.

by Michael Rome on May 10, 2008 5:02 PM EDT   0 recs

Re: What Would 30% Look Like?
I'd say 10 percent or less is accurate, but given the gigantic X factor of the locker room bonuses, its hard to tell. But until the fighters band together and unionize in some form, the fighter pay will never be tied (even loosely) to a percentage of the revenue like in a true major sports league like the NBA.

by smoogy on May 10, 2008 5:28 PM EDT   0 recs

Re: What Would 30% Look Like?
Definitely true.  Until the fighters unionize, or until there is an overarching pay structure in place, you're never gonna see consistency, with certain fighters being paid more than they're worth and others not getting their due.  

by pud333 on May 10, 2008 6:01 PM EDT to parent up   0 recs

Re: What Would 30% Look Like?
The fact of the matter is that figher pay is based on supply and demand.  Right now there is more supply than demand.  As in any organization you have a lot of people at the bottom that make nubbins and a few at the top that make seemingly ridiculous amounts.  A union would definitely help those at the bottom but that is very unlikely in the forseeable future.  Also, fighting in the UFC is like buying a lottery ticket.  If you hit big, you can make millions.  No other organization currently offers that upside.

by !claw on May 10, 2008 10:25 PM EDT to parent up   0 recs

Re: What Would 30% Look Like?
How likely are a group of guys that are paid to punch each other in the face to try collective bargaining? i mean, it's easy to SAY, "let's put our differences aside," but a lot of these guys have genuine animosity for one another.

Besides which, folks like Lindland and Hughes are pretty darned conservative, and that's not exactly fertile ground for a union to spring from.

-- Don't believe a word I say, I don't train BJJ

by jemaleddin on May 11, 2008 9:48 AM EDT to parent up   0 recs

Re: What Would 30% Look Like?
"How likely are a group of guys that are paid to punch each other in the face to try collective bargaining?"  There are tons of hockey fights and physical checking and slashing but the NHL players seem to do it somehow. Same with NFL players who are diving at each others knees and looking to concuss each other 70 plays a game, 16 games a year.  The UFC touts their "80% of our guys went to college" line but you seem to not give them the intellectual ability to put aside minor issues among fighters here and there for their greater monetary benefit.

I can't speak to how republican fighters would take to it, but I'm pretty sure Lindland would have been glad to have a grievance process and a union to fight for him when he got bounced from the UFC for wearing a t-shirt.

by robnashville on May 11, 2008 10:39 AM EDT to parent up   0 recs

Re: What Would 30% Look Like?
So wait, suggesting that people might not get along is a slap at their "intellectual ability"? Really? Smart people are great at working together? And I guess it follows that dumb people can't get along?  Would it be accurate to say that by your reasoning, college is a great measure of "intellectual ability"? So people like me who didn't finish college are of lesser mental quality? And therefore can't get along? Sweet! Now I have a reason for being such an asshole in the comments! :-)

But seriously, there are people with problems getting along in any group - I'm just saying that it's much more direct in MMA. Sure, as Mike Goldberg always reminds us, there's a lot of great sportsmanship in MMA, but do you see Chuck and Tito being the founding members? Handshakes all around?

And if there's one thing I've learned about politics, it's that people's opinions and their best interests don't always coincide: witness the great deal of poverty, lousy educational institutions and general social problems of the south where people don't just vote republican, they fight tooth and nail against any effort that might actually benefit them. (Never mind that most of the red states receive more federal funds than they pay in taxes...) So no, I can't see Lindland trying to get together with the AFL-CIO.

-- Don't believe a word I say, I don't train BJJ

by jemaleddin on May 11, 2008 2:16 PM EDT to parent up   0 recs

Re: What Would 30% Look Like?
The locker room bonuses really are kind of perverse.  You give GSP 600k and a hummer, and of course he's thrilled, but compared to the kind of revenue he brought in for them, that's nothing.  

by Michael Rome on May 10, 2008 5:33 PM EDT   0 recs

Re: What Would 30% Look Like?
kinda akin to the stories of don king back in the day giving his fighters Cadillacs,.... to blind them to the fact he was picking their pocket financially

by robnashville on May 10, 2008 5:44 PM EDT to parent up   0 recs

Re: What Would 30% Look Like?
On top of that, GSP and others get these gigantic figures, while Randy supposedly got nothing after the Gonzaga fight, or at least far less than 500k as best that I remember it.

by smoogy on May 10, 2008 6:45 PM EDT to parent up   0 recs

Re: What Would 30% Look Like?
Randy got a share of PPV buys - probably worth much more than a hummer and $600K.
-- Don't believe a word I say, I don't train BJJ

by jemaleddin on May 11, 2008 9:26 AM EDT to parent up   0 recs

Re: What Would 30% Look Like?
I don't like the phrase "revenue he brought in for them." I'm not downplaying the role of fighters whatsoever because, frankly, without them there would be no sport at all. What GSP did was he did his job. His job is to fight and he is very good at his job. But with that said I don't think we can call it "revenue he brought in for them." Without the UFC, we might not even know who GSP is. The UFC picked him a few years ago to debut in their company out of all the possible prospects out there. He won fights. They put marketing behind him and matched him with the right guys. They put him on the Ultimate Fighter. He won fights.

The point is, it's a business, boys. The UFC builds stars, plain and simple. The guys they choose to build are guys that win fights. So, if you're good at your job, the UFC will promote you. You have to have a few other factors too, but no matter what if you consistently win the UFC will be forced to promote you (Fitch, Machida). I don't think there should be guys fighting on a UFC undercard making any less than $5,000 but at the same token can we honestly say that Tito Ortiz needs to make more than a million dollars a fight? Can we realistically believe that GSP needed to be paid more than what he got at UFC 84? Everyone cries that guys in baseball or basketball are overpaid and now we're crying that UFC fighters are underpaid. Can't there be a happy medium?

by dropkick101 on May 10, 2008 9:18 PM EDT to parent up   0 recs

Re: What Would 30% Look Like?
fair enough point on the bonds, robnashville. But on the flip side of that, most of the others trying to break in don't have the long-term security those bonds brings, meaning potential competitors pop up and vanish, ultimately meaning UFC can keep its' salary structure as is.

by andherewego on May 10, 2008 6:11 PM EDT   0 recs

Re: What Would 30% Look Like?
For some competitor to succeed in being a viable alternative to UFC, they are gonna need exactly what Dana had.... a billion dollar benefactor who is willing to bankroll bad decisions until the person running the show gets grasp of how to run a successful MMA company. Dana is neither a genuis or an idiot... just a guy that was able to outlive his mistakes and learn enough from them to eventually turn the company around

Of the folks out there now, Affliction ain't billionaires so i don't see them being a long term challenger. Viacom dwarfs station casinos but they have zero commitment to EXC, so i doubt they will be able to have time to turn the ship around. Cuban, has the money but probably lack the passion for the sport to stay in the long hall. The ideal system would be these folks working together, but i imagine all those cooks would surely spoil the soup.

by robnashville on May 10, 2008 6:56 PM EDT to parent up   0 recs

Re: What Would 30% Look Like?
I think you're right that they can keep it "as is" and be fine.  However, a lot depends on what happens when the contracts with guys like Rampage, Forrest, GSP, and others come up again for renegotiation.  They are going to want more money, and with Chuck and Hughes on the way out, I think there is going to be a lot of upward pressure.

by Michael Rome on May 10, 2008 6:27 PM EDT   0 recs

Re: What Would 30% Look Like?
So what if a show tanks and loses money?

by Psygone on May 10, 2008 9:06 PM EDT   0 recs

Re: What Would 30% Look Like?
What kind of question is this?  If shows tank and lose money consistently, businesses go bankrupt and the sport will be changed for the worse.  The bottom line is the UFC puts on by far the best shows in this continent.  Would it be better if all fighters got paid a decent amount so that they can live more confortably?  Sure.  But the bottom line is a UFC fighter is in a much better position for long term success than in any other organization.

by !claw on May 10, 2008 10:20 PM EDT to parent up   0 recs

Re: What Would 30% Look Like?
Then the fighters STILL get paid, and the promoters take it in the ass. Which is why they deserve a big cut of the profits when the show does well.
-- Don't believe a word I say, I don't train BJJ

by jemaleddin on May 11, 2008 9:30 AM EDT to parent up   0 recs

Re: What Would 30% Look Like?
The problem is that Tito is repeatedly saying that the UFC is paying only five percent to the fighters, which is off base.

But honestly, Tito often uses info that is not true. About six months ago, he said he had not gotten a raise in years. Since he gets a cut of the ppv, that is utter nonsense. Tito was not making 1-2 million a few years ago.

The UFC's payout , based on my estimation, runs anywhere from 10-20%.

2.5 million is likely not too far off. I know that Serra picked up a nice check (reportedly six figures, but I have heard nothing more specific) as well as what Rich and GSP made. I think Rich made a little less than you suggested, but likely in the 200-300k range.

They paid out 280k in FotN, KO/TKOotN and SotN bonuses. The bottom for UFC fighters now appears to be 4+4. Many new UFC guys are now getting 5+5.

UFC 82 had an announced payroll of $932K, I would say that the contracted payroll for the 22 fighters is likely around that number.

So if we use your numbers, the UFC was paying between 10-15% for this show. 82 did a gate of 2.2 and reportedly did around 400k buys so the percentage was likely a little over 15%.

When folks talk about the money fighters bring in, they also need to remember that it is the UFC (a company of around 100 people) that is taking all financial risks and spending the money to run the show and promote it.

The reality is that the UFC is,for the most part, paying better than any established company out there.

This is not even taking into account the sponsorship money that fighters make. Main card guys are making anywhere from 20-100k per card in sponsor money.

Boxing takes in a lot more in card sponsorship money than MMA. In the future, when MMA is getting millions per card in sponsorships, I hope we do see the 30-40% number being true.

by Lynchman on May 11, 2008 11:26 PM EDT   0 recs

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