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UFC fighter pay has increased but the promotion’s profits have increased even more

By all appearances, UFC salaries have definitely risen over the past few years. But not nearly at the rate of overall UFC revenue.

UFC on FX: Hioki v Lamas Photo by Nick Laham/Zuffa LLC/Zuffa LLC

In response to a question from CNBC regarding low fighter pay, Endeavor Group Holdings CEO Ari Emanuel (Endeavor is the parent company of the UFC) had the following to say: “Since 2005, our fighter pay is up 600% - for a sport that [Dana White] created 25-30 years ago.”

Ignoring this new wrinkle to the Zuffa Myth, that now credits White instead of Art Davies and Rorion Gracie for the UFC’s creation (but not mixed martial arts which existed before the UFC), it’s hard to be sure what exactly Emanuel means when he says pay is up 600%.

The most likely answer is that he is repeating Chael Sonnen’s recent observation that fighter minimums are up from $2,000 to show and $2,000 to win in 2005 to $12,000/$12,000 today. That’s a sixfold increase in the promotion’s minimum. (This is of course excluding the payouts for Dana White’s Contender Series, which reported standard purses of $5,000/$5,000 for the participants.)

It’s also possible he is referring to average pay per bout for fighters. In 2005, according to a graph produced internally by the UFC that was unsealed as part of the Le et al v Zuffa, LLC antitrust lawsuit, the UFC’s total fighter compensation in 2005 was $4.4 million. With 80 bouts that year, the average pay per fighter-bout would be around $27,500. According to the New York Post, total fighter pay was under $150 million in 2019. With 517 fights that year, pay per fighter-bout would be $145,067, or 5.3X what it was in 2005. With fewer fights (456 in 2020 vs. 517 in 2019) and higher revenue ($860 million in 2019 vs. $890 million in 2020), it’s very plausible that average fighter pay reached $165,000, or six times what it was in 2005.

When looking at total fighter pay, the increase has been even more dramatic. As mentioned above, in 2005 total fighter pay was $4.4 million while in 2019 it was under $150 million. That an increase of up to 34x.

Pay, of course, is not the only metric that has increased. Not mentioned by Emanuel was the increase in revenue and EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) for the UFC during this same 2005-2020 time-frame. In 2005, the first year of the Ultimate Fighter and the boom it inaugurated, the UFC saw $48.3 million in revenue that year. That has increased more than eighteen-fold to $890 million in 2020. EBITDA too has grown, from $6.7 million in 2005 to an estimated $423 million in 2020, a 63X increase. EBITDA (basically the money left over for the company after the cost of doing business) therefore has increased at twice the pace as total pay has.

Another comparison can be made by looking at the share of revenue going to fighters (as pay) and to the owners (as EBITDA). In 2005 fighter pay was only 10% of total revenue. This was much lower than in previous years, when the fighters’ share of revenue was reported by Zuffa as 24% in 2004 and over 40% from 2001-2003. 2005 was something of an outlier, as fighter pay bounced back in the years since, fluctuating between 15-22%. Fighter pay is thought to still hover within this range, as the UFC projected in 2016 that total fighter compensation (including fighter costs, not just fight compensation) would remain below 20% through at least 2020.

The New York Post reported that this target has been maintained, with fighter pay at 16% of revenues in 2019. In comparison to the fighters’ percentage, the UFC’s EBITDA margins were 14% in 2005. Margins, based on estimates from Moody’s, increased to 48% in 2020. So the share of revenue for fighters has increased anywhere from 1.5x to 2x since 2005, while the share going to the promoter has increased 3.4x during this same period.

While fighters are definitely making more than they did in 2005, so are the promoters. In fact, the gap between the fighters and the promotion has only increased over the last 15 years.