Higher Fighter Pay is Good for the Sport (and maybe even the UFC)

As many of you know, I've said higher pay won't happen through voluntary UFC action because it takes money out of the hands of owners. So the title may come as a surprise. Let me explain.

In my view, monopsony/monopoly is best for the quality of the output, that is, the best fights. I don't want the top fighters in each division split across 3-4 roughly equal sized, moderately successful promotions. One to rule them all is best. At the moment the UFC has most of the top fighters but not all.

If we look at the sport overall, it is quite clear that, if fighter pay was higher, you can expect:

1) Attract a higher caliber of athlete. I've argued in the past that there is no way the pay can rise to be competitive with NBA or NFL for lower level fighters, thus you won't capture those athletes. But there's still going to be a small non-zero effect "at the margin". What I mean by this is, you'll get a few more Jon Jones types who could have pursued another sport, but love martial arts... and a somewhat higher pay rate, maybe 2-3x current, might be just enough to tip them over the line to choose martial arts training in their youth over other sports. Assuming, for the moment, a fixed roster size, that means a few less CM Punk or Mike Jackson level athletes on the roster, a slight up-shift overall. Every incremental increase in pay gives you that small incremental increase in roster quality, through this mechanism. Better for the audience, but unfortunately it's a pretty marginal revenue effect for the UFC - this alone is unlikely to significantly increase revenues to where it justifies a roster-wide pay increase.

2) Higher dedication of fighters to their training. With 2-3x higher pay, a certain portion of the lower end of the roster will no longer need to have other jobs, and can dedicate their time fully to training/fighting (and ideally, self- and co-promotion leveraging the promotion's efforts). That should also increase their performance and hopefully the entertainment value. I think it's clear that the entertainment value of 2 UFC fighters tends to be higher than 2 regional fighters, thus ON AVERAGE (not every case!) the higher skilled they are the higher the entertainment value.

So it's clear that the audience and fighters will generally benefit from higher pay. I think there should be no debate there.

How can the UFC benefit? In my view, the only realistic path to serious pay increase (to the often-mentioned target of 50%) is, of course, a union or other collective action (a formal association, or a more grass roots coordinated approach like all the major gyms and managers agreeing to apply a certain set of negotiation guidelines, which is almost the same thing in effect). Clearly, THAT will, especially in the short term, damage UFC profitability. There is one way that I see the UFC coming out even or maybe ahead...

If the incremental improvement in product quality from (1) and (2) above is matched by incremental improvement in marketing/promotion (and while I think they are good already, there must be room for improvement in various aspects), then you would hope that you'd also get incremental improvement in UFC popularity and revenues. You don't need to triple revenues to accommodate triple fighter pay, because fighter pay is just one of several major expense categories, and since it is currently 17% of revenue, then you need to increase revenue by 17% in order to cover DOUBLING fighter pay. It's possible that if you, over time, doubled fighter pay, you might be able to improve revenue (as a consequence of leveraging the two effects above... we have to exclude OTHER growth that is unrelated to fighter pay, in this analysis) over that period by 17% or more. It boils down to; "If we double fighter pay, will that increase product quality enough that this increase alone plus relevant promotion of it, can result in a revenue increase of 17% (plus a bit more for any incremental promotion expense related to it)?"... Well, I know this is highly speculative, but it doesn't seem outlandish that if you can pull in a few more Jon Jones caliber guys, over time they will yield greater revenues that might deliver a 17% boost.

So at this point, it's "break even" but who knows if the boost could exceed 17%?

In my view a formal union would be the best, and that's a complicated path (e.g. employee classification, etc are part of that). But if the end state looks a little more like the NFL, that's my preferred outcome. The UFC would have ALL the top fighters, not just most. Other promotions would be almost nonexistent comparatively, in terms of viewership and revenue (even more than they already are...). We would not be wondering whether Pitbull or McKee could compete in the UFC, we wouldn't have Mighty Mouse over in One, we wouldn't have champs and near-champs like Alvarez and Chandler spending ages in Bellator before coming over, etc... And THAT means another increment to quality of matchups, opportunity of matchups... AND UFC revenue. An additional factor that counters to some degree the increased fighter pay bill.

It's by no means a sure thing, but add up the various effects and the UFC could, in the long term, come out ahead if they allowed (encouraged??) a union, achieving higher professionalism of fighters (through better funding for training and dropping other jobs), improved financial outcomes that draw some high quality athletes (at the margin, of course!) from other sports, true monopsony and having the best possible roster at all times, and other factors.

So, this represents some modification to my previous thoughts... as a holistic outcome, it could wind up the best for everyone. I'll still say that in the short term the UFC would likely lose some profitability, and the longer term outlook is highly unpredictable, so we can't expect the UFC to embrace this. The drive for collective representation still has to come from the fighters and their teams.

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