by Kevin Iole, Las Vegas Review-Journal
IN DEPTH: UFC PUTS BOXING ON ROPES EXCEPT IN FIGHTER’S SALARIES
The Ultimate Fighting Championship, the Las Vegas-based mixed martial arts promoter, has in just over five years drawn even with boxing by most objective standards.
The UFC routinely sells as many pay-per-views for its fights as boxing does. It nearly always draws larger crowds to its arena shows. Its television ratings dwarf boxing numbers and compete well against other professional sports on cable.
But the one area in which the UFC lags behind boxing is in fighter salaries, particularly at the top level of the sport.
On March 19, 2005, at the MGM Grand, Erik Morales and Manny Pacquiao engaged in one of the most competitive boxing matches of the year. It was also the year’s fifth best-selling pay-per-view, generating 350,000 buys at $44.95 a buy.
Almost a month later, the UFC staged a pay-per-view at the MGM featuring a rematch between Chuck Liddell and Randy Couture. Though the UFC refuses to comment on its pay-per-view sales — “We’re a private company and we’ve made a business decision not to disclose that information,” UFC president Dana White said — co-owner, Lorenzo Fertitta, said several months later that Lidell-Couture did 320,000 buys.
The price for that card was $34.95, which was the first at that rate. Previously, all of UFC’s pay-per-view cards cost $29.95. But at $34.95, Lidell-Couture generated $11.2 million in pay-per-view revenue.
MMAWeekly.com, a Web site that covers the sport aggressively and one which White admits to reading frequently, reported on July 13, 2005, 280,000 pay-per-views were sold. If that figure is correct, the show generated $9.8 million in pay-per-view revenue.
In either event, both the Morales-Pacquiao match and the Liddell-Couture match were hugely successful, at the gate and at the pay-per-view box office.
In 2006, rematches of both fights were staged.
Because of the success of the first bout, promoter Bob Arum paid Morales $2.5 million for the Jan. 21 rematch at the Thomas & Mack Center and paid Pacquiao $2 million. The entire card was paid a total of $4,661,900, according to Nevada Athletic Commission records.
Morales and Pacquiao also received a portion of the pay-per-view proceeds, though the amount was not disclosed.
Couture-Liddell III was held two weeks later, on Feb. 4 at Mandalay Bay. Liddell’s pay rose from $140,000 in the first fight (which was $70,000 to fight and $70,000 to win) to $250,000. Commission records explicitly state that no bonus for winning on Feb. 4 was paid to Liddell.
Couture made $225,000 for the rematch, up from $150,000. The entire card was paid $656,000, which includes $59,000 in bonus money for winning.
Though White refuses to release the pay-per-view sales for that bout, MMAWeekly.com reported it came in between 400,000 and 410,000 buys worth between $15.98 million and $16.34 million.
Even with expenses, including salaries, production costs, arena rental and marketing estimated at $5 million — a number several boxing promoters say is high — the UFC would have managed to net more than $10 million.
Fertitta said the business model of the UFC is dramatically different from boxing’s and that affects the pay structure.
“If I’m a boxing promoter, HBO will come in and tell me that they think a fight will sell a certain amount on pay-per-view and they’ll come in and guarantee me that and write me a check up front,” Fertitta said. “The boxing promoter has no risk. He knows he has this amount of money coming in and he says to the fighters, ‘You get x, you get y and I’ll take what’s left for my profit.’ He doesn’t have a risk. All the production and marketing of the pay-per-view is handled by HBO.
“But in our model, I’m HBO. I’m paying for the production. I’m paying for the marketing. We get no site fee. So what we tell our fighters is that we can’t pay them as much up front, but if the fight performs well and produces numbers, they’ll get a nice piece of it. Both Randy and Chuck did very well off their (third) fight.”
White said the company was close to being forced to fold in late 2004, when he said debt from the first four years of ownership had reached eight figures. The debt has been reported to be as much as $40 million and as little as $20 million.