A Look Inside the UFC Fighter Contract: Good or Bad for the Sport?

Courtesy of Jonathan Snowden and official MMAWeekly.com content partner Bleacher Report.

Dana White and Lorenzo Fertitta at UFC 129Quarterback Tom Brady will make up to $57 million in mostly guaranteed money to lead the New England Patriots over the next five seasons. Boxer Floyd Mayweather earned $32 million for a single night’s work against Robert Guerrero earlier this month. Los Angeles Angels first baseman Albert Pujols will bring home a cool $16 million this year as part of an enormous 10-year contract that will pay him $240 million before it’s all said and done.

None of this, of course, is breaking news. We know these things because discussion of finances and money is part of the sports landscape in 2013—and has been for years. Generally widely reported, free-agent signings, the salary cap and individual players’ contracts have become part of the discourse for fans of almost every sport.

Except the UFC.

While the MMA promotion of record has generated more overall pay-per-view buys than boxing since hitting its stride in 2009, fighter salaries are kept under lock and key. It’s rumored that they don’t begin to approach mainstream sports money, but information is scarce. When facts do trickle out in the press, it’s sometimes shocking. Georges St-Pierre, the UFC’s welterweight champion, for example, told the Canadian press in 2011 he makes a relatively paltry $4-5 million per fight.

“People want to compare us to other sports, and in some sense that’s fair to do,” UFC owner Lorenzo Fertitta said. He sat down with two key members of his team, president Dana White and general counsel Lawrence Epstein, to discuss the inner workings of the UFC’s fighter contract with Bleacher Report.

“There are a number of things that are unique to our business…First and foremost, we absorb 100 percent of all production and marketing costs associated with the event. The NFL gets a license fee from Fox. Even boxing gets a licensing fee from HBO. Those media entities then roll in and operate the entire production. They do all of the marketing. So those expenses are not borne upon the actual league or entity. In our case, we televise the entire card. There’s over a thousand people who get pay checks when we do these events. It’s a massive, massive undertaking.

“In addition to that, we’re building a sport. We’ve had to open up offices in various countries around the world, work to get laws passed in states all over the U.S. and Canada. When you actually take into account those costs that we bear, and other leagues don’t, we actually compare very favorably on an apples-for-apples basis.”

Randy Couture, one of the sport’s true legends and a UFC Hall of Famer, was loathe to complain about a career that has made him a millionaire. He understands the efforts and expense it took to build this sport from the ground up. But he couldn’t help but wonder about the discrepancy between mainstream sports money and what he and other top UFC stars are paid.

“It’s hard for me to sit here and bitch and complain about the pay I got when I made more money competing in mixed martial arts than I ever made doing anything else,” Couture told Bleacher Report in an exclusive interview. “Does it irk me that Floyd Mayweather can fight one time and make $40 million? Well, that’s more than I made in my career. Yeah, that bothers me.”

White says things have changed dramatically since Couture was in his prime as a UFC champion.

“When Randy Couture says that’s more than he made in his entire career, Randy Couture’s career was in the dark ages,” White said. “He was on the first season of The Ultimate Fighter when that thing first started to take off. The money that’s in this sport now, compared to when Randy Couture was here, is night and day.”

How much UFC fighters are actually paid is a carefully guarded secret. Although some state athletic commissions are required by law to report a fighter’s base pay, most fighters are also paid a variety of bonuses that are not included in that mandatory reporting. Backroom, performance and even pay-per-view bonuses are routinely handed out—but until recently most reporters and fans didn’t know much about that process.

“We don’t give out numbers,” White told Bleacher Report. “We don’t say how much fighters get paid or what the company is making. It’s something that we don’t do and it drives people crazy.”

Enter Eddie Alvarez, a lightweight fighter who is one of the very best in his weight class outside the UFC. He’s looking to join the promotion and challenge Benson Henderson and the other top UFC stars, but is mired in a contract dispute with Bellator, a competing promotion on Spike TV.

The battle has been tough on him, emotionally and financially. Alvarez’s troubles, however, have proven to be a real boon for MMA journalists and historians. For years the UFC’s standard contract has been a mystery, a matter of speculation, but not available for the record. Thanks to Alvarez’s legal struggles, it has become a public document, an exhibit in Bellator’s case to re-sign the fighter to a “matching contract.”

More important, for our purposes, is this—Bleacher Report’s Jeremy Botter acquired a copy of Alvarez’s contract with the UFC’s parent company Zuffa, part of a collection of court documents now available to the public, journalists and legal minds all over the world. And some are not impressed.

“When you look at who gets the money, at the end of the day, it’s disproportionately Zuffa and disproportionately not the fighter,” Northwestern University labor law professor Zev Eigen told Bleacher Report, calling the UFC contract the worst he’s seen in the sports or entertainment fields. “None of these fighters are represented by a professional association or a union. There’s nothing that sets a minimum or basic standard below which the company can’t go. It makes sense—in any relationship like this you would expect the contract to favor the more powerful actor.

“That should be intuitive and it’s universal. If you’re contracting with Apple, you shouldn’t be surprised that Apple takes as many rights as possible. If you use iTunes in anyway they don’t like, hell, fire will rain down on you. That’s what you can expect anytime you’re contracting with an entity more powerful than you are. So too with the UFC.”

In boxing, those minimum standards are set by law, part of the Muhammad Ali Boxing Reform Act that is helping clean up a notoriously corrupt sport. In other individual sports, like tennis, players are protected by a professional association. But in mixed martial arts there are no protections at all. Fighters are left to their own devices to negotiate shark-filled waters.

“The UFC has coagulated all this genius at law. And they’ve done nothing but prosper from it,” Juanito Ibarra, former manager of UFC star Quinton “Rampage” Jackson among others, told Bleacher Report. “They’ve left managers and trainers, and most importantly, fighters out in the cold. They don’t have a voice.”

Ibarra is quick to point out that UFC isn’t the only company that preys on fighters, usually young guys he says have never had a dime to their name and are just happy to be on television and making a little bit of money.

“It’s with all the promoters,” Ibarra said. “The promoters, all they do is copy each other’s contracts. They hire a lawyer, and he tweaks it, but it’s all copy and paste.”

As a private company, the UFC doesn’t have to report its revenues, cash flow or profit margins to anyone. According to a recent profile in Fast Company, the promotion makes in the neighborhood of $600 million per year, though Fertitta says that number is overstated. The UFC is worth north of $2 billion, making it a more valuable property than even the legendary New York Yankees, Major League Baseball’s perpetual cash machine.

Yet despite this success, Fertitta told ESPN that in the seven years since the company started regularly turning a profit, they’ve paid out just $250 million total to the athletes, a far cry from the 47 percent of total revenue the NFL’s players split.

Instead, according to Ibarra, the UFC pays fighters just enough to quell discontent. The promotion often sends fighters high-ticket gifts in lieu of guaranteed money or significant revenue sharing.

“You buy a guy a car and it’s going to keep his mouth shut,” Ibarra said. “They try to run their lives. And they give them a diamond watch worth a hundred grand. Then they put them on a TV show and take their rights away.”

Feritta disagrees.

“We’ve created, literally, nearly 70 millionaires since we took this thing over,” he said. “And some of them multi, multimillionaires.”

Couture, who has battled the UFC under two different ownership groups, is one of those multimillionaires. But while he was hesitant to complain publicly about pay days that have made him rich, he said fighters may be getting a little less than is ideal.

“The biggest issue is between what the promoter’s making from all the pay-per-views and everything else versus how much all the fighters who fought in that single year made. That number maybe needs to shift a little bit,” Couture admitted.

“It’s such a fine line. The promoter feels like he’s entitled. He’s spent money, done a ton of things to market the sport and create a vehicle that’s good for the fighter. But at the same time, it’s the fighter who walks up in that cage. Does the training and puts it on the line and is sweating and bleeding. One doesn’t work without the other. So some kind of more equitable arrangement makes sense.”

After analyzing it for several days, Bleacher Report has come up with some interesting points you should know about the contract every fighter has to sign to gain entry to the UFC. Adding expertise and nuance to the discussion are Eigen and Ibarra, who went over the contract with us term by term to share their thoughts.

Fertitta, White and Epstein also lent their perspective.

“Ask any questions you want,” White told Bleacher Report. “We’ll sit and walk you through everything.”

Bleacher Report went on to do just that.

To read the full article and to go through the finer points of the UFC’s fighter contracts, point by point, with commentary from both the UFC’s representatives and those critical of the contract, continue reading by clicking here.

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