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Follow the Money

My four-year old is just learning how to write so she asks me to “do the dots” for the letters in her name. She traces them with her tongue hanging out like Michael Jordan to reveal, “Charlotte”, to her consistent amazement and delight. There are a lot of dots in “Charlotte” and so this particular game is not one of my favorites as it is very labor intensive and it wrecks my more delicate nubs. This entire lead-in paragraph was largely designed for me to be able to use the word “nubs” – which is grossly underused in MMA writing, but which I have now used twice in the span of one or two lines – depending on your browser and/or reader.

When I first started trying to understand the business of MMA, I did not have anyone to “do the dots” for me so I did what I do in my law practice when I need to learn how an industry works. I made the dots into dollar signs and I followed the money. It was a short trip – from your wallet straight to the promotions. Pay-per-view gates for some promotions, particularly UFC events, are big and getting bigger. (PPV is the clearest path to riches in MMA but there are others. The promotions and other interests are working hard to divert these revenue streams accordingly but that is a topic for another day.) Zuffa does a great job of putting on cards fight fans want to see, with some notable recent exceptions. They do an even better job of hyping and marketing the events and their fighters. Good for them – it’s what promotions are supposed to do.

The disturbing thing about this money trail, of course, is that it bypasses many fighters. Generally speaking, the fighters are not getting wealthy in the cage. A few have entered into agreements with promotions that allow them to make a living – sometimes a good one. A much larger number of fighters, however, either eke out a modest living or struggle from fight to fight. For some, professional fighting affords no real livelihood at all. And even for the lucky few, a promotion’s exclusivity agreement may contain an “acceleration” clause allowing it the legal right to sever ties with a fighter after a poor showing. So, even though a fighter signs a two-year deal, for example, with certain guaranteed payouts (typically split into payment for showing and payment for winning – $X/$X arrangements) for bouts during the term, losses or injuries can trigger the promotion’s right to terminate the contract. The “X” in the preceding sentence can quickly become a zero.

Less disturbing but no less interesting, is where else the money is not going. A few managers/agents are probably making a living in the sport, but we can probably count them on one hand, maybe two. The sport has yet to experience an influx of “super” agents from more mainstream sports. These agents are not shortsighted or stupid. They follow the money quicker than any beings on the planet and they have not yet devised a way to redirect the flow of dollars into their pockets. When they do, they will come in droves. However, for now, with fight purses contractually locked in by promotions, fight purses do not present a target rich environment. (All of this is not to say that managers/agents are superfluous in MMA – a strong manager/agent will have good relationships with companies spending money on marketing in the industry and, through sponsorships, managers/agents can help fighters fill in income gaps while generating a healthy commission for themselves – typically 10-20% of a particular deal. Some of the sponsorship deals are very lucrative. Most are not. Obviously, there is money to be made in high volume representation.)

With a few exceptions, the money does not flow to the companies engaged in the industry as sponsors. They must expect it will – sooner rather than later – or they would not continue to invest marketing dollars on things like banners, patches, and apparel. It is nice to establish a presence on the ground floor and some companies can afford to bide their time. They are content to write their names all over the sport and wait.

MMA websites are not making a lot of money. You can type in any domain name at www.quantcast.com to see how many visitors and page views MMA websites enjoy. Some of the numbers will surprise you. Visitor and page view numbers, of course, are critical data points for advertisers. Popular sites (and note that www.ufc.com is, by far, the most popular) can make a straight-faced business case to companies interested in spending precious advertising dollars. Most sites cannot.

I do not think the MMA print media is making a lot of money on its coverage of the sport. Their costs for labor and production are higher than costs incurred by their online competitors. Because some advertisers want desperately to spend money on pages they can touch and see on the newsstand, the print media benefits from getting a critical first look. Still, as smart companies see the actual returns on their investments, I believe most print media will have a harder time attracting new money, paying writers and producing and distributing magazines and newspapers.

But knowing where the money goes and where it does not go, is more than a parlor game. The real value in following the money comes from teasing out the implications. Bring to mind any question you have about the sport and, by following the money, you have a tool for divining the answer. State Athletic Commissions play a role, but, scoring, rules, drug-testing protocols – the promotions play an important role in how these issues are framed and resolved. Promotions can pay lawyers and lobbyists.

Like most fight fans, I would like to see fighters enjoy more of the fruits of their labor. I would like fighters to have retirement benefits and health insurance. I would even like to see MMA writers and others who share a passion for the sport find ways to feed their families through hard and honest work in the industry. But, no matter how I “do the dots,” I cannot make them spell words that signify a better life for fighters.

8 COMMENTS
  • Rich B says:

    Yeah, …and?

  • Austin says:

    I guess the real trick to making money for this site, is learning how to market and get advertisers. google seems to be the way to go.

  • ultmma says:

    Long intro but was a great read

    according to tonight’s E60 MMA is the fastest growing sport but is it really?

    Its the UFC and everything else. they have the TV deals, PPV, numbers and marketing machine

    I would suggest that the UFC is the fastest growing league in sports, but sometimes I wonder about if there is MMA money left over for everyone else trying to get a slice of the pie.

  • orlis says:

    Great article by Gary Wimsett. Sad, but true. And when you consider that many pro-fighters NOT with the UFC only fight 3-4 times per year, at purses of $2k to $5k each…well, add it up. Not much of a paycheck. This means most pro-fighters have to keep full time jobs, and train, and pay for their training pretty much with their meager earnings. Sad, but true.

  • Angry Mike says:

    Interesting article, but how is MMA growing? Maybe the numbers aren’t available, but it would be fascinating to compare revenues–even educated guesses–to fighter salaries. Are there comparable increases? Plotted on a graph, are the trend lines similar? Maybe there’s a disparity between increasing revenues and the rate that fighter salaries are increasing, but without the data it’s pure guesswork.

  • Astrid says:

    So the basic question is: “Is there any money to be made in MMA?” I believe the answer is “YES.” Does not mean it will happen for everyone. Just with any other business venture, a clear plan and model are crucial.
    As far as MMA becoming a mainstream sport is concerned, ….almost there!! 😉

  • Mbreckles49 says:

    Mr. Wimsett… Why should the UFC pay for fighters’ health insurance? Aren’t the fighters, in essence, independent contractors? They aren’t attending a ‘job’ every day with the UFC. They get paid for providing a service, i.e., to fight. They are under contract, and not really working for the UFC every day. Why should the UFC pay for health insurance when their ’employees’ are rarely on site?

    Would UFC’s insurance have to cover injuries from training? This is probably why the WWE doesn’t pay health insurance for its wrestlers.

  • GaryW says:

    Mbreckles49 – You are absolutely correct. The fighters are independent contractors and not employees. The distinction is critical and I wish I made the point in the article. However, fighters can obtain health insurance and other benefits by other means. There is strength in numbers. Note, too, that some promotions do extend some health insurance benefits to fighters – Zuffa, I believe, does this. This is a positive step.

    Astrid – Thank you for helping reframe the nub of the article. Agreed – failing to plan is like planning to fail. Still, I’d argue MMA dollars are not an unlimited resource. The promotions will continue to capture most of them in the foreseeable future.

    Angry Mike – For solid numbers, I usually check out mmapayout.com. They do a great job of posting fighter purses, PPV figures, and lots of other specific examples of how the money is flowing. This article would have been better had I used some specific examples. Bottom line, the numbers are out there so there’s less guesswork involved than you might think. Start at “Payout” and go from there.

    Orlis – It’s true but whether it’s “sad” is more subjective. We all have to make choices. I hope young fighters are making informed ones about their careers because it’s a very tough business.

    Austin – sites intent on growing and making money must figure out ways to attract eyeballs. Some of this comes from good content. Some comes from SEO. Sites that get this will beat the sites that don’t.

    Rich B – Fair point, succinctly expressed. The article does lack an analysis of what this all means and where we go from here. I hope to write about those issues in further installments. For now, the short answer to “and?” is that MMA is making a very few people very wealthy. It’ll be interesting to see what the very many people in MMA making little or no money can do to divert the revenue stream.

    Thanks for reading.

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