UFC: Where is the Money Going?

Today’s post is courtesy of guest blogger Tariq Ahmad.

On Saturday July 3, the Ultimate Fighting Championship (UFC) hosted a heavyweight championship bout in Las Vegas pitting Shane Carwin against current champion (and former WWE star) Brock Lesnar. Fans were treated to a great fight, as Lesnar won by submission in the second round.

Lesnar, arguably the UFC’s biggest draw, was paid a $400,000 base salary for one of the biggest fights in UFC history.

Why does the top fighter in the organization make a minuscule amount of money compared to top athletes in other sports? Let’s take a look at where all the money goes.

Revenues:

Pay-per-view (PPV) buys: Early estimates show 1.15M PPV buys (we’ll estimate conservatively at 1M buys) * $44.99 purchase price (round up to $45) = $45,000,000

Gate revenue (in-person attendance): Exact figures not released to date, but a UFC event one month before in the same location generated $3.9M in gate revenue with no title fights, so for this event, we’ll again estimate conservatively at $4M (although this figure is probably over $5M).

Total estimated revenue (not all factors included): $49,000,000

Costs:

Total fighter payouts (22 fighters total): $923,000 (including $400,000 to Lesnar). Amounts reflect a win bonus for the winner of the fight, which is equal to the payout for the fight (e.g. fight payout of $26,000, plus $26,000 win bonus, earning a total of $52,000. Lesnar was awarded a flat payout of $400,000 with no win bonus).

Total bonuses paid out: $450,000 (includes Fight of the Night [which was granted for two fights], Knockout of the Night and Submission of the Night). Each payout was $75,000. Fight of the night recipients (four fighters, includes winners and losers) each earned bonuses, while one person each earned Knockout of the Night and Submission of the Night. Lesnar earned submission of the night, making his total payday $475,000.

Total money paid out to fighters: $1,373,000

As you can see, less than three percent of the conservatively estimated revenues went to the fighters. In any organization, salary is the highest cost incurred. Would a company’s payroll ever be less than three percent?

Where is all the money going? It’s obviously not going to the fighters.

The UFC, like any organization, will have event costs (staff payroll, facility rental, marketing, event staff, etc). Even if that accounts for 50 percent of revenues (which it will never come close to that amount), that still leaves over $20M the UFC profits. And this is just for one event. And the UFC runs 12-15 PPV events per year.

Like any sport, your better and more marketable athletes will tend to make more money. Would Floyd Mayweather put his title on the line for less than five million dollars, let alone $500,000?

Lesnar received the top base payout the UFC provides. Carwin earned one-tenth that amount. You read that correctly: $40,000 to fight for the UFC heavyweight title. Even if Carwin won the fight (earning him a $40,000 win bonus) and earned an additional $75,000 for Fight, Knockout or Submission of the Night, his total would have been only $155,000.

The UFC should follow a payscale for its championship fights similar to tennis: the loser earns half of what the winner earns. Lesnar earned $400,000, Carwin should have earned $200,000 for the loss. After all, the UFC has the money to go around.

In one of the most physically demanding sports in the world, these fighters are laying their lives on the line for such a small amount of money. Isn’t it time these guys started earning bigger paydays?

Tariq Ahmad is a doctorate student in Sport Administration. His research and career interests lie in sports business and the intersection of sport and social media.