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

In my first post, I talked about how UFC fighters aren’t making as much money as they should, even though the UFC has enough money to share with the fighters. This article provides a counterpoint as to how fighters make money and can afford to live, eat, train, and run camp for upcoming fights.

In essence, the main way UFC fighters earn money are through sponsorships. Companies that fighters have partnered up with not only provide merchandise and advertising, but are paid money as well. During post-fight interviews, you’ll typically hear fighters say “I’d like to say thank you to all my sponsors” and start listing all their sponsors. Patches of sponsors are also on the fighter’s shorts. The reason for this is because these companies essentially pay for fighters to train full time without them having to find additional work.

Shane Carwin’s salary was mentioned in the last article. For his fight at UFC 116 v. Brock Lesnar, Carwin earned a $40,000 payday from the UFC. Carwin, according to his Twitter page (@shanecarwin) is sponsored by Performance MMA, HeadBlade, MaxMuscle Sports Nutrition, and at least 13 other sponsors. The amount of money he earns from these sponsors is undisclosed, but Carwin can probably afford to live off these sponsorships. In addition, he is one of the few fighters who does not fight full time, as he is a mechanical engineer with the Weld County (Colorado) Water District, located approximately 50 miles north of Denver.

Another way that fighters can earn bigger base salary paydays (although not guaranteed) is to negotiate better salaries with the UFC. After all, the fighters are making the said amount for the fight because they have signed the contract to fight for a certain amount of money. UFC contracts are based heavily on incentives, which include a win bonus (generally equal to the amount of the fight salary), Knockout of the Night, Fight of the Night, and Submission of the Night. In addition to a win bonus, a fighter can earn one or a combination of two of these bonuses.

Let’s go back to Carwin. The general bonus payout is $65,000. If Carwin would have beaten Lesnar via knockout, and assuming it was good enough to win Knockout of the Night and Fight of the Night, Carwin’s payday for the fight would have been $210,000 ($40K fight salary, $40K win bonus, $65K Knockout of the Night bonus, $65K Fight of the Night bonus). Carwin’s payday would have increased five-fold with maximum incentives attached to it.

Probably the best story of a fighter capitalizing on incentives happened to heavyweight fighter Pat Barry at UFC 104 in October 2009. Barry had lost nearly all the money in his savings account the week of the fight after an investment went bad. Barry was living on white rice and ketchup leading up to the fight. Barry knocked out his former training partner Antoni Hardonk in the first round, and provided an emotional post-fight interview. His salary for the fight was $7,000. In addition to the $7,000 win bonus, he also earned Knockout of the Night and Fight of the Night, each carrying a $60,000 payout. In the end, Barry’s original $7,000 payout turned into $134,000.

For a fighter to earn bigger paydays, it is in their best interest to win convincingly enough to earn bonuses. Although the amount of money fighters earn may be low, their ability to win should always be high. The more fights they win persuasively, the better off they may be financially.

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.

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.

On Saturday night, the Ultimate Fighting Championship (UFC) hosted their 100th pay-per-view special event at the Mandalay Bay in Las Vegas.  UFC is by far the most popular brand in the world of mixed martial arts, and the fact that they’ve been able to produce 100 of these major events, each a larger success than the previous one, shows how far the sport of MMA has come over the past few years.  In particular, this event generated over $5 million in ticket revenue, even though the venue only seated about 11,000 (this is the third largest gate for a UFC event).  There were also an estimated 1.5 million pay-per-view purchases worth about $75 million in revenue.  When you look at these numbers, you have to acknowledge that UFC has established itself, and with that, brought MMA into the mainstream.

I have a few quick thoughts and questions to share about UFC and MMA:

• Brock Lesnar has clearly become a top-draw for UFC, even though he’s only fought 6 times.  Some of that has to be attributed to his previous role with WWE and carrying some of that audience with him to UFC.  However, UFC President Dana White is really focused on distinguishing the sport of UFC from the entertainment of wrestling. Unfortunately for White, Lesnar decided to act like a true wrestling heel (bad guy) after the match was over, taunting his opponent and the crowd.  Some fans might get a kick out of this, but it ultimately damages the credibility of the sport and keeps that underlying association with wrestling alive.
• MMA is an incredibly brutal sport.  Michael Bisping was knocked out cold and then got hit again for good measure, and Frank Mir was quite bloody when his match with Lesnar ended.  The potential for someone to actually die during a match is something that the sport will always have to deal with.  Some people believe that if/when this happens, the sport could collapse.  However, boxing was able to go through those unfortunate incidents in the past.  So what would the impact on the sport be if someone died in a match?
• Over time, UFC has been able to gain more acceptance from mainstream sponsors, like Bud Light for example. However, these brands need to be concerned about the violence of the sport having an impact on their brand perception (or in some cases, they might need to worry about one of the athletes openly bashing their company, as Lesnar did on Saturday).  Can UFC and MMA continue to penetrate the mainstream sponsor categories, and are these companies actively measuring the impact of their sponsorships?

I hope it doesn’t seem like I’m being critical of UFC or MMA in general. I’ve been impressed by their steady growth on all fronts, including revenue, fan base and brand development. They still have some unique hurdles to face, so we’ll see how they continue to develop between now and UFC 200!