This was from the site The Fight Opinion:
As a result of the UFC’s recent decision to cut more fighters, we are beginning to see a paradigm shift in the MMA fighter pay debate. For the 1st time in the sports history, fighters from both inside and outside the UFC are questioning the organization’s horrible pay. In response to these questions, Dana White recently mentioned that the issue could be solved if the company eliminated fighter bonuses.
To be quite honest, none of this sits well with me from a financial standpoint. For the most part, ownership still states that business is great. If things are so hunky dory, why have so many fighters been cut and/or forced to retire? If the UFC is doing so well, why can’t they afford to pay the low level fighters better and keep bonuses? Is the UFC struggling or is business down a bit and ownership is just too greedy to give up any profit?
To answer these questions and better understand the UFC financial situation, I put together a basic financial analysis of the organization. The numbers below are not meant to be exact figures, but more of a generic guide to help the average fan understand the UFC from a financial standpoint.
Let’s assume that the UFC has…
250 fighters at $100,000/year (including health insurance) = $25 million
200 front office employees (legal, marketing, etc.) at $100,000/year = $20 million
$24 million a year for advertising ($2M budget/month)
$24 million a year for production costs
$6 million a year for office expenses ($500,000/month)
$1 million cash-on-hand for incidentals
This is $100 million dollars in combined annual expenses. Since the Fox deal is around that same financial range, let’s make it easy and just estimate that these expenses are paid in full with Fox money. With all the Fox revenue accounted for, look at UFC’s other revenue streams:
PPV revenue – average of 500,000 buys at $50 a pop over 12 events = $300 million
Tickets & merchandise – $24 million from 12 PPV events
Advertising/event sponsorships – $18 million from 12 PPV events
UFCStore.com = $12 million a year in sales
Other – licensing video games, action figures, online video = $1 million a year
You’re looking at $355 million a year. What about remaining expenses?
$450 million debt with Deutsche Bank -> $10 million per month = $120 million per year
Since I don’t have access to all of Zuffa’s books, let’s be extra cautious and budget an additional $10 million a month for expenses missed. After accounting for loan payments and budgeting extra cash for overlooked expenses, UFC’s financial picture could be producing a scenario of $115 million a year in annual profit. If that’s the case, here’s what the payouts would look like if they were taxed at 25%:
Frank Fertitta: $34.5 million a year ($2.875 million/monthly, $718,750/week, $102.678.57/daily)
Lorenzo Fertitta: $34.5 million a year ($2.875 million/monthly, $718,750/week, $102.678.57/daily)
Dana White: $8.625 million a year ($718,750 a month, $179,687/week, $25,669/day)
Abu Dhabi owner: $8.625 million a year
If the numbers are close to accurate, it means Zuffa is doing better than expected. With the UFC being so economically strong, Zuffa’s refusal to pay fighters becomes less acceptable. It is now time for fighters to organize a union and fight for every last penny.
The problem for UFC is that if you take away the Fox money, the PPV cash is still the heavy driver of revenue for the organization. That means it’s a volatile situation when buy rates get cold and they have been very cold for the most part. When you lose Brock Lesnar, it hurts. St. Pierre only has a few fights left in his career before retirement. There’s nobody who can step in and automatically draw 750,000 PPV buys for a fight. It’s why they’re putting so many eggs in the Ronda Rousey basket. Will Anderson Silva’s loss against Chris Weidman damage his PPV drawing prospects?
