In 2016, the UFC was sold for $4.025B but even before the lucrative sale, questions surrounding fighter pay had begun to permeate the mainstream. It’s fair to ask why some fighters are getting paid only $15,000 to show, while the company is generating such large revenue each event. And furthermore, why are fighters willing to fight for such a low number given the costs of putting on a legitimate fight camp, including paying coaches and a nutritionist, as well as the rest of the expenses involved in competing at the highest level?
The answer lies partly in the amended complaint of the ongoing antitrust suit between a class of named plaintiffs led by former UFC fighters Cung Le, Jon Fitch, and Nate Quarry among others, and former owners of the UFC, Zuffa LLC. The complaint alleges that Zuffa “engaged in an illegal scheme to eliminate competition from would-be MMA promoters by systematically preventing them from gaining access to resources critical to successful MMA promotions…” The critical resource that Zuffa allegedly prevents access to is championship level fighters. That is to say, other promotions suffer because, among other things, the UFC has a stranglehold on the highest ranked fighters in each division.
While there are a few fighters outside the UFC in the top 10 of each weight class globally, the UFC holds a vast majority of the highest ranked fighters under contract and champions in other promotions, In fact, according to rankingmma.com UFC fighters occupy 85% of the top 10 rankings across all weight divisions. Given the lack of highly ranked fighters, other promotions, try as they may, are hard-pressed to sell “world championship” fights when the competitors are not even ranked inside the top 10 globally. World championships are a true indicator of fighter popularity, as shown in the graphic below, depicting Google search prevalence over time for Michael Bisping, in blue, Robert Whittaker, in yellow, and Israel Adesanya, in red. Adesanya has become one of the biggest draws in the sport but each peak in search prevalence comes around the time that one of these fighters is engaged in a championship fight. The popularity garnered by winning a championship stays with the fighter while he holds the title which would explain why Adesanya, the current UFC Middleweight Champion is so highly searched right now.
It goes without saying but the UFC is certainly aware that the highest ranked fighters make for the most popular fights and thus, the most money. What’s more, the biggest draws in MMA history have always been with the UFC. Beginning with the likes of Chuck Liddell and Tito Ortiz, to Georges St. Pierre, Brock Lesnar, Ronda Rousey, and now Conor McGregor and Israel Adesanya, the fighters with the biggest star power have always been under the UFC banner. It’s estimated that UFC 264, featuring McGregor vs. Poirier 3, sold 1.8M PPVs, which would make it one of the highest selling fights of all time. No other promotion can boast a star with drawing power even close to the aforementioned athletes which only further contributes to the UFC’s market dominance.
All of this brings us to the ultimate question, why aren’t UFC fighters paid more? The average UFC fighter’s salary, of course that includes Conor McGregor’s as well as that of the least popular up and comer, is $166,000 per year. That number equals around 19% of total revenue generated by the UFC in a given year which pales in comparison to the revenue sharing arrangements that are collectively bargained for in other leagues. NFL players by comparison are set to earn at least 48.8% of revenue in the upcoming 17 game season, and NBA players make between 49%-51% of total revenue.
Aside from the fact that UFC fighters do not have a union to collectively bargain on their behalf, the UFC uses the above mentioned vice grip on elite talent to essentially lure fighters into signing contracts that heavily favor the promotion in the hopes of eventually being able to reach the championship summit and capitalize on potential popularity in the future. The UFC has capitalized on this cycle by cornering the market of elite fighters and locking them into contracts that are more slightly more lucrative than their competition can afford, garnering what is referred to as monopsony power. Monopsony power essentially means that the UFC is, for all intents and purposes, the sole buyer in the elite fighter market.
To illustrate that point, it is alleged in the ongoing lawsuit against them that the UFC has up to a 90% total share of the MMA market, which would equal an HHI of 8,100. The Herfindahl-Hirschman Index, or HHI, is a commonly accepted measurement of market concentration where anything in excess of 2,5000 is considered highly concentrated. A maximum HHI of 10,000 means the market is controlled by a single firm. The UFC’s alleged 90% share of the market affords them near sole control of the MMA market which, coupled with UFC President Dana White’s strong opposition to unionization, and the fighters willingness to fight for low pay in the hopes of joining the elite PPV draws, and the UFC is in prime position to continue dominating competitors and paying the fighters a meager percentage of the revenue they generate.