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Residuals: The Elephant In The Room
Money is the one thing on the planet that most would take more of than less, given the choice.
As such, it comes as no surprise that the subject has become a bone of contention within the sport of MMA. More particularly, and because they’re the premier mixed martial arts promotion in the world, it’s become a bone of contention regarding the UFC.
As the brand has grown and the sport exploded over the years, so too have the UFC’s revenue streams mushroomed. Long gone are the days of struggle, poor returns and the burden of having to pay back the Fertitta brother’s 40 million dollar investment.
No, the early days of worry and loss are gone for the promotion’s ownership and in their place, only a future paved with gold.
As it stands, the promotion culls money from not only ticket sales and pay-per-view buys, but as well, bolsters its coffers from a myriad of other sources. Whether or not it’s kitsch or their own UFC video game, the brand has found and continues to find, new ways of squeezing juice into the glass.
However, and as the promotion’s pockets continue to fill with money, many have begun to question the fairness of the brand’s current financial arrangements with its fighters, and more to the point, how it shares that new wealth with those that help to generate it.
In particular, the issue of sponsorships has become a topic of discussion.
Regarding the subject, many have come to view sponsorships as the ‘single ticket item’ that fighters are most hard done by, when it comes to compensation. To the point, the promotion charges sponsors a tax – believed to be 100K per sponsor – for the right to sponsor a fighter in the Octagon. However, of the money created by the brand via the tax system, nothing is returned to the fighters.
However, there is a more substantial area of revenue generation that fighters are not compensated for and that’s residuals.
Fighters are paid once and only once for their performances and never again. Yet, those performances are bundled up and re-sold, time and time again, and in the form of DVDs’, specialty TV shows – ones such as “UFC Wired”, “Ultimate Knockouts” and “Ultimate Submissions” – and of course, the new subscription service known as “Fight Pass”, which features the UFC’s entire fight library.
In short and by way of replays, every fighter that has ever fought in the UFC continues to fight in the brand to this day. As such, their recorded images persist in earning the promotion significant income. Yet, the fighters see none of it.
In terms of the two issues, sponsorships and residuals, perhaps the easier pool of money for fighters to go after, and the one that they’d be considered (most) reasonably entitled to, would be that of residuals. Where revenue sharing from sponsorships taxes might prove to be a questionable and problematic negotiation with the UFC, residuals shouldn’t be.
As the promotion expects to be paid for replays of its fights, it stands to reason that fighters, likewise, should be compensated for the replays of their performances. If the promotion were to see fighters as their partners on residuals and not just products to be re-sold, it would, as likely, go a long way to assuaging fighter concerns regarding income.
If, however, and as Randy Couture has sated, the UFC fails to see the wisdom of “growing the sport to the benefit of the athletes” – and residuals would be a great way of doing that – and unionization becomes the fighters only course of redress on the issue of income, then perhaps the union that the fighters should look to join would be that of the “Screen Actors Guild.”
In synopsis, if UFC fighters are getting the short end of the stick on sponsorship money, then they’re getting none of the stick when it comes to residuals. And without knowing the exact figure, chances are pretty good that the residual stick, particularly over a fighter’s lifetime, is apt to be a much larger one than that of the sponsorship stick. As such, fighters might be well advised to consider the question of residuals.