Residuals: The Elephant In The Room

Posted on February 25, 2014, 04:46 PM by Brian Cox
> Cool 5
|
> Poor 7

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.  

 


Comments

REGISTER OR LOG IN TO POST COMMENTS AND BECOME AN ACTIVE MEMBER OF THE COMMUNITY
  • IGMBurninPiff
    Cool
    2
    Funny | 0
    Weak | 0
    Sharp | 0

    I see fighters gripes with not being compensated for replays of fights. they could be given the smallest percentage for every play on the UFC Unleashed and shows like that and it would still be a nice piece of money. At the end of the day all these issues being raised about sponsors and the replays are really toward the higher up athletes who have the big sponsors and get the replays and most of them are being paid nicely already. So really the problem is for people being under paid at fight time. I hate the Diaz Brothers. I honestly could care less if they ever fought again, BUT when they do fight I certainly tune in hoping to see them get beat up, either way I watch. Hearing Nate was only paid 15K for his last fight made even me sick knowing he's worth far more than that. Some fighters really need better managers however and that's where I think alot of the problems lie.

    Reply 2 months ago
  • falcon4917
    Sharp
    2
    Weak | 1
    Funny | 0
    Cool | 0

    the ufc had hard times in the beginning and had to pay back it's losses. Most fighters go through the same battle though and they don't risk it out of already deep pockets and have little to fall back on. UFC cannot do without fighters, but fighters can do without ufc. The spread of wealth needs to spread.

    Reply 2 months ago
  • Zip
    Funny
    2
    Sharp | 1
    Weak | 1
    Cool | 1

    What f***ing elephant? Go order fight pass!

    Reply 2 months ago
  • clownshoes
    Sharp
    3
    Cool | 1
    Funny | 0
    Weak | 0

    This isn't specific to MMA. If I write a program for my company that is useful, it will continue to use the program that I write and not directly compensate me for its use. Long after I leave, I won't see a dime for the program. That is because when you work for a company, your intellectual property is actually the property of the company.

    The fighters have no ownership over their fights. The UFC has the ownership of the fights. If the fighters don't like the contracts that they are offered with the UFC then they can ask for residuals, and if the UFC refuses then it's simple -- if you don't like the contract then don't sign it.

    Reply 2 months ago
  • falcon4917
    Cool
    1
    Funny | 0
    Weak | 0
    Sharp | 0

    Or fight for more afterwards and put up pressure publicly to get some compensation. UFC wants to be liked.

    Reply 2 months ago
  • Brian Cox
    Cool
    Weak
    Sharp
    Funny


    I wouldn't argue any of that on a past tense basis. The fighters would be hard pressed to get any money for what's already be done.

    However, regarding future contracts, and this Couture's point regarding unions, those rights can be written into new contracts.

    Case in point, the UFC's marquee fighters could easily make residuals a contract demand. IMO, the UFC would have a hard time turning down their name brand fighters on the issue.

    My guess would be, that if fighters ever unionize that residuals will be one of the first things they go after.

    As you said, fighters knew what contracts they were signing. As such, fighters need to start negotiating new contracts that include residual rights. If they can't accomplish this individually, then perhaps they'll need to accomplish it collectively.

    Reply 2 months ago
  • clownshoes
    Cool
    1
    Funny | 0
    Weak | 0
    Sharp | 0

    Yeah, it's definitely a tricky subject, Brian. For one thing, you can compensate someone upfront for contingent payments in the future. So if a fighter said, "I want residuals." The UFC could basically just give them an increase in their current deal to compensate fighters for not receiving residuals.

    My point being, they could already be factoring that in explicitly, but it's a fact that they are factoring it in implicitly, because it affects their overall profits and therefore the demand for fighters.

    Reply 2 months ago
  • Brian Cox
    Cool
    Weak
    Sharp
    Funny


    Clown, they could be factoring it in, but it appears that they are not.

    However, your point is a valid one. They could get out the actuarial tables, figure out "X" replays at "X" this or that and blend that into a contract, but to me, and if I were a fighter, I'd rather get quarterly or yearly residual check for the rest of my life.

    Perhaps another way of looking at residuals would be as some kind of guaranteed old age pension.

    Yet another way of considering this - and turning your idea on its head - would be if fighters opted for less cash, in exchange for a cut of their replay revenues.

    Where lower tier fighters who don't have much pull might not get the deal, fighters like Jones, Silva, Aldo and Pettis might. And as these things go, those contracts would inevitably begin to trickle down as time went on.

    Either way, it's a interesting subject and one that's not likely to go away.

    Reply 2 months ago