UFC and their 'big short' contract negotiation hypocrisy

[paddy_da_pikey]

Longish read so will bullet point:

• The Big Short is a movie about betting on failure
• I see a parallel in this and UFC contract offer to Henderson
• I also see a blatant hypocrisy from Dana White (as if!!)
• There is also a potential loop hole in their matching rights due to Reebok deal

So here goes, I will quote verbatim where I can;

Benson Henderson chooses not to resign with the UFC causing big tremors in the MMA landscape, alot has been discussed about the actual financials of the offer, but not so much about HOW the offers were constructed which is what I would like to explore

For one of the few times White actually hinted at the intricacies of a contract offer, and he did so in such a way as to undermine Benson Henderson for taking the offer with Bellator, in a passive suggestive way that Henderson doesnt believe in himself anymore that he has what it takes to be champion...

"The truth is we made him an offer that would have paid him substantially more - like not even in the same ballpark - than he's getting now if he were to become world champion again, but he chose their deal, which offered more up front," White told MMA Junkie.

So basically White is saying all the risk is on you, we dont value you enough to pay you decent money for all the last minute fights you took, for getting us out of trouble time and time again moving up in weight to fight and undefeated dangerous striker in a higher weight class, no we will keep using you for cheap to headline TV cards and only if IF you become champion THEN we will open up or cheque books, so basically here is a big carrot with long odds for you to take all the risk while we tie you into 8 fights where we put you on TV and fightpass as a cheap headliner cause we dont respect you enough just to pay you your worth for showing up as former champ in 2 organisations

Fair enough you think... however in the VERY NEXT SENTENCE White continues...

"He's a former world champion who's ranked No. 15 now. We're looking for top-5 guys, guys that are going from 15 to 1, not the other way around."

Basically out and out admitting that they had zero confidence in Henderson regaining the championship and as such their substantially more offer was nothing more than a 'big short' bet in which they say favourable risk to bet on Hendersons failure. play on his ego to sign himself cheap and test does he 'believe in himself' etc etc

Im sure this is not the first time they have tried to pull this move by shorting multiple contenders making for a top heavy minority of those who actually get paid pro athlete money cause only one can be champion at a time.

Henderson later confirmed he had a signing on bonus and a much bigger guaranteed purse in an offer he couldnt refuse (it must be north of $300k - $500k guaranteed with like a $1 million as a former UFC champ on a streak considering Melendez was getting offered 250k a fight coming of 1-1 loss of the title and a win over unranked Diego Sanchez) UFC most likely came in around the $150 / $150 with win money and a large cash bonus as a champ and strong PPV points with guaranteed fight on a McGregor card (which in itself would be interesting if that is a negotiating tactic they are using with fighters to get a fight on a McGregor card in order to get some serious PPV points)

Incidently Henderson said that UFC was the lowest out of the 3 offers. I really think Viacom is going to spend the money on this in a big way in a short term push for a few years having seen the UFC will likely make a bid for any compeitor with a decent stable of fighters - that or they become a serious alternative and shift the balance the last time this happened being the WCW vs WWE rivalry and yes there is the comparison in that one company was privately owned by a billionaire who lost all his top performers to an organisation owned by a TV station with more money and offering bigger deals to wrestlers - same could be happening here. Henderson could just be the first in many

***Side note - in matching rights how is it possible for UFC to compete with any other organisation that allows fighters their own sponsors? With such a rigid payscale and max $40k for a champ, a guy like schaub gets a 100k a fight with no limit, surely every fighter could just say im not resigning you didnt match my deal as I have the potential to become champ and get $250k by Nike to appear in ring in their shorts and walkout gear? How does UFC match that potential on paper legally binding?

 

[mmafan559]

 

[ProtoTypeJack]

Good read.

I truly hope Bellator/Rizin do it well.
Would love to see them hypocrits get some real competition.

 

[BisexualMMA]

Regarding the sponsor thing, if the UFC wanted to match what Bellator offered in sponsorship opportunities, I guess they'd have to do it with increased show and win money.

Also, you are asking Zuffa to match hypothetical sponsor rates the fighter would garner in the future in another organization. At least other organizations or sponsors have "something to match" with Zuffa and Reebok's small but public sponsorship tiers.

I guess Zuffa is always free to have the fighter present historical sponsorship revenue from outside Zuffa and Reebok and then "match" that by adding it to their show money.

As to the short selling... I'm sure that's standard negotiating practice at Zuffa and probably elsewhere. If I were Zuffa, I would have also offered Ben big PPV cut numbers that only kick in at buyrates he is likely to never achieve.

 

[KB Warrior]

I don't see a problem with an incentive based contract, that will appeal to some fighters (a guy like Conor who is ideal for the UFC owners).

 

[joebenson]

The "substantially more" offer us meaningless. Anyone who gets ppv points in the UFC (ie every champion) would get paid more than bellator money. Respect to Benson, he has done great things and I hope he goes on to be one of many who, by splitting from the UFC, create more competition in this sport.

 

[SlicerDM]

Dana is a fucking idiot.

He shouldn't do the talking imo.

 

[paddy_da_pikey]

Regarding the sponsor thing, if the UFC wanted to match what Bellator offered in sponsorship opportunities, I guess they'd have to do it with increased show and win money.

Also, you are asking Zuffa to match hypothetical sponsor rates the fighter would garner in the future in another organization. At least other organizations or sponsors have "something to match" with Zuffa and Reebok's small but public sponsorship tiers.

I guess Zuffa is always free to have the fighter present historical sponsorship revenue from outside Zuffa and Reebok and then "match" that by adding it to their show money.

As to the short selling... I'm sure that's standard negotiating practice at Zuffa and probably elsewhere. If I were Zuffa, I would have also offered Ben big PPV cut numbers that only kick in at buyrates he is likely to never achieve.

I agree with almost everything your saying dude even with the proving of your historials for sponsorship, however i had thought that through and that aspect doesnt match up.

We will use Schaub of even Tate as a better example

Tate was earning $70k a fight from sponsorships she said and iv no reason not to believe her, this is when for example she had lost to Rousey and Zingano and was ranked like 4 or 5 in the world, so UFC says ok we will add the difference of your Reebok contract and previous sponsor money onto your show money

eg. $15k Reebok - $70k historic sponsor revenue = extra $55k show money - fair enough

However these historicals only take into account an individuals historic rank at that time, their historic name value and historic exposure - it does not take into account their movement up the rankings, growth in fans or exposure and as such is not a viable measure of an individuals worth in terms of market value that companies are willing to pay for brand association - the only true measure is to test the waters. The fact that sponsors in Bellator dont even have a sponsor tax and also that there are less fighters to sponsor and less events means they can pay fighters signicantly MORE than what they were getting paid in the UFC which was already higher than Reebok

This all looms towards a mass exodus unless UFC figures this out and fast

 

[paddy_da_pikey]

The "substantially more" offer us meaningless. Anyone who gets ppv points in the UFC (ie every champion) would get paid more than bellator money. Respect to Benson, he has done great things and I hope he goes on to be one of many who, by splitting from the UFC, create more competition in this sport.

I 100% agree im with Benson on this one for having the self respect to value himself higher and go with the company who saw value in him and demonstrated so by opening their wallets

 

[INoHespectChael]

Didn't read but the big short is a really good movie.

You should watch it if you haven't already.

 

[NP6796]

Longish read so will bullet point:

• The Big Short is a movie about betting on failure
• I see a parallel in this and UFC contract offer to Henderson
• I also see a blatant hypocrisy from Dana White (as if!!)
• There is also a potential loop hole in their matching rights due to Reebok deal

So here goes, I will quote verbatim where I can;

Benson Henderson chooses not to resign with the UFC causing big tremors in the MMA landscape, alot has been discussed about the actual financials of the offer, but not so much about HOW the offers were constructed which is what I would like to explore

For one of the few times White actually hinted at the intricacies of a contract offer, and he did so in such a way as to undermine Benson Henderson for taking the offer with Bellator, in a passive suggestive way that Henderson doesnt believe in himself anymore that he has what it takes to be champion...

"The truth is we made him an offer that would have paid him substantially more - like not even in the same ballpark - than he's getting now if he were to become world champion again, but he chose their deal, which offered more up front," White told MMA Junkie.

So basically White is saying all the risk is on you, we dont value you enough to pay you decent money for all the last minute fights you took, for getting us out of trouble time and time again moving up in weight to fight and undefeated dangerous striker in a higher weight class, no we will keep using you for cheap to headline TV cards and only if IF you become champion THEN we will open up or cheque books, so basically here is a big carrot with long odds for you to take all the risk while we tie you into 8 fights where we put you on TV and fightpass as a cheap headliner cause we dont respect you enough just to pay you your worth for showing up as former champ in 2 organisations

Fair enough you think... however in the VERY NEXT SENTENCE White continues...

"He's a former world champion who's ranked No. 15 now. We're looking for top-5 guys, guys that are going from 15 to 1, not the other way around."

Basically out and out admitting that they had zero confidence in Henderson regaining the championship and as such their substantially more offer was nothing more than a 'big short' bet in which they say favourable risk to bet on Hendersons failure. play on his ego to sign himself cheap and test does he 'believe in himself' etc etc

Im sure this is not the first time they have tried to pull this move by shorting multiple contenders making for a top heavy minority of those who actually get paid pro athlete money cause only one can be champion at a time.

Henderson later confirmed he had a signing on bonus and a much bigger guaranteed purse in an offer he couldnt refuse (it must be north of $300k - $500k guaranteed with like a $1 million as a former UFC champ on a streak considering Melendez was getting offered 250k a fight coming of 1-1 loss of the title and a win over unranked Diego Sanchez) UFC most likely came in around the $150 / $150 with win money and a large cash bonus as a champ and strong PPV points with guaranteed fight on a McGregor card (which in itself would be interesting if that is a negotiating tactic they are using with fighters to get a fight on a McGregor card in order to get some serious PPV points)

Incidently Henderson said that UFC was the lowest out of the 3 offers. I really think Viacom is going to spend the money on this in a big way in a short term push for a few years having seen the UFC will likely make a bid for any compeitor with a decent stable of fighters - that or they become a serious alternative and shift the balance the last time this happened being the WCW vs WWE rivalry and yes there is the comparison in that one company was privately owned by a billionaire who lost all his top performers to an organisation owned by a TV station with more money and offering bigger deals to wrestlers - same could be happening here. Henderson could just be the first in many

***Side note - in matching rights how is it possible for UFC to compete with any other organisation that allows fighters their own sponsors? With such a rigid payscale and max $40k for a champ, a guy like schaub gets a 100k a fight with no limit, surely every fighter could just say im not resigning you didnt match my deal as I have the potential to become champ and get $250k by Nike to appear in ring in their shorts and walkout gear? How does UFC match that potential on paper legally binding?

Great thread TS! I agree with your analysis. What we are seeing is the first wave of the "post reebok" deal, that top fighters lost BIG on, that are now looking for a better option. No doubt in my mind from a business standpoint that Benson made the right move.

 

[BisexualMMA]

I agree with almost everything your saying dude even with the proving of your historials for sponsorship, however i had thought that through and that aspect doesnt match up.

We will use Schaub of even Tate as a better example

Tate was earning $70k a fight from sponsorships she said and iv no reason not to believe her, this is when for example she had lost to Rousey and Zingano and was ranked like 4 or 5 in the world, so UFC says ok we will add the difference of your Reebok contract and previous sponsor money onto your show money

eg. $15k Reebok - $70k historic sponsor revenue = extra $55k show money - fair enough

However these historicals only take into account an individuals historic rank at that time, their historic name value and historic exposure - it does not take into account their movement up the rankings, growth in fans or exposure and as such is not a viable measure of an individuals worth in terms of market value that companies are willing to pay for brand association - the only true measure is to test the waters. The fact that sponsors in Bellator dont even have a sponsor tax and also that there are less fighters to sponsor and less events means they can pay fighters signicantly MORE than what they were getting paid in the UFC which was already higher than Reebok

This all looms towards a mass exodus unless UFC figures this out and fast

I agree that the Reebok deal is not going to be something the fighters appreciate. Pretty much the day it was announced I started a thread speculating that the UFC may have finally added the straw that eventually breaks the camel's back when it comes to the fighters deciding to bargain collectively.

But the UFC used to have no sponsorship tax. Then they instituted one, and the fighters just bent over and took it. Maybe there was an adjustment such that there was a slight increase in show money as a result, maybe not. I imagine probably not.

Economics happen and fighters will eventually get paid their market value, whether it's in sponsorship money or show money.

Anyway, no argument here that the Reebok deal gives the fighters something very easy to focus on and a reason to consider greener pastures. Before Reebok, they just all paid their sponsorship tax and had little reason to get together and talk about how much they were making in sponsorship money. The UFC decided to gouge them and, at the same time, give them an issue to come together over...if they want to.

 

[paddy_da_pikey]

Didn't read but the big short is a really good movie.

You should watch it if you haven't already.

It is a great movie, the irony of my thread being that its content was 'The Big Long' lol

 

[paddy_da_pikey]

I agree that the Reebok deal is not going to be something the fighters appreciate. Pretty much the day it was announced I started a thread speculating that the UFC may have finally added the straw that eventually breaks the camel's back when it comes to the fighters deciding to bargain collectively.

But the UFC used to have no sponsorship tax. Then they instituted one, and the fighters just bent over and took it. Maybe there was an adjustment such that there was a slight increase in show money as a result, maybe not. I imagine probably not.

Economics happen and fighters will eventually get paid their market value, whether it's in sponsorship money or show money.

Anyway, no argument here that the Reebok deal gives the fighters something very easy to focus on and a reason to consider greener pastures. Before Reebok, they just all paid their sponsorship tax and had little reason to get together and talk about how much they were making in sponsorship money. The UFC decided to gouge them and, at the same time, give them an issue to come together over...if they want to.

I like that term 'collective bargaining' I believe that is the kryptonite to the UFC is solidarity amongst fighters, something that puts them all on the same page

What I also believe is that a high tide raises all ships, and the more these contracts are discussed and the more open fighters are about them, the better it will be for all.

I remember fighters saying things like im the 2nd highest paid in UFC or such like, but nobody really knew what fighters made, now with fighters all getting their own podcasts and the rise of social media which lets be real here, social media only came around 7 years into Zuffa ownership - fighters werent even using social media that much that I remember until maybe the last 4 years or so in a big way - now everyone has access to everything, fighters talk and whats been said cant be unsaid which is great where transparency is concerned

 

[NP6796]

A big problem the UFC is going to have is if they begin losing talent to Bellator, they will still have their TV obligations with even thinner cards. I see Bellator with a great opportunity right now

 

[Rani Yahia]

Longish read so will bullet point:

• The Big Short is a movie about betting on failure
• I see a parallel in this and UFC contract offer to Henderson
• I also see a blatant hypocrisy from Dana White (as if!!)
• There is also a potential loop hole in their matching rights due to Reebok deal

So here goes, I will quote verbatim where I can;

Benson Henderson chooses not to resign with the UFC causing big tremors in the MMA landscape, alot has been discussed about the actual financials of the offer, but not so much about HOW the offers were constructed which is what I would like to explore

For one of the few times White actually hinted at the intricacies of a contract offer, and he did so in such a way as to undermine Benson Henderson for taking the offer with Bellator, in a passive suggestive way that Henderson doesnt believe in himself anymore that he has what it takes to be champion...

"The truth is we made him an offer that would have paid him substantially more - like not even in the same ballpark - than he's getting now if he were to become world champion again, but he chose their deal, which offered more up front," White told MMA Junkie.

So basically White is saying all the risk is on you, we dont value you enough to pay you decent money for all the last minute fights you took, for getting us out of trouble time and time again moving up in weight to fight and undefeated dangerous striker in a higher weight class, no we will keep using you for cheap to headline TV cards and only if IF you become champion THEN we will open up or cheque books, so basically here is a big carrot with long odds for you to take all the risk while we tie you into 8 fights where we put you on TV and fightpass as a cheap headliner cause we dont respect you enough just to pay you your worth for showing up as former champ in 2 organisations

Fair enough you think... however in the VERY NEXT SENTENCE White continues...

"He's a former world champion who's ranked No. 15 now. We're looking for top-5 guys, guys that are going from 15 to 1, not the other way around."

Basically out and out admitting that they had zero confidence in Henderson regaining the championship and as such their substantially more offer was nothing more than a 'big short' bet in which they say favourable risk to bet on Hendersons failure. play on his ego to sign himself cheap and test does he 'believe in himself' etc etc

Im sure this is not the first time they have tried to pull this move by shorting multiple contenders making for a top heavy minority of those who actually get paid pro athlete money cause only one can be champion at a time.

Henderson later confirmed he had a signing on bonus and a much bigger guaranteed purse in an offer he couldnt refuse (it must be north of $300k - $500k guaranteed with like a $1 million as a former UFC champ on a streak considering Melendez was getting offered 250k a fight coming of 1-1 loss of the title and a win over unranked Diego Sanchez) UFC most likely came in around the $150 / $150 with win money and a large cash bonus as a champ and strong PPV points with guaranteed fight on a McGregor card (which in itself would be interesting if that is a negotiating tactic they are using with fighters to get a fight on a McGregor card in order to get some serious PPV points)

Incidently Henderson said that UFC was the lowest out of the 3 offers. I really think Viacom is going to spend the money on this in a big way in a short term push for a few years having seen the UFC will likely make a bid for any compeitor with a decent stable of fighters - that or they become a serious alternative and shift the balance the last time this happened being the WCW vs WWE rivalry and yes there is the comparison in that one company was privately owned by a billionaire who lost all his top performers to an organisation owned by a TV station with more money and offering bigger deals to wrestlers - same could be happening here. Henderson could just be the first in many

***Side note - in matching rights how is it possible for UFC to compete with any other organisation that allows fighters their own sponsors? With such a rigid payscale and max $40k for a champ, a guy like schaub gets a 100k a fight with no limit, surely every fighter could just say im not resigning you didnt match my deal as I have the potential to become champ and get $250k by Nike to appear in ring in their shorts and walkout gear? How does UFC match that potential on paper legally binding?

I agree that DW's response was disingenuous and passive-aggressive:
- Insinuating that BH didn't believe in himself enough to accept this "become a champion & u get paid heaps"contract was in poor form; and
- implying that his ranking was due to his poor performance (rather than him moving up to 170) was worthy of the sneaky snake he is.

BTW Your analogy is off, big short means that you have a large (big) contract whose value is inversely proportional (short) to the value of the underlying (benson). In this case, benson's failure (decrease in value) wouldn't have increased the value of this contract for the UFC. I guess it makes do though

 

[paddy_da_pikey]

I agree that DW's response was disingenuous and passive-aggressive:
- Insinuating that BH didn't believe in himself enough to accept this "become a champion & u get paid heaps"contract was in poor form; and
- implying that his ranking was due to his poor performance (rather than him moving up to 170) was worthy of the sneaky snake he is.

BTW Your analogy is off, big short means that you have a large (big) contract whose value is inversely proportional (short) to the value of the underlying (benson). In this case, benson's failure (decrease in value) wouldn't have increased the value of this contract for the UFC. I guess it makes do though

I ment the analogy in its simplest form - betting on failure ie. UFC making a big money offer if Henderson wins the title - the short being they are betting on his failure

What you just said has gone way over my head haha

 

[Team Sleep]

Dana White plainly lied about making a higher offer. The UFC contract states that they only need match the offer, not beat it, to retain the contracted fighter. An example of how these things are decided is that Alvarez initially was retained by Bellator when the UFC had offered PPV points and to only put him in fights as the main or co-main event. Bellator "matched" that offer by saying they would give him PPV points and making him the main event. Now we know at the time, there was no uniform controversy. We also know that UFC PPV points are exponentially more valuable than Bellator, who never has PPV and even if they did, they don't do more than 150k buys.

So plain and simple, Dana is lying his ass off. If the UFC made a higher offer, Bendo wouldn't even have a choice but to resign or retire or sit out his new contract term. Dana lied.

 

[paddy_da_pikey]

Dana White plainly lied about making a higher offer. The UFC contract states that they only need match the offer, not beat it, to retain the contracted fighter. An example of how these things are decided is that Alvarez initially was retained by Bellator when the UFC had offered PPV points and to only put him in fights as the main or co-main event. Bellator "matched" that offer by saying they would give him PPV points and making him the main event. Now we know at the time, there was no uniform controversy. We also know that UFC PPV points are exponentially more valuable than Bellator, who never has PPV and even if they did, they don't do more than 150k buys.

So plain and simple, Dana is lying his ass off. If the UFC made a higher offer, Bendo wouldn't even have a choice but to resign or retire or sit out his new contract term. Dana lied.

It was the massive caveat attached to the 'substantially higher offer' - the IF he becomes champion again

Like we say in Ireland...

What if? What IF? ..... What if your Aunty had bollocks she's be your uncle!

 

[basherofbrains]

Longish read so will bullet point:

***Side note - in matching rights how is it possible for UFC to compete with any other organisation that allows fighters their own sponsors? With such a rigid payscale and max $40k for a champ, a guy like schaub gets a 100k a fight with no limit, surely every fighter could just say im not resigning you didnt match my deal as I have the potential to become champ and get $250k by Nike to appear in ring in their shorts and walkout gear? How does UFC match that potential on paper legally binding?

The Reebok deal would have no negative impact on match as it simple isn't relevant to a fight contract. Sponsors are the fighters responsibility and nothing about the Reebok deal in no way restricts a fighters sponsorship opportunities.