Collective bargaining would be untenable in the UFC

[Alpha_T83]

There will never be a fighters union in my lifetime, and I plan on living another 50+ years.

Yea, I don't think there will be a fighters union either.

I do however think the Ali Act will be applied to MMA eventually. It's only a matter of time before someone at the level of GSP, Rousey, or McGregor take the UFC to court to have the Ali Act applied to their contracts.

GSP was the closest we've come. When he came back to fight Bisping, before the details were finalized, he wanted to re-do his old contract. Obviously the UFC refused at first, and so he hired lawyers. This was inevitably marching towards a court case that would have brought up the Ali Act, but in the end the UFC relented and they worked out a new deal.

Sadly, it would be such a long, drawn out battle that only the wealthiest MMA fighters could afford such a court case. And in the end, the UFC will always relent if they have any real sense of a court case bringing up the Ali Act.

 

[HHJ]

Finally, the fighters can frankly eat a dick.

 

[Alpha_T83]

No, for two reasons.

1, boxing has a larger market share globally. It can survive the Ali Act. The UFC IS mma. Break up their monopsony, and its game over.

2, average fighters earn less in boxing. The many belt, many promoter system benefits the very top end of fighters.

Finally, the fighters can frankly eat a dick. It is bad for fans, and as a fan, I care about that more. I am not here to be their earning source.

I agree that the lowest level MMA fighters will always be "underpaid". Without a union, whether you follow the current UFC model or the boxing model, the top end always benefit the most. This is just simple free market, scale free economics. The distributions of salaries will follow power laws.

I also agree that MMA as a whole might suffer from the Ali Act. If you break up the UFC monopoly, then MMA might become more diluted, alienating casual fans.

However, if the UFC continue down their current path, the Ali Act is inevitable. This would literally kill UFC stocks, and the company might implode from the devaluation. I'm not exactly sure what the UFC should do to avoid this. Their strategy of playing hardball and then giving in when megastars threaten to go to court won't work forever.

I honestly think that the UFC would be smart to slowly work towards a 50% profit sharing model with the fighters, of their own accord. If they voluntarily did that, the fighters would be much less likely to unionize. And in doing so, they could control the implementation of such a system and do it gradually. I mean, they're only paying the fighters like 20-25% of the profits right now. You could increase that by 2-3% per year, and slowly work up to the 50% mark over a 10-15 year period. You could even stop short at 45% and probably get not too many complaints.

But ya, if the UFC keep on their current path, they're gonna get fucked. It's just a question of when.

 

[CerebralKnievel]

It doesn't matter what it was. Conor fought it while under contract with the UFC. His contract that allowed him to fight outside of the UFC cost him half his pay. As if the UFC made Conor.

It actually does matter, as I was responding to something that was stated in the OP which references maximum differential in UFC fighter pay for an event in this hypothetical situation, and has nothing to do with boxing pay or anything you were talking about in your own head.

 

[Deleted member 512089]

There's no more big paydays. It died with the Entertainment Era. Welcome to the ESPN era where a fucking double champ has to beg Dana for money publicly.

How fucking pathetic is this.

The UFC is currently telling everyone and every manager to take a pay cut or pound sand while they shelve them. It's why so many fights were announced and why the UFC doesn't seem to have as much problem with fighters turning down fights atm.

But this is also why the UFC can't get big draws to show up anymore and has problems with minor draws. They are used to mid upper pay and are all told to take a paycut. Even having a belt is no longer a route to a big payday. Not even when you hold two.

The UFC is a joke.

You're referring cejudo ? Did he complain about his pay ?

 

[kflo]

Lol at collective bargaining resulting in 50% revenue sharing in the ufc.

 

[kflo]

Technically he did but Dana then took half. What a piece of work.

That and them not wanting to pay Conor what he is worth... well any big fighter... is why he hasn't come back. I doubt he is injured. They have been telling him to pound sand for a while now. Conor isn't completely a moron.

Dana didn’t take half. Unless you mean the ufc took their priece of revenue as promoter and then paid Conor his $30m purse plus his Ppv points.

 

[linch]

Firstly, the UFC and the NBA are absolutely comparable. They are organizations that employ athletes.

And revenue sharing is a very complex term (albeit imprecise) stemming from collective bargaining agreements (CBAs). Complex "revenue sharing pools" are created in which the organizations agree to split revenues and costs with the athletes, and then the athletes are paid out of the revenue sharing pool. There is a complex definition of "related revenues" that includes merchandise. And part of the athletes pay is witheld in Escrow to ensure that the players aren't overpaid, as "salary caps" are determined apriori for a yearly period. If revenues fall short of expectations, some of the overpayment to the athletes is recaptured via the Escrow not being fully paid out.

So yes, as you said, with the simple definition of revenue vs profit, it's not 50/50 split of revenue. It's way more complex than either you or I will probably ever fully understand, but in simple English that people are used to, the idea is a 50/50 sharing of profits not revenue.

No, you cannot compare NFL and NBA with the ufc because ufc is a PRIVATE COMPANY, and NBA and NFL are ASSOCIATIONS OF CLUBS.
They're not hiring athletes directly, the clubs do.
Can you invest in NFL directly?
No, it's an association, you invest in or buy a club. (or some brands and ancillary activities that benefit from nfl).
The ufc is a private company like any other. Think Amazon.
In 2018, Amazon had a revenue of 232.9 billion, and profit of 10.1 billion.
Imagine Amazon sharing 50% of it's revenue (or profit) with its employees.
It's ridiculous to think that there's a law which forces companies to do that.
Businesses are set up to make money for their owners.
The business must continue to make money to stay in business.
If a company underpays its employees, it would quickly go down because everyone would go to work for a competitor.
In a capitalistic free market economy, your value is determined by how much is someone willing to pay for your services or products, not how much you think you're worth.

 

[Turf Skirmish]

Unions allow scales for pay.

 

[Alpha_T83]

No, you cannot compare NFL and NBA with the ufc because ufc is a PRIVATE COMPANY, and NBA and NFL are ASSOCIATIONS OF CLUBS.
They're not hiring athletes directly, the clubs do.
Can you invest in NFL directly?
No, it's an association, you invest in or buy a club. (or some brands and ancillary activities that benefit from nfl).
The ufc is a private company like any other. Think Amazon.

Firstly, you can absolutely invest in the NFL. It's called buying a franchise, genius. You can buy an existing team or make a bid on an expansion franchise. Expansion is rare and extremely expensive, but it does happen from time to time. That is a form of investment. And in fact, private companies tend to behave like that. You can't just buy stocks or shares from a private company -- the public can only invest in companies who are trading publicly. Private companies can be invested in, but the trades tend to be much larger (i.e. buying a franchise).

Technically the NFL is a trade association -- but that's just playing with words. It behaves similar to a company, but instead of having a CEO, there's a board of Governor's in which each of the 32 teams has a representative.

In 2018, Amazon had a revenue of 232.9 billion, and profit of 10.1 billion.
Imagine Amazon sharing 50% of it's revenue (or profit) with its employees.
It's ridiculous to think that there's a law which forces companies to do that.

That is going to be the future my friend. We are moving towards a type of socialism in which the employees are the company. Now, you're right that it doesnt make sense for the employees to get 50% of 200 billion dollars. I made a few replies earlier -- sports association Collective Bargaining Agreements talk about "revenue sharing", but in plain English this is closer to profit sharing. So in simpler terms the NHL and NBA compute revenue after costs (profit) and split that between the players and the league. In that sense, if Amazon profit was $15 billion not including employee salaries, then $7.5 billion should go to the employees. That is absolutely fair.

 

[Alpha_T83]

Unions allow scales for pay.

Yes, but usually not more than 100-fold. The NBA has the highest ratio of pay discrepancy among the "big 4" at 100-fold. It's not likely a UFC union would allow more than that, but it's possible.

Once the fighters have a bid for a union accepted, each fighter is going to have an equal vote. You think that 95% of the fighters are going to vote to allow Conor McGregor to make 1000 times the money per fight as the lowest paid UFC fighter? Never.

Once you give a mob that power, they are going to vote for whatever benefits the majority. That's why these collective bargaining agreements never exceed a 100-fold pay discrepancy. It's always possible that will change, but not likely.

 

[Alpha_T83]

Lol at collective bargaining resulting in 50% revenue sharing in the ufc.

Hey Kflo, ya admittedly the "50% revenue sharing" was a poor term to use. I'm referencing the NBA and NHL model, in which they have complex definitions of revenue sharing. In plain English it's basically what we call "profit".

I'm using the terminology from existing CBAs, but it does confuse people. Right now the UFC shares about 22.5% of profits with the fighters, and a union would push that to 50%. Basically fighter salaries would double from what they are now, if that happened.

Sorry for the confusion -- a lot of people pointed that one out.

 

[Threetrees]

Well reasoned thread @Alpha_T83

 

[Alpha_T83]

Well reasoned thread @Alpha_T83

Thanks!

There are a few rough points I wish I'd changed though :S What the NHL and NBA call "revenue sharing" is closer to what we call "profit sharing" in plain English. I wish I'd just written profit to begin with

 

[Threetrees]

Thanks!

There are a few rough points I wish I'd changed though :S What the NHL and NBA call "revenue sharing" is closer to what we call "profit sharing" in plain English. I wish I'd just written profit to begin with

Your central claim is strong though. And I say this as someone whoo has been waving the "collective bargaining" flag over the past year, I found it persuasive.
I think you're right,

 

[JSN]

I mean, I don't know any pro athletes personally. You'd have to go ask NBA players what goes on behind closed doors within the NBPA.

From what I've heard from hockey (which is just rumors), the players definitely want maximum contracts and are hesitant when maximums are increased. This concern stems from Escrow, in which the yearly 'share' of the revenue for the players is estimated apriori. Part of the players pay is put into Escrow, and if the actual revenues fall short of the estimated revenues, then the players actually don't get their full contract money.

This is particularly problematic in hockey, where players sign long 8 year contracts. A megastar might sign a $10 million dollar AAV 8-year contract, but if the salary cap & maximum contract AAV rises 6 years later and teams overspend on free agents, they might actually end up losing some of that $10 million to Escrow recapture!

Thus, higher maximum salaries (or none) can seriously devalue long-term contracts. The shorter the contracts, the less the concern. This is why basketball has some of the highest salaries in pros sports (something like $50+ million now per year for supermax deals). Contracts are maxed at 5 years. In addition, most big stars get "player options" in their final year(s), in which they can "opt out" of their contracts. So if you're on a $30M AAV contract, and the salary cap rises dramatically with your $30M being slightly devalued, you exercise your player option to get out of that last year, and re-sign a new supermax deal.

For that reason, maximum salaries aren't nearly as big of an issue in basketball, and thus basketball has the highest maximum to minimum salary ratio.

https://www.cbc.ca/sports/hockey/nhl/escrow-players-nhl-labour-talks-1.5177705

basketball is also way more popular than hockey.

 

[Alpha_T83]

basketball is also way more popular than hockey.

True but that doesn't necessarily affect the ratio of highest to lowest paid athlete. That ratio is independent of actual dollar values.

However, your caveat is well noted. It's difficult to tell whether basketballs higher ratio is due to the overall greater revenue, or whether it has more to do with contract lengths be nearly twice as long. In reality it's probably a bit of both. So you have a good point.

 

[kflo]

The problem is there is a market for the non star fighter. There’s no negotiating power for them to argue it should be significantly higher just because the promotion happens to make a lot of money. The ufc could literally drop the early prelims and not materially impact their total revenue. They can actually measure the incremental revenue they get from those fights but even then the individual fighters themselves are mostly replaceable with guys in other promotions.

A union doesn’t work and the Ali act would likely be bad overall for mma.

Not sure there’s any good answer.

 

[Alpha_T83]

The problem is there is a market for the non star fighter. There’s no negotiating power for them to argue it should be significantly higher just because the promotion happens to make a lot of money. The ufc could literally drop the early prelims and not materially impact their total revenue. They can actually measure the incremental revenue they get from those fights but even then the individual fighters themselves are mostly replaceable with guys in other promotions.

A union doesn’t work and the Ali act would likely be bad overall for mma.

Not sure there’s any good answer.

On that, we completely agree. A union would be a mess, at least in the short term. And I would strongly suspect a union would lead to a very long strike/lockout for the UFC. Firstly, the fighters would need to agree internally on which terms they want to bargain with the UFC. The in-fighting would be massive once they started hashing out the details. And even if they made it past that hurdle, it could take 6-12 months to get the UFC to actually sign a CBA.

And the Ali Act would likely be bad for MMA. Another user pointed out that "the UFC is the face of MMA". Part of the allure of the UFC is all of the best fighters under one roof, fighting each other. The Ali Act would more easily allow other competitions to put on shows. You'd probably get better "big events" once or twice per year, but the rest of MMA would become a diluted mess. You'd lose out on most of the casuals, and the majority of shows would see a drop in viewership.

I do think we need some new solution not yet seen in sports bargaining between athletes and organizations.

Honestly, the best option would be for the UFC to voluntarily release all revenue and fighter pay information, including bonuses and medical bills paid for. They should then voluntarily move towards 40-50% profit sharing. They're at 22.5% now, so they could increase athlete profit shares at ~2% per year.

If they continue on their current path, the Ali Act being applied to MMA is inevitable. And that would tank the UFC's value overnight.

 

[kflo]

On that, we completely agree. A union would be a mess, at least in the short term. And I would strongly suspect a union would lead to a very long strike/lockout for the UFC. Firstly, the fighters would need to agree internally on which terms they want to bargain with the UFC. The in-fighting would be massive once they started hashing out the details. And even if they made it past that hurdle, it could take 6-12 months to get the UFC to actually sign a CBA.

And the Ali Act would likely be bad for MMA. Another user pointed out that "the UFC is the face of MMA". Part of the allure of the UFC is all of the best fighters under one roof, fighting each other. The Ali Act would more easily allow other competitions to put on shows. You'd probably get better "big events" once or twice per year, but the rest of MMA would become a diluted mess. You'd lose out on most of the casuals, and the majority of shows would see a drop in viewership.

I do think we need some new solution not yet seen in sports bargaining between athletes and organizations.

Honestly, the best option would be for the UFC to voluntarily release all revenue and fighter pay information, including bonuses and medical bills paid for. They should then voluntarily move towards 40-50% profit sharing. They're at 22.5% now, so they could increase athlete profit shares at ~2% per year.

If they continue on their current path, the Ali Act being applied to MMA is inevitable. And that would tank the UFC's value overnight.

I just think the application of the Ali act to mma would probably be illegal. I don’t see a strong basis for government infringement on these promotions ability to do business.

And again it would be bad for mma overall.

It hasn’t happened yet so I don’t see why its inevitable.

And the 22% is not % of profit, its % of revenue (pretty sure at least). Again I don’t see a strong basis for having some fixed % of revenue or profit when both can be very variable year after year and there’s no way to make sure the revenue generators get the revenue in that structure. And again there’s no reason at all to be forced to (or even electively choose to) pay well over market for many of the fighters on the roster.

I think the better path in terms of giving more to fighters is in some sort of pension pool. Even long term health benefits is tricky because these guys often fight longer than they should and for multiple promotions.