UFC's $4 billion sale raises many questions about the fighters' pay and labor rights

speeds · Jul 13, 2016

http://www.usnews.com/opinion/artic...ions-about-fighters-pay-and-rights?src=usn_tw

When news this week emerged that investors purchased Ultimate Fighting Championship for $4 billion, it was easy to applaud the business acumen of the Fertitta brothers and Dana White, who bought the struggling promotion for a meager $2 million in 2001. At the time, few even knew about the sport of mixed martial arts, and some who did felt it was too dangerous and unruly. Now a regulated sport with regular television coverage, global reach and an impressive revenue stream, it's a notable turnaround story.

But the UFC's new owners, WME-IMG, have also inherited lingering issues over fighter pay and employee rights within the organization, particularly after such an eye-popping investment. Addressing those issues might not be easy with the company's current financial commitments. Under the stewardship of the Fertittas and White, the UFC dedicated a lot of resources to expand the sport in China and other overseas locales. It will be difficult for WME-IMG to simultaneously address the share of revenue going to its athletes while getting a strong return on its investment and managing the business's other costs.

Disputes over UFC fighter pay have popped up periodically over the years. Bloomberg coverage of the sale noted that the $4 billion price tag could bolster a pending legal case filed by three former UFC competitors, who argued that the promotion has a monopoly on the sport and provides fighters with a much smaller share of revenue than athletes in other sports. But a more important issue is the classification of UFC fighters as independent contractors, not employees. Professional athletes in the NBA, NFL, Major League Baseball: They're employees. Other athletes enjoy additional legal protections and the ability to unionize and collectively bargain. UFC fighters do not. Under the current circumstances, it is worth asking whether that should change.

Worker classification can be tricky and has led to a couple of high-profile lawsuits involving FedEx and Uber. How the discussion applies to UFC athletes changed significantly in December 2014, when the promotion signed a sponsorship deal with Reebok. Under the agreement, fighters no longer wore their own NASCAR-like, sponsor-covered shorts and t-shirts on fight night. Instead, they'd wear standardized Reebok gear.

You can debate whether the UFC or the athletes came out better in that deal, thoughaccounts suggest most fighters have lost a sizeable amount of money thus far from lost sponsorship opportunities. You can even laugh about former UFC heavyweight Matt Mitrione being forced to attend a press conference barefoot because he was wearing Nike's, not the UFC's preferred brand. But what's worth thinking about is that Reebok outfit. It's a UFC-mandated uniform that changed how fighters can get paid for their profession, and judging by their reactions throughout, they haven't been at the bargaining table when those changes were made.

Despite the massive sale to WME-IMG, it's difficult to say whether the situation for fighters will improve. While the sport has continued its success in major North American markets, Brazil and other countries, much of the UFC's future growth potential lies in Asia, particularly China. It's a smart business move, but expansion costs money. Understandably, the company has taken out debt to help fund the expansion. Just after the sale, Moody's noted that the "Ba3" bond rating for Zuffa LLC (the promotional entity run by White and the Fertittas) was under review for a possible downgrade.

Of course, the UFC's future isn't in doubt. Things look good. And In fairness to the UFC, fighter pay has increased over the years, and Zuffa has even voluntarily offered up health care coverage for its athletes. But fighters might have to wait to see a bigger share of the revenue or have more of a say in their employment status. WME-IMG just went all-in on the UFC for $4 billion. It won't be easy to support a now global infrastructure and generate enough revenue to justify that type of investment. It would be even more difficult to do that while raising pay for fighters or absorbing the additional costs that would arise if UFC fighters achieve employee status.
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UFC's $4 billion sale raises many questions about the fighters' pay and labor rights

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UFC's $4 billion sale raises many questions about the fighters' pay and labor rights

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