MMAPayout.com hasn’t done a Payout Revisited segment in quite some time, but upon reading an article from the Canadian Press on the cost of living for high performance athletes, I thought it might be time to revisit one of my first and most talked about pieces on fighter payouts.

Minimum Fighter Payouts was a part of a much larger Fighter Salaries series in which I talked about all things related to fighter compensation. If you haven’t read the series or don’t remember what I’m talking about, you might get a kick out of running through the gamut again. Here’s a snippet from Minimum Fighter Payouts:

A major interest of the fighters is to be able to provide for themselves and their families. And from a business perspective, it’s probably within the UFC’s interest to provide top-notch fights while also not having to pay anything more than it has to. Talking about the interests of the fighters begs the question, what kind of expenses do they need to provide for? Therefore, taking into consideration monthly expenses such as the money spent on housing, food & supplements, transportation, and saving contributions I have come up with the following rough, yearly before tax requirement that fighters need to meet in order to be financially secure: A simple estimate of fighter expenses on a monthly basis (see footnotes following article for explanation of estimate) makes it easy to see why the minimum payouts need to be raised in order to meet their interests (some would call them basic needs). A fighter signed to one of these $3,000 show/win contracts that fights four times a year is lucky to make $24,000 before tax. Keep in mind that there are discretionary and other performance bonuses in a fighters contract, but that they are in no way guaranteed. The sponsorship money for low-end fighters has to be considered minimal, although to be fair there really aren’t a lot of estimates kicking around right now. Also, theindustry standard for an agent’s percentage of a fighter’s purse is around 20%. All of the above were not included in the monthly expense calculations because ultimately they were not necessary to prove my point. However, they deserve mention as additional food for thought. The Solution Get rid of the show/win contracts altogether by moving to a flat-fee and institute a minimum fight payout for all UFC contracts at $10,000/fight.

You’ll understand why I wanted to revisit the issue of minimum fighter payouts when you read the Canadian Press article discussing the living expenses of high performance athletes:

VANCOUVER — High performance amateur athletes in Canada earn about $10,000 a year less than what it costs them to live, train and compete, according to a report prepared for the federal government. Carded athletes reported an average income of $29,649 in 2008, according to the study conducted by Ekos Research Associates Inc. The average Canadian’s personal income that same year was approximately $38,000. At the same time, athletes said they were spending about $500 a month more in sport-related expenses than in 2004, when the last study was conducted. Add in living costs and shelter and the average athlete faces $39,576 in expenses.

Payout Revisited:

I always wanted the chance to revisit this article, because I felt as though it was misunderstood. I did not suggest that a “minimum wage” be implemented within the regulatory system for mixed martial arts. This would imply further government action and the setting of a standard across the industry that most promotions would ultimately be unable to meet. It would be a mess.

However, I did suggest implementing a payout floor through which the UFC would voluntarily pay every fighter at least $10,000 to show. My rationale here was simple: it costs roughly $40,000 a year for these guys to live and train; so, guarantee the fighter $10,000 a fighter (or $40,000/year if he fights in an average of four bouts per year); then, let his sponsorship money cover the difference created by taxes and agent fees.

What’s the benefit to the UFC? A superior in-cage product. If the fighters are able to focus on training – and not a second job – the caliber of fighting will increase to the point that fans see a noticeable improvement in the overall fight product. The quality of the fight product correlates pretty strongly with revenues; for evidence of this, look no further than a comparison of the buyrates between title and non-title bouts.

Moreover, an increase in minimum fighter payouts is also an act that’s bound to generate goodwill within the fighter ranks. This is something the UFC could truly benefit from given its unpopular stance on DVD and video game royalties or the entire sponsorship approval process.

How is this feasible? There are typically only 2-3 fighters per card that make less than $10,000 per fight. If you consider the average minimum payout in the UFC is currently ~$6,000, you’re probably looking at a maximum of an extra $12,000 per (or $360,000 per year). That’s a $360,000 investment to secure the future of the sport.

Might this commit the UFC to even more money in bonuses? No. To ensure that the UFC pays out no more than the extra $360,000 (or whatever rough approximation that may be), it could simply shift the structure of these contracts towards more guaranteed money and less bonus money. For example, a fighter that’s currently signed to a $7,000 show/win contract would instead make $10,000 to show and $4,000 to win (rather than $10,000 show/win or $10,000 show and $7,000 to win).

Why isn’t the UFC already doing this? The UFC may not be guaranteeing fighters a minimum of $10,000 per fight, but its system of discretionary bonuses may very well already pay every fighter on the card a minimum of $10,000. The truth is we don’t know exactly how much each fighter is making. But we do know what each fighter is being guaranteed, and that’s enough to make an argument from the standpoint of cost-of-living.

I could go on for another day about all the arguments for and against increased fighter pay – there are many – but I’ve largely covered a lot of this topic in the aforementioned Fighter Salaries series. If you’ve got some time over the weekend, take a look (it’s lengthy…).