How Bellator is a big beneficiary of UFC’s uniform deal with Reebok

Most questions regarding whether fighters will benefit from UFC’s landmark six-year contract with Reebok can’t be answered until the deal is in play and fighters can make comparisons. But what appears to almost be a sure thing, is that Bellator, and its top fighters, will benefit by suddenly being the best option for the displaced UFC sponsorship dollars.

It’s way too early to know the ramifications of UFC’s deal with Reebok. The deal announced on Tuesday essentially eliminates all other sponsors, some of which have long histories with the company, from the clothing of the fighters whenever they appear in public for UFC.

It also eliminates the famed sponsor banners, as well as the rambling post-fight interviews where fighters would thank sometimes obscure companies that often came off cheesy and never made for good television.

However, a few things are clear. Whether the UFC fighters end up benefiting from this or not won’t be known until sometime after July, when people find out if the money they are making from Reebok equaled what they were getting from sponsors on the free market. 

Several other things are common sense. A negative for the fighters who had sponsors that paid them a regular monthly check is that if they are injured, the sponsor money could have helped carry them over if there was a long time between fights. Now, you only would get sponsor money from Reebok when you fight, so being injured is a double whammy. It’s also likely a negative to fighters who have developed strong relationships with their sponsors. The positive is that a lot of sponsors are slow in paying, or may not pay at all, and this deal is supposed to include the sponsor checks coming at the time of the fight.

The role and power of managers and agents in UFC diminishes under these new conditions. One of the roles of a manager was to help procure sponsors. It’s not a secret UFC wasn’t thrilled with dealing with managers. Unless you are a name fighter, this isn’t much negotiating done when it comes to a UFC contract. Generally, Joe Silva or Sean Shelby make a fighter an offer, and they can either sign it or not.

While it’s doubtful this was the primary or secondary goal for the company in inking the deal, it does fit into a fringe benefit for UFC.

“It’s absolutely the case,” said one noted manager who asked not to be named. “It’s debatable if that was part of the intent or not.”

“The good managers always get the short end of the stick,” said a post by Dethrone, a company that sponsors a number of well-known UFC stars. “They provide a valuable service to their fighters, but unfortunately, it’s in an ecosystem that would prefer they didn’t exist, which makes there job difficult and seems to be forgotten that this is their livelihood too. There are also dips**t managers who give everyone else a bad name.”

Another huge question regards the next six months. Sponsors of UFC fighters pay what is known as the sponsor tax to the organization. Essentially, the fighters can’t be sponsored on UFC television by any company that doesn’t first pay UFC for that right.

Many of those deals, most of which are 90 days in duration, come due at the end of the year. Many sponsors like the idea of making deals with promising fighters early in their careers, so if they become major stars, they can be part of the ride with them to the top. Now, there is no future in sponsoring anyone. Many agents are asking questions regarding whether many of the dwindling existing sponsors will even bother renewing for the next six months in a lame duck role with no future, or just pull their money out now.

“It would have been a lot better if, when they announced it, it went into effect immediately, instead of a six month waiting period,” noted one manager.

“We knew this was coming,” said a post from the founder of Dethrone on the UnderGround Forum.. “We weren’t `investing in a UFC future’ when we paid the sponsor tax each quarter, we were just paying for the right to be able to pay guys to wear our stuff on UFC broadcasts for the next 90 days. In some cases trying to support a good guy, sometimes trying to align ourselves with a fighter we hoped would move the needle for us, sometimes just trying to get some air time on a good card, and sometimes even we couldn’t figure out why we did it.”

While most concede the biggest stars in UFC will be taken care of, and some may legitimately be thrilled with the change, the questions regard how the near stars and prelim fighters will make out. A lot of lower level fighters weren’t making much from sponsors anyway, particularly since UFC instituted the sponsor taxes. Sponsorship dollars have also dwindled because there are fewer viewers, at least in the U.S., of the majority of UFC events as compared with a few years ago.

There is a clear beneficiary of all this, though. That would be the few marketable names in Bellator.

For any company whose business depends on exposure on MMA telecasts, they are not shut out, because Bellator is an option. It may even be a better option, since a lot of Bellator broadcasts do similar ratings as UFC shows, and there is no Bellator sponsorship tax, so the full share of money budgeted for sponsoring fighters would go directly to fighters and to exposure on television.

With Bellator only having a handful of fighters with a real name brand, the competition to sponsor those few fighters will go way up. In the long run, this also makes Bellator a potential stronger option for fighters with some name value, since there will be fewer major stars than ever before who will be allowed to wear sponsor logos onto televised fights.

If that trickles down to mid-level fighters in Bellator, it can become a key bargaining chip, both in keeping fighters and signing new fighters.

“This doesn’t mean we’re going to go and pay Bellator guys double what we would have paid them yesterday,” said the Dethrone post. “We’d certainly like to align ourselves with a new batch of fighters in other orgs, but we can only offer them what make sense for our business and they can only agree to deals that make sense for them. That’s how it should be.”

“The sponsorship situation at Bellator wasn’t very good,” said agent Mike Kogan. “There were not a lot of companies on the free market that were sponsoring their athletes. Then most of the T-shirt sponsors were paying tax to the UFC, and it only left so much money to the fighters. If I’m running the company and if I’m going to pay UFC a quarterly tax, I don’t have as much money to spend on the fighters. I think this is going to be a good thing for Bellator fighters.

“Bellator’s ratings are no worse than UFC’s, and sometimes even better, and there’s no tax. The company’s left behind can come in and have a global presence and stay in the market, I think,” said Kogan,

“I think there’s no choice,” said another agent. “It’s going to drive a lot of them over there. I do think it’ll create opportunities for Bellator. I can’t see how it wouldn’t.”

Kogan in specific brought up the case of UFC heavyweight champion Cain Velasquez, who had strong sponsors, including Affliction. Velasquez was able to make a regular salary the past year plus while he was out of action due to a series of injuries. And with Reebok, he, as heavyweight champion, still may be in the same boat since the champions are expected to negotiate their own individual deals.

But for a fighter who is not champion, Reebok is only paying them when they fight.

Fighter pay being determined by ratings is also an issue which raised a red flag to Kogan, who has worked with Nate Diaz. Diaz, he noted, was taken out of the ratings by UFC, and then when he signed to face Rafael dos Anjos on Dec. 13 on FOX, he was put back in, but at a much lower position than he was taken out of. But he didn’t care because he didn’t think the ratings meant much of anything. He was still facing one of the top contenders in dos Anjos.

Diaz is currently ranked No. 14, well behind No. 4 Donald Cerrone, who he solidly beat a few years back. He’s also behind Eddie Alvarez, who has never won in UFC and who solidly lost to the same guy (Cerrone) that Diaz solidly beat in his lone UFC outing.

“He didn’t care because two weeks ago, it didn’t mean diddly-squat,” said Kogan. “Now it matters. If he was No. 5, he would get a lot more than No. 15.”

UFC says they are planning to revamp their rankings.

Most questions regarding whether fighters will benefit from UFC’s landmark six-year contract with Reebok can’t be answered until the deal is in play and fighters can make comparisons. But what appears to almost be a sure thing, is that Bellator, and its top fighters, will benefit by suddenly being the best option for the displaced UFC sponsorship dollars.

It’s way too early to know the ramifications of UFC’s deal with Reebok. The deal announced on Tuesday essentially eliminates all other sponsors, some of which have long histories with the company, from the clothing of the fighters whenever they appear in public for UFC.

It also eliminates the famed sponsor banners, as well as the rambling post-fight interviews where fighters would thank sometimes obscure companies that often came off cheesy and never made for good television.

However, a few things are clear. Whether the UFC fighters end up benefiting from this or not won’t be known until sometime after July, when people find out if the money they are making from Reebok equaled what they were getting from sponsors on the free market. 

Several other things are common sense. A negative for the fighters who had sponsors that paid them a regular monthly check is that if they are injured, the sponsor money could have helped carry them over if there was a long time between fights. Now, you only would get sponsor money from Reebok when you fight, so being injured is a double whammy. It’s also likely a negative to fighters who have developed strong relationships with their sponsors. The positive is that a lot of sponsors are slow in paying, or may not pay at all, and this deal is supposed to include the sponsor checks coming at the time of the fight.

The role and power of managers and agents in UFC diminishes under these new conditions. One of the roles of a manager was to help procure sponsors. It’s not a secret UFC wasn’t thrilled with dealing with managers. Unless you are a name fighter, this isn’t much negotiating done when it comes to a UFC contract. Generally, Joe Silva or Sean Shelby make a fighter an offer, and they can either sign it or not.

While it’s doubtful this was the primary or secondary goal for the company in inking the deal, it does fit into a fringe benefit for UFC.

“It’s absolutely the case,” said one noted manager who asked not to be named. “It’s debatable if that was part of the intent or not.”

“The good managers always get the short end of the stick,” said a post by Dethrone, a company that sponsors a number of well-known UFC stars. “They provide a valuable service to their fighters, but unfortunately, it’s in an ecosystem that would prefer they didn’t exist, which makes there job difficult and seems to be forgotten that this is their livelihood too. There are also dips**t managers who give everyone else a bad name.”

Another huge question regards the next six months. Sponsors of UFC fighters pay what is known as the sponsor tax to the organization. Essentially, the fighters can’t be sponsored on UFC television by any company that doesn’t first pay UFC for that right.

Many of those deals, most of which are 90 days in duration, come due at the end of the year. Many sponsors like the idea of making deals with promising fighters early in their careers, so if they become major stars, they can be part of the ride with them to the top. Now, there is no future in sponsoring anyone. Many agents are asking questions regarding whether many of the dwindling existing sponsors will even bother renewing for the next six months in a lame duck role with no future, or just pull their money out now.

“It would have been a lot better if, when they announced it, it went into effect immediately, instead of a six month waiting period,” noted one manager.

“We knew this was coming,” said a post from the founder of Dethrone on the UnderGround Forum.. “We weren’t `investing in a UFC future’ when we paid the sponsor tax each quarter, we were just paying for the right to be able to pay guys to wear our stuff on UFC broadcasts for the next 90 days. In some cases trying to support a good guy, sometimes trying to align ourselves with a fighter we hoped would move the needle for us, sometimes just trying to get some air time on a good card, and sometimes even we couldn’t figure out why we did it.”

While most concede the biggest stars in UFC will be taken care of, and some may legitimately be thrilled with the change, the questions regard how the near stars and prelim fighters will make out. A lot of lower level fighters weren’t making much from sponsors anyway, particularly since UFC instituted the sponsor taxes. Sponsorship dollars have also dwindled because there are fewer viewers, at least in the U.S., of the majority of UFC events as compared with a few years ago.

There is a clear beneficiary of all this, though. That would be the few marketable names in Bellator.

For any company whose business depends on exposure on MMA telecasts, they are not shut out, because Bellator is an option. It may even be a better option, since a lot of Bellator broadcasts do similar ratings as UFC shows, and there is no Bellator sponsorship tax, so the full share of money budgeted for sponsoring fighters would go directly to fighters and to exposure on television.

With Bellator only having a handful of fighters with a real name brand, the competition to sponsor those few fighters will go way up. In the long run, this also makes Bellator a potential stronger option for fighters with some name value, since there will be fewer major stars than ever before who will be allowed to wear sponsor logos onto televised fights.

If that trickles down to mid-level fighters in Bellator, it can become a key bargaining chip, both in keeping fighters and signing new fighters.

“This doesn’t mean we’re going to go and pay Bellator guys double what we would have paid them yesterday,” said the Dethrone post. “We’d certainly like to align ourselves with a new batch of fighters in other orgs, but we can only offer them what make sense for our business and they can only agree to deals that make sense for them. That’s how it should be.”

“The sponsorship situation at Bellator wasn’t very good,” said agent Mike Kogan. “There were not a lot of companies on the free market that were sponsoring their athletes. Then most of the T-shirt sponsors were paying tax to the UFC, and it only left so much money to the fighters. If I’m running the company and if I’m going to pay UFC a quarterly tax, I don’t have as much money to spend on the fighters. I think this is going to be a good thing for Bellator fighters.

“Bellator’s ratings are no worse than UFC’s, and sometimes even better, and there’s no tax. The company’s left behind can come in and have a global presence and stay in the market, I think,” said Kogan,

“I think there’s no choice,” said another agent. “It’s going to drive a lot of them over there. I do think it’ll create opportunities for Bellator. I can’t see how it wouldn’t.”

Kogan in specific brought up the case of UFC heavyweight champion Cain Velasquez, who had strong sponsors, including Affliction. Velasquez was able to make a regular salary the past year plus while he was out of action due to a series of injuries. And with Reebok, he, as heavyweight champion, still may be in the same boat since the champions are expected to negotiate their own individual deals.

But for a fighter who is not champion, Reebok is only paying them when they fight.

Fighter pay being determined by ratings is also an issue which raised a red flag to Kogan, who has worked with Nate Diaz. Diaz, he noted, was taken out of the ratings by UFC, and then when he signed to face Rafael dos Anjos on Dec. 13 on FOX, he was put back in, but at a much lower position than he was taken out of. But he didn’t care because he didn’t think the ratings meant much of anything. He was still facing one of the top contenders in dos Anjos.

Diaz is currently ranked No. 14, well behind No. 4 Donald Cerrone, who he solidly beat a few years back. He’s also behind Eddie Alvarez, who has never won in UFC and who solidly lost to the same guy (Cerrone) that Diaz solidly beat in his lone UFC outing.

“He didn’t care because two weeks ago, it didn’t mean diddly-squat,” said Kogan. “Now it matters. If he was No. 5, he would get a lot more than No. 15.”

UFC says they are planning to revamp their rankings.