Emanuel tries to defend fighter pay, as 5 boxers earn more than entire UFC roster

Ari Emanuel defended UFC fighter pay by saying Conor McGregor has topped Forbes’ list, despite the former champion making most of his money outside the sport.

The UFC has been Endeavor’s main source of growth as of late, and they’ve touted its cash cow and the recent financial records the MMA leader have set lately. With their lucrative sports property constantly bringing in big money, a fair criticism the company has received is about the share its fighters get in return.

Endeavor CEO Ari Emanuel tried to address this issue during a recent Goldman Sachs Communacopia conference. He says athlete compensation has gone up “600% since 2005,” and then gave Conor McGregor topping the Forbes highest paid athlete list as a way to defend low fighter pay.

“They just did a recent study of top paying athletes. The number one athlete was a UFC fighter,” Emanuel said (via Variety). “They’re making money on fight kits, paid marketing opportunities we’re creating for them with our sponsors, revenue for NFTs, and we’re investing money in a performance institute to rehabilitate them, [focus on their] diet, etc.”

Emanuel has already brought up that same line about fighter pay growth of “600% since 2005” in the past, and it’s worth giving proper context to it. In that same time frame, growth in revenue is eighteen-fold, and for EBITDA it’s a whopping 63 times bigger. While fighters are definitely making more than they did in 2005, so are the promoters. In fact, the gap between the fighters and the promotion has only increased over the last 15 years.

Emanuel also brought up fight kits and sponsorship opportunities, when their uniform deals actually ended the previous rights of fighters to bring in endorsements of their own to events. UFC also signed a $175 million deal to have every fighter wear Crypto.com logos on all their uniforms, but the athletes never received a cut from it.

As for bringing up McGregor topping a Forbes list to defend fighter purses, there’s two major things to point out. The most obvious being that almost all of that money wasn’t from his pay from the UFC. $150 million is said to be from the lucrative buyout of his Proper Twelve whiskey, while $8 million is estimated to be from sponsors. The second is that Forbes has also significantly overestimated McGregor’s purses through the years as well:

It’s worth noting that the UFC anti-trust lawsuit has revealed a lot of financial information, and it showed that Forbes’ previous estimates for McGregor’s past purses were inaccurate and significantly inflated. It’s also curious that they estimated McGregor to have made $32 million to fight Cerrone in 2020, then supposedly earned $10 million less for his next bout with Poirier, which was far more successful on pay-per-view.

If we don’t count the one-time pay McGregor got from his whiskey business being sold, he wouldn’t be on that list, nor would any other UFC fighter, because their paychecks won’t come close to other sports stars.

Even compared to a more similar sport, UFC stars still earn much less than their boxing counterparts. In fact, five boxers alone could possibly make more than the entire UFC roster this year.

Bloody Elbow’s business expert John Nash breaks it down:

“We know that for much of the UFC’s history under Zuffa the share of revenue going to the fighters has been around 20% or less. The company projected back in 2016, when it was purchased by group led by WME/Endeavor, that they would be able to maintain that 20% share into the future. This 20% included both fighter compensation and costs, such as medicals, insurance, and USADA drug testing.

While we don’t know the exact percentage paid out today, we do know that the New York Post reported that for 2019 the UFC paid out around 16% of their revenue to the fighters. We can also make an educated estimate based on the data available to us.

According to Morgan Stanley’s recent research report, the UFC is currently projected to generate $882 million in revenue in 2021, while their EBITDA will be $473 million (a 54% EBITDA margin) and their total direct and SG&A expenses will be $409 million.

In 2015, the UFC generated $609 million in revenue and had an EBITDA of $189 million, leaving us with $420 million in expenses of which $114 million were fighter costs (of which $99 million was for fighter compensation). This leaves us with $306 million in non fighter expenses for that year.

WME projected after purchasing the UFC that they would be able to enact from $62 million to $80 million in cost saving cuts to these expenses. If they had been successful in enacting these cost saving measures then non fighter costs today would fall between $226 million and $244 million, leaving between $165 million and $183 million for fighter compensation, or 18.7%-20.7% of that $882 million in revenue.

These numbers though don’t take into consideration inflation, which will have surely raised those prices since 2015. The Consumer Price Index has risen 15% since then. If we adjust our costs for inflation, then total expenses would be between $235 million and $256 million this year. In this case, fighters’ share of revenue would be $153 million and $174 million or 17.3% – 19.7% of the total revenue.

If Endeavor was unable to cut as much as projected here, then the fighters’ share of revenue will be even lower as non-fighter expenses are increased.

So using the estimates above, UFC fighter expenses are projected to make anywhere from $153 to $183 million. This would include a projected $25 million in fighter expenses such as Outfitter payments, USADA drug testing, insurance and other fighter costs, excluding compensation. In comparison, it is very likely that a handful of boxers will together be paid more in 2021 than for the entire UFC roster combined.”

Who are those five boxers?

• Canelo Alvarez is projected to make “more than $40 million” versus Caleb Plant and is reported to have made $35 million versus Billy Joe Saunders.
• Manny Pacquiao was said to be guaranteed around $20 million for his last bout.
• Deontay Wilder and Tyson Fury and reportedly going to make another $50 million together, although with a 60-40 split in a favor of Fury this time instead of the 50-50 split they had last time.
• Anthony Joshua will reportedly collect between $20 million to $34 million versus Oleksandr Usyk, depending on the PPV sales.

Even if you don’t include the tens of millions in purses of their opponents, the five fighters above alone will reportedly earn around $179 million this year, which is already 20.3% of the UFC’s projected revenue for 2021.

That total could be a lot more if you switch in Floyd Mayweather instead, who had an exhibition bout with Logan Paul that drew a million PPV buys. He reportedly earned $35 million, plus several millions more in sponsorship (Mayweather claims patches on his trunks alone were $30 million, while Paul says he got at least $10 million in sponsors). Jake Paul also had two lucrative bouts this year, and is possibly looking for a third. There are several other boxers that command multi-million paydays as well.

The competitive environment in boxing means that its stars take home the lion’s share of event revenue compared to the promoters, while it’s the exact opposite for UFC promoters that keep most of the pie. Filings in the Le et al v Zuffa, LLC antitrust lawsuit showed that between 2014-2016 Golden Boy Promotions paid between 56%-64% of all their revenue to their boxers, while rival promotion Top Rank, paid from 63% to 80% between 2013-2016.

Other major sports leagues like NBA and NFL also pay their athletes close to 50% of the revenue. UFC doesn’t even give half of that, with the company’s own documents showing that they wanted to keep it at just 17% for years.

All in all, it’s a bit telling how Emanuel’s main defense for low fighter pay is an outdated statistic, and a list where the one MMA fighter only got included because he managed to sell a successful business outside of the UFC.