Escaping the champion’s clause? Ngannou’s unique opportunity helped by UFC contract changes

The UFC has made changes to their standard contract, giving even champions a chance to now fight out their contracts

There is a lot on the line at UFC 270. The UFC heavyweight championship. Ciryl Gane’s undefeated record. And Francis Ngannou’s future, for this is the last fight on his current agreement.

If Ngannou defends his title, for the first time in the promotion’s history, the UFC is expected to utilize the champion’s clause, a provision that allows them to extend a fighter’s contract by either three fights or one year if they are a UFC champion at the expiration of their current deal. In the past it was often assumed that the champion’s clause made a fighter’s contract effectively perpetual, thereby forcing them to resign. But Ngannou revealed a potential alternate possibility.

In an interview with ESPN’s Brett Okamoto, Ngannou disclosed that his contract “is over after 5 years.” According to Ngannou he signed the agreement in December of 2017, but since UFC promotional agreements generally commence on the first fight of an agreement, which for Ngannou was UFC 220, the 5 year termination date should be January 20, 2023. A full year from now.

Ngannou is not the only one with this maximum period in their contract, for it now seems to be the new standard. While this provision was made public some time ago, the information was not widely shared and few thought it applied to all the UFC promotional agreements. But starting at some point in 2017 the UFC made several changes to their contracts. Before that, from at least 2011 through 2016, the UFC standard contracts remained remarkably similar to the one disclosed in Eddie Alvarez’s suit with Bellator. To see what those were like Jonathan Snowden provided an excellent breakdown in Bleacher Report.

There was one noticeable change during this period, which was made to the provision commonly called the champion’s clause. This was done right around the filing of the Le et al v Zuffa, LLC complaint. Between 2011 and 2014 the champion’s clause read that it ended on “the later of (i) one (1) year from the Termination Date; or (ii) the date on which Fighter has participated in three (3) bouts” but since 2014 it has read that it ended on the “earlier” of those two possibilities.

There have been additional changes since then. I have been able to examine several contracts — at least one for every year from 2011 through 2021 — and have noticed that starting at least midway through 2017 there was an overhaul of the agreement, with extensive changes in the language used and several specific new clauses added. In addition to the contracts in my possession, I also asked several fighters and managers to confirm the presence of these changes in their own contracts, which they did. Based on the responses, it would seem these changes were present in every contract that had been signed after at least July of 2017 — from fighters debuting in the UFC to those now contending for titles. The presence of these changes in so many agreements (and lack of their absence) would suggest these provisions are now the new standard and are included in almost all UFC contracts today.

To help me understand the potential impact of these changes, I asked Kurt Emhoff, a sports and entertainment attorney with a long history as a manager of boxers, and Sam Spira, a veteran manager and attorney for fighters like Randy Couture, Tyron Woodley, and Victor Ortiz, to look over some of the articles from a few of the more recent UFC contracts. One of my first questions for them was if they thought these changes were in response to the antitrust lawsuit.

“Without a doubt,” was Spira’s response. Emhoff seems equally sure, pointing out that, “The complaint in the [Le et al v Zuffa, LLC] lawsuit was very explicit in claiming that certain UFC contract provisions were onerous. It’s not hard to imagine that these changes were the direct result of [the antirust lawsuit].”

The date of the changes also seems like a giveaway to their possible purpose. The antitrust lawsuit and potential class action filed by Cung Le, Jon Fitch, and others covers a period from December 16, 2010 until June 30, 2017. A second antitrust lawsuit filed by Kajan Johnson and CB Dollaway starts up on July 1st, 2017 and continues today. The fact that the UFC made changes around the time separating the two potential class periods suggests that perhaps they were trying to split the two classes and/or mitigate damages going forward.

So what were these changes that were made and what impact might it have on the fighters? Here are a few of the more noteworthy ones.

RECITALS

The introduction to the new promotional agreement includes language that lays out the relationship between the UFC and the fighter. According to the section:

“ZUFFA is engaged in the business of organizing, arranging, staging, conducting, publicizing and promoting mixed martial arts (“MMA”) competitions” and “maintains a worldwide network of content distribution platforms which publicize, promote and exhibit ZUFFA’s MMA competitions to a worldwide audience.” In addition “ZUFFA with first class MMA fighters engaged in highly competitive MMA competitions. represents MMA fighters in the arranging of fights and in the promotion of their services as MMA competitors” whom “desires to obtain public exposure through fights exhibited around the world, and via public appearances, merchandising and promotional activities and related activities.” The “Fighter acknowledges and agrees that ZUFFA’s business operations…are designed to afford Fighter opportunities to achieve such goals and are intended to maximize the value of Fighter’s services and standing in the MMA community.”

The recital seems to be arguing that the UFC is something like a two-sided market, where the fighters are a user of the market, just as the fans are. The ruling in Ohio v American Express means that if the courts accepted that the UFC was a two-sided market then a successful antitrust argument would have to show how both sides of the market were harmed. This would obviously make such cases harder to win.

TERMS

Perhaps the most noteworthy change is the inclusion of a sunset clause. All of the recent contracts had language inserted that prevented the UFC from extending the agreement beyond five years after the effective date. This five year maximum also applied to extensions from the champion’s clause or tolling. The exception was from retirement or disability, which had a separate 5 year maximum suspension periods, at the end of which the agreement would terminate.

Every manager or attorney I spoke to interpreted this clause the same way: as putting an absolute maximum duration to the contract that even the other clauses in the terms section could not extend past.

This five year maximum was somewhere in all the agreements I read, as well as in all the contracts I asked others to check, although I was informed that some more recent agreements had an even shorter duration of only four years maximum. This was for both the contract period and suspension period. I did not see these shorter versions for myself, though.

Some of the contracts also limited the use of the six month extensions, so that there was a limit to the number of times or total duration that a contract could be extended for turning down fights. This provision was not in all the contracts though, so it’s hard to say if it widely used or was limited to only a few fighters.

The new language and additional provisions represent a dramatic change from previous contracts. It has been argued before that UFC contracts could be perpetual if a fighter refused to fight out the remaining fights on the agreement. There now appears to be clear end dates to all them (even if five years is still a relatively long time in the career of a fighter), something that has long been viewed as one of the most obvious fixes for fighter pay.

At the very least we should no longer see a repeat of a Nick Diaz, who, after fighting in January of 2015, was still under contract with the UFC when he returned for UFC 266 this last September. A period of almost 6 years.

Still the potential impact of these changes shouldn’t be underestimated. As Emhoff pointed out, “[Extensions] exist in boxing too. The promoters put in the provisions so that guys can’t wait the contract out. If you know it will just be tolled (extended) you’re more likely to accept a fight because the alternative is just delaying the end of the deal. But if there’s a definitive end date coming up a fighter has the option of just waiting until the contract is done and then renegotiating something more favorable.”

“[Francis Ngannou] is in a very interesting spot. If he has one of these [five-year limits] then he has the option of turning down fight offers from them and let the contract come to an end. If he thinks there more money to be made with someone else then just waiting until it runs out might be a good option.”

What that means is that if Ngannou wins this last fight and retains his belt he is no longer compelled to fight again in order to have the chance to test the market. Instead he can merely wait out the year preserving his status as the UFC champion, a position where he is at his most valuable.

This option should not be limited to just Ngannou. We know that Georges St-Pierres said last July that he has less than two years left in his contract, which is roughly five years after he announced his retirement in February of 2019. Over the next couple of years, we may see other well known fighters, after reaching the fourth year of their contract, decide it best to wait out the last year before the sunset provision terminates it. Where before they would be compelled to continue fighting until finished with all the fights on their agreement, they could now stop after a win and preserve their value for the open market.

COMPENSATION

A minor but interesting change is seen in the payment structure. Previously, the contracts called for the UFC to “pay Fighter’s Purse and the Win Bonus, if applicable, within twenty-four (24) hours of the completion of each Bout.” That now reads for the UFC to pay “within seventy-two (72) hours of the completion of each Bout.” In addition, the older contracts allowed for a payment to be withheld only at the suggestion or recommendation of an Athletic Commission. The newer contracts allow for payment to also not be made on time if a fighter “tests positive for any Controlled Substance (as defined) in a pre-fight and/or post-fight drug test.”

Also, the standard pay-per-view bonus is apparently unchanged. The typical pay-per-view bonus (for the few fighters that have it in their contracts) is still paid out to a fighter defending a UFC title and championship belt, and covers any domestic pay-per-view buys plus any international that charge at least the equivalent of $40 US after conversion. Based on the sample of contracts available to me, the standard bonus remains:

One dollar ($1.00) for each pay-per-view buy between 200,000 buys and 400,000 buys; and Two dollars ($2.00) for each pay-per-view buy between 400,000 buys and 600,000 buys; and Two dollars and Fifty Cents ($2.50) for each pay-per- view buy over 600,000 buys.

EXCLUSIVE NEGOTIATION PERIOD

None of the contracts I examined contained an exclusive negotiating period, a provision that 100% of the contracts signed in 2015 had. This is of importance since the exclusive negotiation period was cited in the antitrust lawsuit as one of the many means by which the UFC foreclosed on elite MMA fighters. Previously, this provision required a fighter to “negotiate exclusively with ZUFFA regarding the extension or renewal of the Term for a period of ninety (90) days following the expiration of the Term.”

The contracts still contained the right of the UFC to match any offers received by the fighter over the next 12 months though. Based on the wording of the sunset clause, the right to match likely still applies even after the termination of an agreement because of the five year maximum duration.

I was told, but did not see for myself, that some contracts still had the three-month exclusive negotiating period, but these contracts also had only a four-month right to match periods instead of the typical 12 month.

FIGHTER PROMOTIONAL MATERIAL

A somewhat common complaint from fighters and their management over the years has been the lack of material from their UFC fights being made available to them for self promotion. In the past fighters would need to ask for permission from the UFC in order to use any video or images from their fights for, as an example, their appearances on a sports show on their local channel. This apparently has changed.

While the fighter is under contract with the UFC, the promotion will provide them with 3 promotional stills and 3 video clips of up to 20 seconds each. This material cannot be used in any manner for commercial purposes, and are apparently intended for use by the fighter on their webpage, in social media, and elsewhere, as a means to promote themselves and their brand.

Of course, there are plenty of strings attached to the use of this media. As Spira notes, while the “ability to use clips looks good on its face, it’s still subject to [the UFC’s] discretion.” The fighter can’t use the clips for any sort of commercial venture, such as with a sponsor or merchandise, and they lose access to the clips as soon their contract is terminated.

MERCHANDISE

Instead of being a separate addendum, the merchandise agreement is now part of the standard agreement. In it, it spells out that merchandise royalties “shall be equal to (i) fifteen percent (15%) of Gross Revenue (as defined herein) for certain Merchandise as provided hereunder, and (ii) thirty percent (30%) of Net Revenue (as defined herein).” It also includes a paragraph stipulating Zuffa’s right “to use, publish, reproduce, distribute, display and exhibit” a fighter’s tattoo in any manner.

The biggest change from the previous merchandise agreement revolves around the duration. The UFC has the right to use a fighter’s identity in video games and merchandise for the duration of the contract plus an additional two years (the “Post-Term Use Period’) after the termination of the agreement. This is a noticeable change from the previous image rights agreements, which were infamously perpetual.

For the video games, any payments for use of a fighter’s identity are still discretionary. Meaning fighters are not guaranteed pay for appearing in the UFC game.

---

While these changes may not seem like much, they are pretty remarkable considering the history of the UFC. In fact, the UFC’s contracts now likely represent the best promotional agreements in MMA, which is something that Spira points out will hopefully have a positive impact across the industry.

“As the market leader it will be important for other promoters to follow [the UFC’s lead] here.”

These changes mark a small but important step in the right direction, and soon enough, we could be seeing its actual impact for fighters. Will Francis Ngannou be the first high profile example of this? Well it seems like that could be just one of the many things riding on the result of UFC 270.