Eddie Alvarez is a piece of rope in a tug of war for his future. On one side is the deep-pocketed UFC, which recently signed him to an offer sheet that would put him among the highest-paid lightweight fighters ever. On the other is promotional upstart Bellator, which had a right to match the deal and believes they did so.
So what then is the issue? How can something that seems so black-and-white be so shaded in gray? It’s all in the details and the interpretations of the contract. With Alvarez in legal limbo, we attempt to explain what’s happening.
Q: What are the key points in the UFC offer to Alvarez?
A: The UFC offered him an eight-fight deal with a $250,000 signing bonus and an escalating purse/win bonus structure that starts at $70,000 for his first fight. Alvarez would also receive a cut of pay-per-view sales that would be based upon how many units of the event were sold. The UFC also stated an intention to offer him a lightweight championship match in his first bout.
Q: How does that contract rank among top UFC lightweights?
A: Alvarez would immediately become among the division’s highest-paid fighters. By comparison, champion Benson Henderson received a base salary of $39,000 and win bonus of $39,000 for his most recent fight, a UFC on FOX 5 bout with Nate Diaz (who, by the way, had a $50,000 base salary). Gilbert Melendez is believed to have the highest base salary of any lightweight, having earned $175,000 in his most recent bout, though it is unclear if he has signed a new deal or if his existing contract will make the journey with him into the UFC.
Q: Did Bellator truly match the UFC’s offer?
A: This is the whole crux of the dueling lawsuits. While Bellator and Bjorn Rebney feel that they have matched the terms of the deal, Alvarez and his team believe they haven’t matched its terms or its value. That is because of the sliding scale in place for pay-per-view bonus that rewards him with payouts that increase as buys increase. For example, based on the formula in his deal, an event that pulls 400,000 buys will net him a bonus of $200,000, while a blockbuster event that draws 1 million buys will earn him a bonus of $1.6 million.
Alvarez believes that Zuffa’s track record of pay-per-view sales offers him a clear opportunity to make more money. While Bellator is unproven in the pay-per-view market, Rebney has stated they could enter the arena and would offer Alvarez the same cut, believing that Spike could be the same great catalyst for pay-per-view growth as they were for the UFC. Regardless of that, Rebney believes Bellator does not have to match projections, but only what is guaranteed.
Q: Can the UFC submit another offer?
A: No. They essentially offered Alvarez their best available terms, which he was contractually obligated to bring to Bellator under a clause in his deal. Bellator would then be able to examine it and decide whether or not to match. So this contract will be in place over the next eight fights. The only question is which promoter will ultimately be given his services.
Q: Does this mean Alvarez truly wants to leave Bellator?
A: Not necessarily. Alvarez was interested in gauging his price on the open market rather than taking the first offer that came his way from Bellator. In doing so, he likely increased his future paydays, which was his ultimate goal. Alvarez has said that if he felt the contract was truly a match, “I’d have no problem going and fighting for Bellator.”
Within the last two weeks, Alvarez’s team told Bellator that he would come back in the fold if they could settle on a number to make up the money he felt he’d earn under the UFC’s pay-per-view bonus structure, but the two sides could not reach agreement on a figure.
Q: Why didn’t Bellator lock up Alvarez earlier?
A: Bellator made Alvarez an offer during their exclusive negotiating window with him, but he turned it down to test his value on the open market. Bellator then waived the remaining time on their exclusive window and let him take offers from elsewhere, triggering the matching period.
Q: Why didn’t Alvarez just wait until he was an unrestricted free agent to sign with the UFC?
A: Time. Most matching periods are lengthy, with some lasting over one year. Alvarez’s existing contract with Bellator gave the promotion the right to match any offer he received during a one-year period. That means that Alvarez, who turns 29 years old on Friday, would have had to sit out all of 2013 before he could sign with another organization free and clear of his Bellator commitments.
Q: How much does he stand to make?
A: That is up for dispute as well. The only money that is guaranteed is his signing bonus and fight purses. That adds up to $950,000 over the life of the eight-fight deal, though if he earned the win bonuses in his eight fights, he would make $1.65 million.
The UFC did not guarantee they would put him on pay-per-view, and even if they did, there is no way to guess how the cards he is on will sell, as pay-per-view sales fluctuate wildly depending on the strength of the overall card. Take for example, two events that took place just weeks apart in the summer of 2012. UFC 147 sold approximately 140,000 buys, a number which would have netted Alvarez not a single dime in pay-per-view bonus money. Yet had he been on UFC 148 the very next month, an event that sold about 925,000 pay-per-view units, Alvarez would have made a whopping $1,412,500 in pay-per-view bonuses.
Alvarez’s team feels that even if Bellator moves into pay-per-view, the promotion would be likely to produce events with buyrates similar to UFC 147, while in the UFC, that event was on the low end of tallies (UFC events in 2012 — excluding UFC 155 which was not available yet — averaged about 437,000 buys). With so much at stake, the legal process drags on, with both sides requesting injunctive relief that would decide Alvarez’s future.