UFC Finances: How much does Jon Jones make fighting for the UFC?

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And how much is this compared to what Jones brings in?

Over the last few days a spat between the UFC’s president, Dana White, and the promotion’s light heavyweight champion, Jon Jones, has played out in the public’s eye. According to Jones, he had made what he thought was the understandable request for a new, higher purse in return for going up in weight to fight Francis Ngannou. This was said to be rejected outright by the UFC, with the discussion never even getting around to money.

White’s response was to claim that Jones had asked for “an obscene amount of money,” one that was in the neighborhood of what Deontay Wilder received to fight Tyson Fury — $30 million guaranteed according to some reports. Jones has blasted this as a lie, and followed up by saying he would’ve been more than happy to get even half of that. He has since asked for his release and announced that he is relinquishing his UFC title.

Much of the debate, which both Daniel Cormier and Chael Sonnen have weighed in on, has boiled down to how much Jones asked for and if it was too much.

So the big question is what should Jon Jones be paid?

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MARGINAL REVENUE PRODUCT

When trying to determine a fighter’s worth, it is most helpful to know what is their Marginal Revenue Product (MRP).

MRP is the additional revenue created from the addition of one unit of input. A very simple example is someone is hosting a concert festival in which they sell 10,000 tickets at $50 apiece. But then they book a classic rock band that leads to an additional 5,000 tickets sold. That band’s MRP would be $250,000 ($50 x 5,000). And if the promoter then booked a pop singer that led to an additional 20,000 tickets being sold, that person’s MRP would be $1 million ($50 x 20,000).

In theory, since it was the addition of those musical acts that led to the extra sales, they should receive the majority of their MRP. The same should hold true for fighters. The more revenue they add to the UFC’s revenues, the more they should get paid.

Last year, Paul Gift published “Moving the Needle in MMA: On the Marginal Revenue Product of UFC Fighters,” a paper that looked at UFC fighters’ MRPs. He found that the vast majority of revenues were produced by a very small number of fighters, and that the compensation these top fighters received was but a fraction of the what they added to the company’s bottom line. According to Gift, out of the 509 fighters that had appeared on a PPV main card between January 1, 2006, and March 3, 2018, the top 44 had earned on average just 8.5% of their MRP.

Gift also found that a very small number of fighters in a very few fights generated a large amount of additional residential PPV revenue. Approximately 5% of all fighter-bouts added $5 million or more in residential PPV, and 1.5% added $10 million or more to the event’s revenue. This means that during the time period looked at by Gift, approximately 4 fighter-bouts a year during a typical 13 PPV year would add at least $10 million in residential PPV.

THE MRP OF JON JONES

A simple way to make a rough estimate Jones’s MRP would to take the lowest gate figure and the lowest PPV revenues for an event in a particular year – this would represent the UFC’s variable revenue floor – and then deduct those amounts from any other event’s gate and PPV revenue. The difference would in theory be the MRP for all the fighters on that event. Since Jones was the primary attraction for these events, it stands to reasons that the majority of this additional revenue could be attributed to him.

Based on residential PPV sales and gate, I’ve estimated that the eight PPV events headlined by Jones from 2012-2017 did almost $108 million in revenue above the UFC’s floor. That’s an average of approximately $14 million in additional revenue per event headlined by Jon Jones.

Two events in particular did well above the UFC’s floor. These were Jones’s two matches with Cormier. UFC 182 generated $23.8 million more than the UFC’s floor and UFC 214 generated $27 million above.

Now obviously, we can’t ascribe all this additional revenue to Jones. But if we say that his presence is responsible for just 50% of that additional revenue, then Jones’s MRP would have averaged $7 million from 2012-2015. And for his two Cormier fights, UFC 182 and UFC 214, his MRP would have been $11.9 million and $13.5 million respectively.

Photo by Sean M. Haffey/Getty Images

DOES JONES MAKE HIS MRP?

So the question is how much does he make? The closer we are to a perfectly competitive market, the closer Jones’ pay would be to his MRP.

It’s hard to know the exact figure, and the unsealed exhibits in the antitrust case have been careful not to release too much individual fighter information. But what has been revealed does allow us to estimate what the maximum amount he could have earned fighting from 2012-2017.

In a document titled “Project Basquiat” the UFC broke down what share of revenue the top 20 highest paid fighters made in 2012-2015. I examined this document in a previous post.

Based on the information provided, we can estimate what was his maximum potential income was for each year, based on what the highest paid UFC fighter made in each of those years.

In that same Project Basquiat document, the UFC estimated that the highest paid fighter would earn $15 million in total for 2016. While this fighter is most likely Conor McGregor (who was scheduled at the time for only two fights that year), it sets an upper limit for what Jones could have made that year. With that projection having been made while Jones was scheduled internally by the UFC for fights that year, it means that if he too was expected to earn $15 million in 2016 than the UFC expected his pay to average $5 million per fight that year. In the end,

In the end he only fought once that year, in a title defense against Ovince Saint Preux. His rematch with Daniel Cormier, which was scheduled to headline UFC 200, was postponed until 2017. While it’s possible that his pay was increased in the interim year, It seems much safer to assume that would not be the case, considering how he was coming off a suspension and had been stripped of his title.

In addition, a regression summary in Hal Singer’s export reports from the antitrust lawsuit reveals that the most a UFC fighter earned for a single bout until at least 2017, was $8 million. (This is thought to be Brock Lesnar at UFC 200.) This would eliminate Jon Jones from any chance at being the highest paid UFC fighter in 2015, since he only had 1 fight that year. (The highest paid fighter for 2015 is thought to have been Ronda Rousey.)

Thanks to the unsealed expert reports, and other sources we can place McGregor’s total UFC pay for two bouts in 2014 at around $7 million. Since the minimum amount earned by a fighter in the top 5 highest paid of 2015 had to have been at least $2 million, that would mean that Jones’ purse could not be more than $7 million — and was likely much lower than this.

Here then is the absolute maximum Jones could have possibly earned per year:

2012 vs Rashad Evans and Vitor Belfort: $5 million

2013 vs Chael Sonnen and Alexander Gustafsson: $8.2 million

2014 vs Glover Texeira: $1.8 million

2015 vs Daniel Cormier: $7 million

2016 vs Ovince St. Preux: $5 million

2017 vs Daniel Cormier: $5 million

The total earned by Jones from the UFC between 2012-2017 would be no more than $32 million.

This is again the maximum possibly earned by Jones, with the total likely several millions of dollars lower than this. But even inflated, it is still a fraction of the additional revenue his events generate for the UFC, with $32 million versus $108 million.

As for his two Daniel Cormier fights, the difference is even more stark: a potential maximum of $12 million in bout pay, versus $50.8 million in additional revenue.

JONES VS NGANNOU

So what then should Jon Jones make for a fight with Francis Ngannou? Well, if we are basing pay on MRP it would depend on how much additional revenue was generated by that fight over a generic replacement.

Thanks to the contracted guaranteed revenues the UFC now receives for every bout, their floor is much higher than it was just a few years ago. The UFC’s sponsorship and international television deals bring in around $7 million a PPV event. Their ESPN broadcast deal pays them a couple of million dollars to air the prelims. And finally their PPV deal with ESPN+ guarantees them a minimum floor of residential PPV revenue. This is thought to be in the neighborhood of $15 million per event.

Even without commercial PPV or live event revenues the UFC is guaranteed well over $20 million for a PPV event regardless of the headliner. Now obviously the fighters still matter, as eventually fans would probably grow tired of watching UFC events if they were headlined by random fighters pulled off the street. There is an argument to be made that these large contractual deals are the result of the collective MRP of all the UFC fighters. But, even true, that doesn’t help an individual make the case that they are adding any additional value to an event.

The question for Jones (and Ngannou) is how much does he add to a UFC ppv? If we assume that it will just sell a similar amount of PPVs as UFC 245 headlined by Usman vs Covington, which was reported as being 300,000 on ESPN+ we are looking as little $3.5 million in additional PPV revenue once Canada and Australia was included.

If the expectation is that it would look more like UFC 249, which was reported as having sold over 700,000 PPVs on ESPN+, then we could argue that Jones vs Ngannou added at least $21 million in additional PPV revenue.

In another scenario, it’s a very good possibility that the heavyweight super-fight draws better numbers than Gaethje vs Ferguson. If it draws around 850,000 buys — the same estimate as the comparison they brought up in Fury vs Wilder 2 — then we could be looking at an additional $27 million in residential PPV money.

If Jones vs Ngannou ended up being a blockbuster, like the reported 1.1 million buys for UFC 246’s McGregor vs Cerrone, then we could be talking about an addition $37 million in residential PPV in the United States, Canada, and New Zealand.

Perhaps the fairest agreement between all the parties then would be for the UFC to guarantee Jones and Ngannou only their show purses, but then give them any additional PPV revenue the fight generates. In theory, this money was only being produced by their presence, but such an agreement seems incredibly unlikely.

As Gift wrote, “consistent with prior research, evidence suggests the UFC extracts the most surplus from its most productive fighters.”

For what it’s worth, Jones revealed that his current deal now just earns him “5+ per fight.”