UFC’s Elephant in the Room
By Eddie Sanchez
There are many reasons the UFC should be proud right now. While navigating through the COVID-19 world, they were the first sport to host live events without fans in attendance. It was ground-breaking and now after a few weeks of monopolizing the live-sports market, other leagues like the NBA are close to returning.
Unfortunately, the topic of discussion is not highlighting their greatness, we must point out the UFC’s achilles heel, which is their inability to pay their elite talent top-dollar.
The UFC is nearly the antithesis of Boxing in the current climate. Jon Jones, the likely MMA GOAT, walked away from his last fight with a $500,000 purse, while Boxing star Canelo Alvarez is in the middle of an eleven fight $325 million-dollar-minimum guarantee. The UFC does not struggle to gain a following with the younger generation, while Boxing does. However, despite being on ESPN and having stars that the younger generation appreciates, why is there such a large disparity?
I for one am not claiming that they need to hand out purses equal to that of Canelo Alvarez, but there certainly needs to be an increase because the top draws in the UFC are not happy and threatening to walk-away for good.
Henry Cejudo the two-weight world champion walked away following UFC 249. While most in the industry expect him to return at some point, he has already made an appearance on All Elite Wrestling with Mike Tyson and is allegedly in talks to take on Ryan Garcia in the boxing ring. If that fight is to happen, it would be even harder to see him return to the UFC considering the potential check he would receive. There are plenty of stars in his weight class and matchups would not be an issue in the ring for him.
Additionally, you have fighters like Jon Jones and Jorge Masvidal complaining about their purses publicly and throwing shade towards Dana White consistently. Dana White so far has not been phased and is using clever rhetoric to maintain face, but it’s clearer than ever that this is not an issue than can simply go away from ignoring.
Magnifying things even further, Conor Mcgregor claimed for the third time that he is walking away from the fight-game for good. While conventional wisdom would lead one to conclude that he is continuing down the Mayweather playbook, in a worst-case scenario the UFC has to be concerned with the potential of a stable without Conor McGregor, Jon Jones, Henry Cejudo and Jorge Masvidal.
YIKES
So how did we get here? This issue has been a consistent one since their inception in 1993, but there is a larger-cash struggle that the UFC finds itself in the middle of that it must solve.
If you remember, the WME-IMG Endeavor purchasing group bought the majority share of the UFC for $4 billion dollars in 2016. While most praised this purchase at the time, there were considerable hurdles created that Endeavor has since been focused on.
Endeavor had plans to go public in mid-2019, but had to call of their plans in the third quarter that year. Fast-forward to February 2020, the UFC approved a $300 million dollar dividend to its investors which include, “Mark Wahlberg, Charlize Theron, Gisele Bündchen, Ben Affleck and tennis stars Serena and Venus Williams.”
Additionally, S&P lowered the junk bond ratings for Endeavor and the UFC. According to Forbes, S&P said it expects “Endeavor to be very highly leveraged with adjusted debt to EBITDA of about 7% in 2020, incorporating a preliminary estimate of a mid-teens percent drop in events, media and services revenue, as well as a substantial decline in UFC’s live ticketing revenue.”
This paints the picture of the UFC with a broader brush and further clears up why the UFC was so determined to host live events in a time where every other league had indefinitely cancelled immediate competition.
Dana leveraged his relationship with President Donald Trump and tip-toed the political lines to gain the approval to host 249 among other cards in Jacksonville. Fortunately, the UFC successfully completed these cards without trouble and now has their eyes set towards Fight Island in July.
Considering the large amounts of debt the UFC is carrying to make their aspirations come to fruition, the public understands the lack of urgency to meet fighters half-way with higher purses, especially in a climate that lacks live-gate revenue.
As with all problems there are easy solutions and there are hard solutions. Life often teaches you that the easy solutions are the wrong ones to choose. The UFC clearly has many tough choices in front of them, but I believe they will eventually be met with their stars settling for mediocre purses as they generally always have.
