Issue 125
February 2015
Gareth A Davies, MMA and Boxing Correspondent for The Daily Telegraph, London, UK, on the impact of the UFC’s uniform deal with Reebok.
The landmark deal the UFC signed with Reebok, the world’s third largest sports retail company, means that the 500-plus fighters on the roster will wear the sportswear giant’s clothing from July 2015.
Revenue from the partnership, which I understand to be worth $70 million over a six-year period, will be divided among the athletes in a five-tiered grading system from champion downwards. The brackets will be from rankings 1-5, 6-10, 11-15, and non-ranked. In addition, fighters will also receive royalty payments on any merchandise sold as part of the uniforms that bear their likeness, which can continue as a revenue stream after their retirement.
That’s the bones of it. But like any change, people get tetchy. It’s a touchy subject, for some fighters, at least. The fear is MMA brand sponsors they have now will desert them and “the names” will get the spoils. In the short-term, things may have to be jiggled about, but I suspect not.
Some fighters may also ask if the media’s ranking grades should be used. But is there another way? Again, I’d guess the ranking system may be tweaked in the long term, using statistical analysis from fighters’ performances and, of course, based on their popularity, underpinning the means of measuring their true place. It all comes down, as ever, to money.
How often do we forget that things we love, or have a passion for, will never get anywhere unless underpinned by “business?” Regular readers of this column over the years will be aware of how I’ve underlined so many times that the UFC employs market economy – and it will never be any different. It was the only way they survived.
But the move with Reebok does represent a step-change. The UFC is giving its fighters a uniform and what could be deemed “professionalization” in sponsorship terms alongside their fight purses. Not everyone will agree, but as ever, the UFC has global growth and long-termism in mind.
Lorenzo Fertitta, chairman and chief executive of the UFC, explained the organization reached out to “a really long list” of fighters throughout the process. The response, he reported, was “overwhelmingly positive.”
The crux of it is that fighters will get paid for wearing the uniforms for each fight. They will also partner with the UFC and receive a percentage of sales for any of the gear sold that’s part of their own uniform. It’s very much an incentive process, much like fighter bonuses can be viewed, broadly.
Fertitta sees it as “a long-term investment” and “no different to the investment me and my brother (Frank), made in 2001.” The brothers invested and there was a return after some time pouring money into a black hole. Dana White believes the financial incentive from tiered sponsorship will mirror fighters’ athletic wishes to climb the ladder.
“All of the guys that are down there at the bottom are working their way up anyway. It’s not like those guys are doing big money in sponsorship,” said the UFC president. “Every guy wants to break into the top 10. Every guy wants to be a world champion. There’s no difference here. The difference is, every time they step in there they’re getting paid. They all have a sponsorship now. That’s more incentive to get bigger and get better.”
As it rolls out from July, no doubt some fighters will express openly the way it’s affected them in relation to their current sponsors. But all of this will happen organically. Then, as ever, it’s back to market economy.
In the long-term, the consumer and the fans “are going to decide,” as Fertitta put it. “They’re going to be voting with their wallets.” That will involve sales of shirts, hats, shorts or whatever it may be.
“We’ve done a lot of research over the last two or three years trying to understand what the open market place is for fighters in various positions – how they’re ranked, where they’re positioned on the card or how sponsors determine that stuff,” said Fertitta. Again, I suppose that research will continue with Reebok.
Additionally, a sponsor could be on the kits. Fertitta added they would be major, global brands like those seen in other sports, like in European soccer. They are huge, multi-million pound deals too.
In other words, this is a game-changer. Fertitta said this is as important as the creation of The Ultimate Fighter, getting Budweiser on board, the FOX deal and partnering with Electronic Arts.
White is equally enthusiastic. “We’re getting into this space, we’ve got Reebok behind us and they’ve made an incredible investment in the UFC, the sport of MMA and the fighters. The fighters are the ones that are making all the money off this deal. Hopefully this thing takes off the way the UFC did and this will continue.” Let’s hope so.
