Issue 111

May 2014

The days when deals were done with little more than a handshake are long gone. Fighter contracts in MMA are growing increasingly complicated – in fact, so much so they’re starting to affect fight cards and careers. FO explores exactly how fighter contracts work

So you wanna be a fighter? OK, but it takes far more than just throwing hands and kicks in the direction of an opponent. You must understand that fights begin long before two men in shorts are beckoned towards the centre of a ring or cage by a referee, and that to even reach that point a fighter must first conquer a line-up of sparring partners and, perhaps far more importantly, a variety of men in expensive suits. 

Alas, it pays for fighters to be just as savvy around the negotiating table as they are on the canvas. Fight sports are, after all, riddled with stories of athletes being stitched up over contracts or agreements having been viewed as easy prey by superior business minds.

Promoters and managers in boxing, especially, would often have a field day with their pawns, promising them the world and then delivering only headaches and regret.

Mixed martial artists, a new breed of fighter, face many of the same battles these boxers encountered, but now, in 2014, the emphasis is on protection. And while promoters continue to rule the roost and hold a tight stranglehold on their flock, there is more of a sense that fighters themselves, perhaps having learnt from the past, are better positioned to understand the ins and outs of contracts and their rights as entertainers and commodities. 

Therefore, when the time comes for a fighter and his representatives to broker a deal with a promotional company, they do so with confidence.

CONTRACT AGREEMENTS

In the US, there are typically two agreements made between a fighter and the promoter: the promotional agreement and the bout agreement. The promotional agreement serves as the master arrangement between the fighter and the promoter, and in this deal the fighter agrees to fight exclusively for the promoter for a specified number of fights and/or a specified amount of time.

The bout agreement, on the other hand, is specific to each fight and is regulated by the state in which the fight is to take place. If a fighter signs a four-fight promotional agreement, for example, he will sign four separate bout arrangements during the term of the promotional contract.

Typically, bout agreements are very short; so much so, some regions use a one-page fill-in-the-blank form. The bout agreement specifies the date of the fight, the venue, the agreed opponent, the agreed weight and the amount the fighter is to be paid. It will also include statutory language and restrictions that are contained in the state’s codes and regulations relevant to mixed martial arts.

The promotional agreement is a more comprehensive arrangement and covers things that are not contained in the bout document. For instance, the promotional agreement contains fighter obligations such as promotional activities, medical evaluations, the number of airfare tickets he/she is to receive, the number of hotel rooms and number of complementary tickets to the fight. 

This agreement will also cover intellectual property rights of the promoter with regard to the production and broadcast of the contests and the use of the fighter’s publicity rights in promoting the fights.

Jefferson Meyer, the CEO of MMA Incorporated, a full-service management and marketing firm, boasts a client list that includes Anthony Pettis, Urijah Faber, Chael Sonnen, Chad Mendes, Joseph Benavidez, TJ Dillashaw, Erik Koch and Scott Jorgensen. He has spent the last seven years working alongside the best in the sport and feels progress has been made on numerous fronts.

“Promotional agreements have become more sophisticated over time,” he says. “As technology evolves and the sport continues to grow, the promotional agreement has evolved to address new media and new challenges faced by the sport. 

“For example, when I started managing fighters in 2006, social media was in its infancy. Back then, promotional agreements did not even mention social media. But, today, social media is an integral part of a promotion’s marketing efforts and the fighter’s personal social media accounts are part of the marketing effort behind the fights.

“In the age of instant access to fighters via social media and the internet, the ability of the promoter to ‘filter’ what a fighter says publicly is limited. And one recent change to the UFC’s promotional agreement is the inclusion of the Fighters’ Code of Conduct. 

“In a nutshell, if a fighter publishes something that is offensive to a segment of the population or a sponsor, that fighter can expect to be sanctioned or have his promotional agreement terminated. The Fighters’ Code of Conduct is similar to conduct codes enforced by other professional sports promotions.”

IMAGE RIGHTS

In an era when fighters stand to make just as much money from their image and brand as they do from fight purses, it’s fair to say promotional and bout agreements are not the only contracts flashed before their eyes in the days, weeks and months leading up to an event. 

Indeed, fighters also enter into numerous sponsorship deals, endorsement contracts and personal appearance agreements.

“The sophistication of agreements related to sponsorships, endorsements and personal appearances has increased over the past few years,” admits Meyer. “As more and more large companies decide to market to the MMA fan base, the fighters’ interaction with legal departments and advertising agencies has grown dramatically.

“Several years ago, most sponsorships were accomplished with a handshake between the fighter’s manager and the sponsor. This is a rarity today. Most sponsorship and endorsement agreements are now mutually negotiated between the fighter’s representative and a representative or attorney for the sponsor.”

Sponsorship agreements pertain to the many company logos one might see plastered on a fighter’s shorts, T-shirts or the personal backdrop draped over the cage fence during the introductions. 

Many issues are addressed in a sponsorship agreement, including the duration and scope of the licence given to the sponsor to use the fighter’s publicity rights; a definition of the product or service that the sponsor may use the fighter’s publicity rights to promote; the exclusivity or non-exclusivity of the endorsement; the medium in which the sponsor may use the fighter’s publicity rights; the number of days or hours that the fighter is obligated to provide to the sponsor in order to capture content to be used in the sponsor’s marketing; and, of course, the amount of compensation to be paid to the fighter and the manner of payment.

As an attorney, licensed to practice law in the State and Federal courts of California for the past 14 years, Meyer has extensive experience in negotiating and drafting commercial contracts. And if a flurry of contracts come his way, whether related to promotional agreements, upcoming bouts or potential sponsors, it usually means his fighters are heading in the right direction. They’re men in demand.

“I personally enjoy the negotiation process,” he tells FO. “People often believe that the negotiation process needs to be adversarial, but I don’t subscribe to this view. I enter every negotiation with the understanding that the final agreement needs to make sense for the fighter and the other party, whether it is a promoter or a sponsor.

“If an agreement is one-sided, it will not last beyond the initial term. One party will feel they did not get any benefit and will simply refuse to renew the contract. When dealing with a sponsor or a promoter, I approach the negotiation with the goal of entering a partnership that will hopefully last for many years. 

“For example, Urijah Faber has endorsed Pepsi’s Amp Energy brand for six years. Urijah has a wonderful relationship with the folks at Pepsi and Pepsi treats Urijah as part of the Pepsi family – a true partner.”

Negotiating with sponsors is one thing, but negotiating with promoters – effectively the paymasters – is another thing entirely. Get it right and a fighter could be on the fast-track to the land of wealth and opportunity. But get it wrong and they could be frozen out completely, left inactive on the sidelines. For that reason it pays to get along.

“We do not take an ‘us vs. them’ approach when dealing with the UFC, for instance,” says Meyer. “Over many years, we have developed close relationships with the upper management and staff at the UFC. We approach every negotiation with the hope of getting to a deal that makes sense for the fighter and for the UFC. 

“We view each individual fighter’s relationship with the UFC as a long-term partnership, and the goal of any business partnership is for both parties to succeed and prosper over many years.”

WHEN DEALS GET MESSY

Last year, contract disputes were something of a hot topic, as both Eddie Alvarez and Ben Askren became embroiled in situations that threatened to derail their careers. Firstly, Alvarez, after months of trying to leave Bellator MMA and take his talents elsewhere, decided enough was enough and re-signed with the Viacom-owned promotion. 

Why? Well, it turned out that, despite seeing out his contract and becoming a free agent, Alvarez remained attached to Bellator due to their matching rights. This effectively meant that Bellator retained the right to match other offers Alvarez might receive on the open market, thus allowing them the chance to let the lightweight test the waters and figure out his true value. Then, and only then, would they be able to swoop and match the offer put on the table by another organisation. Which is precisely what they ended up doing. 

“In our contract with Ed (Alvarez), we have the right to match, just like the UFC do in their contracts,” explains Bellator MMA CEO Bjorn Rebney. “Ed went out and got an offer from the UFC, and we took a look at that offer, reviewed it for about eight days, and decided to match it dollar for dollar, deal point for deal point, term for term. We matched every single element of it.”

Matching Alvarez’s proposed UFC contract made sense for Bellator. They retained one of their star attractions and, along the way, realised the value of him. In contrast, when a similar situation arose with Hector Lombard in 2012, Rebney was not so keen to match the UFC’s deal. 

“In Hector’s situation, just like Ed’s, he had the ability to go out and get an offer from the UFC,” continues Rebney. “When that offer comes back, we have to make a decision – we can either match it dollar for dollar, deal point for deal point, offer for offer, term for term, or we cannot.

“If we say we’ll match it, that means everything Ed or Hector were guaranteed in the UFC deal, they have to be provided in the Bellator deal. So if it’s guaranteed in their deal, it has to be guaranteed in our deal. In the Hector deal, we took a look at it and made a business decision and said we don’t think we can monetise that situation; we don’t think it’s the best move for the company. In the Ed situation, we looked at it in a different way.”

Former Bellator welterweight champion Askren suffered the same fate; despite being unbeaten in 12 pro bouts, and viewed as a threat to all the planet’s leading welterweights, Rebney decided to throw away his right to match any Askren offer and instead let him pursue opportunities elsewhere. 

In a Bellator statement, Rebney explained: “I’ve said it many times, Ben’s a completely one-dimensional fighter who is utterly dominant in that dimension. I had a number of discussions with Ben and it became clear it was time for both parties to move in different directions. We’ve relinquished any right to match and Ben can sign with whoever he chooses to sign with.”

In essence, then, Rebney believed that whereas retaining Alvarez made financial sense, he was unable to see the same sense in keeping Askren, a man whose fighting style polarises opinion. In the end, the UFC, also reportedly refused to make Askren an offer, and he eventually decided to sign a two-year, six-fight contract with the Asian powerhouse organisation One FC. 

Ultimately, if last year proved anything it’s that unbeaten records and titles don’t necessarily provide fighters with the type of security they desperately crave. More important than belts and zeros, it seems, are great performances and an even better management team.