Lorenzo Fertitta and Dana White. Photo property of the UFC.
The UFC made headlines last month when it announced that it had signed multiple merchandising deals that would bring UFC-licensed products such as watches, clothing, action figures, and credit cards to stores nationwide, at the same time, essentially solving one of the sport’s biggest problems in the form of a lack of proper compensation for the fighters’ usage of their own images.
“Our top guys now are making millions. Others are making hundreds of thousands,” UFC President Dana White said last month. “But when we get this thing globally where I know we can, with the merchandising and all the ancillary stuff, the fighters are going to be paid when they’re sitting on their couch.”
Most would agree that the above should have been done close to three years ago, when the organization started to explode in popularity following the success of “The Ultimate Fighter”. While Randy Couture may at least find some solace in the fact that fighters will now be somewhat compensated, many have questioned the legitimacy of the UFC’s model for making this happen. Now those in legal field are as well in a must-read article for everyone in the industry at Sherdog.com:
Want to buy a t-shirt of your favorite fighter now that he’s competing for another promotion? Not if he’s signed on the UFC’s dotted line. And how likely will Zuffa be to continue promoting a fighter through product placement if he is no longer in their stable?
“The fighters should be wary of granting these rights in perpetuity,” said Peter Bonfante, a licensing attorney based in Beverly Hills who has represented several athletes, including major league baseball players. “At the very least, fighters should seek a term that continues only as long as they are promoted by the UFC.”
Messed up isn’t it? Well that’s what Bonfante and others have found after taking a glance at a version of the contract the UFC is sending out to it’s current signed fighters. However what the UFC is doing isn’t new. The four major sports leagues (MLB, NBA, NFL, NHL) all have similar deals with their athletes. So it’s not that bad then, right? One look at the potential numbers game might change your mind:
“If the UFC’s gonna sell licensed golf balls or BIC lighters, that would be fine,” an unnamed attorney said in the report. “But, say, a t-shirt deal, that’s what we do all the time. They’re taking it away from the managers. And we do that better than the UFC. There’s no guaranteed bonus or royalty. Say a guy gets paid $40,000 for a two-year t-shirt deal, which is what some guys can get if they’re a name fighter, a legitimate contender or fan favorite. A t-shirt company will come to a fighter and say we’ll give you 15 percent of gross proceeds. For $10 per shirt, our fighter gets $1.50. What UFC is saying is, we’ll give you 20 percent of whatever we bring in (through the stated terms of the third-party agreement). What the UFC is doing would be make this t-shirt, and say they negotiate a really good deal with the t-shirt company and get 20 percent. They get $2. Of that 2 bucks they will give our guy twenty cents. The economics on that deal don’t make sense unless the UFC can sell a lot more shirts.”
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