Playing the Money Game
Major MMA promotions have a bigger broadcast footprint than ever. So why is tough for fighters to cash in on sponsors?
“Is this Mark Gingrich?” the voice on the line politely asks.
“Yes,” says Gingrich, who’s conferenced in a call that interrupted an interview for this story. It’s dark outside his office in Dallas, where he runs the apparel company HTFU (Harden The Fuck Up). Dozens of calls have blown up his cell phone in the past 24 hours, including death threats to him and his family.
But mostly, the message is one like this: “F’ you.” The line cuts off.
Five days earlier, lightweight Rick Hawn tweeted that a sponsor was unhappy with his performance at Bellator 88, which ended in a submission loss to champion Michael Chandler, and stopped payment on a $1,500 check owed him for wearing the sponsor’s gear. He didn’t name the sponsor, but soon after, Hawn’s rep started a thread on a popular MMA message board, and Gingrich’s phone started ringing.
If measured in cage time, Hawn’s fight to get paid probably lasted just a bit longer than the 8:07 he spent with Chandler. A few email parries with the rep, a public shaming, a day fielding angry MMA fans, and Gingrich agreed to send Hawn a new check. He denied stopping payment based on performance and claimed Hawn hadn’t honored a deal when his cornermen didn’t wear HTFU. Hawn’s rep countered that cornermen weren’t included. There had been no contract between them, so it was a matter of who you believed. That was already clear.
Despite Bellator’s new broadcast platform on Spike TV, which initially brought a nearly tenfold increase in the promotion’s average viewership on MTV2, Hawn said he had battled just to get sponsors. Yet the experience of being shorted even a relatively small sum wasn’t a shock.
“That’s part of the game,” says Hawn. “There’s not a lot of money out there right now.”
During their fight at The Ultimate Fighter Finale 15, Jake Ellenberger represents Lunarpages.com and Martin Kampmann Sports Safe Auto, as fighters look to secure sponsorships from companies outside of the MMA industry.
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As the UFC enters the second year of its FOX partnership and Bellator’s national profile heightens, the current sponsorship market remains anemic for rank-and-file fighters, according to several fighters and industry vets. The payouts brought by the boom of 2006-2008 have by and large vanished, yet fierce competition exists for a smaller pool of free cash. In the rush to get as much as possible in the weeks leading up to an event, a frenzy of pitching, haggling, and undercutting goes on behind the scenes.
Manager John Fosco said it’s not uncommon for him to pitch a marketer on a $15,000 sponsorship package that meticulously tracks broadcast exposure and social media impact, only to be undercut the next day by a manager offering a patch for $1,000.
Those encounters shadow high-profile endorsements recently called game-changers in the sport’s visibility. UFC Welterweight Champion Georges St-Pierre is rumored to earn more than eight figures from endorsement deals with Coca-Cola, Google, and Bacardi, while Jon Jones is the face of MMA for Nike. Meanwhile, ex-champ Quinton Jackson reportedly wears Reeboks on trail runs, no doubt in the bountiful scrub of Ladera Ranch, California.
The potential rewards remain rich for those who continue to win inside the cage. But for most fighters on their way to stardom—or fighting to keep it—the market is more unforgiving than ever. The average payout to wear a shirt, hat, or patch for a fight broadcast on pay-per-view or network TV is now 50 percent less than three years ago, according to numbers given by several managers and fighters. Prices also have dropped steeply for bouts seen on cable, and fighters whose bouts stream online can only expect a few hundred dollars or free products.
The reason? MMA companies now know that all but a few athletes can bring a return on investment.
“Even the top guys are not getting as much,” says manager Brian Butler. “Obviously, we want to make as much for them as possible, but a lot of the time, the fighters don’t understand it. They don’t understand how today’s market is different.”
Nevertheless, they have adapted. Lightweight Jacob Volkmann boycotted a sponsor that first paid him $1,500 per bout, dropped him when he fought on an un-televised preliminary-card, and then resurfaced with an offer of $500 when he returned to TV. He was convinced he could replace the income from local businesses in White Bear Lake, Minnesota.
Welterweight Jake Ellenberger, who recalled getting stiffed $20,000 when he didn’t wear a sponsor’s t-shirt (the sponsor never sent it), enlisted a trusted friend to handle the process after so many unfulfilled promises. He recently inked a deal with a small web hosting company and participated in an anti-bullying workshop at the school of a sponsor’s son.
“The biggest thing for me is over-delivering on what they’re expecting,” he says.
But when managers don’t deliver on expectations, some fighters shop for new managers between bouts. Savvy reps, meanwhile, have sprung into action. After dialing for dollars with MMA companies all too willing to drive down prices by playing reps against each other, Fosco sold executives in auto insurance, supplements, and bodybuilding companies on MMA. Instead of naming a price for his fighters, he asked to represent them in the market. He now controls a budget “deep into the six figures” for insurer Safe Auto, which reportedly banks $300 million annually in revenue and sponsors an average of 30 fighters a year. He is part of a growing contingent of MMA managers who also act as marketing directors for brands you see in major fight promotions. Now, he gets calls from competitors asking for money.
He calls himself one of the most hated managers in the industry.
“The business model is to sell the sport,” Fosco says. “Other managers say, ‘I have Jon Fitch. He’s a great brand. He’s an All-American type.’ Well, isn’t there a conflict of interest there? You’re pushing your guy and trying to tell your brand that your guy is the best guy for their brand, when it actually could be a number of other fighters who are a better fit for what they’re trying to do.”
To those who suggest he’s in the same position, Fosco, and others with his role, say they don’t favor personal clients and pay fair market value while maintaining profit margins. With little prompting, he says his star client, Clay Guida (a Safe Auto endorser), banks between $75,000 and $100,000 per fight.
Meanwhile, since becoming an official sponsorship partner of the UFC, Safe Auto has made a killing on referral fees for insurance requests in states it doesn’t cover, Fosco says. This past year, it purchased a minority share in his company. If the manager is unapologetic toward critics—in fact, Fosco has a string of expletives for every adversary—it’s because he fought to keep the insurer in the fold.
“The UFC at first blocked Safe Auto and said, ‘You cannot sponsor fighters unless you do a deal with us,’” he says. “It’s a very eye-opening thing as a business owner, because in the blink of an eye, all your work can be snatched away so easily. It’s not their fault. They built this world that I play in.”
In 2009, the UFC instituted a sponsor tax on companies that utilized its platform for advertising. Brands wanting to sponsor an athlete had to pay between five and six figures annually for the right. Thus, the promotion created another revenue stream. Whether they helped or hurt the marketplace is a matter of debate.
Until the credit crunch of 2008, it wasn’t uncommon for companies to dole out a minimum of $12,000 for a walkout shirt. Monthly sponsorships generated $5,000 a month for top fighters, and some signed six-figure bonuses for exclusivity. Many of the deals were financed on home loans during the real estate bubble, and hundreds of companies went bust in the slowdown.
While there are now fewer fly-by-night t-shirt companies among taxpayers, an excess supply of fighters strengthens the position of remaining sponsors. Fewer companies compete for more advertising space, and with the death of Strikeforce, more are on the way. Some companies continue to overspend and quickly disappear, but most keep a tight budget. They are aware of their leverage with fighters and managers looking for extra cash prior to a fight, and so the incentive to make a big commitment is less.
“The companies that are around know each other,” says manager Jeff Clark. “They’ve paid their dues, so people are going to get things for what they can. I don’t think it’s the UFC’s burden. At the end of the day, fighting has its own feeling. Is it the UFC’s responsibility to build all these brands, or is that the brand’s responsibility?”
Manager Jason Genet nevertheless crafts sponsorship plans that are not dependent on camera time in the cage. He believes that commodity is a bonus to the value he provides through a multi-level marketing strategy that includes in-person promotion and web marketing on his independent media platform.
“Sponsorship and marketing is about reach and return,” he says. “You must control the controllable. If the brand is approved to be a sponsor, you still must overcome the significant investment they have in gaining that approval, and no patch will compare to what was paid.”
There are several managers who believe the value of MMA, whether measured on TV, the web, or through an athlete, is lost on blue-chip companies. Former venture capitalist Bill McFarlane has brokered sponsorships from Coca-Cola and Procter & Gamble for Olympic gold medalist Henry Cejudo, who now plans to fight MMA. He said, despite the UFC’s sophistication, most big companies still look at the sport as an untested commodity, and many athletes’ out-of-cage behavior acts as a deterrent to investment.
“That can easily diminish the value that these companies may be missing,” he says. “You can’t just say he’s a badass fighter. If you’re going to represent their brand, they want to make sure you know how to behave in public.”
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The day after he tweeted, Rick Hawn received a $1,500 check, but it wasn’t from Gingrich—it was from Bellator. A week later, another check arrived from the sponsor, who vowed never to support another MMA fighter. Hawn claimed something of a moral victory in the dispute by declaring that one of Gingrich’s staff members had resigned in protest. He was skeptical that there had been death threats and expressed little sympathy for the harassment the Dallas man encountered.
“There’s so much more to the whole story, it’s just ridiculous,” Hawn says.
Hawn, a former Olympian in judo, planned to give the extra $1,500 to a pet rescue charity. He said he and his fiancé were animal lovers, and it was a worthwhile cause.