The UFC owners at Endeavor reported another strong quarter to start 2022 with revenues up once again, but the publicly traded company continues to face questions about fighter pay and overall athlete compensation compared to other sports leagues around the world.
On a Thursday earnings call, Endeavor executives revealed that the company’s sports properties, which include the UFC and Pro Bull Riding, saw a five-percent increase year over year, with 296.7 million in revenue for the quarter – up $ 13.2 million from the same time. in 2021. Endeavor also touted that every UFC pay-per-view in the first quarter sold out its venues, in addition to two record-breaking events for live attendance at UFC Fight Night cards with the back-to-back shows in March in London and Columbus, Ohio.
Following a robust report with healthy profit margins, Endeavor CFO Jason Lublin fielded a question about continued concerns over fighter pay, especially when compared to other major sports leagues like the NFL or NBA.
“We agree there has been a lot of comparisons drawn to team sports such as the NFL and NBA, and we actually don’t think that is the right comparison to the UFC,” Lublin said. “We think the right comparison is to other individual sports, such as the PGA tour, F1, NASCAR, and ATP.
“If you look at those athletes and what they’re paid as a relative percentage of revenue for those leagues, it’s right in line where the UFC is with their athlete compensation.”
Thanks to documents made available during the ongoing class-action lawsuit brought against the UFC by several former athletes, it’s public knowledge that revenue paid out to the UFC’s fighters has typically averaged between 16 to 20 percent.
Leagues such as the NFL or NBA pay out approximately 50 percent of the revenue to the athletes, which is a figure that’s usually negotiated during collective bargaining with unions representing the players.
No such unions exist in combat sports, but Endeavor has repeatedly defended overall fighter pay, especially when looking at the growth of the UFC over the past 20 plus years.
“I would also like to point out that the fighter [compensation] CAGR (compound annual growth rate) since 2005 has been 26 percent, while the revenue CAGR for that period has been 21 percent, ”Lublin said. “So the fighter pay CAGR has been outpacing the CAGR of revenue for the entire company, and that’s before we talk about other ancillary ways that our fighters are earning through – sponsorships and other consumer product deals. In summary here, we believe we can continue to invest in our fighters without risk to the margins of our business. “
CAGR is defined as the rate of return that would be required for an investment to grow from its beginning balance to its ending balance.
While the figures Lublin released makes it appear that fighter pay has significantly outgrown overall revenue, those numbers can be deceiving, especially when looking at the overall picture dating back to 2005, which is before the UFC had ever signed a major broadcast deal.
Following partnerships with Spike TV and FOX Sports, the UFC inked a multi-year deal with ESPN worth over $ 1.5 billion while also moving pay-per-view broadcasts to the company’s streaming service at ESPN +, which has also increased overall revenue.
As far as comparisons to other organizations mentioned by Lublin, PGA Tour commissioner Jay Monahan sent a memo to players in late 2021 with a statement that said 55 percent of the tour’s money was going into prize money paid out to the players. That’s similar to the payouts made in leagues like the NFL or NBA.
Meanwhile, the ATP tennis tour sees events typically pay out between 20 to 30 percent of the revenue back to the players.
Lublin’s reaction to the fighter pay question comes after Endeavor CEO Ari Emanuel faced a similar situation in the company’s previous earnings call, when he was asked to respond to criticism from high-profile influencers such as Jake Paul, who has continuously bashed the UFC’s pay practices. .
“I’m not commenting on that,” Emanuel said in March. “I think we’ve done very well as it relates to the pay for the fighters.”