November 6, 2007
Boxing v. MMA Pay Scale & Business Models
MMA Weekly has quotes from Gary Shaw talking about supposed discrepancies between the boxing and MMA pay scales.
“Truthfully, I don't think there is a discrepancy,” he said in a recent conference call. “I think that people believe that. But trust me, there's not a discrepancy that you all think there is. Fighters that are starting out that are getting paid a thousand or two thousand a fight are no different than an undercard boxer.”
In comparing the pay scales of boxing and MMA, particularly the UFC, it is important to consider the differences in each sports respective business models. Boxing promotions generally operate on an event to event basis with small full time staffs. Third party partners are the key to producing successful events in this model.
As a result boxing promoters have lower overhead and can afford to pay fighters higher guarantees since they receive more contracted fees (site fees, broadcast fees, major sponsorships, etc.). These advantages come at the expense of creative control, which isn't that important in a business model designed to maximize current profits, the future be damned.
The UFC on the other hand is largely self sustained. It handles everything from television production, advertising, etc. in house. As a result it has a much higher overhead and is much more dependent on the live gate and pay-per-view revenue in order to have a successful show. In exchange for bearing greater risk, the company deserves a greater financial share.
Deciding which model is best for the fighter is not as a easy as saying which model pays better. In the short term, boxing's model may offer bigger paydays, but at the potential expense of the future. Promoters have little investment in future success, creating a make money now, worry later mentality that has hurt the sport. The UFC on the other hand may offer smaller payoffs as a percentage now, but its model should provide more consistent future paydays. The company's insistence on exclusivity inherently invests it in protecting the sport's future.