Wednesday, April 2, 2008

Warning to UFC Fighters: Beware the MMA Bubble

Mixed Martial Arts (MMA) is arguably the fastest growing sport in the United States, with the the Ultimate Fighting Championship (UFC) dominating the sport since 1993. With popularity at an all-time high, maverick billionaires and long-time boxing promoters are jumping into the fray, giving fighters more options than ever. Fighting historian Larry Weaver looks at the opportunities - and pitfalls - this presents to today's MMA fighters.
Warning to UFC Fighters: Beware the MMA Bubble
Here’s some unconventional wisdom for all current MMA fighters: there has never been a better time to stay with or get into the UFC. Because when all of the new upstart MMA promotions go belly up, Dana White will reward those who remained loyal, and relish in the unemployment of those who jumped ship.
In a previous post entitled "Randy Couture vs. Fedor Emelianenko: Who Cares?", I boldly predicted that much-ballyhooed MMA upstart "M-1 Global is going to fail. They'll probably go out of business before Fedor's two-year contract is up." Turns out I was overly optimistic. It only took about five months for the company to implode - without ever putting on its first event.
Is there an MMA bubble?
The current MMA landscape is eerily reminiscent of the dot com bubble. The late 1990’s saw investors line up to pour millions into speculative Internet companies. While a few lucky people managed to cash in (hello, Mark Cuban), most investors managed to lose millions. But the biggest losers were the employees - the computer programmers and administrative staff who found themselves dumped into an overcrowded job-market with few prospects for income.
Don’t remember the dot com crash? Well, turn on the news right now to learn about the residential real estate crisis. Despite the lessons of the dot com crash, workers around the country left their stable jobs to become real estate agents at the height of the boom. Fast forward six months, and there are a lot of real estate agents across America looking for a job right now.
Make no mistake, the majority of new MMA companies will be out of business within a year. Investors are in the business of making money. When things go South, they will close up shop and you, the fighter, will find yourself unemployed.
And when the MMA bubble bursts, there will be a lot of talent looking to get into the UFC. They can’t possibly hire everyone.
Is now the time to take chances with your career?
For MMA fighters considering joining an upstart MMA promotion, make sure your signing bonus and guarantee for your first fight (and your first fight only) are equivalent to the UFC offer.
Let’s assume that you have two offers, one from the UFC and one from an upstart promotion. Both are five fight, two year deals. We’ll give the UFC 100% probability of fulfilling your contract, and the upstart promotion 20% probability of fulfilling your contract.
"Winning" formula Upstart deal x .2 (+ singing bonus) > UFC deal x 1.0
If you’re feeling really optimistic, assume that the upstart promotion will last at least one year and fulfill at least 2 of your 5-fight deal (40% probability).
Of course this formula is overly simplistic. It doesn't take into account sponsorship deals, which can exceed a fighters purse. Appearances on CBS or NBC could potentially lead to much more mainstream exposure and lucrative sponsorship deals than available in the UFC. Maybe... Are you willing to be your future it?
A final piece of advice:
Wait until June 1, 2008 before making any contractual decisions.
When the rating comes in for the debut of Elite XC on CBS, you will either have much better offers on the table, or you’ll be glad you didn’t make any rash moves.
Larry Weaver is an author, professional comedian, and expert on Internet marketing. A life-long pro wrestling historian, Larry has followed MMA since UFC 1.

No comments: