Opinion: MMA's 20-Million Dollar Man?

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The Ultimate Fighting Championship on Saturday heads back to Rotterdam, Netherlands, with a card headlined by two very tall men. However, in the wake of Floyd Mayweather-Conor McGregor, it only stood to reason that the biggest MMA discussion of the week would be in some way related to “The Money Fight.” Blossoming superstar and opportunist that he is, Nate Diaz -- McGregor’s real, honest rival -- found a way to seize the moment without even opening his mouth.

Submission Radio interviewed on Wednesday Richard Perez, longtime boxing trainer for Nate and elder brother Nick Diaz. Naturally, Perez was asked what he thought it would take for Diaz to sign on for a rubber match with McGregor after their two-fight rivalry did historic, record-setting business for the UFC in 2016.

“At least $20 million, $30 million. Come on. UFC’s making a whole lot of money, a whole lot of money, and they’re pocketing it,” Perez said. “They’re giving more to McGregor, so it’s not fair because it takes two in that ring to draw a crowd -- I mean, a good two fighters. Nathan and McGregor, third one would be outstanding. Everyone knows that, so he needs to get paid at least $30 million easy.”

Self-promotional kudos to Diaz, who even in his absence tangentially finds a way to be the focal point of the post-Mayweather-McGregor discussion. Depending on what flavor you prefer, the conversation is now whether or not Diaz is worth $20 million in a third McGregor fight, if he deserves it or if it’s rational. Even if it’s not Diaz himself talking, given the bond between Perez and the Diazes, especially Nate -- Perez publicly vented about Nick not paying him after his bout with Anderson Silva at UFC 183 -- he is at least a fair proxy, one whose words could reasonably approximate the mindset of his fighter; and he is someone whose counsel Diaz would seek anyway.

Is $20 million really so crazy? First of all, WME-IMG should be thrilled that the asking price is already down: When Diaz was asked immediately following UFC 202 nearly 13 months ago how much it would take for him to complete the trilogy, his response was, “[Expletive], $100 million.” In seriousness, the Diaz-McGregor rematch set a UFC pay-per-view record with an estimated 1.5-1.65 million buys, plus a $7.7 million gate, and that was with the newly opened T-Mobile Arena suffering the growing pains of not being tied to a casino. By the official Nevada Athletic Commission payouts alone, McGregor took home $3 million and Diaz $2 million. This obviously doesn’t include any other bonus sorcery and their points on the biggest PPV in company history; some reports estimated McGregor and Diaz took home $15 and $13 million, respectively, while McGregor himself claimed prior to UFC 205 that he made $25 million from the bout.

It is no exaggeration to say that given every facet of the hypothetical bout -- McGregor's global star power, their respectively unique cult followings, their personalities, the action and drama of their first two bouts -- this is the biggest money-drawing fight in MMA history, UFC or otherwise. Re-breaking their PPV record with over two million buys, maybe well over two million buys, is very realistic. It’s also reasonable to the think that a rubber match could double the UFC 202 gate. The potentially decisive third fight is inherently a bigger deal; the T-Mobile Arena seems to have found its bearings as Las Vegas’ mega-fight venue; and McGregor’s star power after “The Money Fight” is even more profound. Even if he hasn’t fully morphed into Mayweather, he has at least transitioned into a prizefighter whose fights are a cool thing to do for the idle rich, which has an enormous monetary and, sadly, cultural impact.

On top of all that, the build for UFC 202 didn’t really penetrate mainstream media and consciousness until three days before the fight when Crumlin and Stockton’s finest infamously started hurling water bottles and energy drink cans at each other ... or in Jake Shields’ case, a Starbucks cup.

For a certain kind of vicious UFC loyalist or weird, MMA-meets-“logic” guys, there are immediate “concerns” about whether or not this is financially prudent, as if Diaz’s demand is going to bankrupt the UFC, which was just purchased for $4.2 billion. Speaking of paying back that $4.2 billion, the best analysis of McGregor’s tangible, financial impact on the UFC came back in March, when BloodyElbow’s John Nash made his case for McGregor gaining equity in the promotion.

Nash’s piece is especially important because the numbers come via the UFC’s lender presentation in July 2016 and offer the company’s internal PPV numbers -- for better or worse, buy-rate estimates in the MMA sphere are almost wholly reliant on the reporting of Dave Meltzer, who while being one of the greatest journalists alive, is still a single journalist. The lender presentation also included PPV revenue numbers which account for things like bar sales, theater presentations and so on. This is also crucial due to the fact that while estimates of UFC buy rates tend to be inflated, other PPV outlets are almost entirely disregarded; yet things like bars and theaters are exactly the sorts of revenue streams that become viable and lucrative with big-ticket fights. All this to say, these are the best numbers we’re going to get and they’re certainly more accurate than fuzzy math based on PPV estimates.

Most importantly: the UFC claimed that every million PPV buys adds $25 million to its Earnings Before Interest, Taxes, Depreciation and Amortization. It’s not hard to think that between potential gate and the variety of PPV sources -- keep in mind that international PPV via Fight Pass is going to be as lucrative here as any time, given it’s a McGregor card -- the UFC could be looking at $70 million, more than enough to divvy up appropriately to Diaz and McGregor. While Perez said Diaz would need “at least” $20 or $30 million, no one would ever expect that for a guarantee in this case. If Diaz ultimately was given an offer that would put him over $20 million for a losing effort in a PPV that does two million buys, he’d likely take it. Plus, this is how the negotiating process works, isn’t it? Are Diaz and his own team supposed to lowball him?

The truth is that this is the spawn of the late Zuffa era, new WME-IMG era superstar model. The imperfect but generally manicured veneer of meritocracy is done; being a UFC contender or champion can be an asset but doesn’t specifically confer worth or drawing power. The promotion has gone all-in on producing spectacular periodical events predicated on superstars in an effort to make money. That process honed and enhanced Ronda Rousey and allowed her to exit this sport. It morphed McGregor into the biggest draw in MMA history and in turn rubbed off on Diaz, letting him make tons of money to do club appearances and cannabis conventions.

The maxim works in magnitudes: If this is the way WME-IMG wants to make tons of money, it will take tons of money, too.