Opinion: The Art of Public Negotiations

Editor’s note: The views and opinions expressed below are those of the author and do not necessarily reflect the views of Sherdog.com, its affiliates and sponsors or its parent company, Evolve Media.

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Justin Gaethje should have stolen the show at UFC 249 by finishing Tony Ferguson and putting an end to his legendary 12-fight winning streak, but Henry Cejudo refused to stay out of the spotlight and announced he was retiring from mixed martial arts competition.

The move caught nearly everyone off guard except the promotion apparently, as UFC President Dana White told ESPN in an interview immediately following the event that “Triple C” had been talking to the company about retirement for months. In an interview with MMAFighting.com a few weeks removed from the event, longtime coach Eric Albarracin indicated his belief that Cejudo’s decision to hang up the gloves will be permanent, stating the two-division champion plans on focusing on his dream of starting a family—unless, of course, the company offers to pay the Olympic gold medalist more money.

During the UFC 249 post-fight press conference, the self-proclaimed “King of Cringe” indicated that White “knows the number” to bring him back to the Octagon, leading many to speculate that the sudden career decision was nothing more than a negotiating tactic. In an interview with TMZ, Cejudo’s manager, Ali Abdelaziz, said he believes the 33-year-old bantamweight will make his return sometime this summer, all but explicitly stating that “The Messenger” was using retirement as leverage for a new deal with the Ultimate Fighting Championship. The sentiment is certainly easy to believe, after all, as Cejudo made it clear in December that he would walk away from the sport unless he received higher financial compensation for his services.

Cejudo isn’t alone in airing his grievances about the UFC’s pay rate, either. UFC light heavyweight champion Jon Jones on social media lambasted the promotion over the company’s refusal to negotiate a higher payout for the 32-year-old in regards to a prospective superfight with heavyweight contender Francis Ngannou. According to White, when it came to the current 205-pound champion moving up a weight class, Jones was asking for “Deontay Wilder” money—something the Rochester, New York, native has vehemently denied. Escalations between the two sides have reached a point where Jones has stated he will vacate the light heavyweight strap due to being underpaid. White’s reply: “The decision he wants to make regarding his career is up to him.”

Cejudo and Jones are two recent examples of fighters publicly demanding better compensation from the UFC, but these types of disputes have been going on for much longer. Remember when Randy Couture in 2007 retired after disagreements with Zuffa management? As the UFC antitrust lawsuit has continued to march on, more information regarding true fighter salaries has been made public through unsealed court documents, indicating that the UFC tends to cap fighter pay at somewhere around 20 percent of the company’s overall revenue. The court documents further reveal that rival MMA promotions, such as Bellator MMA and the now-defunct Strikeforce, have traditionally paid fighters around 45-50 percent of overall revenue—more than double the rate of the UFC. Given the extremely lucrative broadcast deal the UFC signed with ESPN in 2019 and other factors like the promotion’s Reebok apparel sponsorship—though that appears to be coming to an end—it’s not surprising that several of the UFC’s contracted athletes are starting to have issues with their paycheck.

The raw numbers certainly back the fighters’ claims to more money. According to a study by Pepperdine University economics professor Paul Gift regarding the marginal revenue product of UFC fighters—which I broke down previously—between January of 2006 and March of 2018, only five percent of fights managed to generate more than 200,000 pay-per-view buys and over $5 million in incremental revenue, with a mere 44 out of 509 fighters that appeared on PPV main cards generating 75 percent of total MRP. That would indicate that the handful of athletes within the promotion who are considered to be more mainstream stars, such as Jones, are the biggest difference makers when it comes to surplus PPV revenue for the UFC. According to Bloody Elbow’s John S. Nash, between 2012-17 Jones earned a maximum of $32 million while generating around $108 million in additional revenue for the UFC, with “Bones” likely earning far less than that in reality.

Despite the math being on Jones’ side, however, it is unlikely to make much of a difference at the negotiating table. The UFC is notorious for not budging when it comes to athlete compensation, going so far as to rebuke Conor McGregor’s retirement ploys in negotiations over the past several years when the Irishman is far and away the promotion’s biggest star. As the UFC has shifted from relying heavily on variable PPV revenue to more stable income from broadcast media rights deals, the organization is no longer dependent on building crossover stars to generate the bulk of its earnings. This gives the UFC the ability to play hardball in negotiations with fighters while assuming little to no risk on its end, especially since a star like Jones can retire but can’t compete for a rival due to current contract stipulations.

Although Cejudo and Jones have generated a fair amount of media attention regarding their respective decisions to walk away from the sport, unless others follow suit, the UFC will have little reason to give in to their demands. Ultimately, the only way for athletes to really gain leverage over the UFC at this point would be to form a union or convince lawmakers to pass legislation such as the Ali Act expansion, both of which seem unlikely to happen anytime soon. The antitrust litigation currently making its way through the courts against the UFC could also provide some opportunity for fighters, especially if current athlete contracts are deemed unreasonable and changed to a one- or two-year maximum length. Should we see a wave of champions and high-profile fighters retire over the next several months as a result of Cejudo and Jones speaking out, then these public negotiation tactics will have at least made some kind of impact, but otherwise, one can expect business as usual from the UFC moving forward.