The Bottom Line: The UFC’s Looming Conor McGregor Decision

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.

* * *
Following his professional boxing debut against Floyd Mayweather on Saturday in Las Vegas, the big question among MMA fans centered on what is next for Conor McGregor. It was a good night for McGregor despite losing via TKO. He put up a pretty good showing, considering he was competing under the rules of an opponent who is an all-time great at that game. McGregor came out of the fight a much bigger mainstream name and interest is likely to be sky-high for his next fight. The Irishman made it clear he plans to fight again, something that some saw as in doubt after the massive Mayweather payday.

With McGregor establishing he will fight again, attention turns to the natural next question: Where? McGregor is still under Ultimate Fighting Championship contract, but his taking an additional boxing match is another widely raised possibility. The thought process is that McGregor can make a lot more money under boxing’s economic model than he can under MMA’s. Putting aside the lack of opponents who possess even a fraction of Mayweather’s drawing ability and the fact that the novelty of McGregor boxing will fade, boxing doesn’t offer a lot that the Irishman can’t get in MMA.

There is nothing about boxing’s business model that makes it inherently more lucrative than MMA. McGregor’s recent UFC fights have done more pay-per-views buys than all but a handful of boxing events in history, almost all of them headlined by either Mayweather or Mike Tyson. MMA has proven it can bring in the big bucks just like boxing, and there’s likely to be more fan interest in McGregor competing in the sport for which he’s best suited.

The notion that there’s more money in boxing than in MMA is misguided. The UFC’s top stars make less money than the top boxers, but that’s a choice rather than a fundamental state of being. It’s something that could change in the future if McGregor exerts enough pressure and the UFC elects to change its model to accommodate him. The UFC often receives harsh criticism for its pay scale relative to boxing, but there is logic to the promotion setting up the system that it has. The UFC brand name has historically been a big factor in fan interest, much more so than Top Rank or Golden Boy in boxing. Deep cards have also always been part of the appeal of UFC pay-per-views; thus, the money needs to be spread out more. In addition, the UFC controls much more of the top talent than any boxing outfit, and MMA’s stars need access to those opponents in order to draw.

Those factors have over time forced the UFC’s top stars to accept less money than their boxing counterparts. However, none of them really apply to McGregor any more. McGregor’s name on the marquee means much more for pay-per-view than the UFC brand. He has reached such a level of star power that it doesn’t really matter who else is on his cards; just ask Gervonta Davis. McGregor needs access to opponents, but he draws enough money that he could afford to sign up potential opponents to lucrative contracts when they become free agents.

With all this leverage, McGregor can and almost certainly will go to the UFC and demand a different type of arrangement for his fights than the organization has ever agreed to in the past. This could be structured in a number of different ways, but McGregor is likely to demand a much higher percentage of revenue for his shows than any other fighter in UFC history. McGregor may not go all out in his requests for his next fight, but a massive contract battle is pretty much inevitable given his past history of driving a hard bargain and his current stature. This will force UFC to make a pivotal decision that will have massive ramifications for years to come.

Option 1 for the UFC will be to give in to McGregor’s demands. This will keep McGregor in the UFC fold, inflating the stature of the company and helping raise the prominence of all its events. It will also obviously mean massive McGregor fights that have the opportunity to gross huge amounts of money. However, the decision to retain McGregor won’t be as easy as the decisions to retain superstars in the past. Giving in to McGregor will likely mean sharing or even shouldering the risks for his events. When fighters get a cut of pay-per-view, it means they make more if the fight does better. If the fight doesn’t do as well, the UFC simply doesn’t have to pay out that extra money. By contrast in boxing, top fighters are usually given lofty guarantees. If an event disappoints on pay-per-view, like the Andre Ward-Sergey Kovalev bouts or Mayweather-Andre Berto, the promoter can end up taking a bath. It also means profits aren’t nearly so high, even for the biggest fights. Staying in business with McGregor will also likely mean setting a precedent for higher future fighter pay. This isn’t that much of a threat in the near term because nobody is in McGregor’s league as a star. However, when another superstar rises up to something resembling McGregor’s level, he or she will be looking for the qualitatively different type of arrangement “Mystic Mac” secured.

Option 2 for the UFC will be to play hardball. This doesn’t mean refusing to increase McGregor’s pay; McGregor is clearly due for enhanced paychecks either way. However, the UFC can decide it’s only willing to bump up McGregor’s existing contract and not to give him the new type of precedent-setting contract he’s likely to demand. This would keep costs in line for the future. It’s possible McGregor would settle for incrementally higher guarantees and per-buy pay-per-view points. However, it’s more likely it would lead to the ambitious McGregor leaving the UFC.

This is a scenario we’ve seen play out many times in boxing. McGregor is unlikely to get out of his contract, so he’d likely have to fulfill his remaining fights and then become a free agent. Like Oscar De La Hoya, he could then promote his own fights and take a much higher percentage of the revenue. He would need to hire partners to run the business and would need to build a stable of fighters, but McGregor is a big enough star now that it’s well within his grasp. It’s no accident McGregor Promotions was listed as a co-promoter of Mayweather-McGregor. McGregor spoke of that with pride after the fight, and it’s a reflection of where his head is at for the future. The UFC losing the biggest star in the sport would be a serious blow to its prestige moving forward.

Both options for the UFC are perilous. That’s the downside in dealing with someone as successful and ambitious as McGregor. To this point, the UFC has benefitted greatly from McGregor’s presence. In the not too distant future, the UFC is going to have to decide how much it’s willing to give up to preserve that alliance for the long haul.

Todd Martin has written about mixed martial arts since 2002 for a variety of outlets, including CBSSports.com, SI.com, ESPN.com, the Los Angeles Times, MMApayout.com, Fight Magazine and Fighting Spirit Magazine. He has appeared on a number of radio stations, including ESPN affiliates in New York and Washington, D.C., and AXS-TV’s “Inside MMA” television show. In addition to his work at Sherdog.com, he does a weekly podcast with Bryan Alvarez at WrestlingObserver.com and blogs regularly at LaTimes.com. He received his BA from Vassar College in 2003 and JD from UCLA School of Law in 2007 and is a licensed attorney. He has covered UFC, Pride, Affliction, IFL, WFA, Strikeforce, WEC and K-1 live events. He believes deeply in the power of MMA to heal the world and bring happiness to all of its people.