The Business of MMA: As the UFC’s grip loosens, free agency takes center stage

DETROIT, MI - DECEMBER 02: Eddie Alvarez celebrates after defeating Justin Gaethje in their lightweight bout during the UFC 218 event inside Little Caesars Arena on December 02, 2017 in Detroit, Michigan. (Photo by Josh Hedges/Zuffa LLC/Zuffa LLC via Getty Images)

The balance of power in contract negotiations is changing in favor of fighters, with no signs of slowing down 

Over the past couple of decades the UFC has dealt with competition in the marketplace in one of two ways. Either buy out a rival promotion or lure away their biggest stars. For the most part, this strategy has been successful. Acquisitions of Strikeforce, WEC, and Pride lead to a consolidation of the sport’s top talent under their umbrella. Other competitors such as Elite XC and Affliction shuttered and shriveled away due to financial woes.

But in the past two years the promotion’s priorities have started to shift. Notable names and contenders have started leaving the UFC for what they perceive as greener pastures. While the company allowed them to do so without much of a fight.

Gegard Mousasi, Ryan Bader, and Rory McDonald have all gone on to become champions in Bellator.

Kyoji Horiguchi is now the bantamweight champion of Rizin. As reported earlier this week, top prospect Sage Northcutt has parted ways with the UFC and is currently a free agent.

The Slipping Grip

While most of these decisions undoubtedly have some financial component, it’s clear that the UFC is abandoning its approach of trying to hold all of the top contracts in the market—and simply hoping to be the premier brand instead.

The effects of this pivot already rooted throughout the sport. The groundbreaking trade between the UFC and ONE Championship, the supposed closing of the UFC’s men’s flyweight division, and the aforementioned high-profile fighter signings across multiple promotions. These are all directly or indirectly the result of the alteration in the UFC’s competitive strategy. Even if one were to argue that some of the roster changes were inevitable, the timetable of these moves was certainly accelerated due to the current business climate.

The Power of Free Agency

It’s within those roster shakeups where the biggest power shift can be seen. Specifically, the increased leverage of free agency.

Although free agency has always been an option for fighters, it’s been a while since an MMA promotion not named the Ultimate Fighting Championship has been able to offer a competitive salary without the threat of financial ruin or a looming buyout. With Bellator receiving financial backing from their parent company ViacomPFL and ONE Championship raised funds through venture capitalists. This influx of cash flow allows the market to finally provide enticing alternatives to the top contenders of the UFC. This is especially true for perennial title contenders and “gatekeepers” who feel they are underpaid.

The UFC’s acquiescence to let ranked fighters compete elsewhere is another major factor in the expanded clout of free agency. For some time now several pundits and UFC veterans argued that the promotion held a monopoly/monopsony power in MMA. Some former athletes went as far as filing an antitrust lawsuit against the company.

While the UFC has always disputed this, there are multiple examples of the organization aggressively pursuing other promotion’s champions and former champions, as highlighted by the lawsuit between the UFC and Bellator over Eddie Alvarez’s contract in 2013. The recent trend in name value signings to other companies, however, shows that the UFC is no longer willing to pay the premium of holding all the elite level contracts in mixed martial arts.

What Does Being a Free Agent Actually Get You?

So exactly how much greener is the grass outside of the UFC? —Apparently, it’s a whole new shade.

According to the above-mentioned Eddie Alvarez, who signed with ONE Championship this past October, his new deal is a “true partnership”. A partnership with the Asian MMA promotion that is worth an astounding eight-figure salary. Even if the “Underground King” stretched the truth, the fact that ONE secured Alvarez when the UFC apparently made him an offer he said “came close” to what he hoped for speaks to how much money the former lightweight champion received for his services (if his 2013 contract is any indicator).

Money isn’t the only perk offered to fighters either. ONE recently announced a move into eSports with the newly recruited Demetrious Johnson. Johnson, an avid gamer and twitch streamer, is the chief brand ambassador of this venture. The majority of fighters that jumped ship to Bellator stated that the straightforward politics and promotional opportunities they receive from the Viacom subsidiary are far more favorable than in the UFC. Kyoji Horiguchi has said he has “no regrets” leaving the world’s largest MMA organization. Now he is a bonafide star in Japan and has more exposure than ever before.

Whether or not these free agent signings will help promotions thrive—or even survive—in the current market is yet to be seen. But there is no doubt that fighters have more negotiating power than ever before. The real question is, how long will that leverage last?

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