After 'landmark' UFC-Reebok deal, fighters, managers and brands wonder what's next

Benson Henderson

The day before the UFC officially announced one of the MMA industry’s worst-kept secrets – a six-year partnership with Reebok to be the exclusive apparel provider for the UFC, thus eliminating fight-night sponsorships, walkout T-shirts, sponsor banners, the whole deal  – lifestyle clothing brand Dethrone Royalty sent out a mischievous little tweet:

This was “just a little poke” at the UFC, Nick Swinmurn, the founder of both Dethrone and Zappos.com, told MMAjunkie. It also went ahead and let the cat all the way out of the bag, effectively announcing the announcement before the UFC could do it on its own terms.

“We thought, well, we can sit here and act like it’s some big shock, poor Dethrone, or we can have a little fun with it,” said Swinmurn, who added that he knew the end of his company’s formal association with the UFC was nigh when Zuffa officials told him they couldn’t renew Dethrone’s deal for more than a six-month term.

Dethrone had been among the most prominent brands to regularly shell out the money for the UFC’s so-called “sponsor tax” – the fee that many, but not all, sponsors are required to pay the UFC in order to be eligible to buy space on fighters’ shorts or sponsor banners during UFC events.

Now, with Reebok taking over in July 2015 as the sole sponsor inside the cage and throughout UFC fight-week festivities, that money will stay in the pockets of companies like Dethrone and others. That much we know for sure. We don’t know too much more than that, however, and neither do they. The resulting uncertainty is fueling speculation across the industry, as fighters and managers and the brands that have paid them over the years all grope for answers, and attempt to steady themselves in unsteady times.

A troubled market, searching for a solution

Lorenzo Fertitta

According to UFC Chairman and CEO Lorenzo Fertitta, the Reebok partnership is a “landmark deal” for MMA, “essentially changing the sport’s landscape again.” Which is odd, since, of the brands that were just swept off that landscape, it’s tough to find too many willing to admit that this new development is such a big deal.

“It’s just going to change our focus a little bit,” said Craig Clement, co-president of Hayabusa, a maker of technical gear worn by many UFC fighters both in training and in fights. “We’re obviously going to be saving a lot of expenses when it comes to our marketing. If you look at our income statement, a significant portion is going to the UFC and to the fighters for those UFC sponsorships, which isn’t going to happen anymore.”

But if companies like Hayabusa and Dethrone were spending that kind of money to be seen on UFC broadcasts, it must have been because they believed, whether rightly or wrongly, that the return was worth the investment. With that option no longer available, it’s hard not to wonder what effect it will have on the companies that helped support UFC fighters over the years, not to mention the fighters themselves.

For a time, sponsorship money accounted for a significant portion of just about every UFC fighter’s total income. Three or four years ago, many UFC fighters were making more in sponsorship income than they were from their fight purses.

But that’s changed in the past few years, according to both fighters and managers. As UFC middleweight Tim Kennedy put it, “Ever since UFC bought Strikeforce, my earnings in endorsements have dropped every single fight, even though my ranking has gone up every single fight.”

The question is, why? Some are quick to blame the UFC’s sponsor tax, but others say it’s more complicated. While the tax definitely forced a few sponsors out of the game, it also solidified those who stayed as reliable sources of consistent revenue, according to several sources.

Not all sponsors were asked to pay the tax. Industrial supply company Dynamic Fastener was one such example, though company president Kevin Perz told MMAjunkie that after spending around $250,000 sponsoring fighters as “a hobby,” he likely would have stopped the practice relatively soon even without the nudge from Reebok and the UFC.

Those who did pay it, such as clothing company Bad Boy, often enjoyed the way it whittled down the field of competing logos.

“I was never much moved by the UFC tax,” Bad Boy CEO Robin Offner said. “I never found it to be a lot of money. Frankly, I welcomed it. We’ve been doing this a long time, and there is no marketing avenue that would give us the bang for the buck that the UFC gave us. The amount that we paid the UFC was minimal for what they gave us.”

Chris Weidman

Then again, Bad Boy never really spread its money around. It preferred to stick with a few select fighters, and usually major ones, such as Mauricio Rua, UFC middleweight champ Chris Weidman and Alexander Gustafsson. It’s not the kind of company that a UFC newcomer could get a few thousand bucks from for a fight on the prelims, though some of those were pushed out by the tax.

Still, said Charles McCarthy, himself a former UFC middleweight who now manages fighters through his Guardian Sports Group. “I can tell you absolutely it wasn’t the tax” that depressed the UFC sponsor market in the first place. At least, it wasn’t only the tax.

“The number of (UFC) events, and especially the number of events overseas, that has a lot more to do with it,” McCarthy said. “To many sponsors, who don’t even know if their stuff is going to get on TV or not, sponsorships just aren’t worth what they used to be.”

That sentiment was echoed by Dethrone’s Swinmurn, who lamented that “there are so many fighters and so many fights, it’s hard to keep up with it all. Two or three years ago we tried to be on every fight card. But there are so many events now, we’ve had to really just pick our guys.”

That’s one consequence of the UFC’s international expansion. When the organization runs an event nearly every weekend, sometimes promoting more than one event on more than one continent all in a single weekend or even a single day, it forces sponsors to reevaluate what it’s worth to be on any one fighter’s shorts. The more fights there are, the less valuable each one begins to seem, especially as many are relegated to the UFC Fight Pass digital streaming service rather than appearing on TV.

The UFC’s busy schedule also results in fights being booked on shorter notice, according to several managers, which in turn forces them to scramble for sponsors at the last minute, inevitably leading to lower and lower payouts for fighters. And once those familiar MMA-related brands (the “endemics,” as managers like to call them) become accustomed to a certain price point, they’re reluctant to go back up.

“You’ve got more shows,” Audie Attar of Paradigm Sports Management said, “but these companies didn’t increase their marketing budgets just because the UFC decided to put on more shows.”

But then, that still places the blame back in the UFC’s lap, even if it’s oversaturation rather than the sponsor tax that’s the main driver. What that leaves us to wonder is, in signing this deal with Reebok – a deal from which UFC President Dana White claims his company “won’t make a dime” – did the UFC solve the problem that it helped to create?

At least so far, no one seems sure of the answer to that question. Until they see actual numbers on actual paychecks, both fighters and managers say, they can’t tell whether the Reebok deal will be good for them.

“I do believe it’s a great day for MMA and for the UFC, just because any time you’re reaching new heights, that’s a good thing,” Attar said. “But some of the concerns people are voicing, like with the media rankings, those are valid.”

By far, the UFC’s stated plan to use its “media-generated” rankings system to determine each fighter’s initial payout from the Reebok deal was the biggest source of stress and worry for the fighters and the managers MMAjunkie spoke to. Not only are there concerns about which media members actually vote in the rankings, and what their motivations might be, but there’s also fear that the rankings could be too easily manipulated once there’s enough money involved to make anyone care enough to try.

As McCarthy put it, “You hear that and, as a manger, your first thought is, ‘How do I influence the rankings?’”

Even if the integrity of the rankings (insofar as a glorified top-15 list on the Internet can be said to have such a thing) remains intact, there’s also the question of whether it will accurately pay fighters what they’re worth.

“If I have the No. 6 guy, but he has the star power of the top guy, is he going to be compensated fairly?” Attar said. “And those top guys, is the ceiling going to be too low for them? There’s got to be some sort of cap, but we don’t know yet where that will be.”

Conflicts and competitors

Georges St-Pierre

One problem top-tier fighters didn’t have under the old system has a ceiling on their potential sponsor earnings. They could court multiple sponsors at a time, snatching up lucrative deals with brands from an array of different fields, as former UFC welterweight champion Georges St-Pierre did during his active fighting days.

One of St-Pierre’s sponsors, in fact, was Hayabusa, which still has a “long-term deal” in place with the former champ, according to Clement. If St-Pierre were to return at some point after the UFC’s deal with Reebok takes effect, Clement said, it could be a thorny issue.

“Obviously we’ve got to look at his contract with us, because there’s a conflict there,” Clement said. “He’s contracted, legally, to be wearing Hayabusa in the octagon. What happens when the UFC tells him, ‘We’re sorry, we’re contracted to put you in Reebok’? I don’t know. It should be very interesting, because the other deal with Georges is that he’s also sponsored by Under Armour, which to me is more of a direct competitor (to Reebok).”

But without fighters like “GSP” to wear its gear into the cage, where does that leave Hayabusa? Clement admitted that, especially for technical equipment makers, the ability to be in the cage for the fights themselves is a major part of the value of sponsoring any fighter. It’s one thing for the UFC to tell fighters that they keep their existing sponsors as long as they don’t sport their stuff on fight week or during the event itself. It’s quite another to actually pull that off in practice.

According to Clement, when news of the UFC’s Reebok deal broke, his phone was “blowing up” with calls from fighters, and the voices on the other end weren’t all happy ones.

“You hear from all the talk that the fighters are going to be in the best position from this deal,” Clement said. “I don’t know if that’s the truth. From the fighters that I spoke with, they’re not happy about it. … Some of these fighters are making a good payday from sponsors like us. And depending on how the UFC distributes those funds, it should be interesting to see. We’ll see soon enough. The fighters know how much they get paid currently. Come July, when they’re getting their paydays, it will be curious to see what’s going to happen, whether they’re in a better position, the same position, or a worse off position.”

Life after the UFC

Tim Kennedy

For those companies looking for a clue as to what may lie ahead once the era of the in-cage UFC sponsorship has officially ended, they might want to take a hint from military-themed clothing brand Ranger Up, which got out of the sponsorship game when the UFC instituted the tax.

According to Ranger Up CEO Nick Palmisciano, once that happened, “We had to look at, hey, what are we spending money on, who do we want to be involved with, what’s the benefit to the company, and how do we make all this work?”

“That really changed the way we were sponsoring people,” Palmisciano said. “It’s no longer views and how many people are going to come to your website. It’s about associating with the right people and connecting with the fans who actually believe in your product. I think that made us a stronger company.”

But as companies look to find those fighters who are capable of making an impact even when they aren’t sporting a T-shirt on a UFC broadcast, it could change how they determine who’s worth sponsoring and who isn’t. If all you need is a walking billboard on TV, lots of fighters will do. But if you need someone who fans care about even when he’s not actually fighting or even about to fight – also known as the only times he’ll be allowed to wear your stuff, once Reebok takes over – you might very well decide that you need to look for different qualities and different people.

Frankie Edgar

“I think you’re going to have guys who people really believe in – the Frankie Edgar types – who will have no problem,” Palmisciano said. “They’re likable people, they stand for something, and fans want to engage with them. The people who are going to have problems are the fighters who just don’t have big personalities.”

Those fighters could also have a hard time earning money under the revenue-sharing plans surrounding fighter-specific branded gear. According to Tuesday’s announcement, each fighter will get a cut of the sales for his or her own merchandise under the UFC’s deal with Reebok.

But as Palmisciano pointed out, “If you’re a New England Patriots fan, the jerseys you’re most likely to have are Tom Brady or (Rob) Gronkowski. You’re not going to make money off people who are journeyman fighters or new fighters.”

Then again, many of those journeyman fighters and newcomers aren’t making much now. Finding sponsors has been a persistent headache for both fighters and their managers, and getting those sponsors to pay up in a timely fashion after the fight isn’t always easy.

If, as the UFC claims, fighters will be paid their set Reebok fee (again, based on the rankings on the day of the weigh-in) within 10 business days of the fight, that guaranteed cash could make a huge difference to the fighters lower down on the pay scale.

‘Laziness in exclusivity’

Demetrious Johnson

Even for superstars, however, change is in the air. The big names in the UFC are in the best position to keep their existing sponsors, since most are famous enough and have enough social media power to direct eyeballs to a product even without the UFC’s help, but that doesn’t mean they won’t feel the impact.

According to Bad Boy CEO Offner, the company isn’t planning to part ways with any of the fighters it sponsors, but some contracts – particularly those that are “very fight bonus-heavy” – may need to be tweaked.

“We anticipate adjusting our contracts when the time is right, but we’re not that worried about that,” Offner said. “We just need to find new ways of activating our fighters, but they’re not going anywhere. They’re important to us.”

Offner is also optimistic about the overall boost to MMA and the UFC, since he’s long been disdainful of fighters who appeared “logo’d up” on fight night, covering themselves in so many emblems that it’s impossible for any one sponsor to stand out. Demetrious Johnson, the UFC flyweight champion sponsored by Xbox, is one of the rare fighters who doesn’t have that problem.

“I think this will provide a cleaner look, and it’ll be better for the UFC’s image, make them look more professional,” Offner said. “It’s going to elevate the sport.”

As for where that leaves other companies, that’s tougher to say. Some, especially the newer, less established brands, may wither and die without the UFC’s marketing platform. Others might find that they like having a little more cash freed up for other uses.

As for Dethrone, the company that jabbed the UFC with its spoiler of a tweet, it might get more involved with other MMA organizations like Bellator MMA, founder Swinmurn said. It also might look to develop a style that clearly separates it from whatever the look and feel of the UFC’s Reebok gear ends up being.

“The thing where someone is watching the fights, sees the shirt inside the cage, then goes and buys it, that will be hard to replicate,” Swinmurn said. “The good news is, they’ll all be wearing more or less the same thing, so that will become kind of invisible.”

According to the UFC, Reebok will customize gear for different fighters, and few people within the industry expect to see every fighter walking around in identical outfits. At the same time, Swinmurn noted, “I think there’s probably some laziness in exclusivity.”

“It’s like, ‘Oh, Conor (McGregor) is wearing Reebok,’” Swinmurn said. “Well, if everybody is wearing Reebok, who cares?”

For more on the UFC’s upcoming schedule, check out the UFC Rumors section of the site.

MMAjunkie’s Steven Marrocco contributed to this report.