The economics of UFC fight-night bonuses (article)

Really excellent article on the economics of fight-night bonuses by ug'er Ben Fowlkes, with some insight from an econ professor. worth the full read imo

 

Only – hold on – things aren't as bad as they seem. There are three different bonus awards up for grabs at the end of the night, and each one is worth about three times your entire take for fighting and winning. And you? You're eligible for them. Hell, you might even win more than one. You could show up to fight for $16,000 and end up pocketing an extra $100,000 just for doing a really good job. What's not to like about that?

In theory, it sounds like a pretty sweet deal for prelim fighters. It's just that, once you actually look at how it shakes out in reality, you realize their odds aren't so great.

For instance, look at this graph from MMA analyst Reed Kuhn. After looking at roughly eight years' worth of UFC end-of-the-night bonuses, Kuhn found that, statistically, prelim fighters are unlikely to actually win one of those bonus awards. According to Kuhn's analysis, 36 percent of main event fighters took home some form of bonus (most often the "Fight of the Night” bonus), while fighters in the 12th spot on a card – typically the first fight of the night – won a bonus just seven percent of the time (including zero "Fight of the Night” bonuses).

Throughout the prelims, the numbers look similarly depressing. The six and seven spots – the two fights just before the main card begins – offer the best hope for a bonus, but even those fighters win a bonus award only 14 percent of the time. The chance of two prelim fighters combining for the "Fight of the Night” is even worse. As Kuhn pointed out, "A fighter in any given spot on the main card will average a 14.7 percent FOTN bonus rate, while being on the prelim card results in a measly 3.2 percent FOTN average. That's a huge drop, and a far larger drop than Knockout and Submission averages across the card.”


According to Seth Gitter, a professor of Economics at Towson University in Baltimore, it might have something to do with the psychology that motivates someone to become a fighter in the first place.

"Most economic theory assumes that most people want to avoid risk,” Gitter said. "That's why we buy insurance. But in some cases people are risk-loving.”

A sport where people lock themselves in a cage with other humans who are trying to smash their faces may just be one such case. By its very nature, fighting isn't the kind of sport where you can afford to be content with second place. The 25th best tennis player in the world might make a good living with relatively minimal risk, but the 25th best welterweight in the UFC is going to have to bleed a lot for not much cash in the end. The big money is this sport goes to those at the very top of the pyramid.

That aspect of fighter compensation, Gitter said, brings to mind the economic concept known as "tournament theory.”

Rest of article at http://www.mmajunkie.com/news/2013/07/the-economics-of-ufc-fight-night-bonuses?utm_source=dlvr.it&utm_medium=twitter

ttt

"[T]ournament theory might help explain why fighters are often content to compete for very little in the hopes of one day hitting it big."

 I assume most fighters get this. If you don't reach the top you don't get paid very well, but it you do the rewards are enormous. The top fighters aren't just rich - they're rock stars.

There is absolutely nothing wrong with performance based bonuses.

That is indepenent of whether or not an athlete can earn a living off of their base pay when that athlete competes for an organization that is the pinnacle of the sport and brings in over $500 million per year in revenue.

Just because Dana stated they were considering getting rid of bonuses to up the pay for the lower tier guys doesn't mean they can't afford both.

  1. Economics is not a science, its often based on societal values. Most economist theories are based on unproven assumptions and value biased social science data.

    2. It has been proven consistently that people are not that motivated by money. In fact studies have shown that people are likely to become less motivated when they are given more money.

    3. People are motivated by their interests not by money.

    4. Most economists are a plague on the society and shouldn't be taken seriously.