What’s GSP Worth to the UFC?

Three years ago, two controversial scorecards sided with Georges St-Pierre over Johny Hendricks. It had been one of St-Pierre’s worst performances in years. In truth, for a fighter who had been consistently dominant for years, St-Pierre hadn’t looked quite himself in the few fights prior to that. To hear him tell it, his head wasn’t in the game.

“When I first started doing this sport, in the beginning it didn’t have any money,” he told Joe Buck on his Undeniable program. “I was doing it for the love and the passion of the sport I really like what I was doing.

“And then the fun became a business,” he continued. “So the fun became a business, and the business became stressful.” He likened the stress to a brick he carried on his shoulder, and he needed relieve himself of the weight or he’d face the consequences inside the cage. “The last two, three fights I didn’t have fun, I did [them] because I had to, not because I wanted to.”

Immediately after the Hendricks fight, St-Pierre indicated he needed to take time away from fighting. A month later, he vacated his long-held welterweight championship and went home not knowing when or if he’d return.

Three years on, St-Pierre, now 35, is willing to return. The UFC has finally instituted a random drug testing policy, which St-Pierre had pushed for years and listed as a contributing factor to his leave. (St-Pierre entered the USADA testing pool in August.) His head is clearer than it was three years ago, and the ACL he tore in early 2014 has long since healed. So what’s keeping St-Pierre out of the cage? Once again, the business is getting in the way of the fun.

Although St-Pierre has stated his readiness to return, UFC President Dana White is adamant that St-Pierre does not want to fight. In this case, White’s attitude, whether real or a façade for negotiating leverage, is reportedly based on St-Pierre asking for more money than UFC is willing to hand over easily.

Much has changed since St-Pierre last competed, with the two key changes being the UFC’s Reebok sponsorship deal and the sale of the promotion.

In 2015, UFC and Reebok began a reported 6-year, $70 million agreement for all UFC fighters to wear Reebok gear in the cage, costing fighters the ability to sell the space on their shorts and their fight banners. St-Pierre was one of the sport’s biggest sponsorship earners, with estimates pegging his per-fight sponsorship haul in the seven figures. If St-Pierre were to return in a non-title bout (and not sign a separate deal with Reebok), his sponsorship take would dwindle to $20,000 in the Reebok era. Winning back his championship would mean an extra $20,000 per fight.

Based on St-Pierre’s public comments, how he will be compensated for lost sponsorships in the Reebok era is a sticking point for negotiations.

The second key change is that the UFC sale to WME-IMG was heavily leveraged, with debts totaling $1.8 billion (including $425 million in existing debt from the previous ownership). According to Dave Meltzer, the annual interest on that debt, assuming an average interest rate of 7.5%, will be about $137 million. As reported in the Wrestling Observer Newsletter, UFC’s profit for 2015, the biggest year in company history, was $157.8 million pre-interest. The prior year, it was $73.957 million. According to Bloomberg, the new ownership is looking toward cost-cutting and licensing revenue increases to raise the company’s EBITDA (earnings before interest, taxes, depreciation, and amortization). In this position, the promotion is going to be resistant to changing the way it compensates fighters, particularly if it risks creating a domino effect with star fighters, like compensating St-Pierre for the Reebok deal could do.

So what is St-Pierre worth the UFC? Let’s look at some numbers.

From 2010 on (his last 6 fights), St-Pierre averaged about 769,000 pay-per-view buys per fight. Conservatively estimating UFC takes home about $25 per buy, which is $19.225 million in pay-per-view revenue for each St-Pierre bout. To compare, let’s look at the average card headlined by a middleweight or welterweight fight, since those are the divisions St-Pierre has expressed interest in fighting at. Due to Conor McGregor’s absurd drawing power making him a statistical outlier, and the fact he has no plans to compete at welterweight again, I’ve removed his two fights with Nate Diaz from the data. With that in mind, the average card headlined by a middleweight or welterweight fight from the past two years did about 344,000 buys, or $8.6 million in revenue.

At the gate, those same 6 fights averaged $5.5 million, although that includes the outlier of UFC 129 in Toronto, which did the biggest gate in company history with $12 million. Removing that show, the average drops to a healthy $4.2 million. Pay-per-view events headlined by middleweights or welterweights from the past two years (once again removing McGregor bouts), averaged $2.365 million at the gate.

Between those two metrics, one St-Pierre fight is $12.46 million more valuable than a comparable replacement main event. However, if you believe St-Pierre’s star is falling (two of his last three fights didn’t beat the above mentioned pay-per-view average), if St-Pierre averages 600,000 buys per fight in his return, his fights would be worth about $8.2 million more than a replacement bout. In my view, his first fight should be bigger than the average, and everything after that will depend on too many different factors to guess.

The above does not include whatever impact St-Pierre would have on the Canadian market, once UFC’s second home, which has never recovered from his absence. Nor does it include increased marketing costs related to promoting St-Pierre’s return (while he was active, the UFC spent millions promoting him, most notably in their Primetime series).

Assuming the figure isn’t out of this world, St-Pierre is likely worth whatever price he’s asking for. The key factor is that UFC does not want to give St-Pierre so much money that it disrupts their existing pay scale, with other top stars asking for similar money. That fear on UFC’s side, not necessarily St-Pierre’s requested dollar amount itself, is likely the hold up with his return.

Dan Plunkett has covered MMA for 411Mania since 2008. You can reach him by email at [email protected] and follow him on Twitter @Dan_Plunkett.