How Expensive Is It For UFC Athletes To Fight Abroad?
Introducing the most and least favorable tax locations for UFC fighters.
What is the financial burden of performing overseas?
Warning: this article is about taxes (boring!). It is also about breaking down the personal cost for fighters to participate in events overseas. Many people might not necessarily know how UFC fighter salaries are distributed, so we looked into what happens to that money when UFC fights happen abroad.
Before the pandemic, the UFC regularly hosted events in countries across the globe. This helped increase its brand awareness and can be credited with helping grow the promotion’s popularity immensely. Part of the reason why the UFC can touch every aspect of the globe can be tied back to hosting events in multiple countries across several continents.
To date, the UFC has hosted events in 26 countries. In 2023, the promotion visited Brazil and is looking toward events in Australia and the U.K. within the first half of the year.
So, besides travel costs, visa fees, luggage logistics, and other expenses relating to travel, how expensive is it for the average UFC fighter to perform abroad? Which countries have the most unfriendly tax regimes for foreign fighters? Do they get any relief?
We looked into it and found some interesting stuff.
An example scenario
Take an American UFC fighter on an entry-level contract: $12,000 to show, $12,000 to win. And let’s say they’ve been tapped to make the walk at UFC 284 (the upcoming card in Australia). Let’s map their journey and calculate their expenses along the way (Note: This is a simulation for educational purposes only. Consume with a grain of salt).
Ok, for this scenario our budding prospect trains at American Top Team in Coconut Creek, Florida.
From there, they’ll be flying out of Miami. According to data aggregated by farecompare.com, the average price of a round-trip flight from Miami, Florida to Perth, Australia is $3016.
Check out how far in advance one has to book to beat the average price. I hope our prospect wasn’t tapped on short notice!
Assuming our prospect purchased the itinerary at the average price, we can safely assume the total cost to arrive in Australia is closer to $3,200 door-to-door (Ubers, bags, overpriced airport food, etc).
Between arriving in Australia and fighting, the financial burden of fight week is generally stable. The UFC houses the athletes in a hotel and has nutritionists on site to help with weight cuts, eating, hydrating, and staying in prime condition. This ensures that the athletes (unless they choose otherwise) only have to worry about media obligations and performance. When it comes time to fight, money is the last thing on our prospect’s mind.
Now, let’s say our prospect has a tough night losing a tightly contested split decision. They don’t get their hand raised. They are battered, bruised, exhausted from battle, and now only pocketed $12,000.
What happens? Well, it’s not great news financially speaking.
According to KPMG, a global management and taxation consulting firm, Australia’s tax rate on non-residents is 32.5% on the first 120,000 AUD (~$87,000).
At a 32.5% tax rate, this means from the $12,000 gross income our prospect earned, they must subtract $3,900 instantly. That $12,000 just became $8,100 faster than a straight left hand to the jaw (and probably feels like one too).
Then it’s time to pay your team. I’m sure these numbers aren’t accurate, but for simple math let’s just say….
25% to coaches or gym
10% to an agent or manager if applicable
And we can’t forget our prospect spent $3,200 just to get there. So, after all of that, we can finally map out the take-home salary for our up-and-coming prospect from ATT. Needless to say, it’s a grim outlook (again, it’s not 100% accurate, but you get the idea).
$700.00
You can imagine the financial strain on fighters making the minimum salary especially if they lose. To go all that way just to pocket $700 is demoralizing to say the least, especially after completing a brutal fight camp. But how does Australia stack up against other countries the UFC has entered before? I took a look at the other 25 countries that have hosted a UFC event. While I won’t touch on all of them, it’s interesting to see how fighters must succumb to specific monetary regulations given their pay structure (the fact that they are independent contractors.
Other tax regimes
First, a quick note on my research process for transparency's sake. I sourced the following data from articles written by some “Big Four” consulting firms such as PricewaterhouseCoopers (PwC) and KPMG. When those articles didn’t yield an answer, I diverted to government websites (at least the ones I could understand). I am not an international tax specialist, but I feel as though I collected generally accurate numbers.
Of all the previous countries that have hosted the UFC, China is the least friendly in terms of taxes on foreign earners. Per China’s tax structure, any income earned that succeeds 80,000 CNY (~$11,000) is automatically subject to 45% tax. So, if we think about the minimum UFC contract as a $12,000 to show, and $12,000 to win, everyone would theoretically be liable for this tax.
Some countries adhere to a progressive tax system for non-residents while others apply a flat rate (to learn more about the difference, see here).
Singapore, New Zealand, Germany, Czechia, and Canada all apply a 15% flat tax to non-resident income. Japan and Poland both use a 20% tax whereas, in Croatia and Russia, it’s 30%. Brazil administers a 25% flat tax for foreign earners.
The most friendly was the United Arab Emirates at 0%.
All this to say, taxes matter when it comes to the levels of income different fighters make depending on their contract. The same can be said for different U.S. states as well which I chose to leave out this article. Paddy Pimblet mentioned it last year when he was asked if he would fight at Madison Square Garden. According to this article from MMAFighting, “[Paddy said he’s] not thrilled at the thought of his purse being subjected to New York’s high state income tax. ‘Come on,’ he said. ‘That tax man just taking all my dough. That’s not happening, the tax man’s not getting my money in New York.’”
So now that we’ve determined the tax burden on fighters when they perform abroad, one question remains: Can they get a break?
Luckily, for American fighters at least, they can.
Foreign Earned Income Credit (Form 1116)
Consider the FEIC as a life raft for the prospect we met earlier. In lamens terms, the $3,900 tax Australia levied will be returned in the form of credit whenever our fighters file their tax return.
According to the IRS, “You can claim a credit only for foreign taxes imposed on you by a foreign country or U.S. possession.” Full stop. (Obviously, the UFCs roster is made up of plenty of international fighters, but I didn’t look into if other countries offer something similar.)
Is the UFC responsible for factoring in foreign taxes when structuring fighter salaries? The short answer is no, just like any other entity. However, would our prospect benefit from a small bonus dedicated to helping cover the tax burden? Absolutely.
As the UFC continues to bring back international events, I’d be curious to see if more fighters speak up about not wanting to fight in places with unfriendly tax structures, like Paddy. The tax man comes knocking for all of us, but for prospects trying to gain traction in the UFC, it's much less a knock than it is a punch in the gut.
Was gonna say, UFC doesn’t help out with this? Very surprising. Don’t blame paddy for picking his fight locations based on tax. That estimation is crazy too, pocketing $700 after making $12k pre-tax/expenses lol. Crazy
45% tax on foreigners in China! Bonkers.