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How the Gilbert Melendez deal changes the industry

For three years, if a top five fighter wanted to make the most money possible, there was only one place to go. Bellator's bidding aggressively enough to get Gilbert Melendez to agree to an offer showed the MMA world that dynamic has changed.

Esther Lin, MMA Fighting

The announcement on Friday that Gilbert Melendez had signed a multi-year contract with Bellator is a potential game changer for the entire industry.

No, Gilbert Melendez is not going to be the star that leads Bellator to overtaking, or even being competitive with UFC, as the leading MMA company in the world. But for top talent, everything is a little different today.

Since UFC purchased Strikeforce three years ago, the leverage for top fighters when it came to negotiating deals was all but gone. With only a few exceptions, UFC had all the top talent, and paid far better than anyone else. There were opportunities for bonuses not available anywhere else, and in a drying up sponsorship market, UFC was the place to be.

You couldn’t match the exposure, nor could you possibly build a name anywhere near as much on the outside. Bellator was there, but their game plan for the most part was to sign either undiscovered talent, or a few guys with some name value who had been let go by UFC, meaning they were no longer championship main event caliber. For most, Bellator offered relatively low start-up money while dangling the carrot of a potential $100,000 payoff for winning a few-month-long tournament.

Sure, they paid big money for Quinton Jackson, but he was already leaving UFC and looking to get into the entertainment world. Bellator, owned by Viacom, provided a better entree. They would help him break in, whether it be movies, a reality show or pro wrestling, and he’d fight to help up the profile of the promotion. Plus, in a television business, whether his best days were behind him or not, Jackson was one of the fighters who had established being a difference maker when it came to people wanting to see him fight.

Realistically, the only thing resembling a top guy that Bellator really got that UFC wanted was Eddie Alvarez, back in 2009. Alvarez was fighting in Japan, and had both charisma and an exciting in-ring style. He was both a good fighter but also had star potential, provided he could get to the top in UFC, which was far from guaranteed.

But in 2009, he was largely unknown in the U.S. market. Bellator, at the time catering to the Hispanic audience since their television deal was with ESPN Deportes, offered significantly more than UFC. To UFC, he was an unknown fighter, clearly one with marketability and potential, but there was no guarantee would be a top guy in their deep division. For Bellator, they were looking for a signature star with an Hispanic surname, and knew they’d have to greatly outbid UFC to get him. At their level, there was also a far stronger chance he would dominate the competition.

Unlike Alvarez in 2009, Gilbert Melendez is a proven commodity. He’s currently ranked as the No. 2 contender in UFC’s lightweight division. If he was still under contract -- and if a superfight with Jose Aldo wasn’t on the agenda -- he was the most logical next lightweight title contender.

This is not a run-of-the-mill fighter. This is a guy whose next fight could very well have been a pay-per-view main event or headlining a FOX special. It’s a guy who has already main evented on FOX and drawn very strong spring-level numbers in the process. It’s a guy who came one round -- on a single judge's card -- from being the lightweight champion in his fight with Benson Henderon on April 20 in San Jose, Calif.

It’s a guy who has been one of the best fighters in his weight in the world for just about a full decade. And he could be with UFC tomorrow, and in a championship fight the next day. All the company has to do is match whatever offer Melendez has already agreed to with Bellator, a number that has established his current value in the free market system. UFC has that right to match any outside offer and retain his services.

Having spoken to Melendez many times over the years, his long-term goal has always been to be viewed as the No. 1 lightweight in the world. Just like that could never happen in Strikeforce, it also can never happen in Bellator. But at 31, having picked up his fair share of injuries over the years, having an outside gym business and a daughter, legacy dreams are trumped by daily financial realities. He's almost surely past the midpoint and will soon be heading down the home stretch of his career.

And who knows how he views the Henderson decision today, past the point he clearly believes he won. Whether one agrees with that assessment or not, what did happen over the past year, without any question, is the legacy of the Melendez/Josh Thomson lightweight era in Strikeforce was clearly established as being a lot stronger than it appeared to be when it was actually going on.

Before last year, he may have believed he was as good as any lightweight fighters in the world, but it was only supposition, with no tangible evidence to prove it. The success of both Melendez and Thomson, both have gone into UFC and established they are championship level main event fighters, forces an assessment of both men's careers to be significantly more favorable than just being big fish who feasted on lesser competition.
This is not a fighter who can be criticized for having boring fights. If anything he’s historically among the most exciting fighters to watch perform on the planet. He’s in his prime, although he hasn’t matched the ferocity of his 2011 win over Tatsuya Kawajiri, which would have to be his career peak. He’s coming off winning one of the wildest fights in company history.

If Melendez’s goal was to be ranked No. 1 in the world and hold the sport’s most important championship in his division, it’s something he’s come close to, but hasn’t reached. By signing the Bellator deal, he’s put himself in a position, if UFC declines to match the offer, that he’s made achieving that status almost impossible for the next several years, at which point he may no longer be able to fight at his current level.

If his goal was to prove to himself he was No. 1, and make the most money to support his family, he may have already proven the former to himself in the fight with Henderson, and by his decision this week, guaranteed the latter.

Of course, all things considered, having that income and getting another shot to prove he’s No. 1 would be the ultimate scenario. But that’s only happening if UFC matches the offer. UFC has not given any comments on the situation, past Dana White’s more than cryptic hinting that negotiations weren’t going well earlier in the week.

For the past three years, UFC has had the upper hand in negotiations with talent. The alternatives for a top-tier fighter was to take the offer, or fight for less money and no notoriety elsewhere. Melendez himself benefited from being on the outside in the past, before the 2011 Strikeforce sale. As far as base salary was concerned, Melendez’s Strikeforce contract was more lucrative than any UFC lightweight fighter’s base for the very reason that Strikeforce didn’t want to lose one of its key fighters.

That contract carried over to UFC. He earned a $175,000 base for his fight with Henderson, and almost surely earned more than that for the final fight of his deal, his Oct. 19 fight with Diego Sanchez, between winning and getting a fight of the night bonus in a bout that captured a number of Fight of the Year awards. The Sanchez fight was the final bout of the deal.

Because the terms of the deal with Bellator are not public, and because UFC has made any comment regarding passing on them or not, there’s nothing that can be said until they make the key decision.

Melendez is not a giant drawing card. If you look at the lightweight contenders who can possibly get the next shot, which would be T.J. Grant, Thomson, Henderson or the winner of the upcoming Rafael dos Anjos vs Khabib Nurmagomedov fight on Apr,. 19, Melendez would mean slightly more than anyone but Henderson as a contender. As a business, the UFC can easily afford the loss. But it’s a loss of one of the best fighters in the world nonetheless.

But for the industry, this was huge. Competition naturally raises the value of the performers, as well as their compensation level. Bellator has talked competition, but had yet to make a move to prove they really were.

Until now.

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