The Champion's Clause: An MMA Comparative

September 7, 2009

A few weeks ago MMAPayout.com examined how Anderson Silva might avoid the “champion’s clause” in his UFC contract in order to seek the oft-rumoured boxing match with Roy Jones Jr. While Silva’s manager, Ed Soares, has since cleared the air with regards to Silva’s intentions, the situation nonetheless has provided an opportunity to shed more light on the champion’s clause – it may surprise you to know that the UFC isn’t the only organization with such a contractual obligation.

UFC version:

“if, at the expiration of the Term, Fighter is then UFC champion, the Term shall be automatically extended for a period commencing on the Termination Date and ending on the earlier of (i) one (1) year from the Termination Date; or (ii) the date on which Fighter has participated in three (3) bouts promoted by ZUFFA following the Termination Date (”Extension Term”). Any references to the Term herein shall be deemed to include a reference to the Extension Term, where applicable.”

Strikeforce version:

The initial term of this Agreement shall commence upon the date of this Agreement is signed by Fighter (Effective Commencement Date”) and shall expire two years from the date that Fight er signs this Agreement or two years from the first bout in which Fight er fights hereunder whichever is the later date, unless terminated or unless extended or suspended in which case this Agreement shall expire no later than seven years from the Effective commencement date hereof. Fighter grants EXPLOSION the option and the right but not the obligation to extend the term of this Agreement (“extended term”) upon the same terms and conditions except as hereinafter set forth for an additional one year if Fight er at any time during the term hereof holds or held a Strikeforce Championship Title.

Bellator version:

“If, at any time during the term, FIGHTER is declared the champion of his weight class, a Tournament winner, or a Tournament runner-up, the Term shall be automatically extended for a period commencing on the Termination Date and ending on the earlier of (i) eighteen (18) months from the Termination Date, or (ii) the date in which FIGHTER has participated in three (3) bouts promoted by PROMOTER following the Termination Date (“Extension Term”). Any reference to the Term herein shall be deemed to include a reference to the extension term where applicable.”

Payout Perspective:

The UFC’s clause is the most controversial because it lacks the clarity to be definitive. The consensus seems to be that most courts would interpret the clause to stipulate a one-term only extension of the contract. However, a very strained interpretation of the clause – one where “Term” could also refer to Extension Term – might allow the UFC to automatically renew the contract in perpetuity, so long as the fighter holds the belt at the end of each term.

The wording is so difficult that the matter would likely end up in court should the UFC choose to contest the issue; something that would effectively serve the purpose of the champion’s clause in keeping a fighter away from rival organizations. The wording also raises many interesting questions such as whether the UFC could appoint someone as champion in order to trigger the clause, or whether a champion could in fact resign or relinquish the belt to avoid the clause.

If, indeed, the UFC’s clause is interpreted to be a one-time extension of the contract, it would appear to be far less restrictive than both the Strikeforce and Bellator clauses. Whereas the UFC clause might only be triggered if a fighter holds a championship at the time of his contract’s “Termination Date,” both the Strikeforce and Bellator clauses are triggered if and when a fighter wins a championship at any time.

Are these restrictions a bad thing? It depends on your perspective.

MMAPayout.com’s Robert Joyner has tackled the subject previously when looking Inside the Bellator Contract, and he highlighted a very important point: champion’s clauses are a necessity from an organizational standpoint, because they’re “self-fulfilling” talent retention mechanisms (particularly in the case of Bellator whereby not just champions, but even contenders are re-upped for an additional term).

It’s simply in an organization’s best interest not only to avoid having a fighter leave with a belt or gain substantial negotiating leverage, but also to help retain top-level talent for competitive reasons.

However, from the perspective of the fighter, these types of clauses hinder their ability to cash-in on their in-cage or in-ring success. The fighter isn’t able to immediately hit the open market, or use the leverage of such a potential scenario, to establish contract terms and sell his services for fair market value.

Not surprisingly the rest of MMA’s stakeholders will take sides according to their own positions within the community. Sponsors will side with the UFC, because more stars mean a better product which attracts more attention to their advertised brand. Fans will side with the fighters as the public seemingly always does when it comes down to employer vs. labour. The government is left somewhere in the middle, hoping that nothing becomes too restrictive or too lax that control is lost and regulatory equilibrium thrown out of balance.

…thus it would appear these MMA organization’s aren’t the only ones looking out for their best interests.

10 Responses to “The Champion's Clause: An MMA Comparative”

  1. David Wolf on September 7th, 2009 6:54 AM

    A few points from a legal perspective:

    First, there’s a principle of contractual interpretation holding that ambiguous clauses are interpreted against the interests of the drafter, in this case, UFC. If a court were to tackle the issue, it would almost certainly limit the champions’ clause to a single term.

    Further, though, there’s a question of enforceability of the clause. Without having done any research, I don’t want to step too far out on a limb, but the champions’ clauses may not be enforceable by courts by reason of, e.g. , public policy.

    There’s also the possibility that the federal government will one day apply the Muhammad Ali Boxing Reform Act against MMA, in which case the enforceability of a number of UFC contractual provisions, including the champions’ clause, would immediately come into question.

  2. Alan on September 7th, 2009 10:28 AM

    I doubt the champion could resign/relinquish the belt to get out of the contract. Wasn’t that one of the strategies Couture and his lawyers tried in freeing him up for the Fedor fight? In that specific case the UFC left him as champ and created the Interim belt.

  3. Derek Stewart on September 7th, 2009 2:56 PM

    Another great article Kelsey. As much as everyone loves to point the finger at “big, bad” Zuffa, it only makes business sense for each promotion to have its own champion’s clause. I wonder how Fedor’s contract reads with respect to this and what happens if, as expected, he’s the champion after going 3-0 in three fights with Rogers, Overeem, and Wedrum? If Strikeforce doesn’t develop other heavyweight contenders, how happy will Fedor be if he’s locked-in to Strikeforce, but has no credible opponents to challenge him?

    This is completely off topic, but I just realized the genius of Strikeforce in its battle with the UFC for viewers for Fedor vs. Rogers. First, they announce it would take place in November to throw the UFC off guard. Then, they quietly arrange a date for October 10th, which happens to be the same date as a WEC event. Is there any chance that Zuffa will reschedule WEC 43 after they’ve cancelled it once already? No! Will they put up counter-programming of UFC on Spike and cannibalize viewership from the WEC on Versus? Of course not! So it will be Fedor vs. WEC and you have to like Strikeforce’s chances. Brilliant. (Brilliant, if the Oct. 10 date is in fact true.)

  4. Alan on September 7th, 2009 10:53 PM

    I agree, an Oct. 10 date would be brilliant in terms of fending off counter programming. However it seems Fedor’s largest flaw is his marketability. Such a quick fight would not seem to leave much time for a marketing blitz.

  5. Mike on September 8th, 2009 5:38 PM

    Kelsy – you failed to perform a complete analysis. You raised questions/issues beyond the champions clause and did not consider other contractual terms/provisions which would impact your analysis of the champions clause.
    Mr. Wolf – the Ali Act doesn’t apply. You also fail to perform a complete analysis of contract terms/provisions.
    Alan is on the right track.
    This is another example of websites trying to look like they know what they are talking about but they really don’t. The champions clause is not the reason why Anderson Silva is not fighting Roy Jones Jr.

  6. Glenn on September 16th, 2009 6:56 AM

    Way to come across like an asshole Mike. Mr Wolf clearly spoke of the ‘possibility’ of the Ali Act so I dont think you needed to clarify that it doesnt apply right at this moment.

    Rather than attacking Kelsy, Wolfy and then the website as a whole, why not try to add something constructive seeing as you clearly have a much more in depth and accurate understanding of things than the mere mortals who have contributed thus far.

  7. Mike on September 21st, 2009 3:26 PM

    Just one question Glenn, how does a comparative of the champions clause in the UFC contract have any bearing on the “oft-rumored boxing match with Roy Jones Jr.” and Anderson Silva?

    Answer: I doesn’t.

  8. David Wolf on September 22nd, 2009 6:51 AM

    Mike on September 21st, 2009 3:26 PM Just one question Glenn, how does a comparative of the champions clause in the UFC contract have any bearing on the “oft-rumored boxing match with Roy Jones Jr.” and Anderson Silva?

    Answer: I doesn’t.

    The champions’ clause does have a bearing on whether (more specifically when) Anderson can pursue a fight with Roy Jones.

    Anderson has three fights left on his contract, and if he’s still champion after the third fight, the champions’ clause takes effect, and his contract with UFC renews, leaving him unable to fight Roy Jones.

    If, on the other hand, Anderson loses or relinquishes the title before the expiration of the contract, the clause wouldn’t take effect, and he’d be free to fight Roy Jones once he satisfies his three-fight obligation to UFC.

  9. Mike on September 22nd, 2009 9:57 AM

    Yes, but your convoluted analysis of ambiguity, enforceability and the possible application of the Ali Act reads too much into the plain language of the agreement. If at the end of the Term (a defined term in the agreement) Anderson is still the champion, the contract would extend for the earlier of two events occuring (1) participating in 3 bouts or (1) one year from the Termination Date (a defined term in the agreement). Zuffa does not have, nor does their agreement give them the power to continually/indefinitely extend a fighters contract, whether or not he is the champion.

  10. David Wolf on September 22nd, 2009 11:14 AM

    Mike,

    Your analysis ignores the final sentence in Zuffa’s clause, “Any references to the Term herein shall be deemed to include a reference to the Extension Term, where applicable.”

    Zuffa’s argument would surely be that when the final sentence is incorporated into the earlier portions, the first sentence of the clause, “if, at the expiration of the Term” should be read “if, at the expiration of the Extension term…”

    Your argument is what a fighter would hypothetically argue, that the terms are plain, but as I tried to demonstrate, they’re really not as clear as you paint them. In fact, the plain language argument cuts the other way, in favor of Zuffa.

    As I said earlier, it’s possible for Congress to apply the Ali Act towards MMA. I didn’t say it’s probable, only that it’s possible. At that point, it would supersede any inconsistent clauses in the contract, irrespective of whether they’re in plain language.

    Issues such as public policy or even disparity of power between the contracting parties can also override what is the otherwise plain language of the agreement, so saying something is in plain language doesn’t end the analysis, even if (for the sake of argument) we assume that the clause indeed is in plain language.

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