Court denies Alvarez’s preliminary injunction application

January 25, 2013

The U.S. District Court for the District of New Jersey denied Eddie Alvarez’s request for a preliminary injunction so that he might be able to appear at UFC 159.  The court held that Alvarez could not satisfy his burden of proof for a preliminary injunction.

Preliminary Injunction Decision

The Court heard oral arguments this morning and rendered its decision this afternoon.  The Court held that Alvarez could not satisfy the first 2 elements for issuance of a preliminary injunction.  First, the Court held that Alvarez could not show a reasonable probability of success on the merits.  Second, he could not show irreparable harm.

The Court held that Bellator had satisfied its matching rights of Zuffa’s contract.  It would not look into the word for word matching of terms but determined that it would apply a “common-sense interpretation to the word “match.””

Notably, the Court would not examine the issues regarding weighing Fox versus Spike TV or the issue of Zuffa’s PPV offer.  Rather, it stated that while Alvarez may prevail at a later date, it would not today.

In a footnote, the Court indicated that it would not and could not find Bellator in breach of contract if it doesn’t provide its own PPV.  So, despite the fact that Bellator has not put on a PPV and there have been no indications of a PPV outside of these legal negotiations, the Court would not decide on an event that may or may not occur in the future.

Even if the Court ruled in its favor with element 1, it did not determine element 2 to satisfy the burden.  The Court held that Alvarez was basing the fact that he would be irreparably harmed on speculation.  Specifically, the argument that Alvarez would lose out on “notoriety, endorsements and a wider exposure to viewers” would require the Court to make speculative assumptions on what might or might not happen as a result of his participation on April 27th.

Furthermore, Alvarez’s brief cited two cases in which preliminary injunctions were granted on behalf of professional athletes based on the fact that they would be irreparably injured if they would not be able to pursue their career in the manner in which they saw fit.  However, those cases differed as in each there was an illegal restraint that necessitated the players to be granted an injunction. The Court held that Bellator was not imposing an illegal restraint on Alvarez and he is not precluded from competing professionally if the injunction were not granted.  Thus, Alvarez could not prove element 2.

(H/t:  Fight Lawyer)

Payout Perspective:

Bad news for Alvarez as Bellator has won a big battle.  The Court punted on two of the more interesting issues in the matching rights debate: comparison of networks and PPV.  Perhaps punt is not fair considering the limited scope the Court was willing to evaluate on a preliminary injunction.  However, the lack of resolution and definition on the issues leaves it primed for further litigation.  As the Court indicated, Alvarez may still prevail in his claims, but he could not obtain a preliminary injunction.

More likely, we will see a settlement of some sort between the parties.  Perhaps even mediation to resolve the dispute.  Its not clear if we will see Alvarez sign with Bellator or if the parties workout a deal where Alvarez will eventually land in Zuffa.

MMA Payout will continue to follow.

6 Responses to “Court denies Alvarez’s preliminary injunction application”

  1. codemaster on January 27th, 2013 1:48 PM

    Alverez will have to fight it out in court–that is the only message from this refusal to provide an injunction by the court.

    Whenever you have contracts which have a matching clause, naturally, the legal wrangling centers upon the equivalency and value of each competing offer.

    That means a full court case. Bellator’s claim to match the PPV remuneration offer of the UFC is disingenuous upon its face. Bellator is not a PPV company nor can it be reasonably expected to match or exceed the UFC on PPV purchases with no prior history of producing a successful MMA PPV event on par with the UFC.

    A court case will attempt to quantify the value of each offer.

    Bellator has the money to beat the UFC offer, but they don’t want to do that. The UFC is content to allow Bellator/Viacom to price themselves out of the market. Ultimately, Bellator seems intent on just dragging Alvarez through an expensive maze of legal muck without a real end-game in sight.

    What is Alvarez going to think of Bellator/ViaCom if he is compelled to fight in their promotion for less than what he knows he could get in the UFC? Will he represent the Bellator brand well after such a nasty legal/career experience?

    What will MMA fans think when one of their favorite fighters is backstabbed by a ruthless, sleazy promoter?

    What is in it for Bellator to go to court with Alvarez?

    That is what I think Bjorn and company need to ask themselves. Evidently they seem to feel their actions will not engender a backlash among their viewer base, and that the court case will have no irremedial impact upon their brand.

    I wouldn’t be so sure Bjorn.

  2. mmaguru on January 27th, 2013 3:12 PM

    Long time poster, first time listener LOL.
    codemaster, I disagree with your last sentiment about Rebney. I don’t feel Bellator will lose anything in this suit with respect to fan viewership. Most ordinary fans have no idea this legal action is ongoing.

  3. Jason Cruz on January 27th, 2013 11:27 PM

    @mmaguru: Where have you been?

  4. Matt C. on January 28th, 2013 2:42 AM

    This is a dangerous road for Bellator in my opinion. They are publicly revealing what they are willing to pay Alvarez. If I’m a champion in Bellator I immediately want at least that offer and probably more. This could really cause a dramatic rise in Bellator’s payroll expenses very quickly. At least if those champions have managers capable of negotiating fair deals for their clients based on Bellator not being mom and pop anymore by their own admission. They are arguing in court Spike is equal to Fox. Plus they are owned by Viacom.

    Speaking of Bellator being owned by Viacom… Dana White is really pushing the narrative now that Bellator is owned by Viacom and that they are sitting on $5 billion dollars in cash. Dana is framing this now as the UFC is actually at a disadvantage to Viacom/Bellator from a cash spending point of view. So managers and fighters need to start wondering why Bellator isn’t paying like the UFC? Which brings it right back to the Alvarez deal and Bellator blowing up their payroll expenses.

  5. Jason Cruz on January 28th, 2013 10:19 AM

    @MattC: I think you hit some very key points. The fact that the contract is out there for all to review makes it easier for agents/managers/fighter reps to ask for the same or similar offer. Even if not with the pay, there’s info on the per diems and how much Bellator is willing to pay for corner folks in the contract.

    And, I think you are right about White. He’s a very savvy guy.

  6. codemaster on January 30th, 2013 9:55 PM

    @mmaguru

    LOL all you want, that does not mean that Belllator is immune to the bad publicity that comes with treating a popular fighter shabbily. While casual fans may not know about this issue, harcores know–and will remember–and pass it on to casual fans. The hardcores are market leaders and I have noticed that MMA fans have very long memories, and unlike boxing, MMA fans actually like and respect most of the fighters.

    My point was that I see little advantage to Bjorn screwing Alvarez. Obviously Rebney does not want to beat the offer–only match it enough to drag the dispute through the courts.

    All the while, Dana White is painting Bjorn and Viacom as the bad guys–and even claiming underdog status for the UFC! ‘ )

    As I said earlier, the UFC is content to let Bellator price theimselves out of the market–and now that these numbers are out–Bellator fighters will have higher monetary expectations. ViaCom may have a ton of cash, but Dana White knows very well they don’t want to spend it on MMA. He’s calling their bluff, and spinning Bellator as greedy and cheap–a promotion who treats their fighters badly. White even warns that fighters will think long and hard before signing a Bellator contract.

    It remains to be seen whether Bellator can pull near the kind of ratings the UFC are on Fox, FX, and Fuel combined–not to mention PPVs.

    Bellator should either take Alvarez or let him go. Keeping him in a legal limbo does not serve a cool, rational business assessment, but rather smacks of tit-for-tat ego competition. The longer the legal dispute carries on, the messier it will get for Bellator–and the greater notoriety and inconvenient revelations of financial details.

    I just don’t see this legal move by Bjorn as making good business sense–short term or long term.

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