CSAC rules Rousey released from fight contract

April 4, 2014

Sherdog’s Mike Whitman first reported that the California State Athletic Commission issued its ruling in the arbitration of Ronda Rousey and Fight Tribe Management.  The commission ruled that Rousey is released from her fight contract but left the commercial aspect of the contract to the court.

Executive Director of the CSAC, Andy Foster heard the arbitration between the parties last week over the dispute between the UFC women’s bantamweight champion and her manager Darin Harvey.  Originally, Harvey had petitioned the Los Angeles Superior Court for the issue regarding the representation agreement between the parties to be decided via arbitration.  However Rousey’s legal representatives claimed that the contract should be determined by the CSAC.  The arbitration was held on March 28 with Foster serving as the arbitrator with the assistance of two attorneys from the AGs office.

Harvey claimed that the representation agreement was drafted as a talent contract and not a fighter-manager contract.  Regardless, Rousey’s attorneys argued that the representation agreement was void under California law.

The facts stated that Rousey and Harvey entered into a 3 year agreement starting on May 15, 2012 and signed on January 29, 2013.  Harvey would receive 10% of Rousey’s income generated from professional fighting, modeling, acting and other commercial activities.  However, the CSAC determined that the agreement “was not prepared on the required, pre-approved forms, nor did both parties appear before the commission at the same time in order to receive the commission’s approval, thereby invalidating the agreement as a fighter-manager contract in California.” (quote via Sherdog)  The CSAC ruled that Harvey was not a “manager” as defined under Business and Professions Code section 18628

The CSAC left open the issue as to the “commercial activities” that were incidental to “fighting activities” to the court.  So, it’s likely that we have not heard the last of this dispute.

Payout Perspective:

MMA Payout will have more on this decision as it becomes available.  The initial read from Sherdog’s report reflects the fact that this contract dispute is not over.  It’s interesting to note  that based on the information available, Harvey sought his manager fee from “commercial activities” which may have been a conflict with Rousey’s agents at William Morris. We note that Rousey signed Fight Tribe’s agreement on January 29, 2013 and then signed on with William Morris in late February 2013.  Whether this was coordinated by Harvey and/or the relationship between Fight Tribe and William Morris became strained over time is an issue that may play out in court proceedings.

Rousey’s management requests arbitration over undisclosed contract issue

March 13, 2014

MMA Payout has obtained documents which shows that Ronda Rousey and her management team are in a dispute over its representation of the UFC women’s bantamweight champion.  Darin Harvey, President of Fight Tribe Management filed a Petition to Compel Arbitration in LA Superior Court last Friday against Rousey.

The documents filed by Fight Tribe Management, LLC request that the Court Compel Arbitration and seek that the briefing in this matter be sealed.  If the Court grants the Application to seal, the documents will unlikely be available to the public.  In his Declaration in Support of the “Application to Seal Briefing,” Darin Harvey states that the terms of the Representation Agreement with Rousey are confidential and cites two clauses in their agreement which support his request.  He indicates the contract states financial disclosure of their agreement is to remain confidential “without the prior written consent of the other Party” unless it is required by law.  It further cites a clause indicating that any dispute over the agreement should also be confidential in its attempt to resolve it.

Sherdog’s Mike Whitman spoke with Rousey’s legal representation in this matter and indicated that there may be an issue as to whether a private arbitrator can resolve the matter or whether the California State Athletic Commission should be in charge of resolving this dispute.  Rousey’s attorney, Steven Bash indicated that the dispute is governed by the California State Athletic Commission and the California Business and Professions Code.  Bash stated that he has yet to file a response and could not give specifics on the nature of what it would be.

Payout Perspective:

This will be an interesting legal fight that we will follow.  Rousey’s lawyer states that the dispute should be resolved under the rules of the California State Athletic Commission while Fight Tribe Management has filed to compel arbitration in Superior Court.  We might see an initial dispute over that procedural issue.  There are rules for managers and fighters under the CSAC but whether they apply to this situation is not known due to the confidentiality of the dispute at this point.

There are arbitration provisions under Article 3, §227 of the California Code of Regulations which relate to contractual issues.  These relate to boxers but we might assume that MMA fighters would fall under this provision.  However, it does not look as though there are rules which would seal briefing (unless the parties agree pursuant to the terms in the agreement in dispute).  The rules state that the parties would have to furnish the contracts that are in dispute at the arbitration hearing.

MMA Payout will keep you posted.

Gilbert Melendez signs with Bellator, UFC maintains matching rights

February 14, 2014

We wrote yesterday about the rocky contract negotiations between Gilbert Melendez (22-3, 1-1 UFC) and the UFC.  Today, Bellator shocked the MMA landscape by announcing a multi-fight deal with one of the best lightweights in the world in Melendez, though the UFC currently maintains matching rights.

Bellatormainlogo

 

Gilbert Melendez sits atop the UFC’s lightweight division. With victories over Josh Thomson, Diego Sanchez, Shinya Aoki and Jorge Masvidal, “El Nino” is ready for a new crop of challengers as the Santa Ana native has agreed to a multi-fight, multi-year deal structure with Bellator that can pit Melendez against some of MMA’s best, including Eddie Alvarez, Michael Chandler, Will Brooks, Dave Jansen and a host of top lightweights from around the world.
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“The moment Gil was legally able to explore the free agent market, Gil’s management team reached out to me and we began figuring out how to bring Gil to Bellator,” said Bellator Chairman & CEO Bjorn Rebney. “It’s no secret that I’ve been a big “El Nino” fan for many years. Gil was one of the first fighters I tried to sign when I launched Bellator back in 2008, and he’s grown and developed into one of the best and most exciting lightweights on earth.  Gil has a vision for what he wants to accomplish both inside and outside the cage and we can help make his vision a reality.  We are in the business of developing and showcasing the greatest fighters on earth. That’s what we intend to do here with Gil and it’s what we’ll continue to do in the future.”
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The UFC currently holds matching rights on Melendez.

 

Payout Perspective:

Bellator’s announcement today was pretty shocking and caught many in the MMA landscape off-guard.  Nevertheless, it’s a key strategic move for Melendez, who is trying to maximize his market value.  This is a classic example of pinning bidder A versus bidder B, and illustrates the importance of having more than just one key player in the MMA landscape for fighters.  Whether Melendez ends up in Bellator or UFC matches Bellator’s pay and signs back with the promotion, it will be a win/win for Melendez in the short run.

In the long run, for a fighter who is as exciting as Melendez, you risk making a choice that may seem near-sighted, and could miss out on potential fight of the night or performance bonuses in addition to base pay, which could end up surpassing Bellator’s proposed pay. Although the exact numbers of the deal are not available at this time, MMAPayout will report them as they become available.

Winning a title and getting a push from the UFC is invaluable for a fighter, but Bellator will do their best to match the same benefits as they tried to do with with Eddie Alvarez, such as offering exposure on Spike TV, featured in a potential PPV down the line against either Eddie Alvarez or Mike Chandler, two of the best lightweights in the world, and certainly other Viacom opportunities.

The ball is now in the UFC’s court, and it’s up to them to determine if they want to retain Melendez and match what Bellator is offering or let him walk away to a competitor.

GSP announces indefinite leave from UFC

December 13, 2013

Earlier today, during a last minute scheduled press conference call from Montreal, Georges St-Pierre announced that he is going to take an indefinite leave of absence from the UFC and vacate his welterweight title in order to deal with personal issues.

GSP opened up the conference call with the following statement,

I’ve been fighting a very long time at a high level. It’s a lot of pressure, a lot of criticism, and I’ve decided I need to take time off. I know UFC is a business, and it can’t wait for one person. They have to keep things rolling, so I’ve vacated my title out of respect to the other competitors.

No timetable was given on when GSP would return, or if he would return at all. In his absence, the UFC has scheduled Johny Hendricks vs Robbie Lawler for the vacated welterweight title on March 15, 2014 as the main event for UFC 171, which will take place at the American Airlines Center in Dallas, TX.

 

Payout Perspective:

We have no idea if GSP will ever be back, and no commitment was made one way or the other, but Dana White pushed the proverbial promoter talk and stated he believed GSP would be back in the Octagon. For years and years, Dana White has trumpeted GSP as the number one draw the UFC has had in its stable, even when Brock Lesnar was around.

Now that he will be gone for at least all of 2014 and considering that the UFC’s stable of champs are ailing from injuries (Cain Velasquez, Jon Jones, Anthony Pettis, Dominick Cruz) and will be out a significant portion of 2014, the impact to the bottom line next year will be noticeable. On the positive side, for fighters such as Jon Jones, Ronda Rousey, and Anderson Silva, the bargaining chips and assumed leverage has never been more on their favor then it is now.

In 2013, after 12 events (UFC 156 – UFC 166), the UFC has averaged an estimated 430K PPV buys.  Without GSP headlining UFC 158 nor UFC 167, the highest PPV buy total would be in the 550,000 range. The average PPV buy number would also dip into the upper 300K range, which would equate close to a loss of roughly 800,000 – 1M PPV buys.

Another interesting note from the presser was Dana White’s comment about GSP’s contract status with the UFC during his leave.  White stated that GSP’s contract would be “frozen” while he is on leave and would continue whenever he returns.  Without any timelines set by GSP and considering that he vacated his belt, it would be interesting to see what parts of his contract are triggered by this scenario, which is one that the UFC has not had to exercise at all in recent years.

Bellator passes on Ben Askren

August 21, 2013

ESPN’s Josh Gross reports that Bellator will let Ben Askren leave for the UFC if Dana White wants the welterweight standout. Bellator head Bjorn Rebney told ESPN that it would not make an offer to Askren.

Askren’s last contracted fight was this past July. Similar to Alvarez, its believed that Bellator has the right to match any contract offered to Askren. However, it appears that it is passing. The news was surprising considering Askren’s record and perhaps not surprising considering Askren’s wrestling-heavy, grinding style which is not exciting. After a bitter legal battle with Eddie Alvarez,which ended in a settlement and Alvarez coming back to Bellator, the company has made a decision on Askren.

When asked about whether Askren would be on Bellator’s first PPV in November he indicated that there would be “no chance.” Thus, it was likely that the parting was mutual.

Askren has already been in contact with Dana White via twitter:

Payout Perspective:

Askren is a dominant wrestler and a personality but his style may have been a reason Bellator has decided to give up on re-signing him. However, Bellator needs top level talent for the company and the PPV. Askren is dominating and Bellator could have utilized this. Perhaps Bellator saw another Alvarez situation on the horizon and thought best to let him go rather than get embroiled in another costly lawsuit. We will see if Askren does end up in the UFC and how his talent does in the UFC’s welterweight division.

Chandler signs long term deal with Bellator

July 25, 2013

MMA Junkie reports that Bellator has signed Michael Chandler to a “long term deal” with the organization.  According to Bellator, the signing makes Chandler one of the highest paid lightweights.

According to Bellator CEO Bjorn Rebney, Chandler will be with Bellator for a “minimum of eight fights.”

Ironically, Chandler’s deal was made easier due to the Eddie Alvarez lawsuit.  Chandler defeated Alvarez for the Bellator belt.

Via MMA Junkie:

Of course, Chandler admitted, it helped that an ongoing legal battle between Bellator and Alvarez has made the details of the organization’s offer to the former champ public knowledge. It showed him what Bellator was willing to pay a man he’d already beaten, and informed his own notion of what he should expect to make for a new deal, he said.

Payout Perspective:

Securing Chandler to a long term deal made sense for Bellator but did it for Chandler?  The UFC is still the major leagues in MMA when it comes to competition and earning potential.  No word on the type of money Chandler could be making but we may assume he’s one of the top paid in Bellator.  It is interesting that Chandler (and his reps) would not have known the market for him but for the Alvarez contract becoming a matter of public record.  While it’s likely that they would have known a ballpark figure, the documents produced in Alvarez’s lawsuit helped with filling in specifics.  For Chandler, being the top guy in the lightweight division Bellator may be a good career choice provided he’s afforded sponsorship opportunities and other revenue streams.  If Bellator/Spike contract with Chandler to help build his brand and grant him opportunities outside of the Octagon (e.g. Spike TV appearances, announcing, specials) the deal could help Chandler beyond the length of the deal.

Alvarez-Bellator lawsuit enters settlement discussions

February 18, 2013

The Eddie Alvarez-Bellator situation may be drawing closer to a possible settlement as Patrick English, attorney for Bellator, sent a letter to the Court requesting an extension of time to respond to Alvarez’s Counterclaims.   The parties have agreed to the extension until March 1, 2013 and the Court approval should be a mere formality.

Mr. English attached a Consent Order requesting an extension of time for Bellator to receive an extension of time to file an Answer to the Counterclaim until March 1, 2013.  Previously, Bellator had an extension to respond until Tuesday, February 19th.  This second extension appears that the parties are willing to negotiate a settlement without further litigation.

Payout Perspective:

Obviously, the Court’s denial of Eddie Alvarez’s Preliminary Injunction weighs heavy into the decision to settle the lawsuits without further litigation.  At the preliminary injunction hearing, Alvarez’s attorneys failed to show the Court that it would have a reasonable probability of success on the merits and they failed to show that Alvarez would suffer irreparable harm.  These were two of the four factors required to prevail on a preliminary injunction.  If Alvarez would have succeeded, it would have been likely that he would have signed a contract with the UFC.

However, Bellator had a strong opposition brief which included two declarations which addressed the issues of the 1) right to match, 2) the Fox v. Spike TV comparison, and 3) the PPV issue.   Prior to the preliminary injunction hearing, a Certification of MMA journalist Dave Meltzer was filed on Alvarez’s behalf.  The certification rebuts the declarations filed by Bellator in its opposition to the preliminary injunction. The certification identified UFC PPV buy rates with the belief that Alvarez would have made more if he would have been allowed to fight in the UFC.

The Court did not agree with Alvarez’s argument that Bellator could not provide an identical match was a failure to match. The Court held this argument untenable although it did not discount that Alvarez could not win based on this theory.  So, while Alvarez lost on this point here, he could win after the discovery phase.

As for the irreparable harm argument, the Court held that Alvarez’s argument that he would be harmed if he could not fight in the UFC on April 27th was speculative at best.  There was no illegal restraint on Alvarez by Bellator and he could still compete professionally even if an injunction were not granted.

It will be interesting to see if the parties can come up with a settlement that would make both parties happy.  The fact Alvarez lost the injunction does not make him bound to the contract offered by Bellator.  He could continue with the lawsuit if he truly wanted to fight the issue. But,we might see some compromise in which Alvarez can be bought out of his contract after a certain number of fights if he truly wants to head to the UFC.  If Alvarez did not want to stay, it would make sense for Bellator as I do not see the company wanting a malcontent with its new partnership with Spike. Maybe the number of fights with Bellator is reduced without a right of first refusal or matching rights clause so that he can fight elsewhere.  However, Bellator may make Alvarez a solid offer as a way to make him happy and be a face for the company.  He could be made one of the top (if not the top) paid fighters in the company.  We should know by March 1st which way Alvarez goes.

Benson Henderson gets new deal

January 12, 2013

Benson Henderson has received a new 8 fight deal with the UFC. The current lightweight UFC champion tweeted thanks to his manager and lawyer for hammering out the details last night.

No monetary terms of the deal have been released as the information was just passed along by the fighter via twitter. Henderson had been making $39,000 to show and $39,000 to win.

One may assume that Henderson’s new deal comes with the news of the Eddie Alvarez lawsuit which revealed, in specific detail, the compensation for the former Bellator lightweight.

UPDATED 1/12/13: According to Malki Kawa, Henderson’s agent, the deal was in the works for over two months.

Payout Perspective::

Good move by the UFC to make sure one of its top stars, not to mention the lightweight champ, is kept happy. We’ve seen in other sports a player gets a deal and another player similarly situated gets upset at the other player’s deal. Here, it made sense to keep Henderson happy and the 8 fight deal ensures Smooth will be around for 2 or 3 more years. It would be interesting to know if Henderson’s agent or the UFC initiated the contract talks. Certainly, its an agent’s job that they look out for their client. Drew Rosenhaus is known for renegotiating with teams on the premise that his player “outperformed their contract.” As the UFC lightweight champ with 2 successful title defenses, one would have to say that Henderson has done his part. The UFC could have started talks with Henderson knowing that the Alvarez contract terms would be made public. Would make sense to bump Henderson to something comparable to that contract.

Arbitrator rules in favor of Top Rank in fight for Donaire

March 30, 2011

Yahoo! Sports is reporting that an arbitrator has ruled in favor of Top Rank Boxing in its fight to keep boxing star Nonito Donaire under contract. Donaire is currently the WBC and WBO Bantamweight champ.

Via Kevin Iole at Yahoo!:

Golden Boy signed Donaire after Donaire had declared that he was a free agent and available to sign with the promoter of his choice. Donaire filed suit in a Nevada court alleging that he is free of Top Rank, but Top Rank contends that is not the case. Petrocelli said Top Rank has yet to be served with Donaire’s Nevada lawsuit.

Top Rank signed Donaire to a three-year contract with a one-year option on June 26, 2008. But Donaire was on medical suspension for more than 300 days in the first year of the contract. Top Rank says there is a clause in its contract with Donaire that adds time onto the contract whenever a fighter is unable to perform because of suspension. That time clause is common in many fighters’ contracts.

As a result, Top Rank claims that its three-year contract thus runs into early June 2012 and that the one-year option, which it exercised, takes Donaire into June 2013.

The Fight Lawyer has a write-up on the breakup and a link to the legal papers.

Payout Perspective:

Nonito Donaire is the best Filipino fighter in the world not named Manny Pacquiao. He is a budding superstar in the lighter weight divisions of boxing and is a hot commodity. Golden Boy is in need of a young, fresh star and Donaire could be the next Filipino sensation to hit it big.

Taking a look at the Complaint, the issue deals with the Promotional Rights Agreement. Donaire asserts that the contract guaranteed that he would be offered three fights a year but he was only offered two, two years in a row. Top Rank claims that Donaire was injured for 300 days which extends the contract. However, Donaire claims that his medical records will show he was not hurt.

If the arbitration decision holds up, it will be interesting to see if Donaire will abide by the terms of the contract and how Top Rank will use Donaire.

Zuffa v. Bellator/Pavia Litigation: Bellator Asserts Claim For Defamation

March 18, 2011

Zuffa v. Bellator/Pavia Litigation: Bellator Asserts Claim Against Julian Gregorio for Defamation & Some Theory of Misappropriation Based on Alleged Leak to Zuffa

Following up on my coverage of Zuffa’s lawsuit against Bellator and Pavia — – a post with earlier links is here and here is my most recent post on the Court’s denial of Bellator’s motion to dismiss for lack of personal jurisdiction — on March 17, 2011, Bellator filed its answer to Zuffa’s complaint and asserted a third-party claim, i.e. a claim against a non-party, against Julian Gregorio who is allegedly a citizen of the State of California and allegedly may have been a former employee of MMA Associates, of which Ken Pavia is the alleged “Principal.”

At the outset, in its third-party complaint Bellator describes why its CEO, Bjorn Rebney, “requested from Pavia certain documents used by the UFC in connection with fighters.”

Specifically, Bellator alleges as follows:

In the summer of 2010 Bjorn Rebney determined to review the sufficiency of documents used by Bellator.  As part of that process he requested from Pavia certain documents used by the UFC in connection with fighters. At no time did Rebney request any document anticipated to contain trade secrets or information proprietary to Zuffa, LLC. Mr. Pavia requested confidentiality due to, as he put it, fear of retaliation by Zuffa for cooperating with Bellator. In any case, communications between the parties would be presumptively confidential.  Zuffa has a reputation for ruthlessly attempting to block competitors in the MMA field.

(emphasis added).

Bellator next alleges that Pavia did send the documents but that it never used the documents:

Pavia did, on a confidential basis, send certain documents to Bellator. However, those documents were not confidential and contained no proprietary information belonging to Zuffa.  The documents in question were sent on a confidential basis but were not confidential documents.  The format of the documents in question was changed from a PDF format to a Word format, but no Bellator representative substantively reviewed those documents as of the time of filing of the Complaint to which this Third Party Complaint is directed.  The documents supplied by MMA Associates were never utilized by Bellator in any way and in fact were not substantively reviewed by Bellator’s staff or by Mr. Rebney.

With respect to Mr. Gregorio, Bellator alleges (upon information and belief) that he was an employee of MMA Associates and that he allegedly “took privileged communications between the CEO of Bellator and the President of MMA Associates and, with the knowledge that he was not entitled to do so, transmitted same to representatives of Zuffa, LLC.”

Further, Bellator alleges upon information and belief that:

Gregorio informed representatives of Zuffa that Pavia and Bellator were conspiring to misappropriate Zuffa’s confidential information when this was untrue. This information was given either with knowing falsity or with reckless disregard of the truth.  Gregorio informed representatives of Zuffa that Bellator misappropriated trade secrets of Zuffa. This information was false and was either known to be false by Gregorio or was given in reckless disregard of the truth.

Bellator asserts claims against Gregorio for defamation and some theory of alleged violation of Bellator’s right to privacy and confidentiality.

Quite frankly, I don’t understand the second claim — perhaps it is something specific to California or Nevada (or maybe Bellator is asserting a claim for misappropriation), but it is not really spelled out.

With respect to confidentiality, the apparent (to me at least) alleged basis for some kind of confidentiality or privilege is that “Bjorn Rebney, the CEO of Bellator, is an attorney-at-law[,] Ken Pavia, the principal of MMA Associates, is a law school graduate and, at the time of the matter complained of, was believed in good faith by Rebney to be an attorney-at-law[,] and MMA Agents has on its staff at least one attorney-at-law.”There is, of course, an attorney client privilege, but I don’t see how it attaches under these alleged facts.  Certainly no explanation is provided.

Even so, I don’t understand why any communication between Rebney and Pavia would be privileged just because both went to law school.

While I know nothing about the third-party defendant, if he is in fact a resident of California (as alleged) my prediction is that we may see another jurisdictional motion.

Fight Lawyer

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Justin Klein is a partner of the law firm Satterlee Stephens Burke & Burke LLP in New York City where he concentrates his practice in commercial litigation and represents clients in the fight industry. He regularly addresses current legal issues that pertain to combat sports, including efforts to legalize MMA in New York, at his Fight Lawyer website. He is a licensed boxing manager with the New York State Athletic Commission as well as the founder and Chairman of the Board of the New York Mixed Martial Arts Initiative, a non-profit organization that gives inner city youth the opportunity to experience the emotional and physical benefits of martial arts training. Justin lives in New York City where he trains in jiu jitsu and boxing.

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