June 26, 2016
Although Deontay Wilder is scheduled to fight Chris Arreola on Fox next month, he’s embroiled in a court battle against Alexander Povetkin and his promoter, Andrey Ryabinskiy due to a purported failed drug test which scratched the fight between the two.
On June 13, 2016, Wilder filed a lawsuit against Povetkin, Ryabinskiy and World of Boxing, LLC (“WOB”) for breach of contract and seeking the court for a declaratory judgment. In addition to the money that has been put up in escrow for the fight
10 days later, World of Boxing, Povetkin and Ryabinkiy (“WOB”) filed sued against Wilder, Lou DiBella and DiBella Entertainment, Wilder’s promoters. WOB is filing claiming causes of action for breach of contract as well as defamation.
Both lawsuits were filed in the U.S. District for the Southern District of New York.
Wilder and DiBella Entertainment, Inc. v. World of Boxing, LLC and Alexander Povetkin
The lawsuit claims breach of contract against WOB and Povetkin.
The facts, as told by Wilder’s attorney are below. Also added, are additional facts from the WOB lawsuit which we identify as well.
- The World Boxing Council (“WBC”) ordered Wilder and Povetkin (as the mandatory challenger) to begin negotiations for Wilder’s mandatory title defense of his WBC World Heavyweight Championship.
- No agreement could be made and a purse bid was ordered. WOB won the purse bid at a price of $7.15M. Notably, the WOB lawsuit claims DiBella’s bid was for $5.1M.
- The agreed payout would include 10% of the amount bid ($715K) to the winner as a bonus and then a 70-30 split thereafter. But, the parties still had to negotiate other parts of the fight including drug testing. The amount would also cover a 3% WBC sanction fee.
- According to the WOB lawsuit, Wilder would receive $4,504,500, Povetkin $1,930,500 and the winner would receive $715,000.
- Wilder’s side wanted to institute a drug program conducted by the Voluntary Anti-Doping Association (“VADA”).
- Negotiations continued but suspicions by Wilder’s camp about Povetkin’s use of performance enhancing drugs increased.
- With the parties at an impasse, the WBC stepped in and instituted an agreement on April 6, 2016. In the agreement, the drug testing program included VADA testing under the “WBC Clean Boxing Program.”
- Since WOB won the purse bid, the fight was to take place in Moscow, Russia on May 21, 2016.
- An agreement was signed on April 11, 2016. A copy is attached to the Wilder Complaint and is below.
- On April 19, 2016 an Escrow Agreement was entered into in which $4,369,365 was put into an Escrow (identified as Chicago Title in the WOB lawsuit). The Escrow Agreement contained a (confidential per Wilder’s attorneys) liquidated damages provision.
- Povetkin tested positive for Meldonium in an April 27, 2016 test.
- The WBC issued a ruling that the fight would not take place as scheduled.
- Wilder’s side advised the Escrow Agent not to disburse any of the money in escrow until it received a “joint instruction from the parties or a non-appealable order from a court of competent jurisdiction.”
Word of Boxing, LLC, et al. v. Deontay Wilder, et al.
The WOB lawsuit mitigates the finding that Povetkin tested positive for Meldonium. This substance was the same one that tennis star Maria Sharapova tested positive for and has received a two-year ban from the International Tennis Federation. In the UFC, Islam Makhachev tested positive for Meldonium and was pulled from the UFC on Fox 19 card. The ban on Meldonium was instituted by the World Anti-Doping Agency (“WADA”) on January 1, 2016. It was added to the list of banned substances and notice was given to athletes three months earlier in September 2015.
However, earlier this year, WADA acknowledged that there was a lack of clear scientific information on excretion times. Thus, this new revelation may actually overturn certain notices of infraction. In fact, this was noted by WOB’s attorneys in its lawsuit.
It argues that Meldonium found in Povetkin’s sample were traces and could not impact an athlete’s performance. It should be noted that both “A” and “B” samples found Meldonium. Povetkin admits to using Meldonim in 2015, prior to its ban. But, the facts reflect that he had a negative sample in April 7 and 8, 2016 but then tested positive in an April 27, 2016 sample.
WOB’s breach of contract claim cites that Wilder did not allow the WBC, the governing body for this fight, make a determination on the Povetkin drug test. Rather, Wilder and his promotion decided not to participate which WOB claims as the breach.
It also cites a breach of the escrow agreement with respect to the monies lodged in an Escrow Account which was to pay for the purses. WOB claims that since the bout did not occur, it should receive its money back from the trust but Wilder has “taken actions to prevent Chicago Trust from releasing such funds…including through a letter directing Chicago Trust to refrain from disbursing the Escrow Property to World of Boxing.
The defamation claim is rather unique as it claims Wilder and his promotion arm instituted a “Smear Campaign” against Povetkin. The WOB Complaint lists multiple news reports where it claims Lou DiBella and his promotion provided the outlets with false statements. WOB claims Povetkin did not cheat or lie and the “trace amounts” in Povetkin’s April 27, 2016 sample do not support the fact that he attempted to do so per the WOB lawsuit. WOB claims the statements were made to avoid their contractual obligation of Wilder having to fight in Moscow, Russia.
WOB is seeking $34.5M in its lawsuit. It is looking for the $4,369,365.000 in the Escrow Account and its defamation claim seeks $10 million.
Leave it to boxing to provide us with some of the more unique contractual legal issues in the sport. There is an issue of who breached the contract between the parties. Should Wilder have a claim due to the positive drug test from Povetkin? Or, does Povetkin side have an argument against Wilder for not following the WBC procedures? One has to think that Povetkin has a right to appeal the VADA ruling especially with the uncertainty of Meldonium. But, we see that the contentious negotiations between the parties have now spilled over into the courts. Wilder has found another fight in lieu of Povetkin. But, does Povetkin have a claim against Wilder for blocking funds to be returned to them in Escrow? It’s clear there is a liquidated damages provision in the Escrow Agreement of $2.5 million as both sides seek that it damages.
MMA Payout will keep you posted.
June 21, 2016
MMA Junkie reports that Zuffa has sent an email to its employees refuting the story that the UFC has been sold. Dave Sholler has made an official statement denying the report from FloCombat that the company has been purchased.
Sholler told MMA Junkie that, “FloCombat.com’s report indicating that the UFC has been sold is false.”
An internal email sent to Zuffa employees was obtained by Junkie addressing the rumors and report of the sale. “A report today by FloComat.com indicating that the company has been sold is false,” read the email obtained by Junkie. It went on to state that the company’s attorneys would “investigate and take all appropriate legal actions against the parties publishing and contributing to these false stories.”
The report stated that Zuffa had accepted a bid for $4.2 billion to sell the UFC. No formal announcement has come forth despite the news that 4 entities had submitted bids to purchase the company late last week.
This is semantics but it seems that the internal email refutes that the UFC has been sold. The question is whether it will be sold. The company has to cover itself at this point since the concern is that anything could unravel the deal (if the news is accurate). The internal email and public denial is to ensure employees that their positions are secure. As for whether lawyers for the UFC will come in to file a lawsuit against the alleged “false” report seems to be posturing on the part of the company. Defamation would seemingly be the only claim the company might have although we do not have all of the facts at this point.
June 20, 2016
Zuffa, LLC has reportedly accepted a $4.2 billion bid to sell the UFC. The report also states that Dana White will remain in his role with the UFC despite the sale.
Jeremy Botter of FloCombat first reported the sale. A group consisting of WME-IMG, the Dailan Wanda Group, The Kraft Group and Tecent Holdings may have made the successful bid.
As of the time of this writing, the sale has not been formally announced. As of a couple days ago, the groups that submitted bids were in the midst of obtaining financing for the purchase.
It is anticipated that Lorenzo and Frank Fertitta will bow out of the MMA business while Dana White will likely stay on with the new owners.
The imminent sale is significant for what the Fertittas and Dana White have done to build something out of nothing but one would suspect that most things regarding business practices will not change. The UFC has made significant upgrades to the look and feel of the company in the past year or so. While most its revenues are derived from pay-per-view, UFC Fight Pass has become a valuable asset for the company that has provided a wide-ranging benefit to showcase the product.
June 19, 2016
UFC Fight Night 89 from Ottawa, Canada drew 10,490 for a gate of $1,278,250. The attendance, gate and bonuses were announced at the post-event press conference.
According to this, TD Place has a standing room capacity of over 10,500. Thus, the numbers reflect a full house on Saturday night for the UFC’s debut in Ottawa.
The bonuses went to Donald Cerrone, Krzysztof Jotko, Steve Bosse and Sean O’Connell. Each earned $50,000. Cerrone and Jotko earned performance bonuses for their respective stoppages. Bosse and O’Connell put on a slugfest to earn fight of the night honors.
A good night of fights and based on the attendance announced it was a well-attended event. The choice in venue (i.e., lower-capacity venue) probably makes this event look much more impressive.
June 17, 2016
The initial draft language for the Muhammad Ali Expansion Act was made public last week. The language, while likely not the final version, amends the existing act which protects boxers.
The UFC opposes federal regulation of its sport. Lawrence Epstein, the company’s Chief Operating Officer told ESPN, “We continue to believe the federal government would have no productive role in regulating MMA promotions or competitions.” This is not the first time the company has lobbied against regulation. According to Fox Sports.com, Zuffa hired lobbyists to help them oppose Senator John McCain’s proposed amendments to the Ali Act.
Officially the Professional Boxing Safety Act of 1996 amends the Muhammad Ali Act. It was referred to the Committee on Education and the Workforce and the Committee on Energy and Commerce in late May.
The language essentially expands the current law to include combat sports. The language and sections are changed but there is nothing wholly different from the existing law other than combat sports are now a part of the proposed law. Certainly, the expansion of the Ali Act could cause the UFC, Bellator and other organizations to change its business practices to ensure that it is in compliance with the law. However, the utility of the law has proven to be a difficult obstacle for fighters that have sued under the Ali Act.
The UFC has retained a lobbying firm to oppose the regulation. A letter to the committees which will evaluate the proposed law, signed by mainly Republican-backed groups, has been circulating opposing the expansion. On the other end, MMAFA has released a letter in support of the law. The letter is signed by many fighters in support of the bill.
June 16, 2016
MMA Fighting reports that Zuffa, LLC is close to selling the UFC. An ESPN report states that the UFC has received two bids in the range of $4.1 billion.
According to ESPN’s Darren Rovell, the two groups with the highest bids are WME-IMG in conjunction with Dalian Wanda Group and China Media Capital. Per Rovell, the groups are finalizing the financing for the buyout. The bids are for the whole company meaning that the Fertitta brothers, Dana White and Abu Dhabi’s Flash Entertainment would cede their ownership interests.
This news comes a month after Rovell reported that Zuffa was actively shopping the company. There was speculation as to whether the sale would be for a portion of the company or not. It appears that the transaction would encompass the entire company.
The Fertitta brothers purchased the UFC for $2 million in January 2001.
Last year, Lorenzo Fertitta told CNN Money that the company made “about $600 million.” MMA Fighting’s sources indicated that the UFC drew $608,629,000 in total revenue and profited $157,806,000.
The much rumored sale appears to be close to fruition. It’s too early to tell whether or not the sale will mean anything in terms of changes of the brand or product. There is speculation that White will be asked to stay with the company while the Fertittas may bow out of the sport. Certainly, White has not been as much as a public figure in recent months. The sale has yet to go through but you have to think that the business is so volatile that a $4.1 billion sale for a company that made $600 million last year is a great coup for Zuffa.
June 5, 2016
Welcome to another edition of Payout Perspective. This time we take a look at UFC 199 taking place at The Forum in Inglewood, California. The show featured two title defenses.
Bisping shocks the world
Michael Bisping waited a long time for his shot at the middleweight title and he did not disappoint. Perhaps exposing a suspect chin, Bisping KO’d the champion Luke Rockhold in the first round. Rockhold appeared to be overconfident in the lead up to this fight and admitted as much post-fight. Bisping is a polarizing figure but you have to respect his journey to the title. We could see a rematch of the two or maybe Jacare Souza, who congratulated The Count on the way out of the Octagon would be a good choice.
Dominator overwhelms Faber
It was a very entertaining promotion for the fight, but in the end, Dominick Cruz showed that he was much better than Urijah Faber. The oft-injured bantamweight champion secured a unanimous decision. Joe Rogan seemed to focus on whether or not Faber would retire after this fight.
Would people be willing to pay $60 for a “superfight” with Demetrious Johnson?
Bonuses went out to Bisping and Dan Henderson (coincidentally opponents at UFC 100) for their performances. Polo Reyes and Dong Hyun Kim earned Fight of the Night. All received $50,000.
Attendance and Gate
The UFC announced post-fight that The Forum was a sellout with 15,587 for a live gate of $2,168,675.
The sponsors in the Octagon included Harley Davidson, Toyo Tires, Bud Light, MetroPCS, and the TNT upcoming drama, Animal Kingdom. Food 4 Less, a Compton, California-based “no frills” grocery was a sponsor in the Octagon as it shared a post with Monster. As with most UFC events, Monster Energy had the center of the Octagon.
Dominick Cruz sported a Monster patch on his Reebok black kit. He also did an old school thank you to them post-match including holding a Monster can.
UFC Embedded appears to be the place to have your non-official UFC sponsors to be visible. Luke Rockhold wore Adidas and Monster Milk during the vlogs.
Odds and Ends
Three big pieces of news not related to 199. First, Brock Lesnar is back. Despite how he left the company, he returns and the move should draw eyebrows as the WWE is allowing Lesnar to fight a month before the company’s second-biggest show of the year – Summerslam.
Second, Fedor Emelienenko will be on Fight Pass on an EFN card on June 17th. Thus, the UFC will finally get Brock Lesnar-Fedor…just not together.
Finally, the rematch no one except Conor McGregor wants as Nate Diaz will face McGregor at UFC 202 in Vegas August 20th. Interesting that the UFC is traveling less domestically.
There were 4 fights on UFC Fight Pass Prelims. 3 of the 4 fights were very good.
UFC Fight Pass introduced a promotion where fans can send in 1 minute videos to tell Dana White why they are the biggest UFC fan. The winner will get to come to International Fight Week, meet Dana White and attend UFC Fight Night: Alvarez-RDA.
UFC allowed flags in lieu of sponsor banners in the Octagon.
Octagon ladies sport the Monster patch on their uniforms, do they get paid for doing so?
Watching Embedded, apparently the champions (Cruz and Rockhold) were given rental properties to stay in during fight week while the others stayed in a hotel.
The weigh-ins were different since newly instituted weigh-in rules with the California State Athletic Commission allowed fighters to weigh-in between a 10am-2pm window the day before the fight. Thus, the televised weigh-ins we usually see did not include the official weigh-ins.
Did the finish of Hendo/Lombard look similar to Hendo/Bisping at UFC 100 with Hendo unloading on an already unconscious opponent?
Ariel Helwani and three others were escorted from the building during UFC 199. Helwani tweeted that he had been banned by the UFC for life. It was Helwani that broke the Brock Lesnar news on MMA Fighting.
The show concluded with a tribute to Muhammad Ali who passed away on Friday.
This was a very good show but it will likely be overshadowed by the news that Brock Lesnar is returning next month. Google trends had 500,000 searches for UFC 199 on Saturday. Notably, Brock Lesnar drew 100,000 searches on Saturday. How many PPV buys will this card receive? Without a proven PPV draw at the top of the card, yet a solid lineup for the PPV, the buy rate should be 350,000 to 400,000 PPV buys.
June 5, 2016
Brock Lesnar will be returning to the UFC and is slated to fight a yet to be named opponent on July’s UFC 200 card. The WWE has given Lesnar permission to fight on the card despite being under contract with the UFC.
This UFC promo during the 199 PPV made the news official:
— UFC (@ufc) June 5, 2016
It appears that his opponent will be announced this Monday on ESPN.
This seems like a risky move for the WWE since Lesnar will be fighting one month before the company’s second-biggest event of the year, Summerslam. You might recall it was in LA a couple years back that Lesnar made his decision to re-sign with the WWE despite entertaining an offer with the UFC. Apparently, the WWE is fine with the risk. And you can say that the UFC is fine with the risk as well. You might recall that Lesnar’s final fights were less than stellar. Of course, there was an injury Lesnar was going through at the time but he is older and has not fought since December 2011 when he was stopped by Alistair Overeem. Lesnar was not even in one of the featured main events at Wrestlemania this past year and he has no story lines actively going with the WWE thus far.
May 25, 2016
Zachery Light has filed a lawsuit in Los Angeles Superior Court against Bellator MMA and Viacom citing wrongful termination based on public policy. Light, a former MMA fighter and employee of Bellator, claims various wrongdoings while working under Scott Coker.
The lawsuit was filed on Tuesday by Light’s attorney, William Crosby.
Light, a former amateur wrestler and MMA fighter, was hired by Bellator and worked under Bjorn Rebney. He became Bellator’s Talent Development Manager. The lawsuit states he was soon promoted to Talent Development Director. He was praised for his work and “received the highest ranking on his annual reviews.”
The Complaint notes a shift of business culture when Viacom acquired Bellator and Scott Coker took over.
Light alleges that in September 2015, he became aware of a number of instances in which Bellator “failed to observe and knowingly disobeyed laws enacted to protect the health and safety” of MMA fighters. Notably, the California law requiring a medical clearance examination by a licensed physician for participants in a MMA fight. Light claimed that “a reliable source” at Bellator 126 noted that Ryan Martinez’ blood and eye medicals that were submitted to the state of Arizona “were admittedly forged.” Martinez lost his fight to Nick Rossborough.
At Bellator 131 in San Diego, Light learned from “reliable sources” that “a number of fighters on the card had submitted California state-required medicals” by Adam Rendon. Rendon, the lawsuit claims, was not a licensed physician and this was in violation of California law. Bellator 131 was the first “tentpole” event of the Coker-era which featured Stephan Bonnar fighting Tito Ortiz.
The lawsuit claims that Light talked to Rich Chou, Bellator’s Vice President of Talent, prior to Bellator 126. Chou indicated to Light that he would follow up but when he did not here from Chou he approached Scott Coker. According to the Complaint, “Coker told plaintiff (Light) “to do what Chou told you to do,” without addressing these issues.” Light went back to Chou who, according to the lawsuit, stated he would be terminated if he (Light) “kept pushing the issue.”
Light went back to Coker to question about Rendon. According to the Complaint, Coker told plaintiff, “a lot of people at Bellator are going to lose their jobs next week. Do you want to keep yours?”
In addition, the Complaint claims that Coker pressured Light into promoting collusive fights in violation of the Sarbanes-Oxley Act. The lawsuit alleges that Coker disliked manager Anthony McGann. Rampage Jackson and Cheick Kongo were managed by McGann at the time and the Complaint claims that Light was instructed to “convince Kongo to fire McGann as his manager.” Light was influenced by Coker to have Kongo fire McGann and have him sign a new promotion agreement or he (Light) would be fired.
Light was instructed to arrange fights for McGann-managed fighters under contract in Bellator with opponents “who would convincingly defeat them.” This would apparently allow Coker the pretext to cut ties with McGann and his fighters. The lawsuit makes a point of indicating that “[s]uch collusive matches were tantamount to fight fixing…”
Under the Sarbanes-Oxley Act whistleblower provisions, employees in privately held subsidiaries of publicly traded companies who assist in an investigation into an employer’s violation are protected from employer retaliation. Under the California Business and Professions Code, there is a similar provision claimed by Light.
Light also indicates that in “late 2014 and early 2015,” Mike Kogan was hired by Bellator in an executive capacity. Kogan, who Light alleges is a “close friend” of Coker claims that Kogan was “paid management commissions for fighters he represented in bouts that occurred with defendant Bellator.” This would be a “serious conflict of interest” and violation of California law.
The lawsuit states that due to stress-related to Coker and Chou refusing to follow laws and regulations and “requiring plaintiff to engage in illegal practices as a condition of keeping his job,” Light suffered an anxiety attack. The health scare occurred on April 10, 2015 after Bellator 136 on the campus of UC Irvine. He was taken to the emergency room and diagnosed with severe depression and anxiety. Light had to take an extended medical leave. He was cleared to return to work without restrictions on March 10, 2016 but was terminated on March 17, 2017 via a letter. He was advised that “his job was no longer available.”
This will be an interesting case as it goes forward. Since it was filed just yesterday, there’s still a lot to digest about the claims. As with many wrongful termination lawsuits, the allegations are salacious and may or may not be true. One would expect Bellator to deny the claims and file a motion to dismiss – none of which is earth-shattering. Obviously, the claims present a public relations issue as the company in support of amending the Ali Act to include MMA fighters are accused of doing things that oppose the protections claimed in the Ali Act. Also, the conflict between promoter and manager rears its head in another MMA promotion. We shall see about the veracity of the claims and how will Bellator address them.
MMA Payout will continue to follow.
May 23, 2016
B.J. Penn has been taken off of UFC 199 next week as a result of a violation of the UFC anti-doping policy.
The UFC has issued a statement found on its web site. A portion reads:
“The UFC organization was notified today that the U.S. Anti-Doping Agency (USADA) informed BJ Penn of a potential Anti-Doping Policy violation. Penn disclosed the usage of a prohibited method – the use of an IV in excess of 50 ML in a six-hour period – during a March 25, 2016, out-of-competition sample collection. In accordance with the UFC Anti-Doping Policy, Penn has received a provisional suspension, and has been removed from his scheduled bout against Cole Miller on June 4 in Los Angeles.
The good news is that the MMA community does not have to fake like Penn’s return to the Octagon was a good thing. In fact, it was quite sad. If you watched his fight against Rory MacDonald in 2012 and then his return against Frankie Edgar in July 2014, you knew that the old BJ was no more and that he was done as an elite MMA fighter. His last fight against Edgar did not show any sign that he was competitive. In fact, he has not won a UFC fight since November 2010.
Unfortunately, Penn’s career and possibly his personal life is in turmoil. Penn was involved in a fight with a friend which resulted in an arrest. You might recall that his return to fighting was delayed due to sexual assault allegations. Earlier this year, the story took a weird turn as a former writer for his web site accused Penn of the assault on his girlfriend. With the possibility of a suspension due to his violation of the anti-doping policy, the future is murky for the former prodigy.