Plaintiffs file opposition to Zuffa’s Motion to Stay Discovery

July 4, 2015

Attorneys on behalf of the plaintiffs in the UFC Antitrust Lawsuit have filed an opposition to UFC’s Motion to Stay Discovery in the lawsuit that is now in the U.S. District Court of Nevada.

You might recall that Zuffa filed a Motion to Stay Discovery pending the court decision in its Motion to Dismiss.  The Motion to Stay Discovery was to be heard September 10, 2015 when the lawsuits were in San Jose.  Since the filing, the court determined that based on the forum selection clause found in fight contracts signed by many of the plaintiffs, the venue should be transferred to the federal district court in Las Vegas, Nevada.  Zuffa argued that since there was a likelihood that the curt would grant its Motion to Dismiss and would resolve all issues, discovery would be a moot point.  It also stressed the fact that the discovery process is “extensive, burdensome and costly.”  Zuffa cited the discovery requests which seek a voluminous amount of financial information from Zuffa.   In addition, Zuffa suggested that federal courts in California evaluated a request for stay during the pendency of a dispositive motion based on whether: 1) the pending motion must dismiss the entire case (or the issue in which discovery is aimed), and; 2) whether the court may determine the motion without the discovery.  Zuffa argues that the court can dismiss the case without the need for conducting discovery.

In its opposition, plaintiffs claim that the UFC’s motion to dismiss is “highly unlikely to succeed” and due to the fact that there are factual issues to resolve, discovery is required.  It also argues that a stay of discovery would hurt the plaintiffs’ case.

Plaintiffs state that the UFC’s Motion to Dismiss raises “at least four contentions” requiring discovery.

  1. Discovery related to UFC’s assertions that its exclusive contracts with fighters, sponsors, venues and others do not substantially foreclose competition or impair rival promoters.
  2. Discovery seeking to determine whether “minor league” promoters do not compete with the UFC.
  3. Discovery related to the argument that “Plaintiffs do not show how excluding would-be rivals from access to some venues, sponsors and TV networks amounts to substantial foreclosure.”
  4. Discovery regarding the UFC challenge of the term “elite MMA fighter” used in the industry creates a factual dispute.

Perhaps a dig at the UFC, the plaintiffs’ brief (on page 4) cites Bob Arum (a noted Dana White foe) stating that the boxing promoter “pays his boxers approximately 80% of the proceeds of events.”  The brief quotes Arum: “[b]ecause of the monopoly that the UFC has, [the UFC] pay]s][its] fighters maybe 20% of the proceeds that come in on a UFC fight.”

Response to Motion to Stay Discovery


Payout Perspective:

Its the standard litigation story that one side is stalling discovery, while the other side wants to facilitate discovery.

The opposition sets forth certain discovery requests it believes necessary for its case.  Essentially, it is laying the groundwork to broker a compromise with Zuffa to allow limited discovery.  The strategy here is for the court to determine what is fair and the fact that the plaintiffs outline a proposed plan may have the court allow the discovery to “see how it goes.”  Probably not what Zuffa wants, but one could see this happening.

If Zuffa wins its motion to stay discovery, it will save a lot of time and money and the litigation will hinge on the Motion to Dismiss.  If the court sides with plaintiffs and/or grants limited discovery, the plaintiffs may have a greater opportunity to withstand a dismissal.

We will see what the court decides.

Top Rank files suit against Al Haymon

July 1, 2015

Top Rank Boxing has sued Al Haymon and Waddell & Reed Financial in the U.S. District Court for the Central District of California in Los Angeles.  Similar to the lawsuit filed by Golden Boy in May of this year, it claims that Haymon and his business holdings violate antitrust law, the Muhammad Ali Act and California state Unfair Competition law.

The lawsuit, provided by the Los Angeles Times, filed on July 1st claims that Haymon attempts to circumvent the above-mentioned laws through his Premier Boxing Champions promotion.  Top Rank claims that Haymon and Waddell & Reed are seeking to “buy up and monopolize the entire vertical channel” of top fighters, “tying out” promoters, excluding promoters from major venues and using its “time buy” strategy as a “predatory ‘payola’ scheme.”

As stated in the Golden Boy lawsuit two months prior, the lawsuit identifies the scheme in which it claims that Haymon is using his market power in one business to take over a different business.  Haymon has a deep stable of boxers that fight exclusively on PBC/Haymon promoted cards thus foreclosing out the fighter market as well as the promotion for these fighters.

In an update from the Golden Boy lawsuit, Top Rank identifies a June 2015 issue in which California state regulators identified Haymon reserving venues such as Staples Center and The Forum so that other promotions would not be able to hold events there.  Per the LA Times, this was a reason why a fight between Lucas Matthysse and Ruslan Provodnikov was sent to a New York casino rather than a more attractive venue in Los Angeles.

Seeking to twist the dagger a little more, Top Rank picks up on Haymon’s music promoter background to accuse him of “payola.”  This is based on brokering “time buys” with a host of networks to air PBC exclusively.  Thus, the argument would be that other promoters are excluded from negotiating with those networks.

The lawsuit states that losses could exceed $200 million in PBC’s first two years in existence.  And while PBC may operate in the red, its “loss leader” strategy allows Haymon to gain an unfair advantage in the promoter market.

The Complaint seeks $100 million in damages against Haymon, et al.

Payout Perspective:

“The enemy of my enemy is my friend,” is an ancient proverb that might prove true in federal court in Los Angeles as both Golden Boy and Top Rank are digging in its heels against Al Haymon.  While it’s still too early to tell whether the two longtime adversaries will work together in its fight against Haymon, it will be an intriguing sidebar to this legal heavyweight battle.  The allegations mirror one another and offer some interesting legal issues.  One of interest to the boxing industry is Haymon’s alleged conflict of interest in serving as a “de facto” manager (although he’s labeled as an advisor) and promoter.  This is something specifically addressed in the Ali Act as prohibited.  MMA Payout will keep you updated.

Aldo pulls out of UFC 189 main event

June 30, 2015

Jose Aldo is out and Chad Mendes is in as he now faces Conor McGregror for the interim Featherweight title in the main event of UFC 189.  Dana White made the announcement on ESPN’s Sportscenter with Conor McGregor by his side.

It was an interesting announcement.  Not because Aldo was pulling out but because it was made with the “challenger” McGregor.  Obviously we are reading into the comments, but White’s decision to make it for the interim title and his statement that Aldo has pulled out of 5 title fights seemed to reflect the fact he believed it was Aldo’s fault for not going through with the fight.

Mendes now will be fighting on very short notice against McGregor who has had a full training camp.

Payout Perspective:

Clearly this was the necessary outcome if Aldo’s injuries limited him.  McGregor seemed to indicate that he was cleared to fight but chose not to.  If Aldo was to go through with the fight, it would have brought scrutiny to the athletic commission.  In light of the Manny Pacquiao situation, the public would look closely as to whether Aldo would have been cleared to fight.  Even if he were cleared, Aldo would have been fighting with a known injury that McGregor would have likely taken advantage of during their fight.

The UFC has to be upset due to the fact they spent so much money for this fight and it will go by the wayside.  A huge Embedded series as well as other shoulder programming leading up to the fight will likely not produce a huge PPV buy rate.  Add the fact that Aldo has publicly spoken out about the Reebok deal and one would think that the now former Featherweight Champion may have to work his way back to a title fight.

With Mendes coming in on short notice, the odds favor a McGregor win considering this is a five round fight.  Prior to the injury, White was bullish on the PPV stating that it would have over $1 million PPV buys.  It already projected to have a $7M gate.  A lot of the marketing was centered on the feud between Aldo and McGregor with McGregor doing much of the promoting.  Now, the marketing will center solely on McGregor to sell this PPV.  The card is still very strong as it has a very good fight for the welterweight title between Robbie Lawler and Rory MacDonald.  But that fight has not been promoted.   It’s a very disappointing ending to what would have been a huge PPV.

With no vote in Assembly, MMA Bill dead in New York

June 25, 2015

A bill to legalize mixed martial arts in the state of New York has failed to reach an Assembly vote once again this year.  Despite a concerted effort to attempt to push the bill through, which included revamping the bill to attempt to appease legislators, it appears that it will not make it to a vote on what is the last day of an extended legislative session in Albany.

Jim Genia relayed the bad news.  Genia among other New York MMA supporters gave up to the minute details on the sausage making in Albany and relayed the news to MMA fans that hoped to see the UFC in Madison Square Garden this December.

This year seemed different in Albany due to the removal of Speaker Sheldon Silver and a more MMA-receptive speaker in Carl Heastie.  But once again, the MMA bill was not brought before the Assembly for vote despite an extended session which many thought would produce one.

Assembly Majority Leader Joseph Morelle, the sponsor of the MMA bill, indicated that it needed 76 votes in the Democratic conference for a bill to come to the floor.  Prior to the revamp of the MMA bill a couple weeks ago, they had 70.

Payout Perspective:

MMA Payout will have more on this as more information comes out but this is a definite blow for MMA and the UFC.  Many believed that this would be the year that MMA would become legal in the state.  But, politics once again rears its ugly head.  As for options, we must wait another year in Albany but the Zuffa lawsuit against New York continues.  Its appeal of the dismissed lawsuit claiming the bill prohibiting MMA in the state is unconstitutional is in the Second Circuit and Zuffa’s briefing is due by August 4th.

UFC 189 main event in jeopardy with report of Aldo injury

June 24, 2015

The main event for UFC 189 is in jeopardy as news surfaced that Jose Aldo has an injury and could be scratched from his July 11th fight with Conor McGregor.  There is no official comment from the UFC as the promotion is weighing its options and Aldo’s camp is determining whether he can still fight.

Brazilian news outlet Combate first reported Aldo suffered an injured rib.

If the fight is scratched, it will be a significant blow for the company as the fight has been the center of its promotion around the biggest weekend of the company’s year.   It has spent a significant amount of money on the fight as well as you may recall the lengthy world tour and Embedded recaps earlier in the year.

Although the co-main event is a respectable Robbie Lawler-Rory MacDonald fight for the welterweight title, the UFC has focused on Aldo-McGregor with little attention paid to the “other” title fight on the card.

Payout Perspective:

The worst case scenario is happening for the UFC right now.  It banked on an Aldo-McGregor PPV with White proclaiming it would do 1 million PPV buys.  While Lawler-MacDonald would still be a good fight, the promotion would lose out on a significant amount of PPV buys.  If they keep McGregor on the card, it would mean that the big fight between the two may not happen until the end of the year assuming McGregor does not get injured and Aldo’s recovery time.  If it takes McGregor off the card, it would be a blow as well since McGregor is a draw.

Then there is the case of Jose Aldo.  With his recent comments speaking out against the Reebok deal, he might not be in the UFC’s good graces.  Tack on this injury and you might assume Dana White is not his biggest fan.  If he decides to fight, it will be at less than 100% and you might expect McGregor going for Aldo’s ribs which could mean he loses his title to McGregor.  Similar to Cain Velasquez, Aldo has been saddled with injuries that has constantly kept him off of cards.  Unlike Cain, Aldo has not been a marketable draw until this fight.  Will he be influenced to go through with the fight or lobby to have it moved until he is better?

Bellator 138 posts biggest ratings in its history

June 22, 2015

Bellator 138 drew 1.58 million viewers on Spike TV Friday night according to Sports TV Ratings.  The event was the largest average viewership in Bellator history.

The previous record was November’s Bellator 131 which averaged 1.2 million viewers.

The main event for Bellator 138 was Kimbo Slice taking on Ken Shamrock.  Slice KO’d Shamrock in the first round.  It drew the highest peak in the company’s history: 2.1 million viewers (11;45pm-12am).

Bellator 138, which aired from 9:0pm-12:03am Friday night, drew an 0.8 rating among adults 18-49 per Sports TV Ratings.

Overnight Peak
Bellator 132 767,000 1,200,000
Bellator 133 565,000 967,000
Bellator 134 872,000 1,200,000
Bellator 135 607,000 922,000
Bellator 136 655,000 900,000
Bellator 137 594,000 768,000
Bellator 138 1,580,000 2,100,000

Bellator 138 ratings

Payout Perspective:

The ratings are great for Bellator as it was second to only US Open Golf on FS1 in cable sports viewing on Friday.  Scott Coker’s “tent pole” event strategy seems to be working as viewers are making sure that they tune in when a big event is on.  MMA Payout will keep you updated on further ratings information as we receive it.

UFC 188: Payout Perspective

June 17, 2015

Welcome to another edition of Payout Perspective.  This time we take a look at UFC 188 taking place from Mexico City, Mexico.

Werdum Undisputed HW Champ

Fabricio Werdum defeated Cain Velasquez to earn the undisputed Heavyweight title.  It was a submission that ended the long-running win streak of Fedor Emelianenko.  It was another submission that ended the Heavyweight title reign of Cain Velasquez.  Werdum’s guillotine choke ended the night for Cain who seemed gassed despite continuing to come forward during the fight.  It was one final lunge at Velasquez that spelled his doom as it seemed that Werdum had a smile on his face as Cain attempted a takedown but was caught by Werdum.

It has been two years since Cain Velasquez had been in the Octagon. It probably was not rust from not fighting but the altitude of Mexico City that could have been the issue.  He spent two weeks in Mexico City but Werdum had been there for over a month.

Werdum could face Andre Arlovski or Stipe Miocic next.

ufc 188 poster

Alvarez escapes Gil

Eddie Alvarez scored a split decision over Gilbert Melendez in an exciting co-main event.  Despite having his left eye almost shut after round 1 due to a Gil elbow strike, Alvarez came back in rounds 2 and 3 to eke out the win.  It must have been a relief for Alvarez to finally get a W in the Octagon after his ordeal with Bellator and losing in his UFC debut last fall.

The decision could have gone either way and these two probably do not lose too much (Eddie #4, Gil #5) in the rankings after the fight.

Next up for Eddie Alvarez?  Possibly Benson Henderson since they were originally scheduled to fight earlier this year.  We could see this in South Korea in November.

Attendance and Gate

The event drew 21,036 which was 36 more than the UFC’s event last year in the same venue.  No gate was announced so we do not know if how many comps were provided.

Bonuses

Fabricio Werdum, Patrick Williams, Yair Rodriguez and Charles Rosa earned the $50,000 fight bonuses.  Werdum and Williams earned the Performances of the Night and Rodriguez and Rosa earned the Fight of the Night.

Promotion of the Fight

UFC Embeddeds provided some controversy as Werdum accused Cain of being a “Fake Mexican.”  Essentially, Cain is American first and not from Mexico.  It was an interesting accusation that reminded me of Oscar de la Hoya-Fernando Vargas from years past.  Of course with recent news events about identity, it would be topical if not for the fact that no one seemed to care.

Similar to UFC 180, Doritos advertised for this fight by having the fighters’ likenesses on Doritos bags.  It also offered a contest for fans to meet and greet UFC fighters.

Doritos bag (pic via Josh Sanchez twitter)
Sponsorships
The Octagon sponsors included MetroPCS, the movie Self/Less, Doritos, DraftKings, Bud Light, Cinemex, BetCris, UFC Mobile from EA Sports and Monster Energy Drink in the center.

BetCris is a Mexican online gambling company. Self/Less is a movie from Universal Studios. It received a little promo featuring Forrest Griffin.

Cain added Monster Energy Drink to his list of sponsors which included Affliction, Oak Grove Technologies and American Ethanol.

Notably, Werdum was sponsored by Reddot.

Odds and Ends

Alvarez’s Underground King shirt, originally made by Jaco, is already on sale (i.e., reduced in price) at the UFC.com store.

Two fights ending in the first round on the UFC Prelims meant a very short night of fights on tv. Speaking of which, it was on FX instead of FS1 due to scheduling conflicts.

UFC 188 was shown in select theatres once again. It would be interesting to know how many people actually went to theatres to watch it.

Is Henry Cejudo ready for Demetrious Johnson yet?

Conclusion

In looking at the success of this event perhaps we look at how it did in comparison to past June PPVs. Traditionally, June PPVs have been terrible. The average PPVs from 2012-2014 is 132,000 buys. Google Trends for UFC 188 showed interest from Mexico by mediocre interest from the United States. Still, one would think that it had to improve on last June’s PPV of 115,000. I have an optimistic estimate of 200,000 PPV buys.

MMA Payout presents The Interview Episode 2 with MMA Journalist Jim Genia

June 9, 2015

MMA Payout presents The Interview, Episode 2, with veteran MMA Journalist Jim Genia discussing the status of the fight to legalize mixed martial arts in the state of New York.

Please note that this interview was done on Monday afternoon right before the news of a revamped MMA Bill was made public.  With the New York State Assembly ending June 17th, we are going down to the wire for a vote to legalize MMA in the state.

You can follow Jim on Twitter and read his latest on his web site.

Show Money Episode 5 discusses UFC and PBC lawsuits

June 7, 2015

Show Money Episode 5 is back with Bloody Elbow’s John Nash and Paul Gift. In this episode we discuss the status of the UFC antitrust lawsuit and the PBC lawsuit filed by Golden Boy.

If you would like to know a little more about the PBC lawsuit, you can find some more information here.

Court orders UFC antitrust lawsuit to Las Vegas

June 3, 2015

The Honorable Edward Davila has granted Zuffa’s request to transfer the venue of the class action antitrust lawsuit filed by former UFC fighters to Las Vegas, Nevada.  In an order dated June 1, 2015, the U.S. District Court for Northern California, San Jose Division granted Zuffa’s Motion to Transfer Venue to the U.S. District Court of Nevada, Las Vegas Division.

In an homage to the parties before it, the court offered in its order, “At the final bell, it is Defendants arguments that clinch this round because the relevant forum selection clause and the sec 1404(a) convenience considerations both favor a Nevada forum.”

The preceding paragraph of the order offered more fight references:

“…Plaintiffs allege that Defendant, now the heavyweight of the industry, has violated Section 2 of the Sherman Act…”

“Defendant now seeks to knock these cases out of the Northern District of California and into its home venue…”

As stated above, the court found in favor for Zuffa based on two arguments.  First, it held that the forum selection clause in the fighters’ fight contracts/bout agreements should be recognized.  With those clauses pointing to Zuffa’s home district of Nevada (or Las Vegas), the case should be decided in that forum.  This finding was directly opposite to the plaintiffs’ argument that the contracts and its forum selection clauses in the underlying contracts should not be addressed in an antitrust claim such as this.

Thus, the question was whether the plaintiffs’ antitrust claim is one “to interpret or enforce” any provision of Zuffa’s agreements so that they are transferred to the contractual venue.  The court held that the “substance of a claim is what matters, not its title.”  It therefore decided that the lawsuit was an action “to interpret” the contracts and thus the forum selection clause should be followed.

In case you were wondering, for those plaintiffs that did not sign contracts with forum selection clauses, the court stated that since they joined this lawsuit, their claims would follow the disposition of the case.  Thus, they go to Nevada too.

While most of the court order reflects on the forum selection clause, it also addressed the convenience of venue factor in deciding in favor of Zuffa.  Essentially, it determined that the relevant parties and witnesses reside in Nevada and most of Zuffa’s employees would need to travel to San Jose if the case stayed in Northern California.  The court did not buy the plaintiffs’ convenience of venue arguments stating it did not convince the court that “Nevada is any less convenient” for the plaintiffs despite arguing that Le and a couple other fighters resided in San Jose and that the San Jose area has a local interest in the lawsuit.

The court also shot down plaintiffs’ argument that San Jose was familiar with antitrust cases and is more efficient in getting them to trial than Las Vegas.  The court acknowledged this fact but stated, “ [e]ven assuming Plaintiffs are correct that the legal process in Nevada generally takes longer than it does in this [San Jose] district, that is simply not enough to overcome those other factors showing why this specific litigation is appropriately venued there.”

The Order is below and can also be pulled of Pacer for free.  Of course, if you pull it from here, please give us an h/t since we did the work for you.

Order – Motion to Transfer Venue

Payout Perspective:

The case would appear to swing in favor of Zuffa now that it is being moved to federal court in Las Vegas.  The pending Motion to Stay Discovery and Motion to Dismiss will be heard in the new venue in Las Vegas.  For the Motion to Stay Discovery, the parties have agreed to allow the plaintiffs to file opposition to the motion 30 days after the disposition of the Motion to Transfer.  So, the pleadings will be filed by plaintiffs by the end of June with a Reply by Zuffa following 14 days after the opposition is filed.

While it may not be the end for Zuffa, the loss could be considered as significant.  Its clear there was a reason why the plaintiffs filed in San Jose.  They were aware of the potential risks of filing with just a small amount of its plaintiffs having ties to the district.  But, the key was how much weight the court would give the forum selection clauses in the contracts.  Its clear from the order that the court took a pragmatic approach to the issue (i.e., what do the underlying contracts state) rather than a theoretical one.

We shall see what transpires with the transfer to Nevada.

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