Zuffa to hand over 6 documents previously privileged in Antitrust lawsuit

August 9, 2017

The Court in the UFC Antitrust Lawsuit has reviewed 86 documents from the company’s privilege log which identifies documents that it is withholding due to Attorney Client Privilege.  Of the 86, it has ordered it hand over 6 documents from the list.

The Order, dated August 4, 2017, relates to an Emergency Motion to Compel Production of Documents Withheld on Privilege Ground and for Other Relief.  Plaintiffs had requested the motion be decided before depositions scheduled in mid-July and early August.  The Court could not comply with the request but required Zuffa to produce 25% of Dana White’s documents withheld on the basis of privilege for “in camera” review.  This essentially means that the Court reviews the withheld documents to determine whether or not they are privileged.  Due to the voluminous amount of documents, the Court requested a sliver of the documents.  Of 86 total documents reviewed, 6 were deemed not privileged.

Order re In Camera Review by JASONCRUZ206 on Scribd

In general, documents that are cited as Attorney client privilege are those in which ask an attorney for its legal impression, opinion or asking for legal advice.

The Order below details the documents.  Briefly, they are:

  1. An August 16, 2011 press release which UFC claimed was reviewed by legal counsel. The release was about an agreement reached with Fox.  Likely, the news of the rights agreement with the network.
  2. An October 3, 2006 email chain between Kirk Hendrick (UFC legal counsel) to Lorenzo Fertitta which appears to be about a bonus for Mirko CroCop for signing a contract.
  3. An October 8, 2007 email chain regarding a “Joe Hand Update.” Hand is the PPV distributor for the UFC.  It appears to be negotiations between the two sides related to a new deal.
  4. A May 23, 2003 email which claims to be providing legal advice regarding broadcasting agreements. It is an email from Hendrick to Lorenzo Fertitta and Dana White regarding “iN Demand and DirecTV paying for Lindell (sic) vs. Ortiz?”  According to the Order it requests, “input from the recipients about Mr. Hendricks’s proposal for “aggressively” telling Zuffa’s PPV partners to reduce their fees for major fights.  The last paragraph of the email does include legal advice which the Court will require Zuffa to redact prior to disclosing.
  5. A September 29, 2008 email from Hendrick to Lorenzo Fertitta, Dana White, Lawrence Epstein and John Mulkey regarding “our final draft” of an agreement with Affliction. It relates to an agreement “Zuffa believes it reached with Affliction.”  It is hard to decipher whether the acquisition was related to the clothing brand or short-lived fight promotion or something else.
  6. An October 10, 2005 email chain which discusses the dollar amount of a media buy Zuffa will purchase from DirecTV. There were portions of the chain that was produced but an email between Bonnie Werth of the UFC and Hendrick were not disclosed.  The Court determined that Werth did not ask for legal advice from Hendrick and privilege does not apply.  Werth discusses Zuffa’s evaluation of DirecTV net revenue from 2003 to 2005 without UFC media buys and provides the media buys Zuffa is willing to purchase.

Payout Perspective:

In certain instances, in the discovery process, when documents which include an attorney on them or in the email chain, it is flagged by attorneys as the potential as having attorney-client privilege.  Did the UFC withhold documents on purpose or were they being aggressive with its protection of possible privileged information?  Maybe both.  Notably, the Court could only review a smattering of documents and thus there might be documents UFC has in its possession that are still withheld that should not be.

Hume-OneFC and Plaintiffs in UFC Antitrust Lawsuit file briefs regarding subpoenas

August 7, 2017

Attorneys representing Matt Hume and Group One Holdings PTE LTD., the holding company for OneFC has filed a response to Plaintiffs Motion to Compel the Deposition of Matt Hume.  Plaintiffs have also filed its response to Hume’s Motion to Quash or Modify its Subpoena to Hume, a OneFC executive.

Hume is an officer in the Asian-based MMA promotion, OneFC.

Hume’s attorneys argue that Plaintiffs in the Antitrust lawsuit are trying to pull an end around into improperly attempting to obtain OneFC’s “confidential and proprietary business information.”  They argue that Group One is a Singaporean company that is not subject to jurisdiction in the United States.  Hume’s attorney assert that it the Plaintiffs seek to obtain documents from the company, it “must follow the procedures adopted by the Hague Convention.”  Moreover, they claim that Hume does not have access to the financial information sought by Plaintiffs.  This process does not have a specific timeframe as to when letters of request must receive a response but it is understood (within the context of European regulation) that it is 90 days.  Yet, there does not seem to be a hard and fast rule.  The average time according to one procedure manual is that it is 6 months to a year for a response which creates problems with US discovery schedules.

Opposition to Subpoena Filed by Hume by JASONCRUZ206 on Scribd

Hume argues that Mr. Hume’s deposition, if taken, cannot be used to obtain Group One’s confidential information.  The concern is that a “fishing expedition” would take place in which the Plaintiffs would be able to ask Hume, under oath, specific financial, business and confidential information about OneFC without using the proper channels to obtain the information.  Hume’s attorneys conceded that if a deposition were to take place, the Court should prohibit inquiry into Group One’s competitively-sensitive business information.  It also opposed any fees needed to be paid by Hume or OneFC as a result of this motion.  Plaintiffs claimed in excess of $21,000 for having to file the motion to compel.

Plaintiffs oppose Matt Hume and One FC’s Motion to Quash or Modify the Subpoena. Plaintiffs cite a declaration Hume submitted on behalf of Zuffa in the Antitrust Lawsuit which states “Group One Holdings compete with Zuffa to sign professional MMA fighters” and “One Championship is not a minor league or feeder league for the UFC.” Based on the fact that Hume’s title at OneFC is that of “Vice President,” Plaintiffs suggest he should have access to business documents – a statement Hume’s attorneys deny.

Plaintiffs’ Opposition to Motion to Quash Hume Subpoena by JASONCRUZ206 on Scribd

Despite the Nevada Court’s stating that OneFC should submit to the subpoena, Hume’s attorneys claim that it is misrepresenting the Court’s statements. Notably, a minute order stated that Plaintiffs could issue a subpoena to OneFC but Hume’s attorney stated that it would not accept service citing that it must abide by The Hague Convention on the Taking of Evidence Abroad.

In addition, Hume’s attorneys are opposing a motion to transfer this issue to the District Court of Nevada. You might recall that the District Court of Los Angeles transferred a discovery dispute to Nevada involving Bellator.

Payout Perspective:

The dispute is not a sexy substantive issue but an important procedurally issue if Plaintiffs believe that OneFC’s information is helpful for their case. Despite the Nevada Court granting the right for Plaintiffs to issue a subpoena, it does not give specifics in its order. As attorneys for Hume and OneFC, they saw the issue with the order and the fact that to ascertain the information from its foreign client, it must go through a process and not through Hume. The motion to transfer the case to Nevada makes sense for Plaintiffs but Hume’s attorneys will try to keep it in Washington state where they might receive a more favorable ruling. MMA Payout will keep you posted.

Report: UFC 214 draws 850,000 PPV buys

August 7, 2017

ESPN’s Darren Rovell reports that the UFC 214 held July 29th featuring Jon Jones-Daniel Cormier drew 850,000 PPV buys per sources.  The number includes US, Canada, Australia and digital platforms like UFC.TV.

The 850,000 PPV buys bests Jones-Cormier I at UFC 182 in January 2015.  UFC 182 drew 800,000 on PPV.

UFC 214 is the best buy rate since Ronda Rousey’s return against Amanda Nunes at UFC 207 in December 2016.  The first round stoppage of Rousey by Nunes drew 1.1 million buys.

UFC 214 also featured Tyron Woodley defending his welterweight title against Demian Maia and Cristiane “Cyborg” Justino winning the Women’s Featherweight title from Tonya Evinger.

Payout Perspective:

Despite the fact that Dana White indicated that the PPV was tracking 1 million PPV buys, 850,000 is a very good number.  While the cynic may claim that it took 3 title fights and a very good Lawler-Cerrone fight to reel in 850,000 buys, the event has to be considered a positive for the new owners.  The first half of 2017 has been sluggish in PPV sales and this event helped create some momentum for the rest of the year.  It also brings up a question as to whether Jon Jones is a major draw or was it the rivalry that stoked fans to purchase the PPV.

Show Money Episode 18 reviews WME-IMG’s first year of UFC ownership and more

August 5, 2017

Its another episode of Show Money, I hop on with John Nash and Paul Gift of Bloody Elbow to discuss WME-IMG’s first year of ownership of the UFC, Bellator’s latest PPV and more.

UFC 214: Payout Perspective

August 1, 2017

Welcome to another edition of Payout Perspective.  This time we take you to the Honda Center in Anaheim, California for UFC 214.

Jones returns to win back the UFC Light Heavyweight Title

The matchup finally happened and DC looked much better than their initial fight.  However, a headkick in the third round undid any momentum Cormier might have had as it was beginning of the end.  Maybe the fight was stopped too late as Jones reigned punches and elbows on a hurt Cormier.

Jones gave one of the best post-fight interviews in the Octagon as he praised Cormier and aspired to be more like him.  Whether or not you believed him is up to you but for his sake hopefully Jones can keep on the straight and narrow.

Should Cormier have been allowed to leave the Octagon as it was clear he was still not aware of what happened?  Should Joe Rogan have interviewed him after?  There was a lot made about Cormier crying after the fight but it’s clear that he had waited so long for this fight and wanted to beat Jones dearly.  The game plan was working out but one headkick spelled the doom.  You have to feel for him and it’s clear, similar to Ronda Rousey after the Holly Holm fight, that they should have left DC alone.  The footage of DC wandering around after being KO’d is hard to watch and you have to wonder why his corner was not able to corral him and sit him down.

The big news going forward after this is that Jones called out Brock Lesnar.  Lesnar is retired and still must serve out his USADA suspension.  News that he had put his name in the active testing pool were not true.  So, if this fight were to happen the earliest we might see this is July 2018.  In the meantime, it would be nice to see a rematch with Alexander Gustafsson.

Woodley wins but loses

Tyrone Woodley pitched a shutout with Demian Maia as he stuffed each of the 26 takedown attempts of the BJJ specialist which negated Maia’s path to victory.  The only problem with this is that Woodley did not supply much offense.  While Woodley displayed one of the best defensive fights in recent memory, the name of the game is excitement.  Even though Woodley announced he would fight GSP at MSG in November post-fight, Dana White had other thoughts.  Due to his performance, White announced GSP-Bisping for that date further distancing the relationship between Woodley and the UFC.

Cyborg wins her title

Let’s face it this division was meant for Cyborg Justino.  When a Megan Anderson fight was nixed and Tonya Evinger was her replacement, it gave fans all the more reason to think Justino would take this title.  Evinger did her best but could not match Cyborg here.  Despite Germain de Randamie winning the title against Holly Holm, Joe Rogan and Dominick Cruz threw shade at GDR for not wanting to face Cyborg.  The only fight you would think happens in this division is a fight with Holly Holm.

Attendance and gate

It was a new record for MMA events at the Honda Center with 16,610 fans for a live gate of $2,448,870.00.  With a variety of great UFC events held at the venue, including UFC on Fox 1, this event did the best of all of them.

Bonuses

The bonuses went to Jones, Vokan Oezdemir, Brian Ortega and Renato Moicano.  Ortega and Moicano earned the Fight of the Night as Ortego submitted Moicano in the 3rd round with a back and forth fight.  Oezdemir vaulted into the Light Heavyweight title picture with a KO of former contender Jimi Manuwa and Jones won with his stoppage of DC.

The Curran-Albu fight could have earned a FOTN but the Ortega sub probably was the deciding factor.  Ricardo Lamas also had a potential Performance Bonus based on his stoppage of Jason Knight.

Payouts

Daniel Cormier earned $1 million and Jon Jones drew $500,000 for the main event.  A total of 11 fighters made a reported 6 figures for UFC 214.  In comparison (and perhaps unfair), the total reported salaries from PFL Everett was $376,5000.  3 fighters made more than that at UFC 214.

Tyrone Woodley made $500,000 for his title defense against Damian Maia.

Promotion of the Fight

The Summer Kickoff press conference a couple months ago kicked off the run up for this event.  Obviously, everyone held their breath that this fight would happen considering the past problems with booking the rematch.

The UFC put on some great video promos for UFC 214 featuring Jones and Cormier.

Notably, the Embedded series focused a lot on Cyborg and less on the Woodley-Maia co-main.  Whether it was logistics since Cyborg trains in Southern California or a choice to push Cyborg more than Woodley.  Also, no Cerrone antics on the Embedded which was disappointing.

Sponsorships

The sponsors in the Octagon at UFC 214 with Toyo Tires, MetroPCS, Budweiser, Harley Davidson, Monster Energy, UFC Mobile, Dana White’s Contender Series on Fight Pass, Gruntsyle.com, Performance Nutrition and 7-11.  Monster Energy had the center of the Octagon.  The UFC Mobile game was also featured in the Octagon.

HSS was a new sponsor on the telecasts as it sponsored the fight clock.

Performance Nutrition sponsored the Embedded episodes this time around.

Also, 7-Eleven, which has shared signage with Monster Energy in one of the Octagon posts.  It also sported the Big Gulp logo during the broadcasts as well as voiceovers about the convenience store.

Tyron Woodley, Jon Jones and Donald Cerrone were some of the fighters sponsored by Monster Energy.

Metro PCS used Facebook Live and Periscope to promote UFC 214 during the event.

Interesting to note that while they did show Mayweather-McGregor insets during the telecasts, there was nothing on the mat or Octagon promoting the fight.

Odds and ends

Before we talk UFC 214, I went to PFL Everett, Washington Saturday night.  On Friday afternoon, I interviewed Carlos Silva and Ray Sefo.  During the Yushin Okami fight, I heard a heckler yell out to Okami, “Remember Pearl Harbor,” which is in reference to Okami being Japanese and that’s really about it because it made no real sense except the guy was a racist.  He followed up with “Come on, we were all thinking it.”  Actually, no I’m sure a lot of people were not thinking racist thoughts because you see a Japanese guy.  There were some murmurs and snickers from people around me which is disturbing as well.  Unfortunately, it goes to show you that racism still persists and people are not afraid to express it.

The Prelims aired on FXX and despite the fact that it aired on a channel different than its usual spot, I suspect that these fights will do well ratings-wise.  No problems with finding the channel as it drew 866,000 viewers and peaked over 1 million during the Sterling-Barao fight.

It’s always awkward to see fighters from other organizations cornering their teammates.  Notably at UFC 214 we saw Tito Ortiz in Cyborg’s corner and Ben Askren with Tyrone Woodley.

CSAC prevented Renan Barao from cutting down to 135 pounds and his fight with Aljamain Sterling was at a catchweight of 140.  Despite a request, Sterling was not given more money for accepting the catchweight fight.

Also of note Sterling and Al Iaquinta are getting into the real estate business.  I feel a reality show on UFC Fight Pass upcoming.

Three interesting notes in MMA journalism at UFC 214.  First, the MMAJA had its first meeting.  The second was Luke Thomas was shut down by Jon Jones after asking a question.  While the question is subject to scrutiny, Jones’ utter refusal and the subsequent applause by fans goes against what a lot of MMA fans want, which is for journalists to ask questions and fighters to answer.  Granted, the question was probably not going to reveal anything as Jones is media trained but he still should have answered it.

Joe Rogan came under scrutiny as he decided to interview Daniel Cormier after it was clear he displayed the symptoms of someone that suffered a concussion.  Rogan stated that he wanted to give Cormier a chance to talk which is fair.  Yet, it seemed like the production crew that saw the footage of Cormier and/or DC’s corner could have prevented Rogan from making this decision.  Cormier did not say anything out of order but he could have which would have been awkward for live PPV.  Rogan apologized the next day via social media.  Some didn’t think the apology was enough but it does come into question the health of a fighter versus entertainment.  Certainly, fighters should not be interviewed after a head injury.  But, that is balanced with wanting to hear the raw emotions of the fight.  Rogan knew he probably shouldn’t interview Cormier (recall the Alistair Overeem interview after he lost to Stipe Miocic post-fight where Overeem thought Miocic tapped), but this was a big moment and the end of a heated, personal rivalry.  From the entertainment perspective, fans wanted closure and hear both sides of the story.

The three-man booth of Anik, Cruz and Rogan is still going through growing pains with Cruz and Rogan stepping over each other at times.

There were stars at the fights but forget all of them.  The Rock was in the building

Quotes of the night:

“Jarred Brooks can cuss ladies and gentlemen.”  – Jon Anik after Brooks’ post-fight interview

‘“I don’t know what’s happening in my hands, but that’s dynamite.”  Vokan Oezdemir after ending Jimi Manawa in less than 1 minute in R1.

There were over 2 million google searches for UFC 214 Saturday night.

Conclusion

This event seemed less-hyped than UFC 182 which was sold solely on Cormier-Jones.  Yet, the depth of this card would seem to help with the UFC casual fan.  The return of Jon Jones probably helped with last-minute buys as folks probably wanted to make sure that he would be fighting.  Will it surpass 1 million buys?  With over 2 million google searches it’s a possibility.  But, I think this event lands somewhere around UFC 182 and expect that it does the best for 2017 with 800,000 buys.

Payout Exclusive: PFL’s Ray Sefo and Carlos Silva

July 28, 2017

MMA Payout had the opportunity to speak with Professional Fighters League (“PFL”) President Ray Sefo and PFL CEO Carlos Silva right before weigh-ins on Friday afternoon ahead of its Saturday night event: PFL Everett.

The main card from the Xfinity Arena in Everett, Washington includes MMA veterans Jake Shields and Yushin Okami.  In addition, former UFC heavyweight Jared Rosholt will be in action against Nick Rossborough.  The main event features undefeated Featherweight Andre Harrison facing Steven Rodriguez.  It airs Saturday night with the main card on NBC Sports Network starting at 6pm PT which means that it will run up against UFC 214.  The prelims begin at 3pm PT and will be online on the PFL website and the FITE TV app.

The Professional Fighters League had its debut earlier this month in Daytona, Florida.  Everett, which held a World Series of Fighting Event last July, will be the second event under the new PFL structure.  The format has fighters divided into seven weight classes competing throughout a regular season schedule, with winners advancing to a win-or-go home playoff tournament.  Each tournament winner will be crowned PFL champion for that weight class and will collect $1 million.  An additional $3 million will be divided among other regular season and playoff competitors.

In speaking with Sefo, he noted that fighters are excited about the new structure.  “I’m a product of that format,” said Sefo, who referred to his K-1 background.  “It was very similar as to how K-1 was run.”  Sefo noted that the new structure addresses a main concern of fighters.  “The most complaints I get [from fighters] is that fighters don’t fight enough.”

Silva sees gradual growth for the PFL.  “Like any league, we are laying the foundation,” said Silva.  “We are big believers that this sort of transition from promotion to sport is what’s needed in MMA.”

“As you look over the next 3 seasons, you are going to see a lot of development.”  Silva added, “Fighters will know when they are going to fight and they will be able to plan out their season and will be treated like professionals.”

Sefo emphasized that the key word from Silva’s comment was that fighters are being treated as “professionals.” The athletes will know when they are fighting and will train and condition accordingly.

As for business, Silva stated that talks with companies to be sponsors are ongoing.  “There’s a lot of active conversations going on,” Silva indicated.  “You’ll see between now and January that a couple of these really interesting title sponsors that we’re talking to that will give the brand equity to the league which we’re excited about but we’re not ready to talk about it.”

Unfortunate for the PFL, but the Saturday event coincides with the big UFC 214 main event in Anaheim with Jon Jones finally facing Daniel Cormier.  This fight has overshadowed the PFL’s second event but Silva is taking the competition in stride.  “It’s a big night for MMA,” Silva stated about UFC 214 on the same night as PFL Everett.  “We’ve had other big nights up against Bellator and up against the UFC.  There are going to be collisions in professional sports whether it is NASCAR or baseball or the football season starting in a couple weeks.”

“What we tell everybody is that you should buy the pay-per-view, but before you do that you should tune in free on NBCSN watch some great [PFL] main card action.”  Silva advised MMA fans that after watching the PFL on NBCSN you can click on your PPV.

Plaintiffs in Antitrust Lawsuit seek $21K in fees in Motion to Compel Matt Hume’s deposition

July 25, 2017

Plaintiffs attorneys in the Zuffa Antitrust Lawsuit have filed a Motion to Compel the Deposition of Matt Hume in the federal court in Washington state.  As a result of the filing, Plaintiffs are seeking sanctions against Hume and his attorney in the amount of $21,000 for having to draft and file the motion.  In addition, they request Hume sit for his deposition and produce documents as requested in Plaintiffs’ subpoena.

Hume, who coaches UFC flyweight champ Demetrious Johnson, also is Vice President for Operations and Competition for Group One Holdings Pte. Ltd., (dba One Championship), the Asian MMA Promotion based out of Singapore.  Hume lives in Washington State where he trains Might Mouse.

In the UFC Antitrust lawsuit, the Court granted the parties the right to seek the deposition and documents from OneFC.  Plaintiffs issued a deposition notice and subpoena for documents related to One Championship’s financial data relating to its promotion of live MMA events.

Hume’s lawyer has opposed the subpoena and request for documents citing the subpoena is not valid and the documents request information from a foreign corporation.  Hume argues that he “is not authorized to comment on behalf of One Championship” or that he “lacks personal knowledge.”

Hume’s attorneys have filed a Motion to Quash the Subpoena in federal court in Washington state.

The Plaintiffs are interested in taking Hume’s deposition as he produced a declaration in which he stated “One Championship is not a minor league or feeder league for the UFC” and “competes with Zuffa to sign professional MMA fighters.”  According to Plaintiffs’ motion, “[t]he purpose of these averments, made on One Championship’s behalf, is to controvert elements of Plaintiffs’ claims and to support Zuffa’s defenses.”

Despite extensive meet and confers, the parties are at an impasse.  Hume’s lawyers had offered Hume to be deposed on limited issues and not requiring Hume to produce any documents but Plaintiffs have denied.

Plaintiffs attorneys in the Zuffa Antitrust Lawsuit have filed a Motion to Compel the Deposition of Matt Hume in the federal court in Washington state. As a result of the filing, Plaintiffs are seeking sanctions against Hume and his attorney in the amount of $21,000 for having to draft and file the motion. In addition, they request Hume sit for his deposition and produce documents as requested in Plaintiffs’ subpoena.

Hume, who coaches UFC flyweight champ Demetrious Johnson, also is Vice President for Operations and Competition for Group One Holdings Pte. Ltd., (dba One Championship), the Asian MMA Promotion based out of Singapore. Hume lives in Washington State where he trains Might Mouse.

In the UFC Antitrust lawsuit, the Court granted the parties the right to seek the deposition and documents from OneFC. Plaintiffs issued a deposition notice and subpoena for documents related to One Championship’s financial data relating to its promotion of live MMA events.

Hume’s lawyer has opposed the subpoena and request for documents citing the subpoena is not valid and the documents request information from a foreign corporation. Hume argues that he “is not authorized to comment on behalf of One Championship” or that he “lacks personal knowledge.”

The Plaintiffs are interested in taking Hume’s deposition as he produced a declaration in which he stated “One Championship is not a minor league or feeder league for the UFC” and “competes with Zuffa to sign professional MMA fighters.” According to Plaintiffs’ motion, “[t]he purpose of these averments, made on One Championship’s behalf, is to controvert elements of Plaintiffs’ claims and to support Zuffa’s defenses.”

Despite extensive meet and confers, the parties are at an impasse. Hume’s lawyers had offered Hume to be deposed on limited issues and not requiring Hume to produce any documents but Plaintiffs have denied.

Motion to Compel Depo of Matt Hume by JASONCRUZ206 on Scribd

Payout Perspective:

The motion is filed in federal court in Washington state (as this is where Hume lives) and the ordered issued from federal court in Nevada. While it is custom to abide by another jurisdiction’s subpoena, Hume and his attorneys believe that they have a legitimate reason to oppose the subpoena and document requests. It also presents the issue of what Hume may or may not have access to as an officer of OneFC. Certainly, the request for documents is of a corporation outside the jurisdiction but Plaintiffs assert that they have a viable right to the documents and that Hume must produce them. The hearing is set for this Friday (July 28th) so barring a last-minute agreement by the parties we will see what the Washington court rules.

The $21,000 in legal fees reflects the fact of how expensive this litigation is and the fact that Hume’s attorneys believe that they have a legitimate argument to object to the subpoena.

Ex 18 re Fees for Matt Hume Motion to Compel Deposition by JASONCRUZ206 on Scribd

As UFC exclusive negotiating window opens, will WME-IMG renew with Fox?

July 22, 2017

As the three-month exclusive negotiating window with Fox began July 1, The Hollywood Reporter reports on the UFC seeking a huge rights fee deal as its current agreement with Fox is nearing its end.  The article notes that WME-IMG will seek to “dramatically increase” the fees to justify its $4 billion purchase made last year.

The article touches on the point that the UFC is an attractive sports property due to its reach to a youthful, male demographic but also reflects caution with some potential sponsors.

Via The Hollywood Reporter:

Reaching that millennial male demographic is one reason UFC has begun to overcome its stigma among media buyers long wary of MMA’s bare knuckle (and sometimes bloody) violence, though not completely. Budweiser and Harley Davidson are UFC sponsors, but the franchise still does not have an automotive sponsor. Ford, which advertises across the Fox Sports portfolio, won’t place ads in UFC programming.

Last year was a good year for the UFC on FS1 based on television ratings as UFC Fight Night averaged near 1 million viewers and the prelims, boosted by 3 PPVs over 1 million buys, also drew over 1.1 million viewers prior to the events.

The article notes that the PPV business, which has dragged this year, will be a sticking point in negotiations.  Since the biggest fights and fighters will be on PPV, a TV deal will not air the likes of Conor McGregor on its network.  Yet, the UFC’s business model is predicated on PPV as its biggest revenue driver despite the fact that it has built out its over the top platform, UFC Fight Pass and FS1 airs a bulk of UFC content.

The UFC’s last two PPVs failed to eclipse 170,000 PPV buys (UFC 212 and UFC 213).  While UFC 211 was a bigger event, there has not been a PPV which has been close to over 300,000 PPV buys.  Next Saturday’s UFC 214 in Anaheim might be the exception with the return of Jon Jones-Daniel Cormier.  The first meeting at UFC 182 rekindled the UFC PPV due to a strong marketing push and that event drew 800,000 solely pushing that fight.

Late last year, the Sports Business Journal indicated that the company was looking for $450 million per year for 10 years.  Currently, the deal is 7 years for $115 million.  Based on the current state of the company (i.e., ratings, events, star power) it will be interesting if that is still what the new owners are looking for.

Payout Perspective:

UFC 214 might be a big PPV in terms of business and the negotiations for a new media rights deal with Fox.  In the coming months, we should hear rumors and rumblings of how negotiations will go.  As a sports property, the UFC is still attractive and for FS1, without the UFC, there will be a major whole in its programming.  NASCAR ratings have been disappointing this year and without the UFC, the network would have to look to other sports/sports properties to fill its void.  It will be interesting to see if the company re-ups prior to the end of the exclusive negotiating period or tries to see if there are other bidders out there.

Hunt’s attorneys file opposition to dismissing his First Amended Complaint against UFC, White and Lesnar

July 19, 2017

Attorneys for Mark Hunt have filed their opposition brief to Zuffa, Dana White and Brock Lesnar’s Motion to Dismiss his First Amended Complaint.  In the brief, they cite specific instances in which they addressed the court’s concerns regarding their allegations.

The brief specifically claims that it has provided adequate information on damages and a proximate cause to go forward with its Civil RICO claim.

Plaintiffs Opposition to MTD FAC by JASONCRUZ206 on Scribd

Hunt addresses the court’s concerns with respect to the Civil RICO claim alleged by Hunt.  They rely on a case, Mendoza vs. Zirkle Fruit, Co., in which the defendants in that case sought to manipulate the work force by hiring undocumented laborers to depress wages of documented workers.  In this case, Hunt’s lawyers argue that the UFC and White wrongfully manipulated the market to depress wages of clean fighters by hiring doping fighters.

They also cite the Mendoza case to dispel the Defendants’ argument that there could be other plausible proximate causation for Hunt’s alleged damages.  They claim Mendoza did not dismiss the plaintiffs’ civil RICO claims although there were alternative theories to the damages from the plaintiffs.  Thus, as Hunt relies on Mendoza, the Court cannot dismiss Hunt’s civil RICO claim solely because there are alternative or intervening causes for Hunt’s financial losses.

Also in his brief, regarding his Breach of Contract claim, Hunt argues the clause in the New Zealander’s contract which states that Zuffa shall be bound by the rules and regulations of the Athletic Commission was breached.  In the first hearing on dismissing the original complaint, the Court questioned what specific part of the contract Hunt alleged was breach as it was not clear to the Court from the original complaint.

 

Payout Perspective:

We detailed the Court hearing and how the Judge was skeptical about Hunt’s claims.  We shall see if the arguments supplied in this Opposition Brief persuades the Court that the First Amended Complaint has changed.  In this brief, Hunt argues that it should be entitled to a shot at discovery, which is being challenged in a different motion.  It also requests another shot at amending the complaint if the Court determines the allegations are not sufficient.  We shall see how that goes.  .

 

 

Taking a look at the Motion to Dismiss hearing in the Mark Hunt lawsuit

July 12, 2017

It’s not often that you get the transcript from a court hearing for free (relatively speaking).  But Brock Lesnar’s attorneys have attached the entire hearing from the parties’ Motion to Dismiss on May 22, 2017 as an exhibit to its current Motion to Dismiss the First Amended Complaint of Mark Hunt.  MMA Payout takes a deep dive into the hearing.

Transcript Exhibt a to Lesnar’s MTD by JASONCRUZ206 on Scribd

There were three parties present.  Howard Jacobs, representing Brock Lesnar, J. Colby Williams and Donald Jude Campbell on behalf of Zuffa, LLC and Dana White and Scott Ingold and Joseph Gonnella on behalf of Mark Hunt.  Jacobs, Williams and Ingold were the attorneys that argued the motion before the Honorable Jennifer A. Dorsey.

The Court complimented the parties on how well-briefed the parties were in arguing the Motion to Dismiss.  As such, he made the introductory note that he had read all of the cases cited by both parties and thus did not need a rehash of the cases.  In my experience, this is helpful and shows the court’s competence.  Also for judicial efficiency, he does not want a party to go too deep into the cases they cite by bringing up the underlying facts in that case unless its central to the point of the parties.

I will let everyone know, first of all, I have read every word of all of the very nicely prepared briefs. I want to thank all of you for the care and attention that went into those briefs. And, because I think everything was so well briefed, I definitely don’t need a reiteration of every argument and every point raised. I’ve spent a lot of time with these motions. I’ve read all of the cases that are cited in them. So I’m prepared to hear what else or what else you would like to stress.

The Court takes time asking questions of Hunt’s attorney about their tort-based claims as well as their theory for the RICO claim.  Defendants seem to have successfully pegged the RICO claim as one that circumvents the rationale behind the purpose of the claim and more of one where attorneys attempt to frame a RICO claim in order to triple their damage claim.  As such, there’s no standing for Hunt to assert his RICO claim.

Colby Williams:

Here, Mr. Hunt’s Complaint is a prime example of the overenthusiastic use of RICO and its specter of criminal wrongdoing to seek a financial windfall in the context of a routine commercial dispute. And, while RICO has unquestionably been stretched in scope and meaning beyond the organized crime context, certain guiding principles remain no matter what the subject matter is of the case.

The most fundamental of those requirements, Your Honor, we would submit, would be that a plaintiff has to have RICO standing under 18 U.S.C. 1964(c) and that’s a two-pronged inquiry. First prong, you’ve got to demonstrate a cognizable injury to a property or business interest. And, Your Honor, most respectfully to opposing counsel, that is not determined by trying to squeeze yourself into some other interest that has been found suitable for RICO injury in a prior case. The courts are unanimous when they tell us business and property interests are a categorical inquiry based on state law. The second inquiry that must be established for RICO standing is that there has to be proximate cause between the injurious conduct and the claimed injury. These are questions of law for the court; they are proper for determination at the 12(b)(6) stage; and, if a plaintiff fails to satisfy either prong, the RICO claim must be dismissed. We submit Mr. Hunt doesn’t satisfy either one.

Defendant’s stress the fact that personal injury and reputational harm are “simply not recoverable” under RICO.  Hunt’s alleged lost opportunities, according to the defendants, are future claims that are speculative and contingent which do not fall under a remedy under RICO.

Notably, the defendants wanted to make known that Hunt was still gamely contracted by the UFC and performing under the contract at issue.

Williams:

Mr. Hunt, on March 4th, fought Alistair Overeem. He references it in his opposition. He was paid $750,000 for that fight, Your Honor. More money than he made in the summer of 2016 at UFC 200 when he fought Mr. Lesnar. He hasn’t lost a single opportunity. He’s continuing to get fight opportunities. He’s making more money. There is no RICO injury here at all.

Jacobs, the attorney for Brock Lesnar, argued that the claims against Lesnar are baseless as they lack proximity.  The RICO claims, which are based on Hunt fighting Bigfoot Silva and Frank Mir do not apply to Lesnar argued Jacobs.  He claimed that Hunt cannot show that he relied on any omissions or misrepresentations from Lesnar which is a requisite for a fraud claim and the underlying actions for a RICO violation.  Jacobs argues the use of the ESPN interviews with Brock Lesnar and Dana White would defeat his own claim.

…I think, all of the causes of action. Certainly RICO, fraud, false pretenses — all of those claims require an allegation of reliance on the false representations. And so the plaintiff in his Complaint and then as supplemented by his opposition says that he relied on either Brock Lesnar’s alleged misrepresentation that he wasn’t doping or he relied on the material omission of the fact that he was doping. So those are the allegations. And there have to be damages pled which he has to show that he relied on these misrepresentations or omissions.

 … And what he [Hunt]wants to do here is have it both ways. He wants to use the interviews that Mr. Lesnar gave as part of his RICO claims and the predicate acts, but then he wants you to somehow find that his own statements, the very same types of interviews, where he said: I know that Brock Lesnar was doping and I don’t care. I’ll beat him anyway. He wants you to ignore those and you can’t because they show that the allegations here are false.

“He wants to use the interviews that Mr. Lesnar gave as part of his RICO claims and the predicate acts, but then he wants you to somehow find that his own statements, the very same types of interveies, where he [Hunt] said: I know that Brock Lesnar was doing and I don’t care.  I’ll beat him anyway.  He wants you [the Judge] to ignore those and you can’t because they show that the allegations here are false.”

Jacobs also attempts to extinguish Hunt’s purported theories for a RICO claim:

And the pattern of racketeering, it’s been alleged that it’s both an open-ended pattern and a closed-ended pattern. And I just wanted to address some of the statements that are made on both of them. On the closed-ended continuity, the claim seems to be that — at least in part because you have to go further back in time — that the prior retirements of Brock Lesnar somehow factor into this closed-ended continuity. There’s a couple problems with that. One, it has not been pled in the Complaint. Two, any allegation that Brock Lesnar’s prior retirements that predated 2015 is somehow being a pattern of activity because they were used to avoid drug testing under the UFC Anti-Doping Policy, they have one significant problem and that is there was no UFC Anti-Doping Policy before 2015 and there’s also no allegation that Mark Hunt ever was in line to fight Brock Lesnar prior to 2015. So it’s — those allegations to establish closed-ended continuity simply are factually impossible in this case.

 As to open-ended continuity, it seems to be thatlooking forward, well, Brock Lesnar could unretire and again avoid testing at any time. Again, if you look at the UFC Anti-Doping Policy, specifically at Article 5.7 which we asked that judicial notice be taken of, it specifically says that if he unretires he — basically he has to serve his suspension from that point going forward. So, if he has 11 months left on his suspension, he has to be in the pool for 11 months if he unretires for testing. So this notion and these arguments that he could somehow step out of retirement and straight into the ring is also factually impossible.

Hunt’s attorney first brings up the fact that it is the burden of the moving party thus setting the landscape for his argument that despite possible omissions, the non-moving party (Hunt) would have deference for any vague or ambiguous facts.  He stresses based upon case law that Hunt need only set forth “plausible” facts for their claims.  Further, he need not provide specifics on damages.

He notes that the RICO claim is based on “an ongoing course and conduct by the enterprise and the parties that make the enterprise,” including Brock Lesnar.  He notes that reliance on fraud need not be alleged to make his RICO claim.

He addresses the Defendants’ issues with Hunt’s standing (re question of damages) and proximate cause.  He notes that Lesnar was allowed by the UFC through a “fraudulent agreement by the enterprise.”  He goes on to state that Defendants “defrauded Mr. Hunt when they did that.  They defrauded the Pay-Per-View subscribers. They defrauded many people who were paying or relying on the fact that Mark Hunt was going to get fight a fair fight.”

But the Court asked whether the allegations were “patently speculative” including whether Hunt would have beaten Brock Lesnar if he had fought clean.  The Judge also questions how a fighter that uses PEDs would be able to increase the value of the company based on Hunt’s allegations in the Complaint.  In fact, the Court seems to question the theory of case and alleged damages posed by Hunt.  The attorney for Hunt does not go into the problems only that it needs discovery to determine more detailed matters.

Yet, he seems to have a hard time with the questioning and focusing on the rationale of the RICO claim.

THE COURT: How is it — how can you — I guess the question may be ultimately is what facts have you alleged currently to demonstrate and how — as opposed to just conclusory allegations that these damages, these lost opportunities, are from the RICO activity and the racketeering activity and not merely from the fact that he got beat?

INGOLD: Well, Your Honor, the defendants seem to say, well, we would have to prove that but for the cheating by Mr. Lesnar, Mark Hunt would have won the fight.

THE COURT: But for the racketeering activity

INGOLD: Well, if — if the defendants had not, in our view, committed wire fraud; if they had said, we’re going to make Mr. Lesnar go through the same testing protocols; we’re going to hold him to the same standards as every other fighter, as Mr. Hunt in fact, then it would have likely turned up that Mr. Lesnar was cheating; he would have not been able to compete; they would have substituted another fighter. Even if Mr. Hunt would have fared better against a clean Lesnar, that would have helped his brand.

 THE COURT: How is all of what you’ve just described not patently speculative?

 INGOLD: Well, Your Honor, Mendoza says that we’re allowed to allege damages generally at the pleading stage.

Ingold goes on to analogize the issue of damages:

Your Honor, I would submit that if Michael Jordan never won a basketball game kids wouldn’t be buying Air Jordan sneakers from Nike for hundreds of dollars; that if Mike Tyson never won a boxing fight, people wouldn’t have paid hundreds of dollars in Pay-Per-View fees to see him fight.

The fact of the matter — and we put this in our brief — is that losing fights is bad for business.

The Court also questions why his claims for false pretenses is based upon a criminal standard rather than a civil one.  The Judge read it more like a fraud-in-the inducement claim and Hunt’s attorney could not really address why the False Pretenses claim was based on a Nevada criminal statute.  The Judge also questioned Mr. Ingold as to whether they were challenging the enforceability of the contract.  It was clear that Mr. Ingold did not want to argue that the contract was unenforceable or voidable.

The Court noted that if there was not a false pretense, it would impact his claim for unjust enrichment and other claims made by Hunt.  Basically, under Nevada law, could not claim damages covered by a contract and then have an unjust enrichment claim against the contracting party.  Mr. Ingold cited a case in which there could be more damages claimed outside the contract under unjust enrichment.

It was curious to note that Hunt is not alleging that his fight contract is unenforceable despite the fact that he claims that portions of the contract were breached.

Notably, the Campbell & Williams attorney, Colby Williams, started by quoting a case in which it attempts to frame its argument that RICO does not apply in this case.

“…Mr. Hunt’s Complaint is a prime example of the overenthusiastic use of RICO and its specter of criminal wrongdoing to seek a financial windfall in the context of a routine commercial dispute.”  Williams goes on to state that Hunt has failed to satisfy the two-prong test set out to claim that they can sue (“standing”) under the federal RICO statute.  First, you have to “demonstrate a cognizable injury to a property or business interest.  Second, the UFC brings up a fact that had not been brought up which actually helps their case here.  Jon Jones failed a USADA test and was not allowed to fight at UFC 200.  This factual distinction serves as circumstantial evidence that the UFC would not have allowed Lesnar to participate at UFC 200 if it had known that he was taking a banned substance, he would not have allowed him to fight at the event.  Thus, the plausibility of a conspiracy claim falls flat here.”

The Judge does side with Mr. Williams here in citing that the claim was “overenthusiastic” use of the civil statute.  He dismissed the cause of action with the right to amend which Hunt did.  However, the Court did warn that the threshold for a plausible civil RICO claim was high.  Whether or not Hunt met this hurdle will be determined in the upcoming Motion to Dismiss of the First Amended Complaint.

The primary problem found by the Judge was “the lack of demonstrated RICO standing.”  The Court did not buy a “specialized business personal injury” as asserted by Hunt regarding his loss opportunities and damage to his Juggernaut brand.  Personal injuries are not recognized under this statute.   He also could not infer proximate cause.  Essentially, the Judge could not determine that the claim that the UFC concealed exemptions “to cause clean fighters to fight doping fighters” caused Hunt’s injury.

Once again, I am curious as to why Hunt’s attorney did not include USADA in its Complaint for damages.  Certainly, there could be a level of liability on USADA, a third party (and nonparty in this lawsuit) that administers and enforces the UFC Anti-Doping Policy.  With the claims that Lesnar was allowed clearance to fight without proper drug testing, USADA could have been an entity to point the fighter.  Secondly, based on the argument and Hunt’s briefing, Juggernaut brand could have its own claims here.  As pointed out by Defendants, the company owned by Hunt should bring its own claim if it had one.

We shall see how Hunt’s attorneys respond and what they will argue to the Judge has changed (specifically the RICO claim) from the original complaint to the First Amended Complaint.

Next Page »