UFC 216: Payout Perspective

October 10, 2017

Welcome to another edition of Payout Perspective.  In this edition we take a look at UFC 216 from the T-Mobile Arena in Las Vegas, Nevada.

Ferguson submits Lee

It was not a good week for Kevin Lee.  Not only did he have issues with cutting weight which kept everyone in suspense on Friday.  It appeared that he had a staph infection on Saturday night.  Joe Rogan noticed a mark on Lee’s left pec immediately.  Lee acknowledged the infection which makes one wonder how the commission allowed Lee to fight.

It was a good fight but it looked like Lee had tired in the third and was eventually submitted.  Ferguson should go on to face Conor McGregor if he decides to return to fight.  If not, could we see another setup with Khabib.

DJ makes history with title defense

Demetrious Johnson did it again with another successful title defense of his UFC Flyweight title and another 5th round stoppage.  Johnson had a sensational suplex into an armbar transition to tap out Ray Borg.  It was the 11th title defense which set a record.  DJ stands alone in the UFC Flyweight division.

Despite the remarkable accomplishment Johnson was the co-main event and not the main fight on the show.  This was a subtle sign that despite the remarkable accomplishment, Johnson is not a top of the card draw as he should be.

Attendance, gate and bonuses

This was the lowest attendance and gate for a UFC PPV held at the T-Mobile Arena.  The figures announced post-fight totaled just 10,638 for a gate of $677,999.50.  Of 7 events at the T-Mobile, it was 6th in terms of attendance and gate.  Only this summer’s TUF 25 Finale drew less and that’s due to the fact that there are events on back to back nights.

The bonuses went to Demetrious Johnson, John Moraga, , Bobby Green, Lando Vannatta.  Johnson and Moraga earned the Performances of the Night while Green and Vannatta earned Fight of the Night for their draw.

Payouts

Tony Ferguson was the highest paid fighter of the night earning $500,000 while Demetrious Johnson drew $340,000.  Both Kevin Lee and Ray Borg earned the most of their career with their pay on Saturday.

Via MMA Junkie:

 

Tony Ferguson: $500,000 (includes $250,000 win bonus)
def. Kevin Lee: $250,000

Demetrious Johnson: $370,000 (no win bonus)
def. Ray Borg: $100,000

Fabricio Werdum: $400,000 (includes $125,000 win bonus)
def. Walt Harris: $28,000

Mara Romero Borella: $24,000 (includes $12,000 win bonus)
def. Kalindra Faria: $12,000

Beneil Dariush: $48,000*
vs. Evan Dunham: $40,000*

Cody Stamann: $24,000 (includes $12,000 win bonus)
def. Tom Duquesnoy: $23,000

Bobby Green: $24,000*
vs. Lando Vannata: $25,000*

Poliana Botelho: $20,000 (includes $10,000 win bonus)
def. Pearl Gonzalez: $10,000

Matt Schnell: $20,000 (includes $10,000 win bonus)
def. Marco Beltran: $14,000

John Moraga: $68,000 (includes $34,000 win bonus)
def. Magomed Bibulatov: $17,000

Brad Tavares: $74,000 (includes $37,000 win bonus)
def. Thales Leites: $57,000

The official Nevada Commission’s pay sheet had Godbeer receiving his show money.  Notably, the Nik Lentz-Will Brooks fight was scrapped due to an illness which hospitalized Lentz.  Although the Nevada Commission may not have paid Brooks, a social media post infers that he was still compensated.

The commission did not have purse payments for Lentz, Brooks and Derrick Lewis.

Promotion of the Fight

With the horrible events that happened the Sunday before the fight the event hype was muted for obvious reasons.  Dana White did not have any fight hype on his twitter timeline until Wednesday.  The Embedded episodes that usually kick off the week were held until that Wednesday.  With this event being a hard sell even before the tragedy, the lack of last minute buzz certainly did not help the buys for this event.

Sponsorships

Although not exactly related to this event, it was announced this week that longtime sponsor Bud Light would be replaced in the U.S. by Modelo Especial staring in 2018.

We are starting to see a lot subtler sponsor promotion on the Embedded series as we see the fighters getting their Reebok gear and visiting the UFC Performance Institute.

Aside from Budweiser, Toyo Tires, Metro PCS, Performance Inspired, Harvey Davidson, 7 Eleven and Monster Energy had the center of the Octagon.  One may have noticed that 7 Eleven had its own signage post whereas in past events it shared one with Monster Energy.  It also had the prep point.  The twitter hashtag Vegas Strong was also in the Octagon.

Odds and ends

It was a different opening for the UFC 216 PPV as Dana White invited over 1,500 first responders to the event and brought some of the survivors of the devastating shooting to the octagon.  Everlast, from House of Pain fame, also sang “America the Beautiful.”  There were cold openings for both the Exclusive Fight Pass Prelims and the Prelims on FX.

The festivities were strained by Dana White’s public scorn for Jason Aldean.  He claimed that Aldean did not want to perform (Aldean was the performer on stage during the shooting).  But, he showed up on Saturday Night Live the same night.  Let it go Dana.  It’s petty to mess up a nice night by getting mad at this.

Derrick Lewis and Fabricio Werdum were taken off last minute with Walt Harris taking the fight against Werdum.  The good news is that Godbeer was paid despite being taken off the card.  Brooks was not although his social media account infers he may have been compensated by the UFC.

Prelims were on FX this time around to compensate for College Football on FS1.  It drew just 653,000 viewers Saturday night.

The commission had some explaining to do with the one hour allowance for Kevin Lee to cut the pound he was over.  Apparently, the rules allow it for championship fights.

There was also the issue of how the UFC Anti-Doping Policy allowed exemptions to Kalindra Faria and Mara Romero Borella.  Yet, it took Andrea Lee off the card due to her prior issues with drug testing.

It appeared as though the upper bowl of the T-Mobile Arena was cordoned off which reflects the attendance was low for the event.  Ticketmaster had seats available up until Friday (and likely Saturday) of the event with the get-in price going for $55.

The UFC sold Vegas Strong T-shirts with 100% of the proceeds going to victims of the shooting on October 1st.

The PPV ended before 10:00pm on the west coast and the broadcast crew was forced to stretch instead of trying to fill in a fight from earlier in the evening.  It did provide some comedy as Daniel Cormier had problems with his headset cords.

There were over 500,000 searches for UFC 216 on Saturday.

Conclusion

This will be one of the lower-purchased PPVs of 2017.  While Lee and Ferguson is a good fight, it is not one you’d pay $60 to see as the main event.  Johnson is one of the greatest fighters ever, but fans do not want to pay to watch him fight.  While it was a good night of fights, its hard seeing this event doing more than 170,000 PPV buys.

Modelo set to replace Bud Light as UFC U.S. beer sponsor in 2018

October 9, 2017

The Sports Business Journal reports that beer maker Modelo Especial will replace Bud Light as the UFC’s Official Beer for the United States starting in January 2018.  The deal is a benchmark move by the beermaker as it is attempting to make a splash in the U.S. market.

Bud Light signed a 10-year pact with the UFC in 20008.  At the time, the deal was huge for a still-growing company.  But, it appeared that despite renewal talks and being pleased with the sponsorship performance, Annheuser Busch did not want to come back at the same terms.

Financial terms were not disclosed but the report indicates it rivals the $10 million deal the UFC had with InBev for the global sponsorship.  The new deal with Modelo allows the UFC to negotiate sponsor deals with other beer companies outside of the United States.

The brand is new to sports sponsorships as it ran its first national English language TV campaign 18 months ago and signed its first sports sponsorship just a year ago.

According to the Sports Business Journal, Modelo is attempting to make a move into sports and this is the biggest deal thus far for the company.  Perhaps a surprise, Modelo is the number 1 beer of choice in the Los Angeles market.  It is the fastest-growing beer in the U.S. over the last 5 years according to SBJ.  Only sister brand Corona, is the best-selling import beer.

Payout Perspective:

The deal is a calculated risk for Modelo as it is seeking to grab more of an audience an attract the vaunted 21-34 male demo.  Unlike other sports sponsorships, this may come with some risk since UFC events are announced in a relative short timespan as compared to other sports.  Thus, market activation targeting a city (outside of Las Vegas) may be somewhat harder than baseball where it is known what cities will hold events.  For the UFC, it’s a good win for the company.  Not only does it grab a US beer sponsor, there is not global exclusive so the company can negotiate with local regions and countries to be the official beer in those respective areas.  Yet, the speculation is that the financial terms of the Modelo deal is on par with what Bud Light paid for the global sponsorship.  Also, the deal may open up what could be a lucrative liquor/spirits market as the Bud Light deal blocked this potential.

Young Bucks receive cease and desist over hand gesture

October 4, 2017

Pro wrestling tag team, the Young Bucks (real life brothers Matt and Nick Jackson) are big stars on the independent wrestling scene.  Recently, World Wrestling Entertainment sent the team a cease and desist letter for using hand gestures and phrases made popular by WWE characters during their performances.

The “Kliq” hand gesture was used in the mid-1999 by WWE performers Shawn Michaels, Kevin Nash, Scott Hall, Sean Waltman and Triple H.  It was later used in the 2000s by wrestling group the New World Order in World Championship Wrestling.

Too Sweet

Hook’em Horns

The Young Bucks have used the hand gesture on the independent scene and in Japan along with their stable of wrestlers.

The WWE sent a cease and desist letter to the wrestlers requesting that they stop using the hand gesture in addition to another gesture as well as catchphrases or else be sued by the company.

Notably, the WWE attempted to trademark the “Kliq” hand gesture with the United States Patent and Trademark Office in March 2015.  However, it received an Office Action that the hand gesture was likely to be confused with a trademark owned by The Board of Regents of the University of Texas System.  That trademark, registered in May 2014, is described as “the representation of a human hand with the index and small fingers extended upward and the thumb closed over the middle and ring fingers.”  It is commonly referred to as the “Hook’em Horns” symbol.  Gene Simmons of famed rock band Kiss attempted to trademark a similar hand gesture earlier this year as it is commonly known as a “rock on” symbol.  But, he later abandoned the application likely due to the fact that it would not survive a challenge from the University of Texas.

Instead of challenging the WWE, the Young Bucks decided to let the hand gesture go.  Instead, their new merchandise is based on the cease and desist.

IP protection of hand gestures in pro wrestling is not new.  Former pro-wrestler Diamond Dallas Page sued rapper Jay-Z over a copyrighted hand gesture which symbolized a diamond.  Jay-Z used the hand gesture to signify his record label.  Page noted he had copyrighted the symbol in 1995.  In fact, a records search reveals that he did.

Trademarks and copyrights differ as we previously discussed in this post.

In essence, the reason for the WWE’s cease and desist relates to the commercial use of the mark.  Protection of one’s intellectual property is important despite many who believe that the move was done to harass the Young Bucks.  Certainly, harassment is an incidental benefit for the WWE, and the Young Bucks, as well as some wrestlers associated with them recently mocked the company prior to a live show last week.  The old saying about messing with the bull and getting the horns finally came around to the bucks as the WWE flexed its legal muscle.

Not only did the WWE come down on the “Too Sweet” hand gesture but it also is preventing them from the “Suck It” callout and gesture as well.

For those wondering, its hard to argue the issue of “Fair Use” as the Bucks could claim parody.  For those that follow this, the 2 Live Crew case which used the Roy Orbison song, “Oh, Pretty Woman,” was retooled by the Miami-based rap group.  The U.S. Supreme Court deemed that the song was a commercial parody of the Orbison song and considered Fair Use.  We talk about “Fair Use” here.

But, the monetization of their use of the phrases and gestures would prove to be a hard factor to overcome.  Moreover, one of the factors, effect upon a work’s value, would be impacted.  The market is affected as the use of the material by the Bucks could be construed as a substitute for the original Kliq which may negatively impact the commercial use of the original Kliq.

 

 

Top Rank and Plaintiffs in Antitrust Lawsuit Resolve Discovery Dispute

October 2, 2017

Top Rank and the Plaintiffs in the UFC Antitrust Lawsuit have resolved their discovery dispute regarding a motion to compel production of documents and for the attendance of the deposition of Bob Arum.

A notice of resolution was filed late last week.  The agreement between the parties avoids a motion to compel brought by Plaintiffs in the Zuffa Antitrust lawsuit seeking financial information and the deposition of company head Bob Arum.

Resolution Re Top Rank Motion to Compel by JASONCRUZ206 on Scribd

Originally, the motion was to be heard in early September but was continued until later in the month, but the parties came to an agreement.

Top Rank argued that a subpoena for the production of documents from the company was not relevant to the Zuffa lawsuit.  It also argued that the Plaintiffs failed to show a “substantial need” for Top Rank’s information. It also stated that the Plaintiffs’ document request were overly burdensome.

Top Rank Oppo to Motion to Compel by JASONCRUZ206 on Scribd

Plaintiffs argued that they were entitled to the discovery as it is relevant to their lawsuit against Zuffa, there is a substantial need for the documents and believe the discovery is not overly burdensome.

Reply to Opposition to Top Rank MTC by JASONCRUZ206 on Scribd

Top Rank noted in its opposition that it “cannot have it both ways.”  It argued that in its lawsuit it claimed that the “relevant market” was limited to the sport of MMA and noted that it was different from boxing.  Yet, it was requesting “ten years’ worth of revenue, profit, loss and payment information.”  Yet, Top Rank claimed that However the Plaintiffs lawsuit against them, claimed that it had differentiated itself from pro boxing and thus its financial information was not relevant to the instant lawsuit.

Top Rank argues that the document requests are intrusive and it is a way for Plaintiffs’ experts to “compare financial data from Top Rank’s promotion of boxing events to Zuffa’s promotion of MMA events and create “benchmark percentages of revenues.”  Moreover, it claims that Plaintiffs do not explain why they are unable to obtain this information from other sources.  Top Rank’s opposition brief claims it has told Plaintiffs where it might obtain public data about the company.

Top Rank lists some of the requests in its brief:

REQUEST NO. 1: Your Company’s Income Statements, including event-level profit and loss statements for the Relevant Time Period [defined to be from January 1, 2005 to present], including without limitation All Documents, including depositions, declarations, affidavits, or other statements under oath, You produced in any lawsuits or arbitrations, or to any governing athletic commission or sanctioning body, relating to TOP RANK’s accounting of its revenues, expenses, and profits.

• REQUEST NO. 2: Data in as granular form as it is maintained (itemized ledger entries, if they exist) sufficient to show all bout-related revenues and expenses (including for championship bouts, bouts where victory leads to championship, and all other Professional Boxing Events), payments made to individual Professional Boxers (including purses, bonuses, pay-per view, and any other event and non-event related payments), and non-bout related revenues and expenses.

• REQUEST NO. 3: To the extent not included in Your response to Request Nos. 1 and 2 above, documents sufficient to substantiate Bob Arum’s statement that TOP RANK pays 80% of event revenue to the Professional Boxers who participate in bouts promoted by TOP RANK….

• REQUEST NO. 4: A Representative Sample of All Agreements between TOP RANK and any Boxers, relating to participation in a Professional Boxing Fight or Professional Boxing Event, and any Documents and Communications relating to the negotiation, termination, cancellation or transfer thereof. Responsive Documents include, without limitation, executed Agreements, draft Agreements, side letters, all negotiations between TOP RANK and any Boxer, including any Professional Boxer,
or their agents, managers, promoters, or other representatives (regardless of whether such negotiations resulted in an executed Agreement), copies of any form agreements; and all Documents relating to the effects any such actual or potential Agreements between TOP RANK and any Athlete, including any professional Boxer, had on TOP RANK’s revenues, valuation, or ability to operate profitably as a Boxing Promoter.

Zuffa Plaintiffs claim that the information is vital for their case and that the UFC denied the differences between boxing and MMA in its answer to the lawsuit with the inference that they were interchangeable.  Notably, in its Reply brief it claimed that the business of promoting fights is the same for all combat sports.

Payout Perspective:

Plaintiffs Reply Brief includes quotes from Lou DiBella and Dana White’s deposition but most of the citations are redacted.  The order which spells out what Top Rank and the Plaintiffs had agreed upon is heavily redacted so we specifically do not know what the parties agreed to provide and whether or if the deposition of Bob Arum will take place.  It could be that Top Rank agreed to provide a portion of documents so long as Arum is not deposed and/or someone else within the company is deposed.

Court denies World of Boxing’s post-trial motion for new trial in Wilder case

September 27, 2017

The trial court in New York has denied the World of Boxing’s Motion for Judgment as a Matter of Law or in the alternative, a New Trial.  It held that the jury did its job in evaluating the evidence and the credibility of witnesses and based on it was able to produce the jury verdict.

The case arose out of a failed fight between heavyweight champion Deontay Wilder and Alexander Povetkin.  MMA Payout has been the only source that has covered this legal case extensively.  You can find some of the background here.

Order by JASONCRUZ206 on Scribd

You may recall, the sole issue at trial was whether Povetkin ingested Meldonium post January 1, 2016.  When the trial took place in February of this year, the jury did not take long to determine that Povetkin had ingested the drug which was prohibited by the World Anti-Doping Agency on January 1, 2016.  Attorneys for World of Boxing (Povetkin’s promoters) and Povetkin filed a Motion for Judgment as a Matter of Law, or in the alternative a new trial.  Additionally, in June, the attorneys for WOB claimed a new study may give cause for the Court to open the case back up to litigation and/or set up a new trial.

via Wikimedia Commons

via Wikimedia Commons

Judge Andrew Carter of the U.S. District Court for the Southern District of New York determined that World of Boxing’s efforts amounted to an attempt to re-litigate the case.  Judge Carter indicated that the jury made the verdict based on the evidence presented and there was no miscarriage of justice or conclusion not based on evidence.  He opined that WOB was asking to take as truth the testimony of their experts only in coming to a jury verdict.  The Court also determined that the jury based its decision on their impressions of Alexander Povetkin as he was able to testify at trial.  Bluntly, the Court stated in its opinion that the jury flat out did not believe his testimony. Moreover, the new study that was produced by WOB attorneys in June was available online on February 6, 2016, which was the first day of trial.  Yet, it was not brought up at trial.

Payout Perspective:

The Court ruling comes over 8 months after the jury verdict.  The case may not die yet as WOB still has an opportunity to appeal to the 2nd Circuit.  If it does not, the issues of court costs and fees arise.  Also, there is the case of what happens to the money that has/had been in escrow which is one of the forgotten issues here.  In reviewing the case, it appears that the first issue with the handling of the case was the agreement to limit the case to just one issue regarding the use of Meldonium.  The carrot of having a shorter discovery schedule and a trial date sooner than later was likely a reason why the parties decided.  However, as we saw, the case involved issues related to the late production of discovery and experts.

The litigation was marred by contentious behavior as the order included a sentence about the parties’ behavior stating, “The Court takes exception to the behavior of both parties throughout the pendency of this litigation.  The parties are once again ordered to proceed with civility and in conformance with the Court’s local rules.”

MMA Payout will have more on this as it comes down.

 

 

Nevada Court denies Zuffa’s Motion for Partial Summary Judgment dismissing Nathan Quarry…for now

September 26, 2017

Judge Richard Boulware has denied Zuffa’s Motion for Partial Summary Judgment to dismiss plaintiff Nathan Quarry from the lawsuit.  However, the Court has indicated that Zuffa may refile at the close of discovery.

In a minute order issued on Tuesday, the Nevada Court determined that the motion for summary judgment to dismiss one of the plaintiffs in the Zuffa antitrust lawsuit was premature.

“The arguments raised in these motions would be more properly considered with the full set of motions that will be filed at the close of discovery,” stated the minute order issued by the Court in denying the motion at this time.  “IT IS THEREFORE ORDERED that Motions for Partial Summary Judgment are DENIED without prejudice to being refiled at the close of discovery.”

In this context, without prejudice is legal terminology which indicates that a party’s rights are not precluded from refiling.

Oral arguments were heard on September 21st for a little over an hour.  Zuffa claimed that due to antitrust statute of limitations, Quarry’s alleged claims of injury were barred by his promotional agreement.  The former UFC fighter argued that his claims still exist as the UFC still use Quarry through the selling of merchandise on its web site and showing his fights on UFC’s Fight Pass.

Payout Perspective:

It appears that Judge Boulware would like to see all of the facts that may come out in fact discovery prior to hearing the dispositive motion set forth.  It’s also clear that he anticipates Zuffa to file a motion for summary judgment on all of the plaitniffs.  At this point, he believes that the motion was premature.  In my opinion, dismissing a plaintiff on summary judgment prior to the close of discovery is rare considering the information that may surface during the fact-finding process.  It’s not clear if there will be any further opinion released past this minute order.  MMA Payout will keep you updated.

Washington state court moves Hume/OneFC discovery dispute to Vegas

September 25, 2017

A federal district court in Washington state has decided to grant the plaintiffs motion to transfer the discovery dispute it has with Matt Hume and OneFC to Las Vegas.  The magistrate handling the Zuffa lawsuit discovery issues will determine the outcome of plaintiffs’ motion to compel Hume’s deposition and documents from OneFC.

Similar to a federal court in LA transferring Bellator’s dispute with the plaintiffs and the UFC in a discovery dispute earlier this year, the federal court judge determined that the complexity of the case and the familiarity with the subject matter were defining reasons why the case should be transferred to Nevada.  Hume, who resides in Washington state, filed a motion to quash a subpoena and objected to document requests by the plaintiffs in the UFC lawsuit.

In addition to being the trainer for Demetrious Johnson, he is an officer within OneFC.  The plaintiffs in the antitrust lawsuit filed against Zuffa had requested documents from OneFC and Hume’s deposition as it relates to their litigation.  Hume had provided a written declaration in which he stated that “One Championship is not a minor league or feeder league for the UFC” and it “competes with Zuffa to sign professional MMA fighters.”

Plaintiffs wanted documents supporting Hume’s statement and also to depose him.  Hume’s Washington state attorneys objected to the deposition and document requests citing that it was an attempt to make an end around from requesting documents from the Singapore-based company.  It also argued that Hume did not have access to the documents requested.  In response, plaintiffs filed a motion to compel and requested attorney fees in excess of $21,000 dollars.

Payout Perspective:

Once again, a federal court decides not to intervene in a nonparty discovery dispute despite the fact that one of the residents in its jurisdiction is seeking relief.  While I understand the court’s reasons to punt the motion to Nevada, it appears that this type of hand off is oppressive for the non-party resident.  However, unlike the Bellator case, Hume did avail himself to the lawsuit by submitting a declaration.  It is within the right of the plaintiffs to seek Hume out for his deposition as well as documents related to the statements.  With the case moving to Nevada, we shall see how the magistrate determines the dispute.

Appeal to 9th Circuit for plaintiffs that felt duped from Pac-May fight

September 20, 2017

Late last month, the U.S. District Court for the Central District of California dismissed the class action lawsuit by plaintiffs claiming that they were duped by the Manny Pacquiao-Floyd Mayweather fight in May 2015 due to the fact Pacquiao did not disclose a previous shoulder injury.

Despite the order dismissing the case, the plaintiffs have filed an appeal to the 9th Circuit Court of Appeals.  But first, let’s look at the facts and the district court opinion.

Order Dismissing Pacquiao-Mayweather Boxing Match PPV Litigation by JASONCRUZ206 on Scribd

As we know, Manny Pacquiao faced Floyd Mayweather at the MGM Grand Arena in Las Vegas, Nevada.  Mayweather won via unanimous decision.  After the fight, Pacquiao indicated that he had an injury.  However, the facts would suggest that this was never disclosed prior to the fight.  In fact, on his pre-fight questionnaire, he did not indicate an issue with his shoulder.

Many believed that the injured shoulder was a factor in the outcome of the fight.  Those that paid for the fight on PPV ($100), bought a seat at the venue or watched on closed circuit or in a movie theatre were angered that they did not see the best Pacquiao and/or the injury was not disclosed.  Obviously, something like this has a trickle-down impact to the consumer but also to those that placed money on the fight.

Lawsuits were filed as a result and were subsequently consolidated to this court.  Plaintiffs allege that “Defendants were motivated by huge profits” to continue with the fight despite the alleged injury.  They claim that they affirmatively concealed the injury in promotion of the fight.

Attorneys for Pacquiao, Mayweather, Top Rank, Mayweather Promotions, and its related entitites filed a Motion to Dismiss the lawsuits.  On August 25th, the district court agreed with the defendants that this lawsuit should be dismissed.

The opinion emphasized that the legal system is not the proper place for unhappy fans to vent their anger over a result of a sporting event.  The court made a determination as to whether to determine the complaints per a “license approach “to assess the rights of fans that purchase a ticket to a sporting event.  Under this approach, purchasers are entitled to “nothing more than a revocable license” regardless of what transpires at the event.  However, the court noted that this specific issue was a novel occurrence and it had to determine whether it should apply this standard.

The court did cite to a ticketholder/PPV purchaser case from 2000 where Mike Tyson was sued after a fight between Tyson and Evander Holyfield.  You may recall that this was the bout where Tyson infamously bit Holyfield’s ear.  Plaintiffs in that case claimed that Tyson’s plan was to get disqualified if he could not win and this was a “premediated plan” to end the fight.  In that case, the plaintiffs’ lawsuit was dismissed and the appeal upheld the dismissal rationalizing that fans got what they paid for.

In addition to the “license approach,” the opinion discusses a set of cases which do not use the theory.  Instead, this line of cases have had plaintiffs assert their legal rights when sports teams allegedly lie to promote ticket sales.  Two lawsuits involve professional teams that were moving but did not tell their fan base and one case in which a team stated it was financially able to finish a hockey season but folded 13 games into the season.

So, the court determined which of these approaches it should take.  Either the “License approach” cases which resulted in no legally cognizable injury or the lawsuits against sports teams which reflects a legally cognizable injury.

The court found the “License approach” was the correct application since the alleged omissions and misrepresentations were based on athletic competition (i.e, concealing Pacquiao’s injury).

From the opinion:

The Court holds that a misrepresentation or omission implicates the core of athletic competition, and therefore does not constitute a cognizable injury to a legally protected interest under the license approach, if it is related to: (A) competitive strategy, or (B) the quality or outcome of competitive performance.

It’s also noteworthy that the court argues public policy as to why it ruled against the Plaintiffs here:

Thus, allowing sports fans to sue over the vicissitudes of competitive sports could destroy the
very thing that makes sports fandom so special. A holding in favor of Plaintiffs in this case could be construed to require near total transparency in sports, whereby any inflated, unreliable, or cryptic prevent statements would beget lawsuits. Gone would be the days of headstrong athletes declaring their complete readiness to destroy their opponents. Athletes would never again publicly predict that they will prevail, or even conclude that an event will be exciting. Sports teams and athletes might even be required to disclose the weak spots in their game plans or preparations before every event for all to see (including their opponents).

The judicial opinion is highlighted by a cite to a Joe Rogan podcast related to the uncertainty of sports.  The court commented that the “unpredictability and uncertainty” of competitive sports is important to it.  The point is that the unexpected nature of sport is inherent in sport and expected by fans.

Payout Perspective:

At first read, you wonder why Plaintiffs have decided to appeal this case to the 9th Circuit.  There’s a lot of money that goes into an appeal and the success rate seems in doubt.  However, if you read the opinion closely, you can tell that the district court is making up their own law as they go.  Perhaps that’s a little strong, but they are definitely applying a legal standard they feel is right for this circumstance.  While the “license approach” has been used to decide cases in disgruntled fan lawsuits in the past, there is no real precedent setting case (as the court notes in the opinion).  Thus there’s a line of cases which could be helpful to Plaintiffs but is not applied.  Moreover, the public policy as argued by the Court gives us the old “slippery slope” argument which I personally take offense.  Even if you think that this is ridiculous to follower, there is a telling piece of law here that may be more important than whether someone gets their $100 back.

 

Payout Perspective: The Money Fight

September 4, 2017

Welcome to a special edition of Payout Perspective.  Almost a week later, but we are still talking about The Money Fight that took place August 26th at the T-Mobile Arena.

Mayweather stops McGregor in 10

Floyd Mayweather waited it out.  As most believed, he tested out Conor McGregor for the first couple around before going on the offensive.  Out of the ordinary for the counterpuncher, but Mayweather pressed McGregor and it was clear that the UFC champ was tiring.  Despite not being brought to the canvas, the fight was stopped.  A good call despite McGregor’s post-interview protesting.

Mayweather gets his 50th win against McGregor who takes his first loss of his career.  Of course, it was just McGregor’s first fight.

We should see McGregor back in the Octagon but it’s clear that Mayweather may want to dabble in boxing again.  He wasn’t the worst in there but boxing in MMA is different than boxing.

Attendance and Gate

The fight was not a sellout which was not a surprise leading into the fight.  The astronomical price to see the event without much of an undercard likely was the primary reason for a non-sell out.  Due to the prior disappointment of Mayweather-Pacquiao, the event likely scared the big spenders away.

Payouts

The official payouts from the event had Mayweather earning $100 million not including PPV upside and McGregor getting $30 million.

Attendance and gate

The only thing that may have been a disappointment was the attendance for the event at the T-Mobile Arena. The event drew 14,623 although the gate was yet to be officially announced.  It was thought that due to the high prices the event would have drawn over the $72 million record for May-Pac.  With capacity at 20,000, the event fell way short of capacity but the big financial boon was the $99.95 price tag for the PPVs.

Promotion of the Fight

The 4-city world tour this past July introduced us to The Money Fight.  Maybe the Toronto tour stop was the best and the New York/Brooklyn stop was the worst.  Whatever you thought of it, it was the beginning of a monthlong run-up to the fight.

There were tons of promotion around the event including Showtime All Access and UFC’s Embedded Episodes.  At times, it appeared that each show favored its own boxer.  As always, this shoulder programming always interests me.

Saturday Night Live did a skit during its prime time Weekend Update the week before the fight.  The skit featured someone pretending to be Conor McGregor.  It was a bad impression.

Television Ratings

The Prelims to Mayweather-McGregor on Fox peaked at 3.1 million viewers and averaged 2,568,000 viewers.   It drew an outstanding 1,156,000 viewers in the A18-49 demo.

Other associated ratings:

  • Mayweather-McGregor Prefight Show 1,463,000
  • Mayweather-McGregor Postfight Show 368,000
  • Mayweather-McGregor Weigh-In 287,000
  • PBC on FS1 drew 269,000 viewers on Friday night.

PPV estimates

Dana White proclaimed that the event drew 6.5 million buys.  Showtime stated that the fight sold between 4 and 5 million buys.  Other reports stated that the initial estimates did not break the 4.6 million record of Mayweather-Pacquiao.  ESPN noted that an estimated 50 million people saw the event.

The PPV estimates will not come in until this week but Showtime’s Stephen Espinoza claims it was a “massive financial success.”  This seems like an understatement based on the numbers.

Espinoza noted in a New York Times article that 10 to 12 percent of the total buys were through a digital service.  We note the tech difficulties those users had below.

Technical Difficulties

Due to the high demand, people reported issues with their streaming of the event.  The Showtime App, UFC.tv and Fight Pass were the main culprits with issues although other ways to purchase the PPV had problems.

Showtime issued a “limited number” of refunds.  Espinoza seemed to minimize the affect the technical difficulties had claiming that they were “definitely exaggerated.”  However, the first lawsuit filed over not being able to watch the event was filed in Oregon over futile attempts to watch the vent on the Showtime App.

The fight was delayed 20 minutes to accommodate for the technical difficulties but those paying $99.95 shut out of the telecast.

The UFC did not immediately state they would issue refunds, but upon meeting with its vendor, noted that it would issue refunds for those that had issues on the UFC.tv/Fight Pass app.

The Las Vegas Review-Journal noted that the PPV issues “appeared to come from a surge of late purchase and connectivity issues.”

Related?  The UFC announced less than a week later that FITE.TV would become the UFC’s new online streaming partner.  No official word, if NeuLion is out altogether with the UFC.

Sponsors

Corona was the main sponsor for The Money Fight.  Notably, this was not rolled out until a week or so prior to the fight.  One would have thought that the sponsorship for the event would have been announced much sooner.  In addition, Body Armor was very visible during the event as “towels and stools in the fighters’ corners had the Body Armor logo on it.  Also, fighters took their hydration from Body Armor bottles.  Also, Wish Shopping made a big splash with signage on the mats and on the weigh-in scale.

McGregor wore irish flag-inspired Beats By Dre headphones for the weigh-ins.  The company also released an ad starring McGregor on August 23rd.  McGregor signed a sponsor deal with Online betting site, Betsafe.

Odds and Ends

There were tons of newsy items coming out of this event and we couldn’t get them all in.  I wrote a preview on many of the issues including the commission agreeing to the glove change and Zuffa signing on as a co-promoter here.

While the PPV estimates may break records, Showtime had to deal with pirates using Periscope.  While Showtime obtained an injunction to stop some sites, it could not stop private users.  A tech security company claimed that almost 3 million viewers watched pirated streams.

Conor McGregor’s flip up sunglasses during the promotion of this fight were reminiscent of Dwayne Wayne’s.

Conor McGregor announced the roll-out of his first foray into the whisky business:

Floyd Mayweather introduced TMT-themed apparel for this event including one with the Irish Flag colors on a TMT shirt. He also had an assortment of mouthguards.  Iceberg Guards is selling a replica guard of the one he wore during The Money Fight for $295.00.

Gervonta Davis drew 100,000 google searches on Fight Night mainly due to his headgear coming out during the walkout.  Davis won, but drew the ire of some fans since he didn’t make weight.

While the Mayweather/McGregor announcement overshadowed the rematch between Andre Ward and Sergey Kovalev this past June, Top Rank attempted to take advantage of the assembled media in Vegas by announcing a deal with ESPN that would include providing the company with the Top Rank fight library for an upcoming Disney-OTT platform.

ESPN showed old Mayweather fights where analysts talked about how he was such a pro and a likeable guy.  How times have changed.  The UFC also aired his fight with Maidana on UFC online to help promote the fight.

Although there was much publicity for this fight, the Miguel Cotto fight in Carson, California on the same night drew 730,000 viewers on HBO which is very good considering it was overshadowed by The Money Fight.

Mayweather and McGregor did the standard media appearances including on Jimmy Kimmel.

There were over 10 million google searches for the “Mayweather vs. McGregor Fight,” and 10 million google searches for “Mayweather.”

Conclusion

Usually we predict a buy rate, but with the news that it’s likely between 4 and 5 million PPV buys, we don’t have to conclude that this fight was a success.  The only question will be whether the buys passed the 4.6 million PPV record.  Whether or not it did, this fight was impressive in how it was marketed and promoted.  The UFC helped its brand with its involvement in the event and Mayweather made money as he always seems to do.  Will we see more crossover fights in the future?  Only if it is big names and promises to bring in big numbers.

Boxer Austin Trout files lawsuit against WBO citing Ali Act violations

September 1, 2017

Boxer Austin Trout has filed a lawsuit against the World Boxing Organization citing violations of the Muhammad Ali Boxing Reform Act.  It is the first lawsuit citing the Ali Act in several years.

The case originally was filed in the federal district court of New Mexico as that is where Trout resides.  The original complaint, filed in February 2016, did not include a claim under the Ali Act, instead includes allegations of Unfair Trade Practices pursuant to the local rules in the state of New Mexico, Fraud and request for Injunctive Relief.  Trout’s essential claim was that he was a highly ranked boxer that should have received a title shot but he was dropped in the rankings for what appears to be no apparent reason.  A boxer that was previously ranked below him was given a title shot.  According to Trout, it was because the promoter gave financial incentive to the WBO.  He also claims that the WBO “solicited and accepted financial remuneration from promoters and/or managers to fix ratings.”  Upon request of the reason why Trout fell in the rankings, he was not provided a response.

Attached to their original complaint was a “Show Cause” letter from the WBO to then Junior Middleweight Champion Demetrius Andrade, why the title should not be vacated due to lack of activity.  Andrade vacated the title and Trout believed that he was due a shot at the vacant belt since he was highly ranked.  However, he was not given the shot and, in fact, dropped from the rankings.  Attached in the documents is correspondence inquiring the reasons for his disappearance in the rankings.

Original Complaint by JASONCRUZ206 on Scribd

The WBO moved the case to Puerto Rico and attempted to dismiss the lawsuit. The lawsuit was moved to the federal district of Puerto Rico where Trout’s lawyers amended the case to include the Ali Act violation, breach of contract and fraud. They claim the requisite statutory damages and attorney fees and costs which would total $40 million.

Amended Complaint by JASONCRUZ206 on Scribd

Payout Perspective:

This will be an interesting test of the Ali Act as there has not been a lawsuit in some time where this has been claimed.  I took a look at this a couple years ago.  For those that want to see MMA expand to the Ali Act, we shall see how this plays out.  The claim relates to the lack of a rankings system to justify championship fights.  Certainly, the UFC has not followed its own rankings and current fighters could make such a grievance against the company.  It is likely that a Motion to Dismiss the Amended Complaint which was filed earlier this will transpire prior to the litigation of the lawsuit on the merits. MMA Payout will keep you posted

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