NYS Assembly Speaker Silver arrested on corruption charges

January 22, 2015

New York State Assembly speaker Sheldon Silver was arrested on federal corruption charges on Thursday.  The charges include mail fraud, wire fraud and extortion.  In MMA circles, the state assemblyman had been the one that prevented a vote on the legalization of MMA in the state.

The Complaint obtained by the NY Times alleges that Silver has received “more than $6 million in outside income from two law firms since late 2002.”  This includes “undisclosed bribes and kickbacks” where Silver used his position and power to “induce real estate developers with business before the State to retain and continue to use a Real Estate Law Firm controlled by an attorney who previously had worked as Silver’s counsel in the Assembly and who caused Silver to be paid for such referrals by the Real Estate Law Firm,” reads the Complaint.

UFC head Dana White has accused Silver of blocking a vote which could potentially grant the legalization of professional MMA in the state.  New York is the only state which prohibits professional MMA.

Silver had served as speaker for more than two decades.  So far, there is no clear indication as to who Silver’s successor would be.

A lawsuit is pending in which Zuffa has sued the state for its legislative ban on professional MMA.

Payout Perspective:

The news of Sheldon’s arrest could breathe new life into the annual Zuffa lobbying activities in Albany this spring.  While Sheldon’s removal from his position may not mean that New York passes legislation legalizing professional MMA in the state, it gives lobbyists new hope that they can obtain a vote in the Assembly.  This story is just getting started and MMA Payout will keep you posted.

WWE sued by former wrestlers

January 20, 2015

Two former WWE wrestlers have sued the company in Federal Court in Philadelphia claiming they suffer from serious brain injuries as a result of “repeated concussions” in the ring.  The lawsuit is said to be similar to the one filed by “Billy Jack” Haynes in Oregon.

Vito “Big Vito” LoGrasso and Evan “Adam Mercer” Singleton are the plaintiffs.  The lawsuit seeks class action status and accuses the WWE of “selling violence” and turning a blind eye to the health of its wrestlers including “ignoring” concussions suffered by the plaintiffs.

LoGrasso wrestled for the WWE from 1991 to 1998 and from 2005 to 2006.  He claims to suffer from “serious neurological damage.”  Singleton wrestled for WWE from 2012 to 2013 and was one of the youngest wresters in WWE history at 19.  He also claims to have “an array of serious symptoms” as a result of his time in the WWE.

The WWE’s attorney, Jerry McDevitt, claims that the company has “never concealed any medical information related to concussions, or others.”

The lawsuit seeks unspecified economic damages and medical monitoring.

LoGrasso is now 50 years old and Singleton is only 22.

Via Reuters and AP/ESPN

Payout Perspective:

It will be interesting to see if this lawsuit will be tied with the Haynes lawsuit.  One of the law firms involved in the LoGrasso/Singleton lawsuit may be involved with the Haynes litigation as well. The WWE will file its response to the Haynes lawsuit shortly.  LoGrasso’s stint in the WWE should help with the claims as both Haynes and Singleton had shorter stints with the company.  These lawsuits appear to be patterned after the NFL concussion lawsuits.  We will see if more wrestlers join the litigation which may evolve into a class action.  If that is the case, it could spell big trouble for the WWE.

MMA Payout will keep you posted.

Wanderlei Silva sues NSAC seeking reversal of lifetime ban, fine

January 20, 2015

MMA Fighting reports that Wanderlei Silva has filed a lawsuit against the Nevada State Athletic Commission.  Silva claims that the commission overstepped its boundaries in issuing him a lifetime ban last year.

In addition to the ban, the NSAC issued a $70,000 fine this past September.  The punishment arose out of his failure to take a drug test in lead-up to a fight with Chael Sonnen this past July.  As we know, the fight never happened.

“This case encapsulates agency aggrandizement at its worst where disciplinary ation was taken against a non-licensed person,” reads the introduction of Silva’s Complaint filed by Ross Goodman in Clark County, Nevada’ District Court.

Silva’s attorney argues that the NSAC did not have jurisdiction over Silva since he was not licensed in the state of Nevada at the time officials attempted to drug test Silva.  Silva’s attorney claims that the statutes which the NSAC must follow only pertain to a “licensee.”

Silva is looking for the NSAC ruling to be reversed and set aside which could the clear pathway for Silva to fight in Nevada again.

Goodman is familiar with combatting the NSAC.  In April 2012, he sued the NSAC on behalf of Nick Diaz.

W. Silva v. Bennett and NSAC

Court filing via MMA Fighting.

Payout Perspective:

As we indicated in December, the process for appeal of an administrative ruling is usually through filing a lawsuit seeking a “petition for review.” Still, we wonder why Silva is going through this legal process when he could work around the suspension in Nevada and still fight. Silva’s attorney makes an interesting legal argument based on the Nevada statutes which the commission must follow. We will see how the judicial system handles interpretation of these statutes and this case.

UFC releases Athlete Outfitting Policy

January 16, 2015

The UFC Athlete Outfitting Policy was revealed Thursday and it has brought up the question as to the independent contractor status of UFC contracted fighters.

Bleacher Report was the first to report on the new policy which details the responsibilities of fighters and their corners.  A newly established UFC Equipment Department has been put in place to implement the uniform policies.  This weekend’s UFC Fight Night 59 will be the first time the Equipment Department will meet with fighters to go over the new policies.  The department will work with fighters to come up with a uniform that will fit their own style.  Presumably, this means that fighters can choose between board shorts versus vale tudo-type tights.

Fighters will be able to choose the colors provided with the higher-ranked fighter per UFC rankings getting first choice.  A fight between two unranked fighters will work with matchmakers to come up with colors.

While this policy is not new for a sports league to implement, it stirs up the issue of the limits the UFC can instruct its fighters, who are characterized as independent contractors, to do their job.  MMA Fighting’s Luke Thomas brings up this issue in which he questions the boundaries that the UFC is pushing.

The short story is that there are advantages for an employer to have independent contractors instead of employees.  For example, the employer does not pay certain employment taxes, health care, wage and hour considerations, pension and are not subject to certain liabilities.

Payout Perspective:

The basic legal premise to determine whether a worker is an employee versus an independent contractor is whether the employer “retains control” over the worker; essentially, whether the employer can tell the worker how to do his or her job.  There are many iterations and interpretations of what retaining control is and whether the employer must exert actual control.

Although there are some differences, the WWE has a similar policy.  All of the costumes the wrestlers wear to the ring are approved by the WWE.  Even Brock Lesnar’s short sponsors were approved by the company.  Like UFC fighters all of the wrestlers in the WWE are independent contractors as well.  That does not mean this is right, it’s just another example.

At the UFC-Reebok press conference, Dana White indicated that he had spoken with UFC fighters about the uniform policy before the announcement.  Yet, there have not been any fighters that have come forward to say that they were contacted prior to the press conference.  Moreover, it’s not clear if any fighter provided their input on the deal.  The UFC will indicate that it is working with its fighters to come up with their own style for the uniform.  Thus, there is input as to what is created for each fighter.  So while fighters must abide by a uniform policy, there are some variations within the policy that allow for each fighter (and presumably their corners) to include their own style.   It’s just that the styles will be limited to what is approved by the new UFC policy.

But, it’s clear that the new policy has eliminated a certain amount of freedom previously known to the UFC fighters.  Not only are they giving up their sponsors (that aren’t Reebok), they must now abide by a certain set of rules or else there will be penalties.

One has to think that the UFC worked with its lawyers to shape this policy.  Still, we’re in that legal gray area where on one end you must ask whether the UFC is retaining control over its independent contractors by implementing these rules in restricting what they wear.  On the other, you ask whether giving workers a uniform is enough control over them to label them an employee rather than an independent contractor.

Golden Boy-Schaefer settle lawsuit, avoid arbitration

January 11, 2015

Kevin Iole of Yahoo! Sports reports that Richard Schaefer and Golden Boy have settled its lawsuit arising out of Schaefer’s departure from the boxing promotion last year.  The settlement leaves Al Haymon with several key boxers for a shwow .

Golden Boy sought private arbitration to settle the departure of Schaefer from this past spring.  Golden Boy was looking for $50 million in damages.  Along with Schaefer, Floyd Mayweather and several key employees of Golden Boy left.  As part of the settlement between the parties, Golden Boy relinquished the rights to several of the promotion’s top fighters notably Adrien Broner and Danny Garcia.

Golden Boy will retain the rights of Amir Khan, Lucas Matthysse and Leo Santa Cruz.  The fighters remain advised by Al Haymon.  The LA Times’ Larry Pugmire indicated that Marcos Maidana will leave to join Haymon (via Bad Left Hook).  According to Iole’s article, Schaefer will be precluded from promoting for a period of time.  But, he’s likely to officially join the Haymon/Mayweather camp.

Payout Perspective:

The settlement saves all parties a lot in legal fees.  It also means that Al Haymon and his “advised fighters” can move forward with a possible network debut on NBC and NBC Sports.  Golden Boy has a thinner roster but it will likely focus its efforts around Canelo Alvarez as the centerpiece for the company.

Zuffa wins court case lifting TV ban on UFC

January 9, 2015

The UFC announced that a German court has ruled a broadcast ban imposed by the Bavarian State Media Authority (BLM) on UFC events is “illegitimate” and therefor annulled.  The Administrative Court in Munich, Germany declared the UFC “a plausible sport.”

The initial ban arose in 2010 out of what BLM believed to be “undesirable” programming which may influence youth.  Zuffa filed a lawsuit against BLM in 2010.  The court ruled on October 9, 2014 that “UFC content is generally suitable for broadcast” and that the BLM could not impose the ban based on its own point of view.  The court also found MMA a “plausible sport.”

Prior to the ban, Germans could watch UFC events on TV Channel Sport1/DSF.

Payout Perspective:

Lifting the ban is an obvious win for Zuffa as it will now be able to negotiate with networks in the region to air UFC programming.  It also helps with the potential to return to the country for fight cards.  The episode reflects the issues the UFC faces when entering new markets and/or dealing with existing international regions.

Nevada AG may review Jones’ commission testimony

January 7, 2015

MMA Fighting reports that the Attorney General of Nevada is looking into whether it will investigate the possibility that UFC light heavyweight champ lied under oath while testifying before the Nevada State Athletic Commission this past September.

Based on the commission review of the incident including Jones’ testimony, he was fined $50,000 and given 40 hours community service in the Las Vegas area.

While testifying about the media day brawl with Daniel Cormier in August, Jones indicated that he had lost Nike as a sponsor due to the brawl.  However, Jones backed off of this statement during a conference call during UFC 182 fight week.

Jones then tried to re-explain his comments from the call (via MMA Fighting):

“I had like thousands of dollars of credit left on my Nike account that I never got to spend,” Jones said. “I had several months of monthly revenue money that I never got to receive. … So I lost several thousand dollars because of that fight, so technically that fight was the reason for thousands of dollars being out of my bank that I couldn’t receive. So technically, they have nothing to come back on me for.”

Payout Perspective:

We wrote about the issue of the possibility of Jones’ punishment due to not stating the truth under oath here.  Jones’ explanation about his own comments does not negate what he told the commission.  Essentially, his re-explanation equates to having store credit but not being able to use it.  He also claims that he had unpaid “revenue” that he never received.  This is vague and it’s not clear if this was related to his credit.  Thus, this would not be the same as losing a sponsorship as a result of the media day brawl.

2014: a look at some of the business issues in boxing

January 2, 2015

MMA Payout takes a quick review of 2014 in the sport of boxing.

2014 was an interesting year for the sport as boxing began to expand with more PPVs than the standard Pacquiao and Mayweather bi-yearly events.

Canelo Alvarez faced Alfredo Angulo in March (the event drew an impressive 350,000 PPV buys), Sergio Martinez faced Miguel Cotto in New York in June (although projected to score 475,000 PPV buys, it drew just an estimated 350,000) and Alvarez returned in July to headline a PPV with Erislandly Lara (it drew an estimated 300,000 PPV buys).  There were also hints of Gennady Golovkin fighting on PPV although that never came to fruition.

Floyd Mayweather fought Marcos Maidana twice this year.  After May’s Mayweather PPV (in which it reportedly drew 900,000 PPV buys), Showtime President Stephen Espinoza informed the media that it would no longer release PPV buy numbers unless the event sets a PPV record.   However, after the second fight in September, it was revealed that the rematch drew 925,000 PPV buys.

Manny Pacquiao’s days as a PPV draw seem to be waning.  Although his rematch with Tim Bradley drew an estimated 750-800K PPV buys, it was down from the near 900K PPV buys in their first fight.  Although nothing official has been released, the Manny Pacquiao-Chris Algieri fight in November drew between 300,000 to 400,000 PPV buys depending on who you asked.  If this number is correct, it’s a huge drop off for Pacquiao.  This would be a likely reason why the push for the mythical matchup with Floyd Mayweather.

In October, ESPN’s Dan Rafael posted the top events in 2014 thus far.  Julio Cesar Chavez vs. Brian Vera 2 drew 1.39 million viewers with a peak of 1.53 million.  The ratings were for only that fight and not the entire card airing on HBO.  HBO dominated the top rated boxing events on cable (premium and/or regular) and Showtime did not crack the top 10.  Still, the competition between the two premium cable channels seemed to heat up in 2014.

With the Kovalev-Hopkins fight, we may see the cold war between Top Rank and Golden Boy softening.  Yet, Al Haymon still is one of the unseen, most powerful men in the business.

There were several notable lawsuits in 2014.

First, Main Events Promotions, the promoter for Sergey Kovalev sued Al Haymon, Golden Boy, boxer Adonis Stevenson and others for backing out of a potential fight between Kovalev and Stevenson.  The lawsuit was dismissed as the parties settled when Kovalev got his big fight against Bernard Hopkins. 

Next, Andre Ward lost a California State Athletic Commission arbitration hearing this past spring against his promoter Goosen Tutor Promotions.  Ward then turned around and sued him in Federal Court alleging violations of the Muhammad Ali Boxing Reform Act.

Mikey Garcia sued Top Rank alleging issues with his contract including violations of the Muhammad Ali Boxing Reform Act.  The lawsuit was transferred to Nevada as Garcia originally filed in California.

Don King was found in breach of contract when his fighter failed a drug test for an event in Russia in 2014.

In addition to these lawsuits, there were major shakeups at Golden Boy with former CEO Richard Schaefer leaving Golden Boy.  But, it appears to be a messy divorce with Golden Boy seeking $50 million in private arbitration.

Just like MMA, 2015 should be an interesting year for boxing.

UFC reverses course on out of competition drug testing policy

January 2, 2015

Dana White stated at a media session on Thursday that the UFC is doing away with plans for its out of competition testing due to the issues it faced with Cung Le.  In his explanation, White blames the lawyers for the drug testing issues with Le.

ESPN reported in August that the UFC was furthering its anti-doping effort by potentially partnering with an independent agency in implementing a random, out-of-competition drug-testing program by the end of 2014.  This was to be a way of ensuring fairness throughout the ranks of the UFC and to ensure that no one was using any banned substances.  It did not happen.  Instead, on the first day of 2015, we see a reverse of course.

At the scrum, White indicated that Zuffa was not capable of such a program.  Instead, Zuffa will help fund commissions to conduct additional testing.  (via Bleacher Report).  White went on the blame the legal team for blowing the Cung Le testing.  Another issue was the change of suspension from 9 months to 12 months.

Payout Perspective:

In this instance, the lawyers take the blame for either botching the drug testing policy in Macau or the subsequent measures after the discovery of Le’s alleged failed drug test.  Or both.  Regardless, the question remains what the UFC will do when there is no commission such as the situation in Macau.  Does it hire an independent agency at that time?  And how much money does the UFC give to a commission and is there any conflict in this happening?

This move does not look like one that supports a policy that is strict against using performance enhancing drugs.  Unless the UFC were to retain an independent agency to conduct its tests, it would appear that the company has done little to ensure that all of its athletes are free of substances that would give them an unfair advantage.

14 for 14: No. 1 the UFC antitrust lawsuit

January 1, 2015

In a lawsuit that may change the structure of the UFC and the MMA business as a whole, fighters have sued Zuffa for alleged violations of section 2 of the Sherman Antitrust Act.  The fighters intend to seek class action status as 5 law firms have joined together to represent the plaintiffs.

The UFC recently retained Boise Schiller & Flexner to defend itself in the lawsuit.

Attorneys for the UFC have yet to file responsive briefing in the three lawsuits filed by 7 fighters (so far) that claim that the UFC was both a monopoly and monopsony in violation of antitrust laws as it suppressed fighter pay as well as other incentives that the fighters believe that they could have received but for the UFC’s business practices.

The dollar amount of what the plaintiffs are seeking has not been identified and will not be until economists  and other experts opine about the issue.  But, under the antitrust laws, the plaintiffs may seek three times the actual amount of damages proven.

Payout Perspective:

Unless the UFC can get the lawsuit dismissed or the parties somehow decide to settle, we probably will see this go through 2015 with no resolution.  Recall, the Zuffa lawsuit filed against New York in 2011 is still pending a summary judgment motion with no trial date set. This lawsuit will be one to watch and if it gets to the discovery phase, we could see some damaging documents (i.e, Zuffa emails, financial information, etc.) which could turn out to be a public relations disaster.  On the other end, look for Zuffa lawyers to paint the plaintiffs as malcontents looking to make a “quick buck” because they were never good enough to make it in the UFC.

But even before we get to the juicy stuff, there may be some procedural hurdles that the plaintiffs may need to go through.  2015 will certainly be a year to brush up on the terms monopoly and monopsony.

14 for 14:

2.  UFC-Reebok announce uniform deal

3.  Bellator 131/Bellator on PPV

4.  Zuffa downgraded by Standard & Poor’s

5.  CM Punk signs with the UFC

6.  Rebney replaced by Coker

7.  UFC Fight Pass a success in first year?

8.  TRT banned by NAC, UFC

9.  UFC PPVs down

10.  WSOF airs on NBC

11.  UFC continues global expansion

12.  Rousey wins CSAC arbitration against Fight Tribe

13.  Cung Le drug suspension overturned

14.  Gil re-signs with the UFC

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