January 20, 2017
Chris Liddell, the global CFO at WME-IMG has taken a post with the newly installed Trump Administration as reported by Deadline.com and the Hollywood Reporter.
As we know, WME-IMG purchased the UFC this past summer. Ari Emmanuel, the former Hollywood agent for President Donald Trump, met with Emmanuel shortly after he was elected president. The substance of the discussions was not made public. Despite their relationship, Emmanuel is considered someone that supports Democrats.
Liddell will take on the role of adviser and has been named an assistant and director of strategic initiatives for the new administration. He had provided advice to President Trump in appointments during the post-election transition.
The appointment is key if you are one to connect dots. The expansion of the Ali Act to include combat sports (i.e., MMA) is still an active bill in the House. The UFC is opposed to this legislation and has lobbied against it. The appointment of Liddell to a post within the Trump Administration might be the death knell for the success of passing this bill. While we might believe that all parties will have an open mind on the bill, you have to wonder if a former executive of the company that owns the UFC would advise the President to veto such legislation if it got to that point. More likely, the bill gets buried before even getting to the Senate.
January 19, 2017
The United States District Court for the Southern District of New York denied a request by attorneys for World of Boxing, L.L.C. to continue the February 6, 2017 trial date.
For background on the case, see our post here. Essentially, the parties are suing each other over a failed fight in Russia due to an alleged failed test by Povetkin and Wilder’s subsequent actions after he learned of the drug test. There is also an issue of over $7 million held up in escrow due to the failed fight.
Notably, the court order identifies a September 26, 2016 hearing in which the parties wanting an “expedited trial” and agreeing on the February 6th trial date. The parties agreed to the sole issue of whether Alexander Povetking ingested Melodonium after it was formally banned on January 1, 2016.
World of Boxing has complained of discovery issues in which Wilder’s attorneys claimed privilege for certain emails between purported agents of Wilder and his attorney.
MMA Payout will keep you posted on the case as it heads to trial.
January 12, 2017
The Al Haymon-Golden Boy antitrust lawsuit filed in federal court in Los Angeles is set for trial on March 14, 2017 if the court does not grant the defendant’s Motion for Summary Judgment.
For a good refresher on what this case is about and the gist of the motion, you can read Paul Gift’s synopsis last month. We take a deeper dive in the legal issues of the motion below.
An oral argument for the motion was taken off calendar (i.e., cancelled) by the court this past November 28th. As of this date, there has been no ruling issued by the trial court. Realistically, there is no timeline for the court to render a ruling on the motion except for the fact that there would likely be an opinion prior to trial documents needing to be filed with the court.
Haymon’s Motion for Summary Judgment
Haymon’s attorneys, and the attorneys for his entities that were also sued in this litigation argue that Golden Boy failed to establish a triable issue of fact of its attempted monopolization. It essentially argues that there is no evidence of specific intent for a monopoly, Golden Boy failed to identify any anticompetitive or predatory conduct and Golden Boy misconstrues the concept of antitrust injury.
One of the claims set forth by GBP is that Al Haymon should be held individually liable for violation of the antitrust laws. Haymon attorneys assert that Haymon could not be liable of antitrust injury because individual liability requires “inherently wrongful” conduct, a per se violation. Haymon argues that attempted monopolization is not properly evaluated as a per se antitrust violation.
In an antitrust case, there are two ways a court looks at whether there is a violation of the antitrust laws. The first is a “per se” violation and the second is the “rule of reason.” Per se relates to conduct that is manifestly anticompetitive with limited potential for procompetitive benefit. The rule of reason is the presumptive or default standard and the general standard it examines whether the procompetitive benefits outweigh the anticompetitive effect.
“Inherent conduct” is equated to a “per se” violation by Haymon. In its moving papers, they state that courts have regularly dismissed claims against corporate officers in cases dealing with conduct that is permitted or even encouraged by the antitrust laws. Here, the argument is that Haymon and his entities did not do anything wrong.
It also argues an “even if” scenario providing the hypothetical that if a court were to analyze the tying claim as a “per se” claim it would fail on the merits. It first argues that there is no tie in the first place. Haymon points out the similar Top Rank lawsuit in citing that Top Rank failed to prove as a matter of law that the two distinct services of promotion and managing were tied together. The clause in the contract that is questioned is the provision that requires consent to enter into contracts. However, Haymon’s attorneys point to the Canelo Alvarez-Amir Khan fight in May 2016 as an example of interpromotional fight making. Also, the Floyd Mayweather-Manny Pacquiao case is another example which reflected the opportunity for a contracted Haymon fighter to work with another promoter. Thus, the examples show that the contracts do not foreclose other promoters.
Haymon argues that the market described by GBP are artificial and are “illogical, divorced from the reality of the boxing industry, and fail to satisfy GBP’s burden to establish coherent markets in which the Defendants could possibly have market power.” It states that “Championship-Caliber Boxers,” the market described by GBP in its lawsuit is not a recognized industry term. Haymon attorneys identify the fact that the term was interpreted differently by multiple people within the boxing industry. They also argue that GBP has not shown that there are barriers to entry in the markets for which they define.
Golden Boy Theory of Antitrust Injury
As you might recall Golden Boy brought a lawsuit against Al Haymon and his entities illegal tying of its managerial and promotional services.
As we wrote:
The lawsuit claims that Haymon, et. al have created a “tying” relationship in violation of antitrust laws. This is done through agreements affecting to separate relevant markets. The first market is for management of Championship-Caliber Boxers and the market for promoters. As described in the Complaint, the management market is the “tying” market whereas the promotion market is the “tied” market. Essentially, the fact that Haymon manages so many fighters it affects the promotions market since he has exercised control over the direction of each fighters’ career.
Tying under Section 1 of the Sherman Act must show:
- There is evidence of a tie;
- There is evidence “of coercion” of purchasers to buy products or services;
- There is evidence of market power in a properly defined market.
Golden Boy opposes the motion on the grounds that Al Haymon is personally liable for antitrust injury. It suggests that the standard for individual antitrust liability is met when an officer knowingly approves to each element of a claim whether or not the claim involves “inherently wrong” conduct. It also states that it has ample evidence to support their tying claim as Haymon tied their management services to the rejection of competitors’ promotion services in favor of their own. Also, it rebuts the assertion by Haymon that it has fabricated the relevant market definition. It also contends that there are “significant barriers to entry” in the relevant markets. Finally, it states that the Haymon acted as promotes as well as managers.
GBP claims that issues of fact exist as it relates to the evidence of exclusionary contracts which “tie out” others. It also claims that its expert’s testimony provides ample evidence of the markets in the industry and that they are controlled by Haymon.
In its opposition to the motion for summary judgment, GBP argues that Haymon’s model of paying supracompetitive sums is not a “rational business model, unless there is to be a payoff.” The “payoff” as concluded by GBP is the monopoly of the boxing promotion business, controlling the television market for boxing and “invoking supracompetitive pricing once dominance is obtained.”
The opposition points to “draconian exclusionary terms” in contracts which give Haymon Sports control over all aspects of the boxer’s career and a veto right over all boxing related contracts. In its pleadings, Haymon does admit that a “standard management agreement gives it the right to approve the boxer’s selection of promoter, it has never exercised this right to require or coerce its boxers to use or not use a particular promoter.” This seems to negate, but confirm terms within the Haymon boxing management contract that reflects control over the boxer’s selection of promoter.
GBP also argues that Haymon has a tying arrangement in which one must refrain from accepting another product. Here, GBP contend that Haymon tied his management services to the rejection of competitors’ promotion services. They suggest that fighters under contract with Haymon know that they cannot work with other promoters outside of Haymon. GBP indicates that this is a triable issue of fact that would
The standard on a motion for summary judgment is to weigh all of the pleadings and facts within and weigh them in the “light most favorable to the non-moving party (in this case GBP).” If the court determines that there are no genuine issues of material fact, it will grant a dismissal as a matter of law. However, a court will deny a motion for summary judgment if there are pending issues of fact.
Whether or not Haymon could be individually liable will be an issue the court will need to determine based on the facts provided and the legal arguments made by the parties. While Haymon’s attorneys argue that personal liability cannot be assessed in these matters, Golden Boy argues that case law supports the contention that Haymon is personally liable. As for the business model, the fighter contracts will be an issue for the court to consider as well as GBP’s expert testimony which addresses the relevant markets.
Once a decision is rendered, MMA Payout will let you know
January 10, 2017
UFC Heavyweight Mark Hunt has filed a lawsuit against the UFC, Dana White and Brock Lesnar in the District Court of Nevada on Tuesday. The lawsuit stems from Hunt’s fight against Lesnar at UFC 200.
Hunt is claiming violations of the Racketeer Influenced Corrupt Organizations Act, Conspiracy to Commit Racketeering, Fraud, False Pretenses, Breach of Contract, Breach of Covenant of Good Faith and Fair Duty, Negligence and Unjust Enrichment.
The premise of the complaint is that the UFC allowed Lesnar to fight at UFC 200 while providing the WWE wrestler with an exemption from the UFC’s anti-doping policy.
Lesnar tested positive for a banned substance in both an out-of-competition and in-competition drug test.
Lesnar defeated Hunt via unanimous decision at UFC 200 this past July.
The Complaint makes reference to UFC 152 when Vitor Belfort was allowed to fight with a testosterone use exemption but without disclosing the information to the public or his opponent Jon Jones.
In the lawsuit is embedded a photo of Lesnar pummeling Hunt.
In Hunt v. Zuffa, LLC, et al., complaint embeds a pic with the caption, “Doping Lesnar Fights Hunt, a clean competitor, at UFC 200.” pic.twitter.com/Q4HCcUAIvc
— Jason Cruz (@dilletaunt) January 11, 2017
Of the notable items in the Complaint, Hunt claims RICO violations against the UFC which carry treble (3 times) damages.
He also claims personal injuries which include damage to reputation, loss of opportunity of career advancement and further earning potential.
Hunt has intimated that he may take legal action and he did. The timing comes after Lesnar was recently handed 1 year suspensions from USADA and the Nevada State Athletic Commission which meant that he could come back in July 2017.
RICO is a very specific statute that requires that a person must commit at least two acts of racketeering activity from a set of crimes within a specific time frame and are related to an enterprise. This will be interesting for Hunt to prove and would make discovery as interesting as the current antitrust lawsuit filed by former fighters.
Hunt is scheduled to fight in March 2017 which makes this lawsuit all the more interesting.
MMA Payout will keep you posted.
January 9, 2017
Zachery Light is dismissing his lawsuit against Bellator. Light’s attorney filed a Request for Dismissal on December 20, 2016.
The Request was signed by Light’s attorney, William Crosby, and Bellator’s counsel Richard Kendall.
The dismissal is “with prejudice” which would end both Light’s lawsuit against Bellator and Bellator’s cross-claim against Light. The details can be found here and in the original lawsuit in which Light stated that the promotion disobeyed laws for forging medial information for fighters. Light claimed that Scott Coker and Rich Chou advised the former Bellator employee not to press the issue.
Bellator claimed that Light requested a loan from the company and was given $9,403 and entered into a written agreement with Light that made him pay back the money on an agreed schedule. Bellator claims that he never paid back the loan.
In all likelihood, the parties have decided to settle their dispute without incurring further litigation costs. Also, I would suppose a non-disclosure agreement was signed by Light which would preclude him from talking about the case. It would be interesting to know of the allegations regarding Bellator hiring Kogan while he still managed fighters. Of course, Light probably could not sustain paying his legal bills up against Bellator. From all indications, he is now working for MMAAA.
January 7, 2017
2016 seemed to be a low-key year in the world of boxing. While 2015 saw some major moves from Al Haymon and his Premier Boxing Champions, the endeavor has fizzled. The same could be said for the year of boxing on PPV as there were no major events that drew PPV buy rates the likes of Mayweather or Pacquiao in their primes.
We saw less of Haymon’s Premier Boxing Champions on the multiple channels it was on the year prior. PBC has blown through a lot of capital since it launched in March 2015. A lawsuit filed by Golden Boy, one of two filed by rival organizations, is set to go to trial in March 2017.
Currently, Haymon and the entities sued by Golden Boy have filed a motion for summary judgment to dismiss the case prior to the trial date. No decision has been made as of this date.
The other antitrust lawsuit against Haymon, filed by Top Rank Boxing was settled by the parties this past spring.
Both of the lawsuits claimed that Haymon’s PBC business model sought to create an illegal tie-in through Haymon’s signing of fighters as their management and then promoting them. They also argued that PBC foreclosed the fighter market and possibly promoting the fighter since fighters under Haymon would allegedly not deal with other promoters. It also tied-out promotions that sought to be on television since Haymon struck exclusive deals with multiple networks.
Chris Algieri fought this past April but expressed concern with how much he would be paid as his promoter did not reveal how much of a percentage he would receive from his fight against Errol Spence, Jr. The situation brought up an issue with the Ali Act.
Speaking of Spence, after defeating Algieri his next fight in August drew an impressive 4.8 million viewers on NBC with a peak of 6.34 million. The PBC on NBC fight aired after the U.S. Olympic gold medal basketball game between the U.S. and Serbia. The one-hour show was sandwiched between Olympic network coverage which may have attributed to the huge viewership which seems to be an anomaly when compared to past PBC on NBC telecasts.
Deontay Wilder and his promoter Lou DiBella are embroiled in a lawsuit with Alexander Povetkin and his promoter World of Boxing, LLC over a failed fight that was set to happen in Russia in May. Povetkin tested positive for Meldonium. However, he claimed that only small traces were found in his sample and his use occurred prior to January 1, 2016 when WADA banned the substance. The WBC reinstated Povetkin because the substance in his system was below the threshold accepted by WADA although it claimed to require Povetkin to submit to drug tests. The parties are embroiled in a discovery fight but the case is set to go to trial this spring.
Notably, Povetkin tested positive after he was reinstated and scheduled to face Bermane Stiverne for the WBC heavyweight title. He stated that he wanted his “B” sample tested on Thursday at the UCLA Laboratory in Los Angeles.
DiBella is one of the boxing promoters that protested the new law legalizing MMA in New York, but requiring promoters to provide $1 million worth of coverage per athlete in the event of a life-threatening brain injury. He pulled the rest of his shows scheduled for New York in late October as a form of protest and as a matter of practicality. Jo DeGuardia of Star Boxing along with DiBella submitted a public comment regarding the regulations.
A survey of all of the fights on HBO, including PPV replays, drew an average of 780,000 subscribers of the premium channel. The highest-rated fight this year was GGG versus Dominic Wade on April 23rd which drew over 1.3 million viewers. Only two other fights reached past 1 million viewers: Sergey Kovalev versus Jean Pascal which drew 1.179 million viewers in January and Andre Ward versus Sullivan Barrera which drew 1.064 million viewers.
Showtime had less fights this year and drew an average of 363,000 viewers.
In May, a year after the “Fight of the Century” between Manny Pacquiao and Floyd Mayweather, Jr. resulted in a lawsuit as Showtime sued Top Rank citing indemnification and breach of contract related to lawsuits filed by third parties against Showtime and Top Rank related to Pacquiao’s claim that he fought with an injury against Mayweather. Showtime sought to invoke the indemnification language in the contract. However, Top Rank, as you might expect, disagreed with the reading of the contract. In fact, they intended to bring a motion to dismiss Showtime’s lawsuit.
But, in September, Showtime voluntarily dismissed its case.
Finally, it was a rather disappointing 2016 for boxing PPVs.
Boxing PPVs 2016
April 9, 2016 – Pacquiao-Bradley III: ~400K PPV buys
May 7, 2016 – Alvarez-Khan: ~450K-600K PPV buys
July 23, 2016 – Crawford-Postol: 50K-60K PPV buys
September 17, 2016 – Alvarez-Smith: >~300K PPV buys
November 5, 2016 – Pacquiao-Vargas: ~300K PPV buys
November 19, 2016 – Ward-Kovalev – 160,000 PPV buys
An unfair comparison, except for this web site I suppose, but if you consider the UFC had its most successful year on PPV with 5 events going over 1 million, boxing had a dismal year. Canelo Alvarez, the predicted heir to boxing PPV, did not draw as expected and Manny Pacquiao is losing his appeal in the U.S. Note that HBO passed on distributing his November fight in order to promote a fight that drew just 160,000 on PPV. Unless GGG-Canelo happens in the fall of 2017, there are not any marquee PPV fights coming up in boxing this year.
January 4, 2017
Brock Lesnar was issued a one year suspension by USADA for failing an out of competition and in-competition drug test for UFC 200. Lesnar will be reinstated on July 15, 2017.
A portion of the USADA press release announcing the sanction reads:
Lesnar, 39, tested positive for clomiphene and its metabolite, 4-hydroxyclomiphene, following an out-of-competition urine test conducted on June 28, 2016, and an in-competition urine test conducted on July 9, 2016, at UFC 200 in Las Vegas, Nev. Clomiphene is a prohibited substance in the category of Hormone and Metabolic Modulators and is prohibited at all times under the UFC Anti-Doping Policy, which has adopted the WADA Prohibited List.
Last month, Lesnar entered into a settlement with the Nevada State Athletic Commission regarding the same drug test failure. He received a one-year sentence and $250,000 fine.
The drug has the ability to double testosterone levels. It is generally used as a fertility drug that causes the pituitary gland to release hormones. Notably, Lyoto Machida’s suspension of 18 months was for 7-keto-DHEA which helps burn fat.
The suspension was more or less expected after Lesnar settled with the NSAC. Of course, the disparity in suspensions we mention with Lyoto Machida have to be frustrating. The drug taken by Lesnar could aid him in fighting and I’m sure Mark Hunt its upset about this suspension. On the other hand, Machida’s banned substance helps burn fat so that you can make weight. The suspension reflect the issues with the UFC anti-doping policy overseen by USADA.
December 29, 2016
In May 2016, Oklahoma Republican Congressman Markwayne Mullin introduced an expansion of the Muhammad Ali Boxing Reform Act to include MMA. A Congressional Subcommittee hearing was conducted in December to discuss the issues related to mixed martial arts and how the introduced law would help fighters.
In addition to Congressman Mullin, it is co-sponsored by Democrats including Joseph P. Kennedy of Massachusetts and Mark Takano of California. Overall, 5 Republicans and 2 Democrats have put their name to the bill.
The UFC opposes the expansion and hired a lobbying firm to influence legislators into voting down the amendment to the existing law. Several op-eds have come out to oppose the law citing government overreach among other reasons. It attempted to strong-arm the December hearing by indicating it would not participate if Randy Couture testified. It backed off and Jeff Novitsky represented the UFC at the hearing.
The amendment to the Ali Act mirrors the current law with few changes but for the inclusion of combat sports. Earlier this year, I outlined the issues with the expansion of the Ali Act which included a variety of cases where boxers sued promoters and came up with a loss. Notably, there could have been more done with the Ali Act to ensure functionality to allow fighters an alternative to needing to file a lawsuit under the Act.
Currently, the Ali Act is in the House Education and the Workforce Subcommittee. There is no word on whether there will be additional hearings on the subject or what the next move will be on the bill.
With the new UFC ownership and its previous relationship with the incoming administration in January I do not know how successful passage will be. At this point, there seems to be a lot more work to do before it comes to a vote in the House.
16 for 16
5. UFC 200
14. Bellator 149
15. CM Punk debuts
December 24, 2016
It was a big year for Jon Jones. But it could have been worse.
Just weeks prior to his return to the Octagon at UFC 197, Jones was arrested for violating his probation (you may recall he accepted a plea deal for his part in a car accident with a pregnant woman). In March, he was stopped by Albuquerque Police for allegedly drag racing. The traffic stop was caught on camera. He turned himself in for the violation. Fortunately, for Jones, only modifications were made to his probation and he did not have to serve any jail time. Also, he was able to continue to train for UFC 197.
Jones returned to the Octagon in April at UFC 197 to face Ovince St. Preux after his rematch with Daniel Cormier was postponed due to a Cormier injury.
Jones and Cormier were rescheduled for UFC 200 in July as the main event. Bur, Jones was taken off the card days before the event as an out of competition drug test was flagged. As we now know, the banned substance he took was a bootleg sexual enhancement pill he received from a training partner. Jones became the first UFC athlete to take USADA to arbitration related to a flagged drug test. However, he lost at arbitration with the opinion stating that despite the fact that he may not have knowingly attempted to take a PED, he did show disregard for ingesting something for which he did not know the contents. As a result, he was given a one year ban retroactive to July 2016. Jones had hoped that he would be in the Octagon much sooner.
Jones settled the drug test infraction with the Nevada Athletic Commission by agreeing to a one year suspension as well which allows him to be on track to be back in the Octagon in July 2017.
This year’s legal issues lost him a lot of trust from the UFC. He has been given chance time and again with him saying all the right things after the problems have ended, but he always finds himself in another problem. The UFC was likely angered by having to rearrange marketing and finding a replacement so near UFC 200. Still, he is probably one of the best pound for pound fighters in the world and the organization will welcome him back this July.
December 23, 2016
The World Series of Fighting will cap off its year with a show on New Year’s Eve in New York. However, there might be cause for concern for the organization as legal problems persist.
3 new lawsuits were filed in Nevada this year which call into question the financial stability of the company. The lawsuits reveal the fact that the company has internal issues with the people that run it and the people that fund it. Based on the information gathered from the lawsuits, the people investing and claiming ownership (even a small %) are not the most professional people you may know. You may recall a lawsuit in 2015 saw issues with loans and an assignment of rights for use internationally. The new lawsuits see similar problems with loans to keep the organization afloat.
In addition to the legal troubles, WSOF cancelled two events in order to bolster its New Year’s Eve show in New York. WSOF opened an office in New York last year and supported the push to legalize professional MMA in the state so it makes sense that they want a show in the state by year’s end. But a New Year’s Eve show conflicts with the College Bowl Playoffs on television.
Notwithstanding what may happen on its New Year’s show, the ratings for WSOF on NBC Sports Network are slightly behind 2015’s average of 189,000 viewers.
Will WSOF survive its legal and financial woes in 2017 and continue through the year into 2018?