US Government shuts down illegal sites
February 2, 2012
A Reuters report states that the US Government shut down 16 web sites related to the illegal streaming of live sports. The sites provided links to pirated sites where viewers could watch sports including NBA, NFL, WWE and TNA pro wrestling for free.
The sweep of illegal sites is in preparation for Super Bowl Sunday. Who watches the Super Bowl via illegal streaming? The article reports that Tom Brady actually used an illegal web site last year in Costa Rica to watch the Packers-Steelers Super Bowl.
The feds arrested a Michigan man who was charged with one count of criminal copyright infringement. Its alleged that he ran several of the pirate sites receiving $13,000 from online merchants who advertised with him. The man was caught as a federal agent posed as a WWE representative seeking to buy a domain from the man.
Payout Perspective:
The crackdown on illegal sites should appease the WWE and the UFC in its constant effort to curb piracy. The article provides some interesting insight on the business behind illegal streaming. The ad revenue seems small considering the risk one may take for running such a site.
FTC Ends UFC Investigation Regarding Strikeforce Purchase
February 1, 2012
Earlier today, Josh Gross from ESPN.com broke the news that the Federal Trade Commission has closed a non-public investigation into the UFC’s purchase of Strikeforce as of last week.
ESPN reports:
Documents published on the FTC website dated January 25, confirm the FTC’s Bureau of Competition conducted an investigation to determine whether the $34 million acquisition of Explosion Entertainment, LLC, by UFC’s parent company, Zuffa LLC, violated Section 7 of the Clayton Act or Section 5 of the Federal Trade Commission Act.
…
In closing letters issued to counsel for Zuffa and Explosion Entertainment, FTC secretary Donald S. Clark stated, “Upon further review of this matter, it now appears that no further action is warranted by the Commission at this time. Accordingly, the investigation has been closed.”
The full letter from the FTC is below (H/T: FightOpinion.com):
UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580
Office of the Secretary
January 25, 2012
Stephen Axinn, Esq.
Axinn Veltrop, and Harkrider LLP
1330 Connecticut Ave., NW
Washington, DC 20036
Re: Acquisition of Explosion Entertainment, LLC (Strikeforce) by Zuffa, LLC (UFC)
FTC File No. 111 0136
Dear Mr. Axinn:
The Federal Trade Commission’s Bureau of Competition has been conducting a nonpublic investigation to determine whether Zuffa, LLC’s acquisition of Explosion Entertainment, LLC may violate Section 7 of the Clayton Act or Section 5 of the Federal Trade Commission Act.
Upon further review of this matter, it now appears that no further action is warranted by the Commission at this time. Accordingly, the investigation has been closed. This action is not to be construed as a determination that a violation may not have occurred, just as the pendency of an investigation should not be construed as a determination that a violation has occurred. The Commission reserves the right to take such further action as the public interest may require.
By direction of the Commission.
Donald S. Clark
Secretary
New York files Motion to Dismiss portions of Zuffa’s lawsuit
January 30, 2012
The New York District Attorney and Attorney General filed separate motions to dismiss two claims in Zuffa’s lawsuit in New York City. While the lawsuits seek to dismiss only a portion of the UFC complaint, it appears that the defendants are leaving open a motion to dismiss the entire complaint in total at a later date.
Courtesy of the Fight Lawyer, the two motions are below:
Attorney General’s Motion to Dismiss
District Attorney’s Motion to Dismiss
Payout Perspective:
The crux of both arguments appear to be that despite Zuffa’s claims, the fact remains that New York had a rational basis for enacting the ban at the time it was drafted. And based on this, the statute was not vague and overbroad as it relates to the due process and equal protection claims. They cite to case law which supports the theory that despite changes over the years that may, arguably, antiquate a statute’s purpose, under a rational basis review of a law, so long as there was a rational purpose for it at the time of its introduction it is valid.
Both motions argue that the proper forum for Zuffa’s claims is with the legislature and that if Zuffa wanted to enact change, it should direct its efforts to the legislature.
Via the District Attorney’s motion to dismiss:
…as a proper exercise of judicial restraint, federal courts must uphold a statute that was rational when enacted, even when post-enactment developments cast doubt on the wisdom, logic, or providence of prior legislative decisions
It also argues that legislatures are given “substantial latitude” when it comes to enacting laws under a rational basis review of the law as “imperfections and even inequality must be tolerated.”
The defendants’ motions are persuasive and could set the dominoes in line if the court grants the motion to dismiss Zuffa’s claims. As indicated in its motions, both parties contemplate a further motion to dismiss the rest of Zuffa’s claims if it is successful with this motion.
Hackers allegedly post Dana White’s personal info online
January 26, 2012
MMA Junkie reports that Dana White’s personal information was revealed online after White challenged hackers that may have hacked UFC.com. The challenge came after the UFC head engaged in a heated twitter exchange with the alleged hackers.
Via MMA Junkie:
A Twitter user claiming to be a member of the same Internet group that over the weekend attacked UFC.com, UGNazi.com, posted a link to a file listing the apparent phone number, social security number and current and past addresses of the UFC boss.
In addition to addressing the issue of the UFC hackers at today’s UFC on Fox 2 press conference, White also addressed the controversial SOPA bill which the UFC supported:
“Is SOPA the perfect bill? No, it’s not,” he said. “The only thing that we’re focused on is piracy. Piracy is stealing. If you walk into a store and you steal a gold watch, it’s the same as stealing a pay-per-view. I don’t care what your twisted, demented idea of stealing is. This kids who grew up on the Internet never had to pay for anything, so they don’t think that you should have to.”
Payout Perspective:
Most would agree that the unauthorized posting of personal information, including White’s alleged social security number, is not acceptable. It has now drawn the attention of White and the UFC. If White had made the statement about SOPA on the day of the SOPA blackout, or if this was communicated in Sunday’s Las Vegas Journal editorial, we may not have seen such a militant response from the hackers. Certainly, most people would understand the UFC’s stance if it was communicated in a timely manner.
There’s no guarantee that hackers would have stayed away from the UFC.com web site even if White and the UFC came out with its statement. But, at least stating its position, instead of pretending not to care about it, would have satisfied most.
[UPDATE]: Las Vegas FOX affiliate says hackers’ attack on White sees innocent woman harassed [MMAJunkie]
“Breeler claims to have received more than 500 phone calls since her information was released in place of White’s actual data.
…
In the report, FOX 5 reporter Matt Delucia suggests the UFC boss’ name became associated with Breeler’s address thanks to a past resident of the house who owned a white cat named “Dana,” and used the pseudonym as a way to detect junk mail.”
SOPA protests has web going dark
January 17, 2012
Major web sites including Craigslist, Wikipedia and Reddit went dark starting on midnight January 18th in protest over the controversial Stop Online Privacy Act (SOPA). The United States Senate will vote on the bill starting January 24th.
The anti-piracy legislation is supported by many media, labor and manufacturing companies as it is seen as a way to curb piracy while online companies oppose it and view it as censorship and stifling innovation. A good primer on the pros and cons is here.
Other web sites, including Google, supported its online brethren through other means. Google and Twitpic blacked out its logos as seen below:
Both sides of the SOPA debate can be seen in various articles across the Internet. According to Politico, two of the major issues in the legislation is one that would allow the movie and television industry to sue companies when its web sites support pirated material and another which would allow the government to block certain web searches.
In addition, there is concern that SOPA will suprress online journalism. The American Society of News Editors (ASNE) provides a compelling argument against the passage of SOPA:
…our members use the Internet in ways that could be construed to violate SOPA,
and that’s not acceptable. Whether utilizing content contributed by third parties, stepping
outside the direct reporter-source interaction to acquire and use information from websites
around the world, or augmenting our stories through the use of multimedia previously
unavailable to print-only publications, ASNE members continue to change the way
news is presented. We fear that SOPA will restrict our ability to engage in these activities
and stifle our capacity to innovate when we most sorely need the freedom to do so.
This past November, Zuffa head Lorenzo Fertitta sent a letter to House Judiciary Committee Chairman Lamar Smith in support of SOPA. Smith introduced the bill in the House of Representatives. Fertitta’s main concern in the letter was the illegal streaming of its PPVs. “This is the issue that keeps us up at night and, we are very concerned about the continued theft of our shows,” wrote Fertitta.
Payout Perspective:
There are interesting arguments on both sides of the SOPA debate. The blackout by the collective of online sites is a definite attention getter for this piece of legislation. The UFC has always been proactive in protecting its intellectual property rights and the piracy of its PPVs. For it to support this legislation makes sense. But, it seems that the primary debate lies outside of the PPV piracy issue.
What could SOPA mean for online journalism…and places like this where third party sources and information from other web sites are used.
We will see how the vote plays out next week.
Update on Zuffa vs. New York: NY files motion
January 9, 2012
The Fight Lawyer reports on the latest from the Zuffa lawsuit in New York. Notably, the New York AG and the New York DA will file a motion to dismiss on the issues of due process and equal protection but the First Amendment issue will not be contested in the motion.
On January 5, 2012 a status conference was held:
Minute Entry for proceedings held before Judge Kimba M. Wood: Status Conference held on 1/5/2012. Defendants will submit a limited motion to dismiss addressing only the issue of whether due process and equal protection analysis requires the Court to determine whether there was a rational basis for the law at issue only at the time it was passed, or whether the Court must determine whether there is a rational basis for the law at present (in other words, whether the Court should take into account a change in factual circumstances that makes the law no longer rational, even if it had a rational basis at the time of passage). Defendants’ motion is due 1/27/12. Plaintiffs’ reply is due 2/17/12.Defendants’ response is due 3/2/12. (js) Modified on 1/9/2012 (tro). (Entered: 01/06/2012)
Payout Perspective:
It will be interesting to see the arguments in the motion. The minute entry appears a little confusing upon first read considering the court will consider whether a law can become constitutionally irrational. But, it appears that the Court will decide whether the MMA Ban is rational now based on the current state of MMA or whether it was rational when the law was introduced in 1997. A breakdown of the due process and equal protection claims are 3, 4 and 5 in the lawsuit addressed here.
As the Fight Lawyer commented in his post, its a limited motion and there is no mention of the First Amendment claim.
One has to wonder whether the defendants believed that Zufffa’s First Amendment claim would survive a motion to dismiss at this point or whether its strategy is to prevail on its limited motion first prior to addressing the other claims in the lawsuit.
More on Overeem-Golden Glory contract
January 6, 2012
The lawsuit filed by Golden Glory against Alistair Overeem in Clark County, Nevada last week included the Golden Glory-Overeem contract.
As The Fight Lawyer points out, this lawsuit is not the same as Overeem’s lawsuit filed in Los Angeles in November. A summary of that lawsuit is here. However, both lawsuits relate to the contract dispute the UFC Heavyweight had with his former gym.
The contract attached to the Nevada lawsuit is interesting insight into the terms and conditions Knockout Investments (KOI) and Golden Glory (GG) had with Overeem. An initial impression is that it was not drafted by an attorney and has certain clauses which seem one-sided and unenforceable. Yet, we presume that Overeem signed the contract with knowledge of its terms.
Here are some interesting tidbits from the Nevada lawsuit:
- The 2007 contract with Overeem was set for 5 years. KOI/GG would receive 30% of essentially everything made by the fighter.
- In paragraph 34 of the Complaint, it states that Overeem receives $2.00 per view for views over $500,000 in the United States, Canada and online. Later in the Complaint, it claims that Lorenzo Fertitta told Overeem that the $1 million signing bonus was Overeem’s and that KOI/GG was “ripping him off.”
- The terms of the UFC contract also includes a $1 million “signing bonus” paid over the first 3 fights of Overeem’s contract. Overeem’s contract guarantees the first 3 fights and could “potentially” cover 8 fights. Here, it appears that the UFC has the option to pick up the additional 5 fights.
- In addition to the UFC-Zuffa contract, the Complaint indicates that there is a separate Merchandise Rights Agreement. No known value was stated although its believed to be in excess of $100,000.
- Overeem made $50,000 from sponsorships from his June 2011 fight with Fabricio Werdum. Of which, KOI/GG demand 30% or $11,000. In addition, Overeem did not pay KOI/GG its cut of Overeem’s fight purse for the Strikeforce fight. Basically, Overeem was paid for his June Strikeforce fight and withheld payment to KOI/GG because he believed that his then managers owed him money.
- Article 10 of the contract includes a monetary penalty for violation of the contract. A $10,000 penalty plus a $5,000 per day penalty for each day the contract is in violation. It also states that the fine “can’t be lowered by any legal authority.”
Here is a further explanation of the Nevada lawsuit from F4WOnline (subscription required):
Knock Out Investments claimed that due to Overeem’s existing five-year contract with them that was signed in 2007, they are entitled to 30%. 30% of [Overeem’s] pay between all the money he got for UFC 141 is $684,000, so they are fighting for a huge chunk of change. They also alleged Overeem never paid them their 30% from the 6/18 fight with Fabricio Werdum. Overeem had already, in November, filed suit against Knock Out Investments, claiming they owed him $151,000 prior to the Werdum fight based on fights he already had, and asked for a court order stating that due to that, his contract should be null and void. Prior to the Werdum fight, almost all of Overeem’s fight money, whether it was from Japan or previously with Strikeforce, was sent to Knock Out Investments and then after they got paid and took their cut, they paid their fighters. Zuffa, after purchasing Strikeforce, refused to continue that practice, stating that they were going to pay fighters and not management teams. At one point Zuffa even fired all of the Golden Glory fighters, including Overeem, because Golden Glory made the demand that they wanted the money to be paid to them. After firing a number of fighters, Overeem included, Golden Glory relented and agreed to let Zuffa pay the fighters. By that time Overeem had been fired and removed from the Strikeforce tournament, and at the time nobody knew the future of Strikeforce and Overeem would have been far more valuable on the UFC side.
“The reality is that a fighter is paid within 24 hours of the bout,” wrote Knock Out Investments attorney Roderick Lindblom. “Given past failure to pay management and training fees, there is serious concern on my client’s part that Mr. Overeem will simply walkaway with the money.”
An explanation of what occurred regarding the failure to recoup UFC 141’s payment is here. Essentially, a surety bond needed for garnishment after the order was issued was never secured.
Payout Perspective:
One has to wonder why Overeem agreed to some of the terms of the contract and whether he had his own legal counsel look over the contract. Notably, Overeem was granted a $1 million signing bonuses (spread over the course of 3 UFC fights) after he was released from Strikeforce. What interests most people with the terms of Overeem’s Zuffa-UFC contract is the PPV points he received for UFC 141. Its rare that the general public get to see the portion fighters receive for PPVs. One might assume that Brock Lesnar received more of a portion of the PPV revenue due to his status with the company.
Overeem paid in full for UFC 141
January 4, 2012
MMA Junkie reports that Alistair Overeem’s fight purse for his win at UFC 141 was paid to Overeem although initial reports had Golden Glory’s lawyers obtaining an order to garnish his wages.
The problem was that a bond required to execute the garnishment order was not deposited. Thus, the order to withhold a portion of Overeem’s pay was not binding.
Keith Kizer confirmed that the Nevada State Athletic Commission did not withhold the pay.
Via MMA Junkie:
A UFC official confirmed that a $200,000 bond required to execute the order was not deposited prior to the event.
The order requested a check totaling $241,285.49 be cut from UFC parent company Zuffa to Golden Glory’s corporate parent, Knockout Investments. The money included Overeem’s show and win purses, performance bonuses and proceeds from the event’s pay-per-view broadcast.
The day before the court order, Golden Glory filed suit alleging heavyweight did not pay a 30 percent commission owed to the team for a fight in June against Fabricio Werdum. In his suit, Overeem claimed the team owed him $151,000 in back pay and asked a judge to determine whether his contract is enforceable.
Knockout Investiments (KOI) and Golden Glory representatives indicated that they would continue with this strategy:
“Seeking the initial writ was merely the first step in a long-term litigation strategy that KOI and Golden Glory will prosecute in Nevada. The writ of attachment remedy remains fully available to my clients and will be sought as to Mr. Overeem’s future pay-per-view payout, which we expect will be more lucrative than his initial fight purse.”
Overeem earns a portion of all pay-per-view revenue, including $2 per PPV purchase “for all revenues received by UFC-Zuffa for telecast of the Lesnar fight in the U.S., Canada or over the Internet in excess of $500,000,” according to an Overeem contract made public by the legal proceedings.
“Rest assured, now that we have had the opportunity to troubleshoot complex international hurdles – and without a long holiday weekend to contend with – future writs of attachment will be utilized to ensure that Mr. Overeem makes good on the commissions owed to my clients and his Golden Glory training team, who helped him achieve the success he now enjoys,” Lindblom stated.
Payout Perspective:
The writ of attachment and request to garnish Overeem’s wages is an indication of how heated this lawsuit will get. Of course, the failure to follow procedure in garnishment is a glaring error. It was inferred from by KOI and GG reps that there was trouble with legal procedure due to the Christmas and New Year’s holiday as well as the “international hurdles.” We are not Nevada attorneys so we are not privy to the type of proceeding that was initiated and the type of order issued by the judge. But as an example, in my jurisdiction a bond is needed in these type of proceedings in the event that the attachment is wrongful. The reason being is that in an attachment hearing (to garnish someone’s wages) there only need be a showing that the claims have “probable validity” and have “probable cause.” Thus, the threshhold to prove something could still be in doubt. In Nevada, KOI and GG had to put up a surety bond of $200,000 to garnish a portion of Overeem’s $385K fight purse. For whatever reason, it did not do so.
The other interesting fact out of this story is the amount of money Overeem makes. MMAPayout is in the process of trying to obtain a copy of the contract and will report on our findings once we receive it.
11 for 11: No. 5 Culinary workers versus Zuffa
December 26, 2011
The Culinary Workers Union Local 226 became one of the biggest opponents of the UFC in 2011. It has helped opposed the legalization of professional MMA in New York state and has requested that the Federal Trade Commission investigate Zuffa for possible antitrust investigations.
In late August, the union sent a letter to the FTC requesting that it look into Zuffa’s acquisition of several of its competitors:
The letter goes on to point out that since 2001, Zuffa has acquired four of its key rivals (Pride Fighting Championship, World Extreme Cagefighting, the World Fighting Alliance, and most recently Strikeforce earlier this year. They also state that through some independent research performed in 2008, Zuffa controls 80-90% of the mixed martial arts market.
Specifically, the letter points out that Zuffa has preserved and strengthened its dominance in the market through their unwillingness to co-promote events as well as anti-competitive contractual restraints placed on their contracted fighters.
As most know, the union’s beef with Zuffa stems from the Fertittas ownership of its Stations Casino. A failed attempt to unionize the workers at the Stations Casinos is the reason why there is staunch opposition to the legalization of MMA in New York. Lobbying efforts by the Culinary Workers have stifled efforts for passage of legislation allowing the UFC in New York.
USA Today reported in October that the union contacted Anheuser-Busch to boycott the UFC for “a history of tolerating homophobic conduct.” In addition, the Union has done the following to get its message across:
• Backing anti-MMA legislators in New York.
• Calling on the Federal Trade Commission to investigate UFC parent company Zuffa, which the union accuses of using monopolistic tactics to thwart competition from other promoters of mixed martial arts.
• Launching a website designed to highlight White’s use of vulgar language.
It will be interesting to see how much more the Culinary Workers will go to lobby against the UFC. The recent Zuffa lawsuit is a way around the union and lobbyists opposing MMA. So far, nothing is being reported about an FTC investigation of Zuffa and we will see if 2012 gives us any findings from the FTC about Zuffa and the claimed anti-competitive practices.
11 for 11: No. 10 Zuffa sues New York
December 21, 2011
For years, the UFC tried to lobby and legislate and now its time to litigate. Prior to its lawsuit, it presented an economic impact study, educated the concerned that MMA is safe and brought its top fighters to the state to rally supporters. Facing a roadblock, Zuffa decided to file suit against the state Attorney General and District Attorney of New York.
The crux of the lawsuit argues that MMA should receive First Amendment protection and that the New York MMA Professional Ban on the sport is unconstitutional. At this point, the defendants have until January to file its Answer to the Complaint.
Only speculation, but its likely that New York will attempt to dismiss Zuffa’s lawsuit. If this occurs, what would Zuffa do next? We should see in 2012.
