Alliance MMA posts positive 2nd Quarter financial results

August 15, 2017

Alliance MMA reported its second quarter revenue and things about to be looking up.  The publicly traded company reported 48% growth in revenue on Monday.

According to a company release announcing its results it posted a 48% increase in revenue over the previous quarter, “based in part on the increment contribution of our most recent acquisitions,” per Paul Danner, Alliance MMA’s CEO.  Danner noted that the revenue showed positive momentum toward achieving “a cash-flow positive position in the not too distant future.”

Alliance MMA has 11 regional promotions in its stable and is building toward a goal of having regional promotions in the top 20 domestic media markets.  It also aims to have at least 125 professional MMA events per year.

According to CFO John Price, the collective contribution of its infrastructure of its electronic ticket platform CageTix.com, fighter management firm SuckerPunch Entertainment and regional MMA events resulted in a 43% operating margin and a 14% increase over the first quarter of the year.  Price also noted that it had a “capital raise of approximately $1,500,000” to support its ongoing acquisition program.

Payout Perspective:

The results are good news for a company that has experienced a dip in its stock and securities lawsuits due to an alleged misrepresentation in reporting.  Notably, one of those lawsuits was voluntarily dismissed according to its 10-Q and the company states that the other lacks merit.  However, it appears that the plaintiffs in these lawsuits are determining who would become the lead plaintiff in a possible class action.  Despite glowing results, the stock on the NASDAQ is up slightly as of this writing Tuesday morning at $1.40.  It has a market cap of slightly over 10 million.

Report indicates former UFC fighter indicted for match-fixing

August 14, 2017

According to a Korean news outlet, former UFC lightweight Tae Hyun Bang has been indicted accused of match-fixing.  Korean prosecutors have filed charges against the MMA fighter stemming from a fight in 2016 in South Korea.

Bang is accused of taking a bribe of almost $88,000 if he lost his fight to Leo Kuntz at UFC Fight Night 79 in November 2015.  However, according to a swing in betting lines, UFC officials warned Bang prior to the fight of match-fixing.  Bang won via split decision and according to the report, he changed his mind in fixing the fight.  Bang was the favorite at the time of the fight but a last minute swing in odds made him into a massive underdog.

According to MMA Junkie, Bang received death threats from organized crime figures that had bet on him losing the fight to Kuntz.  Junkie also notes that Bang denied knowledge of match-fixing.

This is not the first time in recent memory that the UFC has been the subject to possible match fixing.  In Sydney, Australia at UFC 193 in November 2015, there were concerns of corruption on the card.  Recall, this was the Holly Holm-Ronda Rousey main event.  There were concerns by gambling authorities of “irregularities.”

Payout Perspective:

There is no timeline on Bang’s legal issues in South Korea.  However, gambling and the UFC are tied together considering the use of betting lines when discussing and previewing fights.  It’s likely fixing fights will not occur on main events where everyone is looking at the betting lines.  Rather, it would happen with smaller, less scrutinized bouts where most are not eyeing the betting.  Key to this is the fact that the fighters are likely not making money and a lucrative bribe would be considered more than a fighter making more than the minimum 10K and 10K.  It will be interesting to see if the UFC attempts to monitor match-fixing more in the future.

Zuffa to hand over 6 documents previously privileged in Antitrust lawsuit

August 9, 2017

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

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

Order re In Camera Review by JASONCRUZ206 on Scribd

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

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

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

Payout Perspective:

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

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

August 7, 2017

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

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

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

Opposition to Subpoena Filed by Hume by JASONCRUZ206 on Scribd

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

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

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

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

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

Payout Perspective:

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

Zinkin Entertainment ordered to produce more documents to Plaintiffs in Zuffa Antitrust Lawsuit

August 3, 2017

Last week a Federal Court in Fresno, California has ordered MMA Fighter Management firm to hand over more documents in the UFC Antitrust Lawsuit.  The fighters suing the UFC had requested documents from the company related to Zinkin’s clients within the requisite period of time related to clients’ “image and likeness.”

Plaintiffs have offered to provide a third party discovery vendor to Zinkin to collect this information at Plaintiffs’ expense per Court Order.  The MMA Management firm which currently represents Luke Rockhold and Daniel Cormier was served a subpoena by Plaintiffs in 2015.

Zinkin Entertaintment – Order to Produce Docs by JASONCRUZ206 on Scribd

Payout Perspective:

Zinkin had produced documents to the Plaintiffs but based on the motion Plaintiffs believed the documents to be insufficient.  The documents are being produced as “Attorney Eyes Only” which means that only the Plaintiffs’ Attorneys, and not their clients – the fighters, will be able to have knowledge of these documents.  This designation usually occurs where sensitive and confidential information is provided.  It provides some security that the discovery documents are not disclosed to a broad group of people.  It is a condition that Zinkin’s attorneys likely wanted if they had to produce documents.

Parties stipulate to legal briefing schedule contesting Matt Hume deposition

July 31, 2017

The Motion to Compel the deposition of Matt Hume and have him produce documents has been given dates for legal briefing.  But, Plaintiffs seeking the deposition will also face a Motion to Quash from Hume’s attorneys and OneFC.

The parties in the discovery dispute agreed to a briefing schedule.  Originally, the Motion to Compel was to be submitted on July 28th.  However, Hume’s attorneys also filed a Motion to Quash the Deposition as they believe that the deposition notice and subpoena are not valid despite the Nevada court ruling.  With a looming discovery deadline and the parties having dueling motions, they came together to stipulate to when the oppositions and replies would take place.

The briefs will be due July 31st with the reply briefs due August 4th.  It does not appear that there will be oral argument although its not clear.

Plaintiffs are seeking over $21,000 (and perhaps more) in legal fees in addition to commanding Hume sit for a deposition and produce documents.  Hume’s attorneys are seeking to invalidate the subpoena and request for documents.  Hume’s attorneys had offered him for deposition on a limited number of documents.  But, Plaintiffs did not agree to the limited scope.

Order on Stipulation between Plaintiffs and Matt Hume by JASONCRUZ206 on Scribd

Payout Perspective:

One would assume that the Court will have a decision shortly after submission of the briefs since the discovery deadline for fact discovery was/is today, July 31st.  Expect an order which will allow the deposition with some disclaimers.  MMA Payout will keep you updated.

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

July 25, 2017

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

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

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

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

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

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

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

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

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

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

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

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

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

Motion to Compel Depo of Matt Hume by JASONCRUZ206 on Scribd

Payout Perspective:

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

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

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

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

July 19, 2017

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

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

Plaintiffs Opposition to MTD FAC by JASONCRUZ206 on Scribd

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

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

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

 

Payout Perspective:

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

 

 

Hunt’s attorneys oppose Lesnar motion to stay discovery

July 18, 2017

Mark Hunt’s legal counsel has filed an opposition for Motion to Stay Discovery against Defendant Brock Lesnar.

Lesnar’s counsel has requested a stay of discovery pending their Motion to Dismiss of Hunt’s First Amended Complaint.  The UFC and Dana White have filed a similar Motion to Stay Discovery which would prohibit the exchange of information between parties until the Court rules on the Motions to Dismiss Hunt’s First Amended Complaint.

Hunt’s attorneys argue that they should be allowed to conduct non-RICO discovery which centers around UFC 200 as a compromise to Lesnar.  They point out that 2 of the 7 claims against Lesnar relate to RICO and the other claims do not.  Hence, Hunt should be given the opportunity to investigate his case against Lesnar.  They also claim that Lesnar’s attorneys have not complied with the rule in which the parties are to “meet and confer” in trying to resolve discovery disputes.

Of course, Lesnar opposes this due to the time and expense involved in conducting discovery.  According to Hunt’s attorney, they declined the opportunity to provide initial disclosures and limited fact-discovery of non-RICO claims.  Instead, they informed Hunt that they would file a motion to stay discovery.

Payout Perspective:

From Lesnar’s perspective, it makes sense to avoid the time and expense of providing discovery.  Since Lesnar is likely paying for the defense of the lawsuit himself, it might be an unnecessary cost if the Court decides to dismiss the case.  Yet, Hunt’s attorneys want to push their client’s case since they believe that there is a case and do not want to waste time.  They also appear, at least from a high level, accommodating in stating that they would hold off on RICO-related discovery.  Courts try not to get involved in discovery fights but it seems as though Lesnar’s attorneys want a ruling.  This could all be moot if the Court rules on the Defendants’ Motion to Dismiss Hunt’s First Amended Complaint.

Zuffa responds to Plaintiffs’ Emergency Motion to Compel Documents in Antitrust Lawsuit

July 16, 2017

Zuffa has filed its response for Plaintiffs Emergency Motion to Compel Documents as the fact discovery nears an end.  The Defendants argue in part that the Plaintiffs’ motion is moot as Zuffa has provided the Plaintiffs with the documents it requests.

In its opposition brief, Zuffa argues that it has worked with Plaintiffs in providing discovery even accommodating some of Plaintiffs requests.  It also states that its privilege log complies with the appropriate rules.

Zuffa argued that due to the fact that its senior executives in its legal department communicate with outside counsel and internal clients there should be no surprise that the company withheld and logged many documents on the basis of attorney-client privilege and attorney work product.  Zuffa maintains it has correctly identified its privilege determinations on its log and has not waived privileged as claimed by Plaintiffs.  Moreover, Zuffa argues that the case cited by Plaintiffs relying on this waiver of privilege due to a purported insufficient privilege log does not support their contention.

Zuffa contends that it provided Plaintiffs with its log in April 2017, two months after “substantially” completing production to Plaintiffs’ Second Request for Production in February 2017.  It notes that upon a meet and confer with Plaintiffs it revised its log on a little over two weeks after producing it.  Plaintiffs focused on “documents pertaining to acquisitions and contract negotiations with fighters.”

Overall, the response brief takes on the tone that it has worked with Plaintiffs with producing documents to the extent they are not protected by the attorney-client privilege or attorney work-product.  Also, they have complied with the rules of producing a privilege log and they have not waived their right.

Zuffa's Response to Emergency Motion by JASONCRUZ206 on Scribd

Payout Perspective:

In motions to compel documents, the party that is being accused of withholding documents on not playing by the rules usually paints themselves as the reasonable party complying with requests and working with the other side.  Here, Zuffa argues that it has been a willing participant in the discovery process and has taken initiative in reviewing documents to determine whether to send to Plaintiffs.  But it has a right to withhold documents based on privilege.  As a starting point, it argues that the issue of compelling documents is moot because “Zuffa has not completed the process that the parties agreed would fully address Plaintiffs’ concerns.”  We will see if Plaintiffs agree.  Usually, in discovery fights, the party seeking documents, gets some but not all of what they seek.  The parties appear to be continuing to work on the issue but with a pending deadline you may look for Plaintiffs to press this issue.  MMA Payout will keep you posted.

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