UFC Antitrust Expert Hearings today – live updates

August 26, 2019

MMA Payout is in Vegas to cover the first two days of the UFC Antitrust expert hearings with the Show Money cast.  Follow along as we give updates from the courtroom.

MMA Payout:  @MMAPayout

Jason Cruz:  @dilletaunt

John Nash:  @heynotheface

Paul Gift:  @MMAAnalytics

The first day of live testimony will include the economic experts for both sides: Dr. Hal Singer for plaintiffs and Dr. Robert Toepel for Zuffa.  But, before that, Top Rank has been granted permission to appear via phone at 9:30am PT.

 

More unredacted document notes shows fighter discontent with…finding fights

August 9, 2019

In our third installment of looking into the newly unredacted expert report of Hal Singer, we take a look at issues with getting fights in the UFC.

Fighter pay has been the topic of much discussion when it comes to the UFC.  While it is one of the topics driving interest in this lawsuit, it is not the linchpin to the plaintiffs’ case.  But an impactful part of it.

Yet, the fight to actually fight in the UFC is an ongoing problem.  Anecdotally, UFC Middleweight Julian Marquez recently tweeted out that he is awaiting his next fight.  Marquez has only fought twice in the UFC with his last fight happening on July 6, 2008.  The middleweight stated that he doesn’t know when he’ll fight next.

Marquez’s plight is not the only one.

One of the documents cited by Dr. Singer in his expert report includes Angela Hill’s text to Sean Shelby asking if she would be ‘shelved again for 6 months?’  She told Shelby that she is ‘strapped for cash.’

Despite fighter frustration on not knowing when their next UFC appearance and pay will come from, Dr. Singer’s report reflects a roster filled with athletes ready for action.

Kyle Kingsbury, one of the plaintiffs in this lawsuit, noted at his deposition that Dana White controlled their careers and could either give you a tough opponent or put you on the undercard so you could make far less.

Former UFC Heavyweight Josh Barnett’s agent expressed frustration with the situation. Leland Labarre, Barnett’s rep, wrote to Sean Shelby and Michael Mersch, “As you know, a fight every 4 months or so would be typical for MMA fighters, whose career primes are generally short. Conversely, a 4-fight deal with a 5-year exclusive term is unheard of. The interpretation you have provide is simply unreasonable.”

Even if a fighter retired, Zuffa would not release them from their contract if there were fights remaining. A footnote reveals texts concerning Mark Bocek wishing to be released from his contract after he announced his retirement. Zuffa refused due to the potential of Bocek going to another organization. Bocek was told that he would not be released with a reply by Lorenzo Fertitta stating, “Every fighter from Chuck Liddell, Mark Coleman, etc that retired in the middle of their contract are still under contract. You can do anything to make money you just can’t fight anywhere else.”

 The footnote also discusses how it suspended Rampage Jackson’s contract when he informed the UFC that he was going to retire. Even if Zuffa did not receive a request from the fighter, it would threaten the promoter. That is what happened in the case of Melvin Guillard when he attempted to fight on a Combat Fighting Championship event. Even if the combat sport was not MMA, Zuffa would step in. This is what happened when Zuffa denied one of its athletes whether they could participate in a judo match.

Dr. Singer cites documents which supports the position that athletes were not able to obtain fights and this was due in part to a full roster. In August, 2011, Joe Silva stated that there were “too many guys.” Dana White stated in February 2013, “We have 470-something guys under contract…We have over 100 guys too many.”

Dr. Singer identifies Zuffa’s exclusivity provisions in its contract as conduct which prevented athletes to go to other promoters. “Zuffa was consistently able to keep Fighters bound by the exclusionary provisions in its contracts—and thus unavailable to other MMA promoters—while simultaneously promoting an insufficient number of bouts given the unumber of Fighters on its roster.” He went on to argue in his report that this ‘Challenged Conduct’ of limiting the options for fighters prevented them from earning pay as fighters. “In the absence of the Challenged Conduct, Zuffa’s ability to restrict Fighter career paths would have been curtailed, because these Fighters would have had more viable paths for pursuing their careers with other MMA promoters.”

The fighter discontent on the amount of activity coupled with Zuffa’s exclusive contracts and policy of not allowing athletes to fight elsewhere is an issue that Dr. Singer has highlighted as ‘Challenged Conduct’ which attributes to the anti-competitive scheme which is a part of the lawsuit.  How much will this information persuade the Court will be interesting to see in a couple weeks.

Show Money 29 talks unredacted expert report, Endeavor IPO, Zuffa Boxing and more

August 7, 2019

It’s another edition of Show Money with Paul Gift and John Nash.  As the expert report hearings are looming later this month, we talk about the newly revealed information in Hal Singer’s expert report, Endeavor’s IPO the inevitable Zuffa Boxing and more.

You can listen here.

Unredacted passages and footnotes reveal more about Zuffa’s business in plaintiffs’ expert report

July 31, 2019

MMA Payout had the opportunity to review the proposed amended redactions from Zuffa to Plaintiffs’ expert, Hal Singer in the UFC Antitrust lawsuit. The newly revealed sections that were previously blocked from public view, gain some insight into the factual underpinnings of the promotion.  This is the first of a couple posts related to Dr. Singer’s expert report.

Late last month Zuffa, filed a revised version of redactions it sought for Dr. Singer’s expert report. The newly unveiled versions of the report provide some innocuous passages as well as some interesting tidbits which the promotion originally wanted redacted from public view.

The Last Hope – Strikeforce

One of the more interesting unredacted sections include deposition testimony from Bellator head Scott Coker.  While with Strikeforce, Coker indicated that the promotion was the last possible chance of competition with the UFC.  The line might remind you of this.

The acquisition of Strikeforce occurred after Affliction’s demise.  Singer’s expert report reflects the notion that Zuffa tried to exert its market force over the competition.  Coker stated at his deposition:  “If you can’t battle these guys [UFC] it’s over for the MMA industry.  UFC will be the only one left.  We’re the last chance.  Otherwise, fighters’ purses will go down if UFC is the only one – is the only one period.  We’re Luke Skywalker and UFC is Darth Vader and the Death Star.”

Interesting enough, as many know, after Strikeforce was engulfed by the UFC, Coker was  a part of the company until he was able to go to Bellator.  Coker sent this tweet after Cris Cyborg, who is heading into free agency, won her fight this past Saturday at UFC 240.

Why purchase Pride?

The newly unredacted information in the report includes emails from Zuffa’s outside counsel addressing the company’s acquisition of Pride.  In a rather ominous email that may be one to cover the attorney, it states, “the strategic/preemptive nature of this acquisition (i.e., to stop others from buying it) and you having seriously contemplated acquiring them only to shut down their business and utilize their Fighters in the UFC.”  Another unredacted footnote from a corporate representative from Deutsche Bank stated that ‘based on conversations with Zuffa and materials provided by Zuffa, Deutsche Bank’s interpretation was that “Each acquisition [Pride, WEC and WFA] had unique offensive and defensive purposes at the time.  However both the WFA and Pride transactions resulted in Zuffa’s roster of elite fighters expanding significantly.”

It’s worth noting that while the Deutsche Bank comment may buttress the argument of a predatory Zuffa looking to buy up the rest of the MMA promotions in the space, it is speculation and essentially hearsay – a statement made without foundation to assert the truth of the matter.  Deutsche made the conclusions based on conversations and documents not known in the passage so its hard to say whether the documents would be reliable.  Yet, you may infer that the position that Deutsche Bank was in as a lender to Zuffa would command truth and honesty on the part of the organization.

UFC pays DeathClutch

Brock Lesnar’s pay was revealed in a footnote that was unredacted.  When he fought as champion, Lesnar’s company, Deathclutch, was paid $812,500 within 30 days of a fight.  He was then paid another $812,500 within 60 days following the completion of the bout for a total of $1.625 million minus deductions and withholdings. Lesnar was paid a sum of $750,000 for fights where he was not UFC Champion. Similarly, he was paid $375,000 within the first 30 days and another $375,000 within 60 days.

On the issue of fighter pay within the UFC, Singer’s report is a Letter of Agreement from Lyoto Machida that gave him a $100,000 bonus for a fight stoppage.  Presumably this would be in addition to any Performance or Fight of the Night bonus.

The Letter of Agreements according to the report were given to a “small number of top-tier Fighters.”  As explained by Dr. Singer, they were “generally lump-sum payments to Fighters following a Live MMA Event, with the amount often contingent on the outcome of the fight.   Thus, they would not appear in commission reports on purses.  Some were based on a specific outcome and may “also incorporate sponsorship or endorsement agreements or both.”  Dr. Singer explained that the use of these agreements would keep the salaries of Fighters unknown to the public.

Evidence of Counterprogramming to hurt rivals

Another swath of footnotes revealed UFC plans to counterprogram rivals.  The UFC began to air its programming opposite other promotion’s big events starting in 2006.  The UFC first aired a taped compilation of fights opposite a WFA PPV.  In 2008, it countered Affliction’s PPV with a ‘re-run of a prior pay-per-view event on free television.  White openly admitted to throwing together a fighter card  in five weeks in an attempt to choke out another promotion.

 

New UFC Antitrust Lawsuit filings include Plaintiffs’ Objection to Use of Zuffa “Summary of Exhibits”

June 15, 2019

The parties in the UFC Antitrust Lawsuit have exchanged objections to exhibits previously submitted to each side.  The objections are part of the trial schedule and are lodged with the court to argue prior to the use at August’s hearing with the experts.

For context on the request, Plaintiffs included the email to Zuffa attorneys in which they inquire about the exhibits that they seek to now exclude.  Plaintiffs claim that the exhibits are “creating new metrics for analyzing the data (e.g., “Fighter Share Deviations,” Foreclosure Share Deviations,” etc.) or breaking down data in ways that neither Zuffa nor its experts has/have ever before done in this case.”

Exhibit to Plaintiffs’ … by on Scribd

Plaintiffs have objected to exhibits submitted by Zuffa which are “Summary of Exhibits.”  The argument relates to expert materials which they claim are “outside the scope of the record created by Zuffa’s economists during expert discovery.”  As explained by Plaintiffs, they are “undisclosed consultants” with new analyses and cannot form the basis of Zuffa’s expert presentation.

Plaintiffs argue that the exhibits that Zuffa would like to use include new information that they did not have possession of for their experts to render an analysis and opinion.  This would be untimely and not according to the evidentiary rules per Plaintiffs.  The reasoning behind this rule is to give each side a fair opportunity to evaluate the opposing expert’s position and prepare accordingly.  Plaintiffs contend that the information should have been provided in a “timely written report” but they did not provide the report to them per the rules of the Court. Plaintiff points to the expert discovery deadline on January 24, 2018.

Payout Perspective:

Zuffa also objected to certain exhibits provided by Plaintiffs for use and we will look at that in another post.  In this submission by Plaintiffs, they claim that Zuffa has attempted to submit new information to utilize at the hearing of the experts in late August.  Plaintiffs object because of the overarching belief that it is an unfair surprise in that they do not have an opportunity to rebut the new information.  Plaintiffs point to the expert deadline to submit reports as a reason why they are seeking to have these exhibits excluded.  If excluded by the Court, this could cause significant impact to Plaintiffs case.  Of course, its anticipated that Zuffa will argue that the information is not new expert testimony and just a summary of findings already provided to Plaintiffs.

Endeavor files paperwork for IPO

May 23, 2019

Endeavor, the company that currently owns the UFC, has filed paperwork with the Securities and Exchange Commission to become a publicly traded company on the New York Stock Exchange.

Endeavor states that it plans to raise $100 million in the offering which is a standard figure for companies until it provides an actual figure at a later date.  Proceeds from the company receives from this offering will go towards working capital and general corporate purposes.

According to the S-1 filed today, it reported revenue of $3.6 billion.  The company posted a net income of $231.3 million in the year ended December 31, 2018.

Endeavor is the combination of Ari Emmanuel’s company with Patrick Whitesell’s IMG sports and modeling agency in 2013.

According to the filing, Goldman Sachs will be the IPO’s lead banker.  KKR Capital Markets, J.P. Morgan, Morgan Stanley and Deutsche Bank are also underwriters on the IPO.

Zuffa is included in the voluminous S-1 statement.  It includes information on its finances, debt as well as information on the UFC antitrust lawsuit as a potential liability.

MMA Payout will take a look and provide a further in-depth analysis of the S-1.  But, as for now, it looks like the UFC may be a part of a publicly-traded company in the near future.  How does it affect its business?  We will see.

Proposed dates for further UFC Antitrust hearings won’t happen until August or September

January 21, 2019

If you were hoping for a resolution to the UFC Antitrust Lawsuit in 2019, we have some bad news for you.  It’s unlikely to happen.

A letter filed by the plaintiffs on Friday indicates that both sides won’t make an appearance in the courtroom until this fall.

Letter Re Scheduling by on Scribd

In December, Zuffa filed its Motion for Summary Judgment but prior to any decision, the Judge wanted to understand more of the information offered by the experts, specificially plaintiffs’ expert, Hal Singer.  The parties were to meet and confer on available dates.

As one might expect, lawyer calendars (as well as the Court’s) are packed.  Thus, the first available scheduling option proposed is for August 26-30, 2019 with Dr. Singer and UFC’s expert, Dr. Topel.  In the alternative, they proposed an evidentiary hearing which would start September 9th or 16th.

Payout Perspective:

Clearly, the Court moves at a glacial (without global warming) pace.  Clearing schedules for attorneys, the Court and the experts is quite hard and if you thought this was going to end this year, you (and I) were wrong.  Even with these hearings, there are the prospects of renewed motion for summary judgments and the class certification hearing (to determine if the case deserves class action status).  MMA Payout will keep you posted.

MMA Payout Year in Review: No. 10 – The UFC Antitrust Lawsuit rolls on

December 26, 2018

MMA Payout is doing its annual review of top business stories for the year.  The first story we take a look at is the ongoing Antitrust lawsuit which had several key developments this year.

First, Judge Boulware denied Zuffa’s Motion for Summary Judgment on Friday, December 14th.  It did not decide on class certification on the day as the Court made it clear it wanted to hear from the experts in the case for him to determine if there was a viable case on the part of the Plaintiffs.

Earlier this year, experts for Plaintiffs and Zuffa issued the experts reports in this case.  The reports assessed things such as the liability of Zuffa and potential damages.  Zuffa, of course, shot down these arguments asserted by Plaintiffs’ experts.  They, then filed a motion to exclude Plaintiffs’ expert citing (in general) that the opinions did not follow traditional scientific opinions.  A bulk of the reports were sealed as the experts reviewed confidential information.

Plaintiffs also filed for Class Certification, a requisite of Class Action status.  Zuffa opposed the motion.  At this time, this motion is on hold pending Judge Boulware hearing more on the subject from the experts.

As discussed about on Show Money in December, it appears that the lawsuit will come down to Plaintiffs’ expert’s assertion that the way to determine antitrust injury is based on “wage share” versus “wage level.” Wage share, adopted by Plaintiffs’ is looking at the wages of athletes in comparison with the revenues of the company.  Wage level, adopted by Zuffa, is looking at the wages over a period of time and not in comparison with company revenues.  Clearly, a wage share outlook would favor Plaintiffs if they are asserting that their salaries have been artificially depressed due to anticompetitive measures by Zuffa.  Wage level would favor Zuffa since its clear that salaries have increased over time.

Payout Perspective:

Do not look for the resolution of this case in 2019.  Even if Judge Boulware were to dismiss this case, Plaintiffs would seek to appeal the decision.  Zuffa would do the same if there would be an unfavorable ruling for its case.  The only way this case would end in 2019 is if the parties decided to settle the issue short of trial.  While this would be out of the question, if the Judge were to impose his will on the parties to settle, I would foresee this happening.

Show Money Episode 25: The Vegas Field Trip and Uncle Dana reveals some numbers

December 21, 2018

I joined John Nash and Paul Gift to talk about their coverage of the UFC Antitrust Hearing on December 14th and discuss the Kevin Iole piece in which Dana White revealed salaries and PPV buys.  Enjoy.

You can find the audio here.

 

One last motion before the Class Cert-Summary Judgment hearing in the UFC Antitrust Lawsuit

December 13, 2018

In light of Friday’s big hearing in the Zuffa Antitrust lawsuit in Federal court in Nevada, the parties have filed a joint motion to stipulate how they will deal with references to trade secret or confidential information.

The joint motion was filed on Thursday and is agreed to by the parties.  It’s unlikely that the Court will disturb the agreement.  The parties believed the agreement was necessary as the Protective Order which dictates how to deal with confidential information does not address hearings.

Parties for the Plaintiffs that have filed an Antitrust lawsuit against Zuffa will argue for Class Action status while Zuffa has a Motion for Summary Judgment which may dismiss the case in full on Friday in Federal District Court in Nevada.

It does appear that Plaintiffs reluctantly joined in on the motion as the overarching issue deals with the mention of documents Zuffa believes are confidential and/or trade secret.  A motion to seal is pending before the court.

Joint Motion by on Scribd

 

Payout Perspective:

Both parties had a chance to provide statements to the Court in this Joint Motion.  The Plaintiffs cited Kevin Iole’s Yahoo story from Wednesday in which Dana White gave him the payouts of Chuck Liddell since 2011.  This would seem to run contrary to the claim that Zuffa salaries should be confidential.

The Court could rule on the Motion to Seal documents that were fought over during the pleading process but it has yet to do so.  Tomorrow will be a big day because not since the Motion to Dismiss will this case hinge upon being dismissed.

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