March 5, 2015
Newsday reports the details filed within the complaint by Bellator MMA against Quinton “Rampage” Jackson. The complaint filed in New Jersey provides some interesting financial tidbits on Jackson’s contract.
A hearing will be held on April 2nd to determine whether Jackson will be able to fight in the UFC 186 in April.
Jackson received a $200,000 bonus for Bellator’s May 2014 PPV despite not meeting the PPV threshold bonuses indicated in his contract.
Jackson’s contract also included a 2013 Tesla Sport worth $129,603, a $100,000 signing bonuses and guaranteed fight purses between $200,000 and $300,000 for non-PPV fights. He would receive between $200,000 and $450,000 for a PPV fight. Jackson also received a $50,000 guarantee if the event did not receive a certain revenue from sponsors. The contract was negotiated between Jackson’s representatives and then-Bellator CEO Bjorn Rebney.
Additional incentives included:
-30% of Bellator’s net gate receipts over $400,000 at events where he fought
-$35,000 per episode for the SpikeTV Reality Series “Rampage 4 Real”
-A screenwriter for a feature film project and access to Paramount Pictures to develop film projects
-A red carpet appearance at the 2013 MTV Video Music Awards
-$4 for every Bellator 120 PPV buy over 190,000
-Bellator spent $250,000 to advertise Bellator 120 during the NBA Playoffs
-Bellator spent $200,000 to secure rights to a Rolling Stones song for an advertisement featuring Rampage
Bellator filed a lawsuit and injunction this past Monday as a result of Jackson’s purported breach of contract.
Some of the demands seem unattainable and perhaps that’s the reason why Bellator agreed to them (i.e. $4 PPV buys over 190K, 30% of Bellator’s net gate over $400K). Other inclusions in the contract seem very good for Jackson (i.e., $35K per ep for that show, $200K bonus for Bellator 120). Jackson’s management team cited Jackson’s right to breach based on the contract being an “entertainment” contract. Looking at the details, the overall pay guarantees and sweeteners (red carpet appearance and car) is favorable for Jackson.
March 2, 2015
Bellator MMA has filed a lawsuit today in New Jersey against Quentin “Rampage” Jackson for breach of contract. The organization is also seeking an injunction to prevent Jackson from appearing in the UFC.
Jackson is scheduled to fight at UFC 186 against Fabio Maldonado on April 24th. It appears that today’s lawsuit and request for an injunction will seek to preclude Jackson from appearing on that card unless something can be worked out between Bellator, Jackson and likely the UFC.
Bellator issued the following release:
Today, Bellator MMA was compelled to go to court to stop Quinton “Rampage” Jackson from fighting in an April 25th bout promoted by Bellator’s competitor, Ultimate Fighting Championship (UFC). Jackson, who has completed only three fights of his exclusive six-fight contract with Bellator, is barred by contract from fighting for any promoter other than Bellator. Our lawsuit for an injunction and related relief – filed in the Chancery Division of the Superior Court in Burlington County, New Jersey – will compel Jackson to honor his contractual agreement. We look forward to having one of our MMA stars fighting for Bellator again.
This lawsuit had been brewing for a while after Jackson left the Viacom-owned company late last year and indicated that he had conferred with UFC lawyers and “an outside law firm” to determine if he could legitimately leave Bellator. Jackson’s story is that Bellator did not live up to his Bellator contract, Jackson gave Bellator time to cure the issues he had, but the company did not satisfy Jackson’s concerns so he decided to leave. What may be an interesting detail here is that Jackson’s management views the contract he signed with Bellator (under Bjorn Rebney) as an entertainment contract rather than a pure sports contract. This may come into play, as well as the fact that the contract was signed in California. But that is speculation at this point.
Although Bellator MMA is headquartered in Irvine, California and Jackson lives in Irvine, the lawsuit is filed in New Jersey.
As you recall, Bellator prevailed against Eddie Alvarez when Alvarez sought an injunction against the organization in their contractual dispute. The lawsuit was venued in the U.S. District Court of New Jersey.
Timing is everything when filing lawsuits as we recently wrote about. It was clear that there was going to be a legal issue when Jackson left Bellator to sign with the UFC. The timing of the filing and injunction comes close to UFC 186 and might mean that Jackson will be pulled from the card. The interesting issue here is that the UFC will be implicated here and its clear based on its actions that it thinks it had solid legal grounds to sign Rampage and actively promote him for his fight.
MMA Payout will keep you posted.
February 17, 2015
Although the UFC and Draft Kings have yet to formally announce an exclusive sponsorship deal in which the fantasy sports operator will become the company’s official sponsor, the two organizations have something in common: people filing class action lawsuits against them.
As The Legal Blitz brought to light in his ATL Redline post, the Boston-based DraftKings is being sued in federal court in Florida claiming that DraftKings violated the Florida Deceptive and Unfair Trade Practices Act.
Essentially, the lawsuit claims that Draft Kings misrepresented the term “free” in its advertisements in order to induce consumers to deposit money to the website. Commercials and ads which indicate “free sign-up bonuses” that match up to 100 percent of deposits for the site are untrue according to the complaint. As described in the complaint, customers must enter fantasy contests and receive bonuses “in incredibly small increments” and rather than the 100 percent deposit match, they receive just 4 percent of every dollar they play.
In this case, the named plaintiff deposited $25 and only received $1 in return when he played in the fantasy contests. It’s likely that if this case gains momentum, there will be lawsuits all over the country simulating this according to The Legal Blitz.
But, as he points out fantasy sports players registering with DraftKings probably did not know that they agreed to mandatory arbitration. He points out a 2013 U.S. Supreme Court case which dictates that arbitration provisions are binding and enforceable.
While this may not be the ultimate result in litigation, it’s probably a likely outcome.
It’s always advisable to have arbitration agreements in contracts to reduce the potential of litigation as well as control the potential legal costs. Many things that people sign have these types of clauses. The way the clause is drafted is the ultimate issue on whether it may be enforced. The class action lawsuit filed here is an interesting take on the fantasy sports “gaming” industry and how closely it resembles actual gambling. Obviously, the enticements about “free” are stretched and while many consumers were likely duped into thinking that they’d be getting an incentive for playing, they will probably “let it go” in order to play. Unfortunately, Zuffa probably does not have as easy a road to resolving its class action lawsuit.
January 2, 2015
MMA Payout takes a quick review of 2014 in the sport of boxing.
2014 was an interesting year for the sport as boxing began to expand with more PPVs than the standard Pacquiao and Mayweather bi-yearly events.
Canelo Alvarez faced Alfredo Angulo in March (the event drew an impressive 350,000 PPV buys), Sergio Martinez faced Miguel Cotto in New York in June (although projected to score 475,000 PPV buys, it drew just an estimated 350,000) and Alvarez returned in July to headline a PPV with Erislandly Lara (it drew an estimated 300,000 PPV buys). There were also hints of Gennady Golovkin fighting on PPV although that never came to fruition.
Floyd Mayweather fought Marcos Maidana twice this year. After May’s Mayweather PPV (in which it reportedly drew 900,000 PPV buys), Showtime President Stephen Espinoza informed the media that it would no longer release PPV buy numbers unless the event sets a PPV record. However, after the second fight in September, it was revealed that the rematch drew 925,000 PPV buys.
Manny Pacquiao’s days as a PPV draw seem to be waning. Although his rematch with Tim Bradley drew an estimated 750-800K PPV buys, it was down from the near 900K PPV buys in their first fight. Although nothing official has been released, the Manny Pacquiao-Chris Algieri fight in November drew between 300,000 to 400,000 PPV buys depending on who you asked. If this number is correct, it’s a huge drop off for Pacquiao. This would be a likely reason why the push for the mythical matchup with Floyd Mayweather.
In October, ESPN’s Dan Rafael posted the top events in 2014 thus far. Julio Cesar Chavez vs. Brian Vera 2 drew 1.39 million viewers with a peak of 1.53 million. The ratings were for only that fight and not the entire card airing on HBO. HBO dominated the top rated boxing events on cable (premium and/or regular) and Showtime did not crack the top 10. Still, the competition between the two premium cable channels seemed to heat up in 2014.
With the Kovalev-Hopkins fight, we may see the cold war between Top Rank and Golden Boy softening. Yet, Al Haymon still is one of the unseen, most powerful men in the business.
There were several notable lawsuits in 2014.
First, Main Events Promotions, the promoter for Sergey Kovalev sued Al Haymon, Golden Boy, boxer Adonis Stevenson and others for backing out of a potential fight between Kovalev and Stevenson. The lawsuit was dismissed as the parties settled when Kovalev got his big fight against Bernard Hopkins.
Next, Andre Ward lost a California State Athletic Commission arbitration hearing this past spring against his promoter Goosen Tutor Promotions. Ward then turned around and sued him in Federal Court alleging violations of the Muhammad Ali Boxing Reform Act.
Mikey Garcia sued Top Rank alleging issues with his contract including violations of the Muhammad Ali Boxing Reform Act. The lawsuit was transferred to Nevada as Garcia originally filed in California.
Don King was found in breach of contract when his fighter failed a drug test for an event in Russia in 2014.
In addition to these lawsuits, there were major shakeups at Golden Boy with former CEO Richard Schaefer leaving Golden Boy. But, it appears to be a messy divorce with Golden Boy seeking $50 million in private arbitration.
Just like MMA, 2015 should be an interesting year for boxing.
December 29, 2014
The manager for Rampage Jackson issued a statement regarding the reasons it left Bellator and signed with the UFC per a report with MMA Fighting. Jackson’s management cites Bjorn Rebney as the source of the contractual irregularity with Bellator and its subsequent reasons it left the company.
Per Lee Gwynn, Jackson’s manager, Jackson was disenchanted with Bellator and decided to leave. According to Gwynn, in addition to a Bellator contract, Bjorn Rebney offered a Paramount movie deal, a Spike TV reality show and a TNA pro wrestling contract. Gwynn interpreted these additional incentives as creating an entertainment contract rather than a normal fight contract. He also included a PPV payment model for Jackson.
It appears from the statement that the PPV buys did not meet Jackson’s incentives in his contract and they looked to renegotiate the structure at that point. However, Rebney was replaced by Scott Coker.
As Gwynn interprets the contract with Bellator as an entertainment contract, they claim that there was a 45 day notice to list the grievances it had with the company and the company had time to rectify the issues. Obviously, with Jackson signing with the UFC, Coker was not able to satisfy Jackson’s concerns. Per Gwynn’s statement it gave Bellator 70 days instead of the requisite 45 days.
Gwynn indicated that his lawyers, UFC lawyers and “an outside law firm” agreed with Jackson’s position that terminating the Bellator contract was “legitimate.”
This is obviously one side of the story. But, Jackson’s reps paint the picture that Rebney is to blame for the contract and the subsequent breach. The question of whether Jackson could renegotiate the contract when the PPV did not fulfill his contract is an issue. Also, another issue is whether the additional “entertainment” sweeteners made the entire contract an entertainment contract. Rampage did have a “reality series” on SpikeTV entitled “#Rampage4Real.” He also participated in TNA. As we recently revisited the Ronda Rousey split with Fight Tribe, at least in California (we assume the Rampage contract was signed in California since Bellator’s office is in Newport Beach) the fight contract and entertainment portion of the contract can be parsed out to be litigated and/or arbitrated. This will not be the end of this contractual drama.
December 26, 2014
Earlier this year, Ronda Rousey split with longtime manager Darin Harvey and his management company Fight Tribe Management. After an arbitration hearing in which both sides participated, it was determined that Rousey could be released from her fight contract and was not responsible for payments claimed by Harvey due to him.
Harvey filed a “Petition to Compel Arbitration” in LA Superior Court and requested that the briefing be sealed which precludes the public from reviewing the documents filed. After the hearing held this past March, the CSAC determined that Rousey’s “Service Agreement” with Fight Tribe was void as to the “professional fighting services only.” The arbitrator determined that Harvey had not followed the rules promulgated by the California State Athletic Commission with respect to fight contracts.
The ruling, in favor of Rousey, is premised on Harvey not properly executing the fight contract on “printed forms approved by the commission.” The Commission ruled that, “[t]he controlling contract was the subject “Representation Agreement”, which was entered into in California and specifically binds the parties to be governed by California law.” Hence, the rationale by the Commission would lead it to conclude that since the contract was not on its printed forms, the contract was void as to the fighting portion of the contract. In addition, the Commission ruled that “a fighter-contract” is not valid unless both parties appear at the same time before the Commission, and the contract receives the Commission’s written approval.” This did not happen as the contract, which was originally drafted in May 2012, was not executed until January 2013. Regardless, it was not done before the Commission.
Even though Harvey’s “Representation Agreement” did not comply with the Commission rules, he still argued that he was entitled to “quantum meruit” (latin for “what one has earned”). This is a theory in contract law allowing a party to be compensated for actual work/services performed.
Under this theory, Harvey was seeking to recoup losses incurred from representing Rousey. Harvey indicated in an exhibit at arbitration that from January 1, 2010 to January 31, 2014, he collected $25,608 in income from Rousey fights, $23,180 from PPV fights and $20,830 from income of sponsorships. This is offset by Harvey’s claim that he paid $170,376 in expenses related to Rousey’s fighting career which makes Harvey at a loss of $85,818 from representing Rousey. The paid expenses included paying for training including strength and conditioning, sparring partners and living expenses.
Longtime California promoter, Roy Englebrecht empathized with Harvey’s situation but also advised:
I have seen this happen a number of times over the years, where well intentioned people want to get involved in the fight business, but never take the time to learn about the business and some of the rules that govern it. This situation with Ronda and Darin could have been avoided if Darin knew the CSAC rules and followed them. This manager/fighter agreement or promoter/fighter agreement in California is unique to the sport, and if not followed you will lose, as this ruling showed.
The issue of the contract between Rousey and Fight Tribe with respect to representation outside of “professional fight services” still remains in state court in California.
This is a textbook example of the ills of manager representation in sports. Certainly, Harvey and Fight Tribe should have followed the rules of the CSAC. While the representation of Rousey probably was a “handshake agreement” at first (note that there was an 8 month lag between Rousey actually signing contract and the date of Representation Agreement), it was not until Rousey started to become popular that issues began to occur. Rousey signed on with William Morris Endeavor and Fight Tribe likely felt like it was being boxed out of its representation. We shall see if 2015 brings a resolution to the issue.
December 23, 2014
MMA Fighting reports that Scott Coker has turned over the Rampage Jackson issue to Bellator attorneys. The UFC announced the signing of Jackson on Saturday night.
Jackson provided an official statement on his departure from Bellator on his web site.
A portion of the statement reads:
After five months of grueling negotiations and gray-area contract talks with Bellator MMA and parent-company Viacom, Quinton “Rampage” Jackson officially terminates his contract with the up-and-coming promotion citing multiple breaches since the removal of President and Founder Bjorn Rebney. Jackson exercises a clause in the agreement that allows for a 45-day window to satisfy any contract dispute. Bellator MMA, failing to fulfill the requests of Jackson, was put on notice, failed to respond and eventually notified that negotiations were officially terminated.
Ariel Helwani of MMA Fighting reported that the point of contention for Jackson was that “Bellator refused to provide the pay-per-view numbers for Bellator 120 when he fought against Muhammaed Lawal as contracted.”
It appears that what Helwani is reporting is Jackson’s request for an audit of the Bellator 120 PPV numbers which one may conclude the buy rate is related to Jackson’s compensation. One might assume that the contract allowed a 45 day window where the parties would work to fix any issue with the contract. We can deduce that whatever problem that arose in the contract between Jackson and Bellator was not fixed. Or, it was not fixed to the satisfaction of Jackson. Jackson argues that since Bellator could not “cure” the problem with the contract within 45 days, he has a right to cancel the contract and thereby making the contract “void.” Certainly, Bellator is taking a different position on this. With Bellator attorneys involved, we may see another lawsuit in MMA coming soon.
December 21, 2014
On Saturday night’s UFC Fight Night 58 broadcast, Jon Anik announced that the UFC had re-signed Quinton “Rampage” Jackson. The news comes with controversy as Bellator President Scott Coker stated that Jackson is under exclusive contract with the Viacom-owned company.
The signing of Jackson will likely be the start of a legal battle between the UFC and Bellator.
Let us be clear that Quinton “Rampage” Jackson is under an exclusive contract with #BellatorMMA. We will protect our contractual rights
— Scott Coker (@ScottCoker) December 21, 2014
In a Fox Sports interview, Jackson indicated that he had terminated his contract with Bellator because they did not meet their contractual commitments.
The signing comes as a surprise considering the mutual distaste Rampage and Dana White had for each other when he last fought in the UFC in January 2013. It’s clear that based on Coker’s tweet, Jackson’s departure was not granted by Bellator. And, the UFC did not clear with Bellator Jackson’s representation that he terminated his contract due to Bellator’s alleged breach. It appears that the UFC is going with the strategy of plausible deniability. It signed Jackson based on the representation that his contract was void due to the alleged breach by Bellator. This can only lead to a lawsuit for breach of contract (filed by Bellator against Jackson) and tortious interference with a contract (against the UFC).
Jackson was mentioned in the plaintiffs’ antitrust lawsuit against the UFC in regard to the UFC’s desire to obtain exclusive sponsorships with companies. The lawsuit mentioned the UFC blocked Rampage’s exclusive deals with Round 5 and Reebok. Yet, the UFC forged its own exclusive deals with each.
December 16, 2014
Attorneys for plaintiffs on behalf of Cung Le, Nate Quarry and Jon Fitch have filed a lawsuit in U.S. District Court in Northern California in San Jose, California on their behalf. A press conference held Tuesday afternoon announced the lawsuit which was filed earlier in the day which may add more plaintiffs to the lawsuit.
Three plaintiffs’ firms with significant experience in antitrust and class action litigation are the attorneys of record with two others assisting as well. At this point, the UFC has issued a brief statement indicating its aware of the lawsuit but has not been served with it or had a chance to review it.
Cung Le, et al. v. Zuffa, LLC is the 63 page Complaint that maps out the claims of a UFC monopoly and monopsony which is in violation of Section 2 of the Sherman Antitrust Act according to the Plaintiffs.
Below is a portion of the press release from the announcement today:
The lawsuit filed by fighters Cung Le, Nathan Quarry and Jon Fitch, who seek to represent a class of similarly situated current and former UFC professional combatants, alleges that the plaintiffs are victims of the UFC’s illegal scheme to eliminate its competition in the sport of MMA and suppress compensation for UFC Fighters from bouts and fighter identities and likenesses.
According to plaintiffs’ counsel Benjamin Brown, of Cohen Milstein Sellers & Toll PLLC, “The UFC was built on the battered bodies of MMA fighters who have left their blood and sweat in the Octagon. Those fighters are entitled to the benefits of a competitive market for their talents.”
The lawsuit targets defendants Zuffa LLC, the Las Vegas-based company that conducts business as the UFC. Zuffa is primarily owned by billionaires Lorenzo and Frank Fertitta, along with the UFC’s front-man, President Dana White. White has publicly boasted about the success of the UFC’s alleged illegal scheme, allegedly claiming that “there is no competition” because “I am the grim reaper[.]”
The lawsuit claims that the UFC’s alleged anti-competitive acts, in particular its actions over a period of years,have made and maintainedthe UFC asthe onlyoption for MMA fighters who want to earn a viable living in the profession.
“All UFC Fighters are paid a mere fraction of what they would make in a competitive market,” said Brown.“Rather than earning paydays comparable to boxers – a sport with many natural parallels –MMA fighters go substantially under-compensated despite the punishing nature of their profession.”
Above all, the lawsuit alleges thatthe UFC prevents fighters from working with other MMA promoters, mounting self-promotional efforts of their own or signing with outside sponsors – monopolistic practices that suppress fighters’ incomes.
According to named plaintiff Cung Le, of San Jose, Calif., an internationally acclaimed MMA combatant, “Because of the UFC’s coercive practices, competitive market forces have been strangled, future earnings power of the athletes is stripped away, and purses to the fighters are artificially depressed.”
The lawsuit alleges that the UFC has pursued an aggressive strategy of depriving key inputs to potential rival promoters or merging with them to maintain its monopoly position. The complaint alleges “exclusionary scheme” to impair and foreclose competition, whereby the UFC deprives potential competitors in the fight promotion market access to elite MMA fighters, premium live event venues and sponsors.
According to plaintiffs’ co-counsel Michael Dell’Angelo, of Berger & Montague, P.C., “the lawsuit alleges that the UFC has engaged in an illegal scheme to eliminate competition from rival MMA promoters by systematically preventing rivals from gaining access to ingredients critical to successful MMA promotions, including by imposing extreme restrictions on UFC Fighters’ ability to fight for rivals during and after their tenure with the UFC. The UFC also takes the rights to fighters’ names and likenesses in perpetuity. As a result of the UFC’sscheme, we allege that UFC Fighters are paid fraction of what they would earn in a competitive marketplace.”
The lawsuit alleges that as a result of these and other anti-competitive acts, including the UFC’s acquisition of rival Strikeforce, the UFC has maintained control of more than 90 percent of the revenue derived from live MMA bouts nationwide.
The lawsuit also alleges that the UFC has retaliated against fighters who have worked with or who have announced intentions to work with rival promoters or sponsors by refusing to book their bouts and/or eliminating them from key UFC promotional activities such as advertising campaigns and video games.
“UFC’s threats are taken seriously by fighters because they know that a UFC ban will substantially diminish, if not end, their ability to earn a living at their chosen profession,” said plaintiffs’ co-counsel Joseph Saveri of Saveri Law Firm, Inc.“These MMA professionals deserve the right to take back their careers.”
In their complaint, the Plaintiffs claim that the UFC has been able to suppress compensation “to a very low percentage of the revenues generated from bouts.” The Complaint claims that UFC fighters are paid “approximately 10-17% of total UFC revenues generated from bouts. They claim that all fighters “have had their compensation artificially reduced due to the anticompetitive scheme challenged in this Complaint.
In addition, the Complaint challenges several clauses that Plaintiffs’ claim exist in standard UFC contracts including the “Exclusivity Clause,” the “Champions Clause,” (allowing UFC to extend a champion’s contract for as long as they are champion), the “Right to Match Clause” (recall Eddie Alvarez lawsuit), “Ancillary Rights Clause” (granting UFC exclusive and perpetual worldwide identity rights of contracted athlete) and the “Sponsorship and Endorsement Clause” (allows UFC sole discretion on approving sponsors and endorsements of fighters).
The attorneys declined comment on how much they would be asking (likely due to the fact that the actual amount of damages has yet to be quantified by an expert) in terms of monetary relief although the statute in which they are suing under allows for treble damages (three times the actual amount of proven damages)
The press conference did not provide a lot of granular information but one must assume that was done on purpose. Since the Complaint was filed today, the lawsuit and everything that comes with it begins. The process for a lawsuit, especially one that will be detailed, complex and may involve more plaintiffs will take years and lots of money to litigate. Cohen Milstein, one of the law firms representing the plaintiffs, was selected as one of the “most feared plaintiffs’ firms for 2013 and 2014 by Law360. Suffice it to say, the attorneys filing this Complaint and litigating this matter are very good at what they do. The UFC will have good lawyers as well.
It will be interesting to see how many other fighters decide to join the class. We assume that there are more that will join based on the amount of law firms that are joining together on this matter. We will see what happens if there is a groundswell of fighters that will join the lawsuit.
MMA Payout will have more info on the lawsuit in the coming days.
November 14, 2014
Xtreme Fighting Championships (XFC) announced that it intends to file a lawsuit against the World Series of Fighting (WSOF) as a result of Kalindra Faria’s scheduled fight on Saturday’s WSOF card. The XFC stated in a press release that it intends to file the suit in the U.S. District Court in Tampa, Florida.
Via XFC press release:
XFC has an exclusive contract with Ms. Faria which XFC provided to WSOF.
Notwithstanding the clear terms of Ms. Faria’s exclusive contract with XFC, WSOF has made it clear it intends to proceed with Ms. Faria’s bout planned for this weekend.
There is no question that XFC has a valid contract with Ms. Faria and that her fighting in a WSOF match this weekend violates XFC’s rights under that contract.
As a consequence of WSOF’s actions, XFC is filing suit against WSOF today in the United States District Court in Tamoa (sic). XFC is seeking to enforce its rights to the fullest extent of the law.
Faria is scheduled to face Jessica Aguilar on Saturday’s WSOF card. Ray Sefo told MMA Junkie that Faria would fight. Faria’s management claims that the women’s strawweight does not have a current contract with the XFC.
A quick search of Pacer does not reveal the lawsuit although that does not mean it has not been filed and served on the WSOF. Realistically, it appears that it is too late for the XFC to seek a temporary injunction which would prevent Faria from fighting at WSOF 15 tomorrow. Thus, if Faria goes through with the fight, we will see how XFC proceeds with the litigation and what types of damages that it might claim. MMA Payout will keep you posted.