December 23, 2016
The World Series of Fighting will cap off its year with a show on New Year’s Eve in New York. However, there might be cause for concern for the organization as legal problems persist.
3 new lawsuits were filed in Nevada this year which call into question the financial stability of the company. The lawsuits reveal the fact that the company has internal issues with the people that run it and the people that fund it. Based on the information gathered from the lawsuits, the people investing and claiming ownership (even a small %) are not the most professional people you may know. You may recall a lawsuit in 2015 saw issues with loans and an assignment of rights for use internationally. The new lawsuits see similar problems with loans to keep the organization afloat.
In addition to the legal troubles, WSOF cancelled two events in order to bolster its New Year’s Eve show in New York. WSOF opened an office in New York last year and supported the push to legalize professional MMA in the state so it makes sense that they want a show in the state by year’s end. But a New Year’s Eve show conflicts with the College Bowl Playoffs on television.
Notwithstanding what may happen on its New Year’s show, the ratings for WSOF on NBC Sports Network are slightly behind 2015’s average of 189,000 viewers.
Will WSOF survive its legal and financial woes in 2017 and continue through the year into 2018?
November 17, 2016
Attorneys for Deontay Wilder and Alexander Povetkin continue to joust in letters in the lawsuit filed in the Southern District of New York. A February 2017 trial date may be nixed due to issues related to finalization of a protective order to iron-out discovery issues.
After a discovery conference, last week, the parties continue to dispute the contents of the order with the court.
The discovery fight centers around a number of issues. One is related to text and direct messages from the phones of Wilder and promoter Lou DiBella. Notably, attorneys for DiBella state that his phone was destroyed in a hot tub over 4th of July weekend. They indicate there are no responsive texts or direct messages from Wilder’s phone.
Attorneys for Povetkin and his promoter, World of Boxing, requests information concerning an injury suffered by Wilder in July 2016. The heavyweight champion’s attorney objected to the request citing it as not relevant and likely the believe that such production of information (if any) would not lead to discoverable information.
From the court record, it appears that the parties are seeking to fast-track the case to trial with little, if any motions, in the case. However, attorneys for Wilder filed a Motion to Disqualify the attorneys for Povetkin. The Motion was then withdrawn by Wilder’s attorneys. Despite the withdrawal, they cautioned attorneys for Povetkin that they would be violating professional responsibilities if they did not withdraw as trial counsel. The crux of the issue relates to two of the attorneys of record involved in the contract negotiations for the Wilder-Povetkin fight. The motion sought to disqualify the attorneys as well as bar them from potentially depose the attorney that they were involved in negotiations.
The lawsuit arises out of a cancelled fight and money sitting in an escrow account. Wilder was set to face Povetkin in Russia in May 2016. A contract was agreed to which included clauses that put over $4.3 million (a portion of payouts for fighters, as well as administrative fees, etc.) into an escrow account as well as a liquidated damages provision of $2.5 million for breach of contract. It was discovered that Povetkin tested positive for the use of Meldonium which Wilder believe cancelled the fight. As a result, he did not travel to Russia for a fight he did not believe would take place. Povetkin’s camp claim breach of the fight agreement since the governing body had to cancel due to Wilder not showing up in Russia. In addition, they claim that they should be entitled to their share of the purse in the Escrow account however, Wilder’s side has prevented the money from being disbursed without a court order.
The discovery fight is not new to many litigation attorneys. The trial judge will need to sort out the situation and allow time for the parties to obtain the information they believe they need to go to trial. It does seem like this case will go to trial although litigation is a game of chicken to see who concedes first.
October 27, 2016
It’s another episode of Show Money with Bloody Elbow’s Paul Gift and John Nash. In this episode, we talk GSP’s contract dispute, the WME purchase and WSOF’s troubles.
October 18, 2016
Georges St-Pierre’s legal team has maintained that the former welterweight champ’s contract with the UFC is over due to the company’s breach per an ESPN report.
After GSP proclaimed that he was a “free agent” in an interview Monday on The MMA Hour, the UFC rebutted the statement with one of its own stating that he was still contractually obligated to fight for the company.
GSP’s lawyer, Jim Quinn of the law firm Weil, Gotshal and Manges out of New York, maintains that GSP’s contract is terminated. He indicated that the UFC could take legal action or offer a new contract to the fighter.
One of the issues GSP’s lawyers contend that caused a breach was the lack of fights given the St-Pierre. His lawyers state he has never received an actual bout agreement. St-Pierre’s lawyers gave the UFC 10 days to offer St-Pierre a fight. According to his laweyrs, the UFC responded on the final day in which it offered St-Pierre former welterweight champion Robbie Lawler. But that did not come to fruition.
GSP’s current contract was signed in 2011 per ESPN. Of course, the UFC has evolved since then. Notably, as pointed out in the story, is that the UFC has Reebok as its official clothier. Also, fighters are no longer able to have outside sponsors (aside from official UFC sponsors) to promote during fight week. St-Pierre had (or has) a deal with Under Armour in addition to other non-UFC sponsors.
Although not mentioned in the ESPN story, the UFC anti-doping policy came into effect in 2015. It’s not known whether GSP signed an addendum to his contract binding him to USADA testing.
It appears we may have a new legal dispute on our hands. To be fair, GSP’s lawyers gave an artificial deadline (unless a 10-day deadline to settle this type of dispute was set forth in GSP’s contract) for the UFC to offer St-Pierre a fight. But, it seems that the UFC could have made strides to keep GSP either by offering a fight and/or come to a contract extension under new financial terms. Whether or not an actual bout agreement is mandatory as an offer for a fight appears to be a big question in this legal dispute. We will see if the parties will attempt to resolve the situation short of a lawsuit.
August 8, 2016
The letter-writing battle between parties in the Wilder-Povetkin lawsuit is heating up as the parties have exchanged terse letters with the court about Wilder’s Motion to Dismiss the Povetkin lawsuit.
For background on the lawsuit, you can look here. Long story short, a bout between Deontay Wilder and Alexander Povetkin set in Russia for this past May was called off by the sanctioning body due to the fact that Povetkin tested positive for Meldonium. While the positive drug test is a factor in the subsequent events that transpired, it was not the key trigger which the parties are seemingly battling over.
At this point, the parties are fighting over Povetkin’s request to release over $4 million in funds lodged in an Escrow Account related to the WBC calling off the fight. Wilder’s attorneys notified the escrow agent not to release the funds. Povetkin’s attorneys claim that this was against the terms of the agreement and as a result it constituted a breach which triggered a liquidated damages clause of $2.5 million. Povetkin’s attorneys also claim that the fight was called off due to the fact that Wilder never intended to go to Russia for the fight. Thus, it was Wilder that breached his contractual duty to the escrow agreement as well as the bout agreement. In addition, Povetkin filed a defamation claim against Wilder and his promoter as a result of the comments regarding failing a drug test.
While the Motion to Dismiss was filed in late July, the court in which the lawsuit is assigned has a rule in which the parties must submit a 3 page letter as part of Pre-Motion Conference prior to filing of a Motion to Dismiss. The letter is to outline the reasons for the motion and give the non-moving party a chance to amend (change based on the argument) the Complaint. Povetkin’s attorney identify this misstep last week as well as arguing its claim to the court.
While Wilder’s attorney gloss over their missteps in a letter to the court dated August 5th they take direct aim at Povetkin’s attorneys for its substantive arguments to the Court. Povetkin’s attorneys responded to the letter and requested a Pre-Motion Conference.
July 27, 2016
UFC has renewed its broadcast rights partnership with United Kingdom and Ireland provider BT Sport per press release.
The deal allows for BT Sport to the exclusive right to air live UFC events throughout the UK and the Republic of Ireland. The deal allows for BT Sport to show over 150 hours of live UFC coverage including all of the numbered UFC PPVs and all EMEA (Europe, Middle East and Africa) events. Terms of the deal were not disclosed although the deal will run through 2018.
According to the Daily Mirror, there was some competition for the UFC rights deal with Sky.
The timing comes prior to the big Conor McGregor-Nate Diaz rematch at UFC 202 which should garner a lot of viewers in the UK and Ireland due to Conor. The deal solidifies the UFC’s broadcast deal in an area with which they hope to grow with the new ownership.
July 20, 2016
The Zachary Light-Bellator lawsuit in California is getting personal. Bellator has filed a Cross-Complaint against Light stating that he stole money from the company and did not pay back a loan given to him due to the fact he was in financial trouble.
Light filed the lawsuit claiming wrongful termination back in May in Los Angeles Superior Court. Bellator was granted an extension to respond to the Complaint and it’s also filed its own Complaint against Light filed July 12th.
The cross-claim digs right into Light stating that Light told Bellator, that, “despite his sizable income, he had difficulty managing his family budget and was experiencing financial distress.” Bellator loaned Light $9,403.00 and entered into a written agreement to pay back the loan. Bellator attached a copy of the alleged agreement as an Exhibit to its Cross-Complaint. The company also claims that Light stole $4,600 in cash from VIP ticket sales from Bellator 136. Bellator claims Light now owes $5,050.00 plus interest.
Conversion, the civil claim alleged by Bellator, is essentially stealing. It also claims theft under California law and a breach of written contract which alludes to the purported failure of Light to repay the loan.
Bellator claims that as part of his job, Light “would collect the money he received from the sale of consignment and VIP tickets in connection with Bellator events, and remit the money to Bellator personnel shortly after he received it from purchasers.” He would then give the money to Bellator’s Chief Financial Officer, Michael O’Roark or Jane Estioko, Manager of Talent Relations. However, Bellator claims that Bellator remitted to Bellator “at least some of the money” he failed to give “thousands of dollars he collected.” The Monday after the event, Bellator 136, Light did not report for work citing medical reasons.
With respect to his financial issues, Light and Bellator entered into an “Authorization for Deduction” on December 18, 2014 for $6,974.57 in which he would repay the loan in monthly installments of $240.50 from his paychecks. It also appears that Bellator was charging him interest on this loan. The exhibit to the Cross-Complaint is below.
Light will have an opportunity to respond to these allegations. Obviously, these claims were filed as a result of Light’s lawsuit. The lawsuit is turning personal as Bellator infers the fact Light has had financial difficulties throughout. The loan was from December 2014 and the alleged theft occurred in April 2016. Were there any other issues in between this time that Bellator is holding back for the lawsuit or are these two issues the only claims against Light? Certainly Light will deny both claims.
The one question is why would Bellator give Light the responsibility of handling money on the company’s behalf if it believed he had an issue with finances. MMA Payout will keep you posted.
July 18, 2016
On Friday, Brock Lesnar was flagged by the United States Anti-Doping Association (USADA) of a potential violation of the UFC anti-doping policy due to an out of competition test from June 28, 2016. Although testing results of Lesnar’s “B” sample are yet to be revealed, the fallout from Lesnar’s appearance hurts the UFC and possibly the WWE.
On June 5, 2016, it was announced that Lesnar would fight at UFC 200 on July 9, 2016. The signing was unprecedented because he was under contract with the WWE. Yet, the WWE granted Lesnar the chance to fight in the Octagon once again. Despite the fact that the WWE has its own drug testing policy (known as the Wellness Policy – Lesnar has never been flagged for a violation), Lesnar was tested by USADA eight times in just the month lead-up to his fight against Mark Hunt. He took 5 tests in the first two weeks after it was announced he was returning. Multiple tests came up clean.
Despite the tests, the UFC policy handled by USADA dictated that a returning athlete to the UFC most give the company four months written notice so that USADA can put the athlete in the pool of those it may selectively test. But, the UFC anti-doping policy allows an exemption for a returning athlete that may be subject to drug testing. Per 5.7.1 of the UFC anti-doping policy:
An Athlete who gives notice of retirement to UFC, or has otherwise ceased to have a contractual relationship with UFC, may not resume competing in UFC Bouts until he/she has given UFC written notice of his/her intent to resume competing and has made him/herself available for Testing for a period of four months before returning to competition. UFC may grant an exemption to the four-month written notice rule in exceptional circumstances or where the strict application of that rule would be manifestly unfair to an Athlete.
The key sentence here is the last sentence: “UFC may grant an exemption to the four-month written notice rule in exceptional circumstances or where the strict application of that rule would be manifestly unfair to an Athlete.”
Since the UFC Anti-Doping Policy did not begin until July 1, 2015 and Lesnar’s last fight in the UFC prior to UFC 200 was December 2011, he was considered a new athlete. There has not been an official statement as to whether the UFC granted the 4-month exemption due to an “exceptional circumstance” or if it was “manifestly unfair to an Athlete.” Of course, either waiver could be easily explained.
But, one has to think that Lesnar and the UFC had contemplated his return as he had been training prior to the June announcement of his return to the Octagon. One might suggest that Lesnar could have notified the UFC of his return in the requisite 4 months to allow for the proper testing to occur.
However, it would seem that the parties wanted the Lesnar announcement to be a surprise. Recall, that Ariel Helwani and others from MMA Fighting were thrown out of a UFC event and Helwani was banned for life due to his report of Lesnar’s return prior to the UFC’s opportunity to make it themselves. Helwani along with his colleagues were reinstated a couple days later.
Notwithstanding the notice issue, let’s take a look at what Lesnar could face as a result of testing positive for a banned substance. First, Lesnar’s “B” sample, a second sample taken to determine the validity of the finding in the first sample, must confirm the initial finding of a banned substance. If this happens, Lesnar will face discipline from Nevada and the UFC per the anti-doping policy.
Since the infraction took place in Nevada, Lesnar will have to appear before the Nevada State Athletic Commission to address the drug test failure. At that time, we should know what drug(s) Lesnar tested positive for in his out-of-competition sample. In 2015, Nevada adopted guidelines for combat sports which included a 36-month suspension and 50-75% of the purse for a first-time offender for someone taking anabolic steroids.
In addition, the UFC anti-doping policy would discipline Lesnar.
Under Section 10 for Sanctions on Individuals, Section 10.1 specifically states:
An Anti-Doping Policy Violation occurring during, or in connection with, a Bout may, upon the decision of UFC, lead to Disqualification of all of the Athlete’s results obtained in that Bout with all Consequences, including, without limitation, forfeiture of title, ranking, purse or other compensation, except as provided in Article 10.1.1.
Read broadly, under the UFC-USADA Anti-Doping Guidelines, Lesnar could have his purse for the bout and “other compensation” taken from him. It would hurt enough that Lesnar would lose out on his $2.5 million reported purse but “other compensation” could mean money he makes from his PPV “upside.”
Not only could that happen, but the section further states that UFC could fine Lesnar up to $500,000 per Section 10.10 of the UFC-USADA Anti-Doping Guidelines. In addition, he could have his win against Mark Hunt overturned to a no decision per discretion of the Nevada State Athletic Commission according to section 467.850. This would not sting as much since Lesnar did not have a win bonus to forfeit. Regardless, he still could have a substantial amount of money taken away.
The monetary fine would be the hardest penalty for Lesnar. The $2.5 million is the largest reported payout for a UFC fighter in its history. But, Lesnar was going to make more from his PPV guarantee. It is being reported that the UFC 200 PPV drew 1.1 to 1.2 million PPV buys. In most markets, the PPV for UFC 200 was $59.99 HD and $49.99 SD. Lesnar was projected to make $3-5 million in addition to his $2.5 million.
Mark Hunt, Lesnar’s opponent has demanded that he receive half of Lesnar’s $2.5 million or else he is requesting his release from his UFC contract. Hunt, who made $700,000 for taking on Lesnar, will be disappointed to learn that under the UFC-USADA guidelines, any money forfeited by an athlete would be under the UFC’s discretion “to be applied to offset the costs of the Program or given to anti-doping research.”
The UFC could also fine Lesnar pursuant to its Code of Conduct which imposes discipline based on misconduct. Under its Code, “misconduct” may include, “Conduct that undermines or puts at risk the integrity and reputation of the UFC.” A violation of its drug program could fall under this.
There is precedent for a fine as Jon Jones was docked $25,000 for failing a drug test in December 2014. Of course, Jones’ drug test failure was for cocaine use. We note that the detection of this drug was done out of competition and should have not been tested for according to the rules.
Lesnar’s only statement related to Friday’s news of his potential violation was a vague “we’ll get to the bottom of this.”
The WWE does not seem to be concerned with the potential violation and has indicated his next appearance will be at its big event Summerslam, August 21st. They have not addressed the potential violation. From its perspective, its an MMA matter, that a WWE matter.
However, the question looms as to whether a Nevada State Athletic Commission suspension would affect his wrestling career. Some state athletic commissions oversee professional wrestling. Most commissions honor suspensions of an athlete in other states. Would a suspension in combat sports carry over to professional wrestling? We will see.
June 26, 2016
Although Deontay Wilder is scheduled to fight Chris Arreola on Fox next month, he’s embroiled in a court battle against Alexander Povetkin and his promoter, Andrey Ryabinskiy due to a purported failed drug test which scratched the fight between the two.
On June 13, 2016, Wilder filed a lawsuit against Povetkin, Ryabinskiy and World of Boxing, LLC (“WOB”) for breach of contract and seeking the court for a declaratory judgment. In addition to the money that has been put up in escrow for the fight
10 days later, World of Boxing, Povetkin and Ryabinkiy (“WOB”) filed sued against Wilder, Lou DiBella and DiBella Entertainment, Wilder’s promoters. WOB is filing claiming causes of action for breach of contract as well as defamation.
Both lawsuits were filed in the U.S. District for the Southern District of New York.
Wilder and DiBella Entertainment, Inc. v. World of Boxing, LLC and Alexander Povetkin
The lawsuit claims breach of contract against WOB and Povetkin.
The facts, as told by Wilder’s attorney are below. Also added, are additional facts from the WOB lawsuit which we identify as well.
- The World Boxing Council (“WBC”) ordered Wilder and Povetkin (as the mandatory challenger) to begin negotiations for Wilder’s mandatory title defense of his WBC World Heavyweight Championship.
- No agreement could be made and a purse bid was ordered. WOB won the purse bid at a price of $7.15M. Notably, the WOB lawsuit claims DiBella’s bid was for $5.1M.
- The agreed payout would include 10% of the amount bid ($715K) to the winner as a bonus and then a 70-30 split thereafter. But, the parties still had to negotiate other parts of the fight including drug testing. The amount would also cover a 3% WBC sanction fee.
- According to the WOB lawsuit, Wilder would receive $4,504,500, Povetkin $1,930,500 and the winner would receive $715,000.
- Wilder’s side wanted to institute a drug program conducted by the Voluntary Anti-Doping Association (“VADA”).
- Negotiations continued but suspicions by Wilder’s camp about Povetkin’s use of performance enhancing drugs increased.
- With the parties at an impasse, the WBC stepped in and instituted an agreement on April 6, 2016. In the agreement, the drug testing program included VADA testing under the “WBC Clean Boxing Program.”
- Since WOB won the purse bid, the fight was to take place in Moscow, Russia on May 21, 2016.
- An agreement was signed on April 11, 2016. A copy is attached to the Wilder Complaint and is below.
- On April 19, 2016 an Escrow Agreement was entered into in which $4,369,365 was put into an Escrow (identified as Chicago Title in the WOB lawsuit). The Escrow Agreement contained a (confidential per Wilder’s attorneys) liquidated damages provision.
- Povetkin tested positive for Meldonium in an April 27, 2016 test.
- The WBC issued a ruling that the fight would not take place as scheduled.
- Wilder’s side advised the Escrow Agent not to disburse any of the money in escrow until it received a “joint instruction from the parties or a non-appealable order from a court of competent jurisdiction.”
Word of Boxing, LLC, et al. v. Deontay Wilder, et al.
The WOB lawsuit mitigates the finding that Povetkin tested positive for Meldonium. This substance was the same one that tennis star Maria Sharapova tested positive for and has received a two-year ban from the International Tennis Federation. In the UFC, Islam Makhachev tested positive for Meldonium and was pulled from the UFC on Fox 19 card. The ban on Meldonium was instituted by the World Anti-Doping Agency (“WADA”) on January 1, 2016. It was added to the list of banned substances and notice was given to athletes three months earlier in September 2015.
However, earlier this year, WADA acknowledged that there was a lack of clear scientific information on excretion times. Thus, this new revelation may actually overturn certain notices of infraction. In fact, this was noted by WOB’s attorneys in its lawsuit.
It argues that Meldonium found in Povetkin’s sample were traces and could not impact an athlete’s performance. It should be noted that both “A” and “B” samples found Meldonium. Povetkin admits to using Meldonim in 2015, prior to its ban. But, the facts reflect that he had a negative sample in April 7 and 8, 2016 but then tested positive in an April 27, 2016 sample.
WOB’s breach of contract claim cites that Wilder did not allow the WBC, the governing body for this fight, make a determination on the Povetkin drug test. Rather, Wilder and his promotion decided not to participate which WOB claims as the breach.
It also cites a breach of the escrow agreement with respect to the monies lodged in an Escrow Account which was to pay for the purses. WOB claims that since the bout did not occur, it should receive its money back from the trust but Wilder has “taken actions to prevent Chicago Trust from releasing such funds…including through a letter directing Chicago Trust to refrain from disbursing the Escrow Property to World of Boxing.
The defamation claim is rather unique as it claims Wilder and his promotion arm instituted a “Smear Campaign” against Povetkin. The WOB Complaint lists multiple news reports where it claims Lou DiBella and his promotion provided the outlets with false statements. WOB claims Povetkin did not cheat or lie and the “trace amounts” in Povetkin’s April 27, 2016 sample do not support the fact that he attempted to do so per the WOB lawsuit. WOB claims the statements were made to avoid their contractual obligation of Wilder having to fight in Moscow, Russia.
WOB is seeking $34.5M in its lawsuit. It is looking for the $4,369,365.000 in the Escrow Account and its defamation claim seeks $10 million.
Leave it to boxing to provide us with some of the more unique contractual legal issues in the sport. There is an issue of who breached the contract between the parties. Should Wilder have a claim due to the positive drug test from Povetkin? Or, does Povetkin side have an argument against Wilder for not following the WBC procedures? One has to think that Povetkin has a right to appeal the VADA ruling especially with the uncertainty of Meldonium. But, we see that the contentious negotiations between the parties have now spilled over into the courts. Wilder has found another fight in lieu of Povetkin. But, does Povetkin have a claim against Wilder for blocking funds to be returned to them in Escrow? It’s clear there is a liquidated damages provision in the Escrow Agreement of $2.5 million as both sides seek that it damages.
MMA Payout will keep you posted.
May 29, 2016
Showtime Networks, Inc. has filed a lawsuit in the U.S. District Court of New York against Top Rank, Inc. citing indemnification and breach of contract related to lawsuits filed by third parties against Showtime and Top Rank stemming from Manny Pacquiao’s claim that he fought with an injury against Floyd Mayweather, Jr.
The lawsuits, filed by individuals who purchased the PPV claimed that Pacquiao was not ready to participate in the fight because of an injury in early April 2015 and it was not disclosed. Most of the lawsuits point to the Pre-Fight Medical Questionnaire provided by Pacquiao which seemingly misrepresented the injury by not disclosing it.
Under the terms of an agreement between Showtime and Top Rank, Top Rank was to defend and indemnify Showtime from any liability (i.e., lawsuits) and supply Showtime with its own legal counsel. Showtime’s attorneys point out that a potential conflict occurred when Pacquiao did not notify officials of a shoulder injury prior to the Mayweather fight. According to the lawsuit, Showtime demanded that Top Rank pay for Showtime’s legal representations once these lawsuits were filed due to the potential conflict. Top Rank claimed that the terms of the agreement which would trigger Top Rank to defend and indemnify Showtime would be an instance of actual conflict between the parties. Per the lawsuit, Showtime claims that Top Rank did not believe that there was a conflict.
The relevant indemnification language of the Showtime/Top Rank contract is below:
— Jason Cruz (@dilletaunt) May 26, 2016
Showtime also claims that Top Rank threatened to assert its own indemnity claims against Showtime. Top Rank claimed that Showtime promotional materials for the fight were relevant in relation to claims of breach of contract filed by plaintiffs. Thus, Top Rank requested the same defend and indemnification that Showtime had been of Top Rank.
Despite the refusal to pay for its attorneys, Showtime defended the lawsuits it was named in. The legal fees through May 12, per the lawsuit is $682,754.06 plus interest. Showtime seeks to recoup this plus fees and costs of the lawsuit in this action.
It’s clear that this was bound to happen. Once Pacquiao claimed the injury post-fight, the lawsuits started to pour in from plaintiffs’ attorneys and they were going to name any and all entities in its complaints. The lawsuit presents the question of what is a conflict and what is not and when the right to indemnify and defend took place. Showtime claims that the unreported injury should have triggered the indemnification in the contract while Top Rank will likely deny this citing no conflict at the time.
We will keep you updated.