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 26, 2016
Forbes.com reports on 2016’s 40 best business brands. The UFC ranks 6th as one of the best brands for 2016.
Nike topped the list with a current brand value of $27 billion which is up 3.8% from last year. ESPN came in second with a brand value of $16.5 billion despite being down almost 3% from 2015. Adidas, Under Armour and Sky Sports round out the top 5.
The UFC placed seventh with a brand value of $2 billion and a remarkable one year change of 335%. Reebok, the UFC’s official clothing sponsor, ranked 9th with a current brand value of $800 million, down 3.6% from last year.
Forbes.com explains the brand value for a sports business, which differs from sports teams, athlete and sport event brands, in the article:
the brand value is the difference between the estimated enterprise value of the business brand and what the enterprise value of a similar business is worth.
Forbes.com specifically addressed the UFC sale as well as a word of caution:
By my count the price allocation of the deal valued the UFC’s brand at $2 billion–more than three times its value a year ago–based on the enterprise value premium paid for the mixed martial arts promotion. The UFC posted the biggest year–over-year increase among business brands. But if the UFC does not become bigger and more profitable–thereby justifying its $4 billion price tag–its brand could fall sharply in value.
Undoubtedly the UFC’s sale to WME-IMG impacted the brand value. Is it possible that the UFC brand is overvalued? One of the reasons for the high price tag for the company was the strength in the brand. It is MMA to the casual fan. Of course, the buyout loan strategy implemented in the sale has been questioned by federal regulators due to the increase in the possibility of a default.
October 25, 2016
UFC welterweight Lyman Good was flagged by USADA for a potential anti-doping violation. The UFC announced the news on Monday and the former Bellator champion will be taken off of the UFC 205 card as a result of the potential violation.
Good, a native of New York, will not be able to face Belal Muhammad in his home state. The UFC will be seeking a new opponent for Muhammad.
The UFC issued its standard statement part of which reads:
The UFC organization was notified today that the U.S. Anti-Doping Agency (USADA) has informed Lyman Good of a potential Anti-Doping violation stemming from an out-of-competition sample collected on October 14, 2016. USADA has provisionally suspended Good based on the potential anti-doping violation.
Lyman won his first, and only, fight in the UFC, a 2nd round KO over Andrew Craig in July 2015. He was 9-3 in Bellator and was the Welterweight Champion in 2009.
Bad news for the former Bellator champ as he does not get to perform in front of his home fans.
October 25, 2016
Jon Jones’ arbitration hearing is coming up next Monday and the former UFC light heavyweight champion’s lawyer, Howard Jacobs spoke about the upcoming case.
Jacobs, a noted anti-doping lawyer, indicated to Luke Thomas on his SiriusXM show that the products that were found in Jones’ system were a result of a contaminated product. Per Jacobs, he states that USADA testing confirmed what Jacobs’ investigation found which reveals that the product is contaminated with Hydroxy-clomiphene, an anti-estrogenic agent, as well as the Letrozole metabolite, an aromatase inhibitor. Both of the substances were found in Jones USADA tests. The supplement/product that Jones took was not identified in the interview.
Under USADA rules, clomiphene and letrozole are “specified substances” under the World Anti-Doping Agency Code (“WADA”). Per the WADA Code, “there is a greater likelihood that these (specified) substances could be susceptible to a credible non-doping explanation.” The WADA Code recognizes that it is possible for a prohibited substance to enter an athlete’s body inadvertently, “and therefore allow a tribunal more flexibility when making a sanctioning decision.
Jacobs states that under the USADA rules, you may argue that taking the specified substances you are not at fault if you take a supplement or product that contaminated but you may argue that you’re not “significantly at fault,” which allows for the ability to argue a reduced sanction.
Jones could face up to a one-year suspension per the UFC anti-doping policy guidelines.
Under Article 3.1 of the UFC Anti-Doping Policy, USADA shall have the burden of establishing that an Anti-Doping Policy Violation (ADVP) has occurred. USADA must establish that an ADVP has occurred to “the comfortable satisfaction of the hearing panel bearing in mind the seriousness of the allegation which is made.” The standard of proof is “greater than a mere balance of probability but less than proof beyond a reasonable doubt.” It would seem that the legal standard is between “clear and convincing” and “more likely than not.” Jones may have a rebuttable presumption or establish specified facts or circumstances if USADA establishes its burden. Jones’ burden would be “by a balance of probability” per 3.1. It would appear the standard that would be more likely than not.
Based on Jacobs’ view, it would seem that USADA knows that the product taken by Jones was likely contaminated and he apparently has the evidence. It would seem that USADA might meet its burden in proving that Jones took the substance but Jacobs could establish that the product taken was done inadvertently. As a result, Jacobs would be asking that Jones be given a more lenient sentence. We shall see if that will happen on Monday. Of course, the parties could settle the issue prior to the hearing.
October 24, 2016
Bellator 162 drew 582,000 viewers on Spike TV Friday night per Sports TV Ratings. It’s a slight decrease of over 15% from Bellator 161.
In the main event, Alexander Shlemenko defeated Kendall Grove in the main event. According to Sports TV Ratings, it drew 259,000 viewers in the adult 18-49 demo.
College Football ruled Friday night with the Oregon-Cal game on ESPN drawing over 1.5 million viewers despite the fact it went into the middle of the night. Prior to that, the South Florida-Temple game drew 1.3 million viewers. While there were some interesting matchups and the first of likely many promos between Tito Ortiz and Chael Sonnen, there was nothing to tune into that you would have regretted missing.
October 24, 2016
Judge Richard Boulware has filed his Order on Zuffa’s Motion to Dismiss Plaintiffs’ Amended Complaint in the antitrust lawsuit venued in Nevada. The hearing was on September 25, 2015. The order was finally entered on October 19, 2016.
Talk about a backlog of work for a federal judge. But, from my understanding, this is typical for federal courts.
As we know, the judge denied Zuffa’s Motion to Dismiss although the written order was signed and dated over a year later by Judge Boulware.
The opinion denying the Motion to Dismiss is below:
Some notable issues in the Order.
Zuffa had the burden to prove that the Plaintiffs had no case since they brought the motion. Under the Federal Rules of Civil Procedure, a court may dismiss a complaint as a matter of law (1) for lack of a cognizable legal theory or (2) insufficient facts under a cognizable claim. The standard under Federal Rule 12(b)(6), it may dismiss a complaint for failing to state a claim upon which relief can be granted.
The court looked at the main arguments set forth by Zuffa in its opinion.
- Strong Competition v. Antitrust Violation
This argument was quickly dismissed by the court. Essentially Zuffa argued that its business practices are examples of “strong competition” whereas Plaintiffs argue that Zuffa’s conduct “has foreclosed competition and thereby enhanced and maintained the UFC’s monopoly power in the Relevant Output Market and monopsony power in the Relevant Input Market.” For purposes of meeting the threshold to satisfy a motion to dismiss, the Court sided with Plaintiffs.
- Properly Defined Relevant Markets
The court looked at whether the plaintiffs properly defined a “relevant market.” Plaintiffs identified two relevant markets: 1) live Elite Professional MMA bouts (Relevant Output Market), and…live Elite Professional MMA Fighter services (the ‘Relevant Input Market’). Zuffa claimed that these definitions were made solely for the purpose of litigation and that they were vague and subjective.
However, the Court sides with the Plaintiffs for purposes of this motion to dismiss. The Court noted that the validity of the ‘relevant market’ is typically a factually element and not a legal element. Remember, here the Court is looking at whether the lawsuit can be dismissed as a matter of law. As the court notes the market may survive an initial scrutiny under the motion to dismiss, but may not under a motion for summary judgment or at trial. But, the Court found that the Plaintiffs’ relevant market is sufficient for “Section 2” antitrust purposes
- Specificity of Anticompetitive Conduct
Zuffa argued that exclusive dealing arrangements are common, procompetitive and a part of sports and entertainment, Plaintiffs failed to allege specific facts showing that the exclusive arrangements foreclosed competition in either the input or output market and the UFC has no duty to deal with competitors.
The Court did not address the last argument (dealing with competitors) as it did not construe the complaint that it had to deal with competitors.
The Court does side with Plaintiffs in finding that its allegations that exclusive dealing arrangements are a part of the anticompetitive scheme. It also dismisses the argument that Plaintiffs’ claims are a “monopoly broth” – the term given to the use of various allegations to satisfy an antitrust scheme.
- Ancillary Rights and Reduced Competition
The Court looked at the rights issue related to fighters signing off on their likenesses for purposes of Zuffa using for things such as video games. Here, the Court utilized the same analysis as it did with the exclusive dealing contracts in finding that Plaintiffs pled sufficient facts to show an anti-competitive scheme. Once again, the Court is not ruling on the actual evidence, but whether the Complaint states a sufficient amount of facts.
The Motion to Dismiss should not be taken as a commentary on the strengths or weaknesses of Plaintiffs’ Complaint as a whole. It is only a ruling on whether or not the Complaint was sufficient to past standards required by the rules under 12(b)(6) of the Federal Rules of Civil Procedure. It was Zuffa’s burden to carry in order to prove that the Complaint could not pat muster. The Judge, weighing the evidence in light of the rules, determined that the Plaintiffs had pled a sufficient amount for the case to go forward. If this case goes to trial, the Plaintiffs would have to prove the claims in its Complaint. Zuffa will likely bring a Motion for Summary Judgment after the discovery stage ends. Essentially, it is similar to the Motion to Dismiss but would argue that none of the facts would support the claims and as a result, the lawsuit should be dismissed prior to trial. Of course, discovery is ongoing so we shall see if there are facts that have been uncovered which would strengthen either party’s case.
October 23, 2016
MMA Fighting reports that Pat Lundvall’s appointment on the Nevada Athletic Commission will end at the end of October. Lundvall has served for a total of 9 years for the commission.
Lundvall, an attorney in Nevada, has been in a central figure in some of the more recent discipline hearings before the commission. Most recently, she was a factor in the discipline hearing involving Conor McGregor. Instead of accepting a recommendation from the state attorney general of a $25,000 fine and community service, Lundvall motioned for a $150,000 penalty which included the value of a public service announcement (PSA)which McGregor was ordered to film.
After initial reports that the fine was for $150,000, it was clarified that the amount was $75,000 and the value of the PSA was $75,000.
Lundvall was also a central commissioner in the hearing of Nick Diaz in which he was assessed a 5 year ban which was eventually reduced.
Lundvall’s departure will be met with a sigh of relief by some within the MMA community as some of the decisions spearheaded by Lundvall seemed punitive and without much rationale behind them. The Diaz punishment comes to mind. Even McGregor’s punishment seemed out of ordinary and it appeared that it was done to show the commission’s muscle rather than anything else.
October 21, 2016
UFC heavyweight Abdul-Kerim Edilov will serve a 15-month sanction for an anti-doping policy violation after a positive drug test on January 7, 2016.
Edilov tested positive for meldonium following an out-of-competition urine test. Per the USADA release, “USADA accepted Edilov’s explanation that the meldonium was a prescribed medication he was taking in a therapeutic dose under the care of a physician and without the intent to enhance his athletic performance.” Despite this fact, USADA concluded that since Edilov’s use continued after the official prohibition on January 1, 2016, he required a Therapeutic Use Exemption in order to avoid violating the UFC Anti-Doping Policy.
The suspension is retroactive from the date of the failed test of January 7, 2016.
Edilov’s suspension is interesting when you consider meldonium is relatively new on the WADA prohibited list and there are issues with its detection and use. Notably, UFC lightweight Islam Makhachev was cleared of any fault or negligence in connection with a test that showed meldonium in his system. However, the key is that Makhachev appears to have ceased use prior to January 2016.
October 21, 2016
The Boston Globe reports that former Bellator MMA fighter Jordan Parsons was diagnosed with chronic traumatic encephalopathy (CTE). Parsons, who died after he was struck by a vehicle while as a pedestrian in May of this year is the first known case of an MMA fighter suffering from CTE.
Dr. Bennet Omalu, a forensic pathologist, disclosed the diagnosis. Dr. Omalu first discovered CTE with former NFL football player Mike Webster after he passed away. It led to the investigation of CTE in other NFL football players and eventually the lawsuits related to the discovery. Dr. Omalu was portrayed by actor Will Smith in the movie, “Concussion.”
Currently, the WWE is defending a lawsuit brought by former contracted wrestlers related to CTE. Of the claims, it believes that the WWE knew of the dangers of performing but allowed its contracted workers to continue with stunts that caused head trauma.
Parsons’ diagnosis is ominous for Bellator and the UFC as they need only look to what has gone on with lawsuits in the NFL, NHL and WWE. Certainly, Parsons is just one case, but it could lead to further investigation with former fighters that might bring legal action against promoters.
October 19, 2016
The UFC has cut more positions within the company as Ariel Helwani of MMA Fighting reports that many within the UFC Canada office including Tom Wright, the executive vice president and general manager for operations in Canada, Australia and New Zealand were dismissed this morning.
80% of the department in the UFC office in Toronto were let go. The layoffs follow up news that the UFC reduced its work force company-wide including Garry Cook, Marshall Zelaznik and UFC Asia chief Ken Berger.
The company, which was purchased by WME-IMG for $4 billion in July, is downsizing which seems to include a lot from satellite offices outside of its home base of Las Vegas.
It is not known whether more cuts will come.
The reduction in many of its overseas offices might infer that either the UFC will focus its operations in Las Vegas or that there will be less focus on international expansion and conducting events abroad. The latter suggestion would seem to go against the prior regime’s thought of global expansion as a way to increase its fan base and revenues. While there still may be international cards in the future, it would seem the focus by the new owners would be on domestic events and focusing on producing big PPV shows stateside.