Zuffa appeal offers opportunity for court to address First Amendment issue in sports

August 24, 2015

Earlier this month the UFC filed its appeal brief to the Second Circuit Court of Appeals with respect to its dismissed lawsuit against New York.  The appeal focuses on Zuffa’s claims that MMA is protected by the First Amendment and that Plaintiffs have standing to press their challenge that the law prohibiting MMA in the state is unconstitutionally vague.

For those that are subscribers to the Sports Business Journal, I provide a lengthier in-depth analysis of the implications of Zuffa’s First Amendment appeal as a guest columnist in this week’s edition.

This past spring Judge Kimba Wood of the Southern District of New York dismissed Zuffa’s lawsuit which attempted to overturn the law banning professional mixed martial arts in the state.  The UFC retained former U.S. Solicitor General Paul Clement to handle the appeal which was filed this spring in the Second Circuit.

The two primary issues that Zuffa focuses on in its appeal is its First Amendment claim that MMA deserves free speech protection and that the statute is unconstitutionally vague.

We will focus on the First Amendment appeal in this post and address the vagueness claim in another post later this week.

In its appellate brief filed on August, it argues that live entertainment, including MMA is presumptively entitled to First Amendment protection when performed in front of a live audience.  This is based on the belief that implicit in the statute prohibiting MMA in New York according to Clement, is that the New York law restricts live MMA but does not prohibit the practice of MMA in gyms and training facilities across the state.  Thus, the district court, as Clement writes “missed the forest for the trees.”  Essentially, Judge Wood evaluated the law banning pro MMA in the state from the aspect as to whether MMA is inherently expressive when not part of a live performance.  Clement asserts that it is “backwards” rationale.  “As the Supreme Court has confirmed time and again, performing before an audience is what brings conduct that might not otherwise be expressive within the scope of the First Amendment,” writes Clement.  The brief goes on to further argue that “a law that singles out for prohibition public exhibitions of perfectly lawful conduct is plainly problematic…”

It’s clear that MMA falls within the ambit of free speech and so Clement argues that the state of New York cannot contend that the message MMA live events convey is not entitled to First Amendment protection.  He goes on to argue on behalf of the UFC that the district court dismissed the First Amendment claim, in part, due to the fact that even though live MMA conveyed a “particularized message,” it must be “understood by those viewing it.”  Clement negates the belief citing the fact that whether the conduct involves lives performance before an audience, the case law suggest that there is no other need for further inquiry.  As stated above, the law specifically addresses live MMA and since the law specifically seeks to regulate live MMA, there should be no further evaluation as to whether the audience will understand the particular message.

The response brief from New York will be filed the first week of November.  At that point, the UFC will have a chance to reply to the response brief.

Payout Perspective:

The appeal before the 2nd Circuit will not be decided until sometime in 2016 (if that) as the appellate court does not have a hard timeline to make a decision.  If the court determines that MMA deserves First Amendment protection, it could have bigger implications than just MMA as one might conclude that sports in general could receive First Amendment protection.  Moreover, it may impact technology like live streaming phone apps such as Periscope and Meerkat.  If MMA, and sport by extension, is determined to have First Amendment protection, then what would prohibit an individual from live streaming an event for others to watch online?  Another broader issue also addresses the intersection of a league’s intellectual property versus First Amendment protection.  We have seen leagues and its sponsors attempt to use Periscope with the eventual hope of monetizing it and take advantage of its content.  If the general public is allowed to stream sporting events using their phones, leagues and sponsors face an issue.

Although this was not brought up as a big issue, MMA Fighting’s Marc Raimondi was prohibited from using Periscope during fight week leading up to UFC 189.  It was later clarified to him (according to Raimondi in a subsequent tweet) that he just could not Periscope during the actual night of the fight.  For those wondering, I had reached out to the UFC to see if it had an official policy on live streaming its events.  I did not receive a response.

MMA Payout will keep you posted on the appeal.

UFC Fight Night 74 attendance, gate and bonuses

August 23, 2015

MMA Junkie reports the attendance, gate and bonuses from UFC Fight Night 74 from Saskatoon, Canada.  The numbers were announced at the post-event press conference.

The bonuses were awarded to Patrick Cote, Josh Burkman, Felipe Arentes and Frankie Perez.  Each earned $50,000 each.  Arantes and Peres drew the Performance of the Night while Cote and Burkman won Fight of the Night.

The event drew 7,202 and a live gate of $717,000.  The SaskTel Centre houses 15,100 for hockey and 14,370 for a center stage concert.

Despite having more in attendance (7,539), the night in Saskatoon did better in gate than Nashville ($454,551) at UFC Fight Night 73.

Payout Perspective:

Perhaps the most shocking event of the night was the sudden retirement of bonus winner Perez.  If you are going to retire, you might as well end on top.  The gate fared well for the UFC’s first event in Saskatoon.  It will be interesting to see ratings for the event as it went up against WWE’s Summerslam and NFL Preseason football on Fox.

ESPN covers Summerslam Sunday

August 23, 2015

While there is a Sunday night UFC Fight Night from Saskatoon, Canada airing on FS1 DSunday night, the event might be overshadowed by WWE’s Summerslam which will air at the same time as the live MMA event on the WWE Network and through PPV.

The WWE has received support in promoting this event from ESPN which is airing live at the Barclay’s Center in Brooklyn, New York where the company is holding three sold out events which started last night with the WWE’s developmental arm NXT holding an event.  In addition to Sunday’s Summerslam, the company will air Monday Night Raw from the same venue.  Former WWE commentator and current ESPN anchor Jonathan Coachman was a central part of the coverage.

According to Forbes.com, there was some controversy as to whether ESPN should cover the WWE event.  However, the company decided to make the decision to cover it for a variety of reasons.  Forbes.com touched on the fact that ESPN is losing subscribers and covering the WWE is a way for ESPN to attract more viewers.  Earlier this year, ESPN aired Brock Lesnar’s decision as to whether he would sign with the UFC or stick with the WWE.  It also produced a documentary featuring WWE superstars.

Strategically the WWE has offered a free month of WWE Network for non-subscribers which should boost viewership.  The offer is an almost quarterly strategy to entice curious fans to sign up.  As of the last earnings call, it appears that paid subscriptions are doing well and offering the free month is one of the reasons the sub numbers have progressively increased.

Payout Perspective:

This summer, ESPN has done live remotes at unique sporting events across the nation to give little known events some notoriety.  This, of course, is a little different.  In the past, ESPN has covered Wrestlemania in the past but never in a serious capacity.  ESPN’s involvement in covering Summerslam is great for the WWE.  In year’s past, the company’s biggest card of the summer was held in Los Angeles but interest had waned.  This year appears to have had a resurgence and part of that has to be due to ESPN’s involvement.  Brock Lesnar was on the network earlier in the week and you may recall he indicated that Vince McMahon was a better promoter than Dana White.

Based on the attendance from Saturday and the anticipated attendance for the next two events, it appears that the WWE has found a new home for Summerslam.

Rousey files for “DNB” trademark for apparel

August 22, 2015

Ronda Rousey has filed to trademark “Do Nothing B—-“ and “DNB,” the acronym for her new venture.  The trademark applications with the United States Patent and Trademark Office were filed on August 3rd by Rousey’s trademark attorney, Deborah Greaves.

The trademark DNB will be for “Headwear; Hooded sweatshirts; Sweatshirts; T-shirts” according to the application filed with the USPTO.

DNB is the acronym for “Do Nothing Bitch,” a phrase Rousey coined in leadup to her fight at UFC 190 with Beth Corriea.

Rousey sold DNB t-shirts with a portion of the proceeds going to nonprofit Didi Hirsch 501c3 for their work in mental health services & for women with body image issues.

Just landed back in LA from Rio and I’m shocked and moved to see so many of you getting behind my represent.com/ronda campaign. You already know how much this message means to me, and it’s heartwarming that it means something to so many of you too. To say thanks, I’ll be sending some signed shirts to buyers at random in 24 hours! Get your shirt at represent.com/ronda (link in bio!)

A photo posted by rondarousey (@rondarousey) on

The initial goal of the t-shirts (at $24.99 each) were to sell 1,000 but it appears that they have sold 56,798 as the date of this writing.

Payout Perspective:

Both trademark filings will take at least 3 months before they are assigned to a trademark examiner that will assess the marks to see if there is a likelihood of confusion with any other marks as well determine whether they pass other tests.  “Do Nothing B—“ might face scrutiny since the term “b—-“ may be considered “scandalous, offensive or immoral.”  That is likely a judgment call by the examiner and Rousey’s attorney could challenge an adverse ruling.

There are other “DNB” trademarks but they appear to be in other industries (i.e., they are not selling t-shirts, etc.) so it may be unlikely that “DNB” gets stopped due to the other holders of the DNB trademark.  If the examiner deems it worthy of a trademark there will be a period in which it will be open to the public to view it and file any objections to the mark.  If no objections, Rousey will own the “DNB” trademark with respect to clothing.  Based on the trademark we may see more clothing coming out under this brand or perhaps she will guard against anyone attempting to make money off her trademark.

Its not the first time that athletes have trademarked phrases based on things that come up during interviews or while in action.  For WWE fans, the company filed for a trademark of “Suplex City” with the USPTO the day after Wrestlemania this year after Brock Lesnar yelled it out during his main event match.

Rousey announces Holm fight for UFC 195

August 21, 2015

Ronda Rousey announced her next opponent on ABC’s Good Morning America Friday Morning. In a surprise, Rousey announced that she would be facing Holly Holm at UFC 195 on January 2nd.

The news is a bit of a swerve considering most, including Rousey, post-UFC 190 believed she would be facing Miesha Tate in December at UFC 194. However, Rousey delivered the news on GMA.

“She is definitely my biggest challenge to date so I’m super excited about it,” Rousey told GMA.

ronda-rousey-to-fight-holly-holm-at-ufc-195-1108383-TwoByOne

Holm was a much heralded pickup for the UFC and many believed she would be groomed to face Rousey someday.  That day is coming sooner than most expected.

Payout Perspective:

Holm is an attractive opponent for Rousey in more ways than one. While many will not believe Rousey’s claim that she is the “biggest challenge” to date (rather the next challenge), Holm has a boxing background that might pose some problems for Rousey’s straight ahead style of standup. If nothing else, there’s the proverbial “puncher’s chance” that Rousey might be caught with a punch. Of course, the actual marketing of the fight will help as well. Holm has a good backstory and is appealing. While looks should not be factored into selling a fight, with women’s MMA it is even though people do not want to admit it. As opposed to UFC 190, there will be a portion of fans that will want to see this fight not only for Rousey but also for Holm.

It should be mentioned that Rousey’s announcement happened on ABC’s Good Morning America instead of ESPN. It’s clear that this is targeting women and the casual fan. One would also think that this is a way to introduce Rousey to more mainstream industry executives that could place here in movies. Perhaps a Disney Captain Marvel role for Rousey in the future?

UFC hires law firm to investigate Johnson incident

August 20, 2015

The UFC has released a statement on the alleged incident between Anthony Johnson and a female gym patron as a result of a social media rant by Johnson.  The organization has retained a law firm to launch an investigation into the matter.

Via UFC.com

“UFC is aware of the situation involving Anthony Johnson. We take these matters seriously and have commenced a formal investigation by a third-party law firm. We will act accordingly once we gather more information.”

Johnson posted, then deleted (and later apologized) a Facebook rant regarding a woman that was in his way at the gym.  In his post, he stated that he threw her yoga mat.  Johnson confirmed an incident at the gym when responding to someone on twitter.

Johnson’s past is the likely reason that there is a third-party investigating this recent incident.  In late 2014, Johnson was suspended by the UFC after domestic violence allegations from the mother of his children.  However, he was reinstated after a civil temporary protection order was voluntarily dismissed.

It appears that the alleged confrontation and not the social media rant is the focus of the investigation.

Johnson is scheduled to fight at UFC 191 on September 5th against Jimi Manuwa.

Payout Perspective:

The ills of social media rear its head again.  For all involved, it’s probably fortuitous that this happened as it sheds light on a potential problem that could have escalated into something more.  The UFC did the right thing in investigating this incident as it is protecting its contracted fighter from possible liability.  There are two sides to every story and it’s interesting that we haven’t heard Johnson’s side especially since he wrote about it on social media.  With Johnson’s fight coming up soon, we will see if the UFC takes any action against Johnson if it is determined that there was any wrongdoing.

Sports sponsorships on the rise but who is benefiting?

August 20, 2015

The International Business Times wrote a feature on the state of sports sponsorships in smaller leagues including the UFC.  Overall, it provides a good overview of the current state of sports sponsorship using the UFC’s recent deal with Reebok as anecdotal information.

The article leads with Stitch Duran’s dismissal from the UFC and includes an explanation from the UFC’s Lawrence Epstein later in the story.

The article addresses the issue of sponsorship clashes between athletes’ personal sponsors and the official sponsors of the leagues and organizations in which they participate.  The most recent example involves track and field athlete Nick Symmonds who was left off the US roster for this month’s 2015 World Championships in Beijing.  Symmonds, a middle-distance specialist won a silver medal in the 800 meters at the 2013 World Championships and is a two-time Olympian.  Yet, the U.S. Olympic team is a Nike sponsor (a reported $500M deal with USTAF) and Symmonds has an individual sponsorship with Brooks Running among others.  As a result, he was left off the team to the consternation of Symmonds.  He estimates that his income is 3 percent from the U.S. Track Team with 10 percent coming from prize money, 10 percent from personal appearances and the rest coming from corporate sponsorships.  The New York Times detailed the sponsorship spat between the runner and the U.S. team as the chasm between the athlete and organization highlights the current push/pull of the business of sports.  It indicated that an athlete like Symmonds could draw $250K-$350K a year which is still below the wages earned by NFL or NBA players.  But, Symmonds’ earnings are probably more than a lot of UFC fighters.

Similar to the UFC-Reebok outfitter policy, the U.S. Olympic Track Team allows for its athletes to wear non-Nike gear but requires them to wear it during designated times (i.e., competitions, ceremonies and other official functions.)  As we know, UFC contracted fighters are allowed to wear other sponsors but cannot wear them during fight week and/or other times where it is promoting a UFC event.

IBT notes that Nike and Adidas (and Reebok since it is owned by the 3 stripes) are spending more money than ever on sponsorships.  Per research firm IEG, in North America, corporate sponsorship spending across all sports jumped 21 percent from $12.38 billion in 2011 to a projected $14.98 billion in 2015.

As IBT outlines in its article, “small leagues” like the UFC and U.S. Track and Field, there is a disparity not readily made up through earnings.  The article notes that the NFL, NBA, MLB and NHL negotiate sponsorships and athletes obtain 50% of the revenue via the league’s collective bargaining agreements per sports management professor Dan Rascher.  Of course, the four leagues have unions which represent the players of the league so that there is some facet of representation when leagues enter into these types of agreements.  Any problems with the sponsor deals, the athlete can contact a union rep.

Lawrence Epstein was quoted in the IBT article.  He stated that despite lower payouts versus past individual sponsor deals, “companywide deals provide fighters with stable sponsorship money” as well as facilitate long-term growth for the UFC.  He indicated that 15 UFC fighters will have individual contracts with Reebok by year’s end which indicates that four more UFC fighters will have individual deals.  Currently, 11 fighters have individual deals.

He also stated that Duran wasn’t fired because of his comments about the Reebok deal.

Via IBT:

“Unequivocally, his [Duran] comments had nothing to do with him getting let go. I can’t be more firm on that. There are a variety of reasons that he was let go but nothing to do with his comments on Reebok,” Epstein said. “He’s trying to paint this thing as, he said some stuff about Reebok and as a result, he was let go. It’s just not true. That’s not the reason why he was let go. I can’t be more clear on that.”

Payout Perspective:

The IBT article is an interesting look at the disparity of earnings between established team sports and smaller counterparts.  What should be noted is that sponsorship spending is on the rise in sports which one might conclude that there are good opportunities for athletes to make extra revenue through sponsors.  The UFC, like U.S. Track and Field, have brokered sponsorship deals which include substantial exclusivity that forecloses out opportunities for its athletes.  The response by the UFC, as stated by Epstein, is that these deals provide stability for its fighters and will help the product in the long run.  This is great if most of the contracted fighters are still with the UFC in the long run.

As for the continued repercussions of the Stitch Duran fallout, it is becoming a he said/he said sort of battle.  Epstein contends Durant’s dismissal had nothing to do with his comments about Reebok yet he the timing of Durant’s departure is clearly not coincidence.  Furthermore, White’s “shifting the conversation” about the Stitch departure lends one to think it had to be about Reebok.

UFC to sponsor World Wrestling Championships

August 19, 2015

USA Wrestling announced that the UFC will be an official sponsor of the 2015 World Wrestling Championships.  The event will be held from September 7-12th at the Orleans Arena in Las Vegas, Nevada.

The event is a qualifier of the Rio 2016 Olympic Games.

Via USA Wrestling press release:

“We’ve had numerous athletes that have gone on from our National and Olympic teams to great success in UFC, including trailblazing athletes like two-time Olympians Dan Henderson and Daniel Cormier and Olympic champion Henry Cejudo. With UFC located in Las Vegas, it made a lot of sense for both organizations to partner on this historic event,” said USA Wrestling Executive Director Rich Bender.

According to the press release, more than 800 athletes are expected to compete in the six-day competition over three Olympic disciplines, Greco-Roman, women’s freestyle and men’s freestyle.

It will be the first time since 2003 that the United States has hosted a Senior World Wrestling Championship event and the first time in Las Vegas.

12485947-ufc-logo

Payout Perspective:

The sponsorship makes sense based on the number of successful wrestlers in the UFC and the fact that amateur wrestling is arguably the most important discipline in MMA.  Clearly the UFC will be watching the event closely hoping to scoop young and upcoming wrestlers that might have transferable skills for MMA.  In the past, USA Wrestling has sponsored UFC events with octagon signage so this is a type of reciprocity.

Lesnar’s ESPN comments sparked by twitter query

August 19, 2015

Brock Lesnar is making the rounds on behalf of the WWE as it promotes the company’s second-biggest event of the year, Summerslam, at the Barclay’s Center in Brooklyn, New York.  The biggest news to come out of Lesnar’s appearance was his comments that Vince McMahon is a better promoter than Dana White.

The statement itself is not that controversial.  The 38-year-old Lesnar signed a lucrative deal with the WWE and as he said he upon announcing the  re-signing with the WWE he gets paid full-time for working part-time.  So, for him to take the side of the WWE is not that extraordinary.

But the reason for the question by ESPN was based on a twitter back and forth between Dana White and a fan in which White stated that wrestling is “fake.”  Well, of course it is.  And there’s no dispute there.  Yet, we should probably go all the way back to the source for the response: some guy on twitter.  The question asked by the guy to White is to whether UFC PPVs should be priced at $9.99 like WWE PPVs.

Obviously the second half of the tweet may be tongue in cheek as both White and twitter guy know its fake.

One might assume the question was based on whether the UFC should go to the WWE model of placing its PPVs on Fight Pass like the WWE has done or whether the UFC should charge its fans a discounted rate for PPVs that do not have big stars appearing on them.

White told the twitter follower that wrestling is “fake” and one might read into that response that based on its scripted finish the price point should reflect accordingly.  Still, the back and forth seems rather innocuous.

As with most of White’s tweets, it did not go unnoticed.  WWE Champion Seth Rollins chimed in with a response to White’s “fake” comments.

Fast forward to yesterday in which ESPN hosted Lesnar. The question which got MMA web sites to sit up at their keyboards and take notice was the now infamous White tweet that wrestling is fake.  Lesnar responded with perhaps an honest response in stating that McMahon is a better promoter than Dana White and explained the differences between UFC and WWE.

Payout Perspective:

I would argue that the UFC and WWE business models are similar but not the same. It’s clear that the WWE has taken a big step with its WWE Network as opposed to what the UFC is doing with Fight Pass.  The WWE received steep criticism from the outset with its plan as it essentially invested heavily into the over the top network while planning on moving its PPVs to the platform. Not only did this deteriorate its PPV business, it put off its previous distributing partners that received a revenue split from the PPVs.  The distributors still receive a PPV cut, but it is less than before.

The question about whether UFC PPVs should be $9.99 needs to be addressed because it’s such an illogical question from the start. The UFC business model is predicated on the success of its PPVs. While the company receives revenue from event gates, merchandise and Fight Pass subscriptions among other revenue streams, PPVs remains one of the biggest pieces of the UFC financial pie. Starting this year, it increased its PPV price point $5 to $59.99 which likely meant an increase in PPV revenue. To suggest it cut UFC PPVs by $50 so more people can afford it seems way off the business model. Yet, it’s not wrong for someone on twitter to ask. And perhaps White’s response was appropriate as he was making the point that its business of real fighting is different from the WWE’s.

But, as with anything on twitter, it exploded into more.  While most web sites, including this one, are picking up Lesnar’s comments, the underlying cause for the news is predicated on non-news.  A question from someone on twitter that escalated.  It’s an obvious commentary on the state of what is news nowadays.

ESPN picked up the twitter back and forth from White and asked Lesnar. Thus, what was an innocuous question about lowering PPV prices turned into Lesnar calling out White on ESPN. Of course, just a few months ago, Lesnar showed up in LA at UFC 184 with White and entertained thoughts of going back to the UFC. So, it’s unknown how personal White will take the slight. In the past, McMahon has taken swipes at the UFC with no response by White. One might expect nothing more to come of this since the WWE would like to have Ronda Rousey make another appearance at next year’s Wrestlemania in Dallas. Thus, a working relationship between the two companies is warranted for that to happen.

But then again, someone might ask another question of White on twitter which may once again be blown out of proportion.

Cosmopolitan features Eye in article on body issues

August 15, 2015

Cosmopolitan recently ran an article featuring UFC bantamweight Jessica Eye where she talked about self-esteem issues with respect to their bodies.  Eye was featured along with Olympic gold medalists Sanya Richards-Ross and Natasha Hastings and fitness models Christmas Abbott and Massy Arias.

The underlying issue for the athletes was reconciling the perception of what a female bodies should be versus their athletic bodies.  The magazine is geared to women and the article addresses many issues that young women have with their bodies.  The overriding issue was the “body-shaming” most of those interviewed endured including people who believe that they are “too muscular” or “masculine.”

Eye talked about being raised like a tomboy as she was raised by her father and did not meet her mother until she was 16 years old.  She also revealed being bullied at a young age and through her early teenage years by her father.

Payout Perspective:

The article is great exposure for Eye and allows her to reveal a little bit about herself.  It also serves a purpose as not only is the interview good PR for Eye and the UFC it also speaks out about bullying and body issues among young women.  These are two initiatives that the UFC could capitalize on to boost the profiles of its women fighters as it moves forward.

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