Court changes course, rules in favor of Zuffa to seal and redact docs in Mark Hunt case

August 21, 2018

The Court in the Mark Hunt lawsuit against Zuffa, Dana White and Brock Lesnar granted Zuffa’s Renewed Motion to File Exhibits Under Seal and To Redact a Portion of Their Reply Brief.

Notably, Plaintiff did not file a response to oppose the “renewed motion.”  Originally, the court denied Zuffa’s request which seeks to seal and redact portions of the 2017 Promotional Agreement with Hunt.  The Court ruled that since this is a dispositive motion (a motion that may bring an end to the lawsuit), the party seeking to seal the record “must articulate compelling reasons supported by specific factual findings that outweigh the general history of access and the public policies favoring disclosure…”  Included in the request to redact documents, the Zuffa Dana White attached Hunt’s Bout Agreement for UFC 200 and other Bout Agreements from previous fights on as exhibits to its Motion to Dismiss Hunt’s First Amended Complaint.  Denial of its Motion to Seal these documents presumptively means that they would be available for public viewing.

Order on Renewed Motion to Seal by JASONCRUZ206 on Scribd

Zuffa “Renewed” its motion although it did not cite to specific and compelling reasons to seal or redact. It did argue that it was “sensitive commercial information of the parties, the disclosure of which would cause the parties harm and jeopardize their competitive standing in the professional MMA industry.”

In the only two sentences which enlightens the reader on the rationale for the decision, the Court states, “[D]efendants claim that the agreements contain proprietary information, and that competitive standing with MMA promoters.  The court finds that defendants have identified compelling reasons that warrant sealing the exhibits…”  This explanation does not seem compelling at all.

 Payout Perspective:

This is a surprising and disappointing ruling from the perspective that the Court rationale was limited and did not offer up an explanation as to what had changed from its original ruling.  It also promotes the further practice of sealing and redacting based on vague notions that the information is “sensitive commercial information.”  It also may impact the Zuffa Antitrust lawsuit as that case is also in a battle with redaction of Zuffa business information.

Details of Zuffa exec deposition reveals questions on exclusivity provisions, right to match and toy deals

August 20, 2018

Zuffa filed its Motion for Summary Judgment in which it wishes to dismisses the antitrust lawsuit filed by ex-fighters.  MMA Payout takes a look at some of the deposition testimony attached as exhibits to the motion.  This is the first of a series.

In order to prove its case, Zuffa attaches portions of the deposition testimony it cites in its motion.  The depositions are not the full transcript but small snippets of pages from the depositions.  There are a portions that are redacted for the public so we cannot see the full transcript.

For instance, Sean Shelby’s deposition attached to the motion reveals nothing. The first question is visible, but the rest of the deposition is redacted.  The question posed to Shelby was an Exhibit which is a text completion between “multiple parties.”   One could only assume that the texts may be between Shelby and/or Dana White, Joe Silva or another UFC employee.

Depo of Sean Shelby by JASONCRUZ206 on Scribd

But, not all transcripts are like Shelby’s.  For instance, UFC Executive, Ike Epstein includes some interesting testimony.

Exhibit 8 – Depo of Ike Epstein by JASONCRUZ206 on Scribd

Reason for Exclusivity

The snippets that were provided in the exhibit provide Epstein’s testimony with respect to the purpose of exclusivity provisions in athlete contracts.  He testified that the UFC were “putting on 40 fights per year, and in order to put on 40 plus fights per year, you have to know that fighters are available to put on those events.”  He added, “[i]f the fighters were not exclusive to us, we could never put on 40 plus events per year, and our output would significantly decrease.”

He stated that the provision was a benefit for all UFC fighters and that no one would be affected negatively by the clause.  He did qualify this statement by testifying “all fighters are different.”  Although lured into the trap that exclusivity prohibits fighters from finding other opportunities elsewhere, Epstein stated that the sole purpose of the provision was to ensure that the company could do 30-40 events per year.  He qualified his answer to the UFC lawyer’s “narrow question” by stating that he disagreed with the “underlying assumption” in the question that assumed there were more opportunities for an athlete but for the exclusivity provision in UFC contracts.

At this point in the testimony it seems to get contentious, as the parties fight over the semantics of the questions.  Here, the plaintiffs’ attorney would like Epstein to agree to the question that based on the UFC’s exclusivity provision, the fighters cannot seek opportunities to fight elsewhere.  However, Epstein is wary of the trap and will not cede to this admission.  He does note that the viewpoint of the question infers something that the UFC does not want to admit, but plaintiffs cannot provide.  And that is that if fighters were given an opportunity to freely contract with others, they would earn more money, find more fights and/or both.

When asked by plaintiffs’ attorney Joseph Saveri whether boxing has the “same sort of exclusivity problems,” Epstein said yes.

He also agrees that most fight contracts are for 4 fights or 20 months, whichever comes first.  However, some fighters have longer terms.

He also testifies about the negotiations surrounding the Gilbert Melendez contract and how they thought the matching offer given to the lightweight was unreasonable.

There is an interesting exchange where Epstein discusses the willingness to match the offer made to Cheick Kongo.  However, the company decided to let the heavyweight go and he signed with Bellator.

Jakks and Round 5

Epstein is questioned about a toy deal with toy makers  Jakks Pacific and Round 5.

The limited testimony addresses Round 5’s ability to sign exclusive agreements with certain fighters.  Epstein notes that Round 5 was able to secure exclusive contracts to do toy deals with UFC fighters and were paid directly.   Jakks Pacific had the official license to replicate UFC fighters but, for a time, were foreclosed from making certain UFC fighters due to an exclusive contract with Round 5.

In 2009, Jakks, the master toy licensee for the UFC sub-licensed with Round 5 Corp to share UFC and MMA talent in the selling and distribution of action figures.  This brought all of the UFC athletes under the same umbrella and all were paid the same.

The example underscored the limited freedom that athletes had to resource other forms of revenue.  Ultimately, this was consolidated within Zuffa.  This testimony also related to Identity Rights for fighters.

Who is this?

There is a snippet where they discuss an individual that is hard to decipher without more information.  All that can be gathered is that “he regularly reports on ratings of UFC events,” and Epstein viewed reports as “business intelligence.”

Payout Perspective:

We’ll take a look at other depo transcripts as we await the plaintiffs response to this motion.  Epstein, a lawyer, understands the depo process so its no surprise that his testimony did not illicit anything of substance aside from the fact he liked Cheick Kongo.

After ESPN deal, White says UFC now worth $7 billion

August 20, 2018

Dana White states that the UFC is now worth $7 billion after the ESPN deal.  In an interview with Tony Robbins, White stated that the company has improved since Endeavor purchased the UFC for $4.025 billion in August 2016.

White spoke in front of a crowd with Robbins for one of the motivational speaker’s seminars on Business Mastery.  He spoke about managing Chuck Liddell and Tito Ortiz when he learned that the UFC was in financial trouble and discussed purchasing it with Lorenzo and Frank Fertitta.

White talked about the “burn of $40 million” during the down years of the UFC when the promotion was in a hole.  At that time, White was asked about trying to sell the UFC and could only get $6-7 million.

UFC inked a new media rights deal with ESPN for $1.5 billion for five years earlier this year.  Despite the fact that television ratings have been on the decline and PPV buy rates have been less-than-pleasing, the company still has definitive revenue drivers.  This past week saw the UFC get the second-highest gate of all-time for October’s anticipated UFC 229 featuring the return of Conor McGregor.  Its international business is on the rise and with another show this November in China could open up more business in the country.

Payout Perspective:

The $7 billion figure stated by Dana White may not be accurate since he was talking to an audience ready to hear about the successes of the business (and they want to hear success stories).  But it may be in the ball-park.  While there are a lot of reasons to believe that the company is losing money since its acquisition by Endeavor, it is actually doing much better.

Rockhold awaiting right contract from UFC to fight Weidman

August 16, 2018

UFC middleweight Luke Rockhold indicated that he will not fight Chris Weidman until he has a new contract. The rumored rematch between the two was set for one of the big events this fall at UFC 230 in New York but Rockhold is making a stand for better pay.

Rockhold spoke with reporters at an event with his sponsor American Ethanol in Sioux Falls, South Dakota.  He indicated that he had to be shown the right contract.  “Business is good,” Rockhold said inferring that his other interests outside of the Octagon were lucrative enough that a UFC fight was not a necessity.

Rockhold seemed to intimate that athletes have learned how to game the UFC Anti-Doping Policy and he does not like it when fighters like Brock Lesnar or Jon Jones are able to be inserted into the main event after a long time away.

H/t: MMA Junkie

Payout Perspective:

You might recall that Rockhold agreed to fight Yoel Romero despite Romero not making weight at UFC 221.  He lost via TKO and his chance for a middleweight title shot.  So, you can see why Rockhold may be wanting more money to get back into the Octagon.  Rockhold is playing it close to the vest as he indicated that he’s almost ready for a return to fighting after being injured but won’t fight without it making sense.  He stated that he was not “going to lose money fighting” which goes to say that he’s been able to make money outside of the Octagon.  Certainly, it’s a good thing for Rockhold to establish other business ventures that don’t include getting punched in the face.  While it seems that his competitive fire is still there for fighting, he is sick of the politics in the promotion.  I think that Rockhold does come back against Weidman and that his interview is just venting his frustration.

UFC official sponsor, BodyArmor receives big investment from Coca Cola

August 16, 2018

UFC official sponsor BodyArmor is receiving an influx of case thanks to soft drink maker Coca Cola.  It is buying a stake in BodyArmor making it the second-biggest stakeholder in the company.

The deal, according to the Wall Street Journal, allows Coca-Cola to take a full ownership of the startup company which lists Kobe Bryant as one of its backers.  Bryant’s invested $6 million in the company in 2014 and since the acquisition by Coca-Cola, the former NBA champ’s shares are now worth $200 million.  UFC bantamweight Cody Garbrandt is also a sponsor of the drink.

Coca-Cola’s investment in BodyArmor is an attempt to cut into PepsiCo-owned Gatorade’s dominance in the market.  It sells its sports drink as healthier and recruited younger athletes to appeal to the demo.

The deal with the UFC is one of the tactics in which it seeks to promote the drink to a younger demo.

The WSJ states that the U.S. sports drink market is about $8 billion in with Gatorade having about ¾ of the market. BodyArmor is expected to have about $400 million in revenue this  year and could be valued between $1-$2 billion.

Payout Perspective:

The sponsorship deal between BodyArmor and the UFC seems to be a good match in terms of growth.  The Official Sports Drink of the UFC is looking toward international distribution and we could look to see its signage in the cage for overseas event.  It is also seeking to grab a foothold in the younger demo and sponsoring UFC events should help with its visibility and promotion.  If Coca-Cola were to attain full ownership, it would benefit BodyArmor and perhaps lure the brand to the UFC.

UFC 226 draws near 300K PPV buys according to report

August 15, 2018

MMA Fighting reports that UFC 227 is estimated to have done 300,000 PPV buys.  The event was headline by two title fights in the Flyweight and Bantamweight divisions.

According to the report by Dave Meltzer, the PPV buys are in the same range as the April 7th PPV featuring Khabib Nurmagomedov and Al Iaquinta.

The event was headlined by Cody Garbrandt gaining a rematch against T.J. Dillashaw for the bantamweight title.  Dillahsaw stopped Garbrandt in the first round.  The co-main saw Demetrious Johnson fall to Henry Cejudo ending the long title reign of Mighty Mouse and flyweight.

Payout Perspective:

The indicators for the event did not really point to this card doing 300,000 buys.  The Prelims airing on FX drew 717,000 viewers although it was the third highest on cable.  The google searches for Saturday drew over 1 Million for “UFC 227.”  But, what may have sold the PPV was the bad blood between Dillashaw and Garbrand as it’s a foregone conclusion that Johnson is not a PPV draw.  With Cejudo as champion, we will see how the UFC packages him.

 

With USADA suspension almost over, UFC releases Tom Lawlor

August 13, 2018

The UFC has released Tom Lawlor from his UFC contract.  Lawlor, who is serving a 2-year UFC Anti-Doping Policy drug suspension is currently working as a pro wrestler.

Lawlor accepted a 2-year suspension after he failed a test for Ostarine on October 10, 2016.  Despite an exhaustive look into what may have caused the test, Lawlor decided not to make a formal appeal.

Lawlor will be off of suspension on October 10, 2018.  However, since he’s been away from MMA, he’s embarked on a pro wrestling career to keep him busy.

According to the report on F4Wonline.com, where Lawlor also is a co-host of a weekly show, he had asked for his release when being suspended but the company refused until today.

In addition to news of Lawlor being released, the UFC released Gleison Tibau.  He was the second UFC athlete to be put on provisional suspension as a result of the UFC’s anti-doping policy.

Payout Perspective:

Perhaps if there is any good news for Lawlor is that he’s been able to focus on his wrestling career and travel the country doing shows and making an income.  It might be the best situation if he wanted to be a UFC champion, but it elevated his name in the world of pro wrestling.  We will see if Lawlor will seek out Bellator or another promotion to continue his MMA career.

Zuffa “Renews” its Motion to Seal in Mark Hunt case

August 12, 2018

Zuffa has “Renewed” its Motion to Seal Exhibits in its Motion to Dismiss Plaintiff’s Supplemental Complaint.  The Court originally denied Zuffa’s Motion to Seal but it now requests the Court once again.

Similar to a Motion for Reconsideration except Zuffa styles the Motion as a “Renewed” Motion.  In most instances, filing a Motion for Reconsideration requires new evidence not considered by the Court to prevail.   A “Renewed” Motion appears to be the same thing.

According to the Motion, it requests the Court to have the documents to remain sealed until the Court determines the results of it.  Originally, the Court was to release the documents on August 6.  Based upon a Pacer search, it appears that the Court is honoring this request.

The Court originally denied Zuffa’s Motion to Seal which included, among other things,  Hunt’s Bout Agreement for his fight with Derrick Lewis.  They also request to seal a Promotional and Ancillary Rights Agreement and a Letter of Agreement between Zuffa and Hunt from August 8, 2014.  According to Zuffa, the agreements are predecessors to the 2016 Promotional Agreement.  Additionally, there are “three Bout Agreements for different events that took place pursuant to the terms of the parties’ 2016 Promotional Agreement.”  Zuffa claims that these are “sensitive commercial information of the parties, the disclosure of which would cause the parties harm and jeopardize their competitive standing in the professional MMA industry.”

Renewed Motion to Seal by JASONCRUZ206 on Scribd

Payout Perspective:

Remember when Demi Moore’s character in “A Few Good Men” ‘strenuously objected’ after the Judge’s objection was overruled.  This situation is the same thing.  There is no real reason that a Court would rethink a previous ruling unless something arose post-ruling.  But, that does not appear to be the case here.  If the Court were to rethink its ruling, one might expect an appeal from Hunt’s attorneys.  This will be a ruling that the plaintiffs’ attorneys in the Zuffa Antitrust Case will be looking at with interest as well as the lawyers in Leslie Smith’s NLRB case.  The reveal of contractual information as to how MMA fighters are paid is a secretive process and unlike wage scales in other sports, payouts in the UFC are held close to the vest.  MMA Payout will keep you posted.

White confirms TUF to continue in new ESPN deal

August 8, 2018

Dana White has confirmed that The Ultimate Fighter will continue as part of the ESPN deal despite record-low ratings the past several seasons on FS1.

After the season finale of Dana White’s Contender Series on Tuesday night, White told reporters of the future of the series. “There’s still a huge market for ‘The Ultimate Fighter.’ ‘The Ultimate Fighter’ still does well.”

The last season of TUF on FS1 will feature Robert Whittaker and Kelvin Gastelum as coaches this fall. It will then move to ESPN as part of the new deal announced earlier this year.

White indicated that TUF would move to ESPN or ESPN+ and stated that its likely to air once a year as opposed to the two seasons per year.

Payout Perspective:

It was ironic that White spoke about the future of TUF at the end of his Contender Series which is essentially what TUF was made to be. Dana White’s Tuesday Night Contender Series has been a success this summer with some good prospects, great fights and the reality show element of White choosing fighter(s) for contracts in the UFC. TUF has shown its age throughout the past several years as it went from a something pitched as live content to a show that picks up viewers via DVR. But, with the new deal with ESPN, it is likely looking for content for its ESPN + platform so I would imagine it would be something the network would be interested on seeing if it has traction.

Show Money episode 23 discusses Antitrust, DAZN-Bellator, etc.

August 8, 2018

Show Money is back with John Nash of Bloody Elbow, Paul Gift of Forbes/Bloody Elbow and myself discussing Zuffa’s recent Motion for Summary Judgment filing, the Bellator/DAZN deal and other issues in MMA…and cinema.

 
 

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