Perfect Tan not perfect sponsor for UFC

May 10, 2015

Sam Alvey and his tanning sponsor, Perfect Tan, will no longer be able to work around the UFC’s sponsor rules according to the organization.  UFC exec Tom Wright indicated that Alvey’s “#PerfectTan” that he had spray-tanned on his chest this past Saturday at UFC Fight Night 65 was against the UFC’s sponsor rules.

Wright stated at the post-fight press conference that “Fighters definitely can’t do that.”  Wright referred to the sponsor name tanned into Alvey’s chest which was first revealed at the weigh-ins the day before his fight with Daniel Kelly.

UFC sponsorship is a controversial subject considering fighters, like Alvey, will no longer be able to solicit sponsors starting this July when Reebok takes over as the official clothing sponsor for the UFC.  Last week, the company revealed the sponsorship pay structures.

You can see a pic of the offending sponsor at MMA Fighting.

No word if Alvey will be punished for his actions.

Payout Perspective:

Alvey’s sponsor stunt is reminiscent of days that boxers were paid to wear GoldenPalace.com on their backs.  Of course, those were written on their backs and not spray-tanned onto Alvey’s skin.  If you think about it, Alvey’s actions were “perfect” as the UFC could not really tell Alvey at the weigh-ins (although Wright states the UFC did not notice until before the fight) to get rid of the sponsor if it was tanned into his skin.  Moreover, the sponsorship tied into the company since it deals with tanning.  Not sure the benefit of a hashtag rather than just including the web site of the company.  Look for the UFC to issue a reminder to its fighters that it cannot do this.  Hopefully for Alvey, he is not subject to a monetary fine.

UFC Fight Night 65 attendance, gate and bonuses

May 9, 2015

Robert Whittaker, James Vick, Daniel Hooker and Alex Chambers received $50,000 Performances of the Night Bonuses at Saturday’s UFC Fight Night 65.  Dana White tweeted out the bonus winners and it was also announced at the post-event press conference.

In addition, UFC Executive Tom Wright announced attendance at 7,984 and $1,051,000 million Australian dollars.  This would equate to $833,810 US dollars per MMA Junkie.

The capacity at the Adelaide Entertainment Centre is 12,000 and 9,300 for netball.

Payout Perspective:

Interesting that Stipe Miocic did not receive a $50,000 for his record breaking dominating performance.  It was the first time for the UFC in Adelaide.  In comparison, the last time the UFC was in the region was this past November with UFC Fight Night 55 in Sydney.  That card drew 9,904 for slightly over $1 million.

TUF 21 Episode 3 draws 364,000 viewers

May 7, 2015

The third episode of TUF 21 drew just 364,000 viewers for its third episode airing Wednesday per Sports TV Ratings.  The episode drew a 0.2 rating with adults 18-49.

For comparison sakes, the third episode of TUF 20 drew 433,000 viewers.

TUF 21

Episode 1 – 490,000 live + Same Day

Episode 2 – 454,000

Episode 3 – 364,000

The TUF 21 early average sits at 436,000 viewers.

TUF 21 Episode 3

Payout Perspective:

The NBA and NHL Playoffs topped the sports TV ratings on cable.  We’ll have more analysis on the numbers in the coming days but it’s clear that viewers are not tuning in…or are setting their DVR.  We shall see how the DVR progress through the season.

 

Zuffa files Reply Brief in support of Motion to Dismiss in antitrust lawsuit

May 7, 2015

Late last week, Zuffa filed its Reply Brief in support of its Motion to Dismiss the Plaintiffs’ Complaint in the class action antitrust lawsuit filed in Northern California.  The Reply Brief addressed issues from Plaintiffs’ Opposition.  The hearing is set for July.

First we take a look at the Opposition Brief.

In Plaintiffs’ Opposition, they focused several issues including rebutting Zuffa’s contention regarding the definition of “Elite MMA Fighters” with respect to it as a key input for MMA Promotions, the UFC engaged in Anticompetitive conduct to exclude competitors and monopsonize the market for the defined Elite MMA Fighters, the UFC dominates the relevant markets and the UFC’s scheme caused antitrust injury to Plaintiffs.

In its Opposition brief, the Plaintiffs argue it sufficiently outlined that the UFC has monopoly and monopsony power.

Secondly, it contends that Plaintiffs “plausibly allege exclusionary conduct in violation of Section 2” of the Sherman Antitrust Act.  It argued that the UFC’s conduct “substantially foreclosed competition.”  Plaintiffs state that this was done through its exclusionary contracts with respect to its fighters, identity rights (e.g., exclusive use of a fighter’s images in such things as video games) and through “exclusive dealing agreements with venues, sponsors and distributors.”

Plaintiffs contend it sufficiently alleged anticompetitive effects resulting in an antitrust injury.

In order to survive a Motion to Dismiss, a party must have allegations that, “taken as a whole, are facially plausible” according to the Supreme Court case of Bell Atlantic Corp. v. Twombly.  The Twombly case, decided in 2007, changed the way federal courts analyze complaints as the rule prompted more detailed.  In the Opposition, Plaintiffs contend it laid out direct and circumstantial evidence to support its allegations in its Complaint.

Some notable arguments in its Opposition:

  • It argued that the distinction between “Elite” and non-Elite fighters is well understood in the industry.  In its argument regarding the definition, Plaintiffs cite the case of International Boxing Club of New York, Inc. v. United States.  In this antitrust case, the Supreme Court affirmed a market limited to “championship” boxing contests rather than all professional boxing contests.  Thus, Plaintiffs argue that in the past, courts have upheld a relevant market based on a quality distinction of one league over another.  To further support its claim, it notes in a footnote that investment analysts such as Moody’s describes UFC fighters as “elite” as well as fan blogs and web sites.
  • Plaintiffs plausibly allege direct evidence of monopoly and monopsony power. The Plaintiffs contend that it need not cite circumstantial evidence as prior cases have found direct allegations sufficient.
  • Plaintiffs rebut the argument claimed by Zuffa that it must provide a number with respect to the amount it has foreclosed competition stating that it indicated that it foreclosed competition 100%, but in the alternative, it cites cases stating that dispute about the degree of foreclosure need not be resolved on the pleadings.
  • Plaintiffs argue that Zuffa misinterprets the law with respect to the need it must show specific facts as to the extent of the UFC’s use of exclusive contracts with MMA fighters and that Plaintiffs must separately show foreclosure of competition by means of the exclusive contracts. In this case, Plaintiffs argue it may allege foreclosure as a result of cumulative conduct and that the contracts are a portion of the “chokehold” the UFC puts on the market for MMA events.

In its Reply to Plaintiffs’ Opposition, Zuffa hammers home the argument that the Plaintiffs’ Complaint was not sufficiently pled in accordance with Twombly.  It first argues to the Court about the sheer cost in discovery that an antitrust case encompasses and that was one of the reasons why the Supreme Court decided the way it did in Twombly.  It then argues that Plaintiffs’ Opposition fails to explain with plausible facts 1) any anticompetitive conduct by Zuffa, 2) that such conduct caused substantial foreclosure in any relevant market, or 3) that Plaintiffs suffered antitrust injury as a result of anticompetitive conduct.

In addition, it argues that Plaintiffs’ “Monopoly Broth” theory does nothing to support its case.  It also states that the allegations fail to show UFC’s Conduct resulted in substantial foreclosure and that it failed to properly plead defined relevant markets.

Among the key takeaways from Zuffa’s Reply Brief, Zuffa characterizes Plaintiffs’ argument that the alleged cumulative conduct equates to antitrust injury as a “monopoly broth.”  This terminology is based on a law review article by a University of Michigan law professor which cites the uses and abuses of utilizing a compilation of issues to make an antitrust case.  The law review argues for a corrective use of the “monopoly broth.”

Also in the Reply Brief, it cites cases which supports Zuffa’s contention that courts must still examine the various issues individually.  Next, Zuffa argues that Plaintiffs’ claim that the UFC foreclosed 100% of the alleged market for Elite fighters is flawed.  They claim that Plaintiffs’ argument is circular since, according to Plaintiffs theory, all fighters under contract with the UFC are “Elite,” few or no fighters not under contract with the UFC are “Elite,” and thus UFC contracts foreclose access to 100% of Elite fighters.

Payout Perspective:

This week, we may find out whether or not the Motion to Dismiss will be argued in San Jose or Las Vegas dependent on the Motion to Transfer Venue.  The above is just some of the arguments the parties will argue in July when the Motion will be decided.   The Motion to Dismiss may be decided based on whether the Court views Plaintiffs sufficiently pled antitrust injury in its Complaint through its “monopoly broth.”  Zuffa articulates in its Reply Brief reasons why Plaintiffs fail to satisfy the Twombly analysis for a sufficient Complaint and appeals to the economic factors in arguing the huge expense this lawsuit will have on Zuffa for a Complaint with little or no concrete allegations.  We will see whether the Court takes the position that Plaintiffs’ argument that the compilation of activities by Zuffa equates to an alleged antitrust claim or whether it sides with Zuffa in finding that Plaintiffs fail to provide sufficient facts for its allegations.

UFC reveals Reebok pay structure to its fighters

May 6, 2015

The UFC has issued its pay structure for its Reebok sponsorship deal which goes into effect in July.  UFC fighter Cody Gibson tweeted a photo of what appears to be a letter with the pay structure listed.  The lowest tier for fighters with 1-5 fights is $2,500.

The next tier for fighters with 6-10 fights is $5,000, 11 to 15 fights get $10,000, 16 to 20 fights gets $15,000 and fighters with 21 fights or more in the UFC get $20,000.

Fighters with 1 to 5 bouts will receive $2,500 per fight; 6 to 10 bouts get $5,000; 11 to 15 bouts get $10,000; 16 to 20 bouts get $15,000; and 21 bouts and above get $20,000.  As it previously indicated, title fights would receive more.  Challengers will receive $30,000 and Champions will receive $40,0000.

How does this compare to what UFC fighters once made through sponsorships?  Take the case of Brendan Schaub who indicated that he made twice as much from sponsors than he did from the UFC.  If we are to assume this is true, he would have made over $60,000 from sponsors.  Based on this structure, he would receive $10,000 as he would fall into the 11 to 15 fight tier based on his 11 fights in the UFC.

Recently, the UFC announced a change to the payment structure as it moved from a pay structure based on media rankings to one based on the number of fights with Zuffa.  The new Reebok sponsorship deal has drawn criticism from fighters and managers.  It will go into effect in July with UFC 189.

Payout Perspective:

At this point, the UFC has yet to comment publicly (the letter received by Gibson was sent to all contracted fighters) on the payment structure and its rationale.  It’s clear that this is a hit for some (if not most) fighters that had deals with sponsors that it will now lose due to the Reebok deal.  Schaub indicated he was losing 6 sponsors.  Probably the same for many established fighters in the UFC.  We will see what the fallout will be in the coming days.

White talks Jones, FS1 ratings and PBC in MCN interview

May 4, 2015

Multichannel News interviewed Dana White about the UFC’s first quarter of this year as well as the dustup with Dish Network, Jon Jones and boxing.

Coming off of a successful first quarter on Fox Sports 1 where 8 UFC live events were up 30% over live events on the network from 2014 and up 34% among 18-34 year olds.  White spoke to Multichannel News.

Addressing the recent news that Dish Network would no longer carry UFC PPVs for its subscribers White only stated that the UFC was “hopeful that we can this resolved for our fans.”  With the recent news of Jones, White admits that it’s a hit to the UFC’s business in the short-term.  However, he stated that the move to strip Jones of the title and suspend him indefinitely would benefit the UFC brand long-term.

As for the positive ratings for 2015 on FS1, White attributes it to the fights staying in tact with less injuries. When asked about whether boxing’s recent success with Al Haymon’s PBC, White deflected any notion of a competition between the UFC and boxing citing that the two only compete for dates and days.

When asked whether FS1 ratings success equates to PPV success, White said it did although he did not provide much detail as to why and how.

Payout Perspective:

Starting off with the issue of whether boxing is competing with the UFC, I think White answers the question in that it is a competitor.  Why?  If both sports compete for dates and days to hold its events, the inference is that it wants to hold an event without the other sport doing the same.  The reason is that the organizations are vying for the same audience.

With respect to the suspension of Jones, it’s interesting that White was frank about losing money by suspending Jones later this month with the intent that it would help the brand in the long run.  Usually, you don’t see this strategic planning from the company which might infer that the successful first part of 2015 helped them in making the decision on Jones.

Prior to recent legal troubles, Jones threatened NSAC with lawsuit for December drug test

May 1, 2015

MMA Junkie reports that an attorney for Jon Jones threatened to sue the Nevada State Athletic Commission for releasing results of Jones’ drug test which revealed his positive test for using cocaine.

Ross Goodman wrote on behalf of Jones claiming that the fighter’s privacy was invaded due to the release of the drug test results to the media.  Per Junkie, Goodman wrote the commission on behalf of Jones stating that they were considering a civil lawsuit against the NSAC and its board members for invasion of privacy.  The NSAC stated that the test for street drugs was an “administrative oversight.”

Junkie obtained the commission letter of February 13, 2015 in response to Goodman’s letter of January 29, 2015.  Notably, the commission indicated that it did not disclose the December 4, 2014 Jon Jones test results to the media, but the UFC did.  In the letter written by the Nevada State Attorney General (which represents the NSAC in these matters), it claimed to have broad authority over unarmed combatants within the state as well as permitting out of competition testing of any unarmed combat.

In its letter the commission indicated that it had adopted the WADA Prohibited List but not the WADA Code.

Notably, Goodman represents Wanderlei Silva in his lawsuit against the commission related to the NSAC’s fine and suspension after Silva allegedly evaded a drug test.  He also represented Nick Diaz in a lawsuit against the commission in April 2012.

Payout Perspective:

This information is probably not news as Jones was mum (Jones doesn’t comment at 7:27 in the FS1 exclusive on January 19th) when it came whether he would seek action against the commission.  With Jones’ latest troubles, a lawsuit against the commission is likely the last thing on his mind.  In general, to prove a civil claim for Invasion of Privacy, there must be an intrusion upon reasonable expectations to be left alone.  Jones’ claim would likely fall under a claim of “Public Disclosure of Private Facts.”  Here, legal action may be taken if an individual publicly reveals truthful information that is not of public concern and which a reasonable person would find offensive if made public.  Clearly, the commission argues that 1) it did not disclose the drug test and 2) these are not private facts.

With all of the legal issues facing Jones, this one might be on the backburner until Jones’ criminal issues are clarified.

TUF 21 Episode 2: 454,000

April 30, 2015

The second episode of TUF 21 on FS1 scored just 454,000 viewers in overnight ratings per Sports TV Ratings.  It’s a slight decrease from the debut.

In the second episode, Luis “Buscape” Firmino defeated Uros Jurisic by unanimous decision in a fight that Dana White voiced his displeasure.

TUF 21 was up against the NBA Playoffs on TNT as well as a Game 7 on NBCSN in the NHL Playoffs.  The Portland/Memphis game won the night for cable TV sports with 2.937 million viewers tuning in.  The ESPN Mayweather/Pacquiao press conference which aired from 4:00-5:00 ET drew 465,000 viewers, which was just ahead of TUF per Sports TV Ratings.

TUF 21

Episode 1 – 490,000

Episode 2 – 454,000

Payout Perspective:

The series is not off to a good start although it appears that many people are recording this show and watching it later.  Per a Nielsen source, the adjusted viewership (DVR +3) ratings for last week’s debut drew 700,000 viewers.  As long as people are tuning in to watch at some point, I think that

Zuffa files Reply Brief in Motion to Transfer Venue

April 29, 2015

Zuffa has filed its Reply Brief in response to the Plaintiffs’ Opposition to Zuffa’s Motion to Transfer the Venue.  Predictably, the big issue will be whether or not the fighter contracts which avail them to the Nevada should be interpreted by the Court.

In its Motion to Transfer Venue from San Jose to Las Vegas, Zuffa lawyers argued that the fighters that filed suit against Zuffa executed contracts or bout agreements which availed themselves to Nevada or Las Vegas as the fora for which a lawsuit would arise.  There are variations within the contractual language of the plaintiffs but the gist is that the contract limits lawsuits to Nevada.

The Plaintiffs argued in its opposition that the contracts were not at issue and need not be interpreted to adjudicate this matter.  Thus, the forum selection clause dictating forum were inapplicable.

In its Reply Brief, Zuffa argues that a “crucial component” of Plaintiffs’ case is that Zuffa’s contracts improperly restrict competition.  Thus, at some point, this will need to be demonstrated through “specific terms of the contracts” and how it illegally bars completion.  It contends that Plaintiffs cannot just show market share or a disparity of purses but through fighter contracts.  Moreover, it opposes Plaintiffs’ interpretation of the contracts that they impose perpetual and indefinite terms on athletes.

Zuffa cites the Ninth Circuit case of Simula, Inc. v. Autoliv, Inc. which it argues is binding authority.  Zuffa argues that Simula advises that when a plaintiff argues antitrust claims which have anticompetitive effects, the contracts must be interpreted.  In that case, the Court determined whether an arbitration provision in a contract should be followed.  In addition, it determined that with antitrust claims under Sherman Act 1 and 2, the Court would have to evaluate an agreement between the parties.

As Zuffa argument goes, since the contracts will need to be evaluated, Nevada would be the proper forum since it would be “more familiar” with the governing law.  It also argues that since the plaintiffs contend that this is a nationwide class action, the relevancy of the location main class representative is not relevant.  Thus, it rebuts the argument that Le and others live in Northern California since the lawsuit alleges to be a nationwide class action.  It also contends that the residence of the plaintiffs is “substantially diminished” when the plaintiff’s venue choice is not its residence.  This would be the case, as pointed out by Zuffa, by plaintiffs such as Brandon Vera and Gabe Ruediger.

As for Plaintiffs suggestion that San Jose is more expeditious to trial and has handled more Antitrust cases, Zuffa summarily dismisses these contention citing they are not elements in determining a motion to transfer venue.  It also argues that there is not a strong local interest in the underlying litigation.

The hearing on the Motion to Transfer Venue will be held in San Jose on May 7th.

Payout Perspective:

It will be interesting to see how the court addresses and interprets the Simula case.  While the case does point out that it needed to look at the underlying agreement when deciphering an antitrust case, the main issue there was whether an arbitration provision found in the contract applied to the dispute.  Thus, the case hinged on whether or not there should be a stay of the lawsuit pending an arbitration or whether that case should be dismissed in its entirety.  The point being is that the court did not necessarily decide whether a forum selection clause bound the parties to the contractual provision when the lawsuit is premised upon anticompetitive behavior of a party (i.e. antitrust claims).  This is just a cursory look at the Simula case and certainly plaintiffs’ lawyers will analyze the case and make its own distinctions.   This is the last filing before the hearing next week so we shall see what arguments are presented by plaintiffs to rebut these assertions.  MMA Payout will keep you posted.

Reebok ends Jon Jones sponsorship deal

April 29, 2015

Darren Rovell reports that Reebok has terminated the contract of Jon Jones.  The news comes on the heels of his suspension from the UFC on Tuesday.

Jones had an individual sponsorship agreement with the soon-to-be official clothier of the UFC.  He was featured in a commercial for the brand which debuted during NBA games last month.  A link on the Reebok web page which featured Jon Jones is no longer valid.  Also, a tweet from Reebok last week promoting Jon Jones with an Instagram pic/video no longer works.

A representative for Reebok told TMZ Sports, “In light of recent events, we have made the decision to terminate our contract with Jon Jones, effective immediately.”

Payout Perspective:

The decision by Reebok to pull Jones’ individual sponsorship deal was a likely result of his indefinite suspension and actions this past weekend.  Like the UFC, it had stuck with Jones despite the positive showing that he had used cocaine, but the latest episode was too much for the brand that becomes the official sponsor of the UFC in July.  It’s an obvious hit for Jones and also one for Reebok as it had invested in Jones as well.  Certainly, the brand can shift to another UFC star but it would be of no surprise if Jones was to be a main driver for Reebok.

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