Golden Boy eyes potential antitrust lawsuit against Haymon, PBC

May 1, 2015

There are reasons why Al Haymon never speaks, one of those may be to prevent the threat of litigation.  A recent article about Haymon’s Premier Boxing Champions may bring on an antitrust lawsuit involving rival Golden Boy Promotions as chief plaintiff.

A recent Sports Business Journal article featured Haymon’s PBC and went over how funding was structured.  Although Haymon did not provide comment for the article, factual information in it allegedly strengthened the argument that Haymon’s business model for PBC violates portions of the Muhammad Ali Boxing Reform Act.

A draft of the Complaint has been viewed by and it appears that Golden Boy Promotions is seeking a temporary restraining order and then a permanent injunction against his business practices that violate state and federal laws.  It also requests monetary damages against Haymon.

The claim is that Haymon is using his monopoly as a boxing manager to create another monopoly for promoting TV fights.

Golden Boy is hush on if and when this lawsuit may be filed.

Notably, the SI article includes a letter dated April 28, 2015, from the Association of Boxing Commissions (“ABC”) to the Department of Justice in which it claims that Haymon is in violation of the Ali Act.  Essentially, through his controlled companies Haymon is acting as manager and promoter which the ABC claims to be a violation of the “Firewall provision” of the Ali Act (specifically section 5(b) of the Act).  ABC also calls into question the contracts Haymon fighters must sign.  Essentially, ABC believes that they are in “restraint of trade” and “contrary to public policy” as the contracts exceed 12 months.  A footnote in the letter notes that UFC, Bellator and other MMA promotions have this contractual model.  It also notes that MMA is not covered by the Ali Act.

Payout Perspective:

This will be an interesting lawsuit and with the Zuffa antitrust lawsuit ongoing, we can see some major waves happening in the business of combat sports.  Haymon’s boxing business model is unique and received much scrutiny by rival promoters.  There have been attempts in the past to sue Haymon but those were summarily dismissed and/or settled.  If Haymon and PBC are sued, we may see some interesting information divulged from the factual discovery process in the lawsuit.  It could also overturn the current wealth of boxing on multiple networks by PBC.  MMA Payout will keep you posted.

UFC manager comments on Reebok deal, fight management

April 22, 2015

In light of Zuffa’s announcement that it has changed the policy through which it will compensate fighters under the Reebok sponsorship deal, a manager of UFC fighters has spoken out about the deal and the sponsorship landscape.  Oren Hodak of KO Reps who represents Johny Hendricks, Ovince St. Pierre and Joe Lauzon among others has expressed his opinion on the problems with the current state of MMA sponsorship.

“The current problem in the MMA landscape is the managers/agents that are in the business.  They aren’t working hard enough or smart enough going after non endemic brands.  They are simply seeing a logo on another fighter and then contacting that company. Or even more pathetic is agents calling another agent to help them out with a deal,”  Hodak told MMA Payout.  Hodak holds a Master’s degree in Sports Marketing and worked in the sports industry for several years before opening up his MMA management company.

“KOreps has had great success giving companies such as Reebok, Bass Pro, Smart Stop Self Storage, Instaloans and most recently their first real taste of Octagon exposure in addition to partnering with fighters outside of the cage,” stated Hodak.  “Sure, the sponsor tax takes money out of budgets from your core MMA clothing and supplement companies but there are plenty more companies out there with a sports marketing budget.  Over the years the UFC has slowly raised the sponsor tax and added numerous categories to the non-approved list, giving fighters less and less opportunity. In turn, managers have an excuse as to why they aren’t producing and UFC has fighters openly complaining about sponsorship money.”

On Monday, the Sports Business Journal reported that the UFC had changed the way it would pay its fighters through the Reebok sponsorship deal which goes into effect in July.  Instead of relying on media rankings, it would base the sponsorship pay on the number of fights an individual has had under Zuffa.  This would include fights in Strikeforce and WEC after both were acquired by Zuffa.  The change in the policy was said to be based on speaking with a number of fighters and managers.

“Some fighters may come out ahead with this new deal but I believe the fighters with professionally qualified sports management behind them will not,” Hodak added, “We have already heard from numerous fighters losing deals because they can’t utilize the valuable fight night impressions surrounding tv viewership.”

Payout Perspective:

It’s clear that despite the change in payment structure, the UFC-Reebok deal will still affect the bottom line of many fighters.  Hodak points out an issue he sees as a manager of fighters.  It’s an interesting viewpoint and a constructive critique on the nature of the business.  It also calls into question the management practice of some in the industry.  Not only will the sponsorship landscape change in the UFC, but the management of fighters may change too.  We shall see how this plays out in the UFC after the Reebok deal is put into place this summer.

Fertitta talks UFC drug policy in SBJ

April 6, 2015

In its latest issue, Lorenzo Fertitta spoke with the Sports Business Journal (subscription required) on the UFC taking a tougher stance on drugs.  Fertitta shed some light on the need for a new policy after the spate of failed drug tests.

While there was nothing in the article that added on to what the UFC has already said about its new policy on drug testing, Fertitta talked about being more proactive about the issue in asking what the UFC could do rather than what the commissions could do.

In the SBJ article Fertitta is quoted as saying:  “We needed to stop having academic debates on the legalities of our contracts and just go do this.”  He added, “You get hung up in a conference room with a slew of lawyers. We could debate this for years to come and never get anywhere. We’ve always run this business for the long term, so we’re going to do this.”

The UFC will pay for additional tests for its fighters and will advocate for a 2 year suspension for any fighter who tests positive for a banned substance.  He indicated that the UFC will “advocate rather than act” at this point due to the current employment contracts of its independent contractors.

However, Fertitta intimated that future contracts would reflect the stiffer penalties for drug violations.  These contracts would also include an appeal and arbitration process for suspended fighters.

The UFC will implement its new drug policy on July 1, 2015.

Payout Perspective:

Fertitta takes a shot at lawyers although in the article he indicates that there are complex legal issues to implement its new policy when it comes to an appeal and arbitration process.  Thus, he needs them.  We saw the issues the UFC had when it came to the appeal process with Cung Le and the new appeal/arbitration policy will be interesting if the suspensions are longer than what commissions require.  Obviously, the new contracts will pose a question for fighters.  Sure, the drug policy is a good thing to adhere to fairness, but how much of an independent contractor’s rights are being given up?

New poll asks sports execs about relevancy of sports

November 5, 2014

A new sports poll posted in the Sports Business Journal (subscription required) last week lists boxing and mixed martial arts as sports that some senior-level sports industry executives in pro and college sports thought may slip into irrelevance. The poll, which was a part of bigger feature on horse racing in last week’s issue named the sport of sailing as the most dangerous to become obscure.

The poll that was given this past September to 2,000 senior-level sports executive had boxing as the second most dangerous sport to fall into irrelevance followed by horse racing and then MMA.

The poll, which was part of a story on the Breeder’s Cup horse racing event last week gauged the pulse of sports executives as to their opinions. Turnkey Sports & Entertainment conducted the survey in conjunction with the Sports Business Journal.

The question that was posed to the executives was, “Which of the following sports is in most danger of slipping into irrelevance?”

Sailing was on the top of the list with 43% of those polled picking the sport which most visible event is The America’s Cup. Next, was boxing with 34% followed by horse racing, 15% and then MMA 6%. Two percent of those polled gave no response or were not sure.

Payout Perspective:

The poll appears to be solely based on the opinions of senior sports industry executives and does not base it on any findings or numbers which would have them conclude which sports has fallen into irrelevancy. But, the survey reveals the perceptions of those within the sports industry. Its likely that the poll was meant to evaluate the opinions as it relates to horse racing as the feature story this survey accompanied was how the Breeder’s Cup adds enhancements to bring more of an audience to its event. As for the listing of boxing and MMA, one might infer that boxing appears so high on the list due to the lack of notable fights and the lack of the sport on network television. Obviously, those that follow the sport of boxing know that with the battle between HBO-Showtime and the influx of PPVs for boxing fans, the sport continues on. For MMA, why it appears on the list although not as high, might be due to the fact that there are not as many big events.  Similar to boxing, most MMA followers know that there are a lot of MMA events for fans to watch, its just that there are not enough big events due to injury, scheduling or other factors.

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