MMA Payout has obtained a copy of the Bellator-Eddie Alvarez lawsuit filed in the U.S. District Court of New Jersey. The Complaint and Exhibits are interesting pieces which reveal the negotiations between the two sides as well as the inference that the UFC may be pulled in as well.
The Complaint pleads two causes of action: Breach of Contract and Tortious Interference. The Breach of Contract claim is based on Bellator’s claim that Alvarez did not honor the “matching rights” provision in his contract as Bellator literally copied the exact words of the UFC contract Alvarez was offered. A copy of the UFC Bellator contract (with use of Track Changes in Word) is attached as an Exhibit to the Complaint. The cut and paste job appears to be the Bellator strategy to either ensure it would match the offer made by the UFC or call out the UFC if it claimed that Bellator did not match the offer.
The Complaint is requesting declaratory relief (among other things) which requests a court to make a ruling on an issue. Here, determine whether Bellator matched the UFC contract.
After Bellator provided the matching offer it received an email dated December 16th to Bellator’s representatives from Alvarez’s attorney Neil Tabachnick claiming that the Bellator offer was illusory. Specifically, 1) a Fox event (in which it promised Alvarez) would be on network television whereas Spike TV (where Alvarez’s bouts would be shown) is on basic cable and 2) Bellator claimed it would have a PPV by March is contradicted by statements from Bjorn Rebney in the media that it would not have a PPV. Thus, no matching of offers. Although the correspondence indicates that these two issues are not all of its issues with the contract, they appear to be the central ones.
In response, Bellator’s counsel argues that the contract matches the UFC contract. Most telling in the correspondence is the fact that Bellator claims to have a PPV in the works by March of this year. In addition, Bellator offered three “sweeteners” as described by Bellator’s representatives as well as appearances on Spike TV which it believed would aid in Alvarez obtaining personal sponsorships. The monetary total amounted to $125,000 but it appears that Bellator includes the exposure on Spike as additional value. Presumably, this is in response to the $250,000 signing bonus and guest commentating spots the UFC offered Alvarez.
Bellator’s points outs that Spike would replay Alvarez’s bouts at least twice on its network which would grant him more exposure. Bellator argues that an Alvarez bout on Fox is usually not replayed.
While most of us believed that a central issue was that the UFC could offer PPV percentages while Bellator cannot. Bellator indicates that it may have a PPV by March and would offer similar percentages for Alvarez. Also, a title shot by March would be offered on both contracts.
As for the second cause of action for Tortious Interference, it names a John Doe as interfering with the Bellator-Alvarez contract. Generally, a tortious interference claim occurs when a party intentionally damages contractual relationship. In this claim Bellator is requesting injunctive relief which would preclude the “John Doe” (you know who) from interfering with the contractual relationship as it would cause Bellator an economic loss.
Although Alvarez claims to have sued Bellator, MMA Payout has not obtained this lawsuit and there is no listing of a suit in New Jersey. It could be that he will file a counterclaim to this lawsuit and that has yet to be filed.
Payout Perspective:
Its interesting that Bellator does not name John Doe. It could be that they would like to come to some resolution without full blown litigation or that it feels the facts are not sufficient to bring in the party yet. The Alvarez lawsuit reveals the overwhelming leverage the UFC has in negotiation. With the leverage of the Fox contract, it can argue that any other offer made by a rival organization will never suffice. Furthermore, being the only MMA organization on PPV, no other organization could match the buy rate bonuses.
We will keep you posted on any further developments.
This is going to get interesting to follow. It really could go so many ways. If it matters Bellator does a PPV will it matter they have no history there and an unknown expect buy rate? i Have 2 thoughts on this. 1. I dont see how the courts can include any of the PPV contract talk. At this point it is unproven conpensation and amounts to speculation trying to put a value on it. 2. While the difference in these two seem to come down to speculation the UFC deal clearly has the more value. Making it hard for the courts to ignore that fact.
Also the term match seems to not be very clear. Bellator “Matched” the UFC deal in wording only. They have not matched the value.
Brain Smasher: I think you are right. Court will probably dismiss all the PPV talk. (but take into the consideration, that I’m from Europe and as such, don’t really know in depth how US law system works).
Because, as a counterarguments: Is it really that impossible for Bellator to do a PPV and score for example 200 000 PPVs? What if they take their biggest, biggest stars, do a four title fights event and price it for the $5?
I doubt an Alvarez-Henderson PPV would hit 200,000 buys so what difference does all of this make?
Anyone think they’re actually considering running a PPV show at this time? I can’t imagine that it would sell well at all, and if they ever are going to run a PPV, wouldn’t they wait until they’ve had a lot more exposure on SPIKE than a few months worth? Seems like smoke and mirrors to satisfy their agenda here.
I agree, the head start the UFC has over any other promotion in the PPV arena makes it nearly impossible to match and with their years of PPV data to make accurate projections they also have the ability to include PPV bonus guarantees without much risk.
The thing that is really the most damaged is Bellator’s reputation, this lawsuit will now be forever associated with them and their treatment of fighters. I can’t imagine why anyone would want to fight for them as it seems the more success you have in their promotion the lower they’ll be willing to stoop to either keep you or make sure you can’t go anywhere else. I think the bigger question is, why would you want to keep a fighter that doesn’t want to be kept? Do you think Eddie Alvarez will be a happy fighter if this whole thing plays out and he has to stay with Bellator?
The proper course of action would have been to overpay for Eddie Alvarez if he was that valuable, make him an offer that the UFC wouldn’t be willing to match which would show Eddie just how much the promotion values him and if that still didn’t work then let him go because at that point it would be obvious that his motivation wouldn’t have been money, but the UFC spotlight. Let him go, focus on Michael Chandler, Rick Hawn, Ben Askren and the other fighers you do have, stop trying to fight the UFC and focus on equaling and then surpassing them, make Bellator the promotion that fighters aspire to and not what fighters settle on if the UFC isn’t interested.
LOL at Bellator thinking they can do a PPV and it will sell well, maybe in time after a year or two on Spike they could try it but if they try it now they will be embarrassed when it doesnt even do 100k buys.
If I were the UFC I’d plan an event the same day as them on PPV just to shit on them and laugh.
Both sides have a point but since the UFC didnt guarantee him PPV fights Bellator is gonna win. We all know Eddie would be on PPV at some point during his 8 fight deal and he will make money if the PPV does good but its not a guarantee. Bellator can say the same thing, we’ll give you the same PPV points if we put you on PPV, they probably just never will put him on a PPV.
If they do thats where Eddie is pissed because a UFC PPV is gonna make him money, a Bellator PPV isnt.
Don’t under estimate the power of Viacom.
This isn’t the UFC, an MMA promotional company. This is a media conglomerate with tons of assets at their fingertips.
Don’t think so SMALL…
This rumored PPV was set for MArch. There was no way in hell they could have pulled off a PPV without a full year of Spike tv promotion. Not 2 months. Even then nit is debatable if they ever will be able to have a PPV at that level.
Caidel, PPV provider takes half of the PPV revenue. So at $5 Bellator would only get half to cover all expense. They wouldnt even make a profit before giving Alverez anything. There would be to much production to charge $5 even then 200,000 buys would be doubtful. Thus far they have only reached that number a couple times in their 80 events when it was free. $5 right now would maybe get them 50,000 buys imo. That could change with more time on spike. Even then a PPV with Alverez vs Bendo would hit 300,000 buys on the low end. They rarely do worse for North American events. But now Bendo has been promoted on FOX which did very good ratings and his Docu show has been airing all over the FOX and FOX sports. SO he will sell more than his past fights. So depending on who else is on the card it shhould do 400K range and potential more. So a 400K buys would get him a cut of $200,000. 500K buys would be $400,000 bonus. Keep in mind that the most successful non ZUffa PPV was Affliction who was a house hold name among all MMA fans and was kinda mainstream with their clothing. They bought all the biggest stars who were much bigger than anything Bellator has and paid many millions to promote it and still only drew around `100-150,000 buys. So it will be hard for Bellator to ever compete on PPV. There would be no chance in hell of doing so in March like they claim. Plus im pretty sure they do not have a PPV deal with providers. That takes a lot of time because there are so many between the different cable branches and Direct TV and Dish Network. Basically their talk of a march event was a bold face lie. 3 months is not enough time to get all this done imo.
LOL at everyone blowing on the Viacom trumpet. They havent done anything for Bellator yet and they are not going to dump endless money into a dead end. Right now Bellator is a good investment because it is realitively cheap and has good upseide potential. But at the same time it is only a good deal as long as it is cheap. Viacom realizes how tough it will be to compete with the UFC and grow past past MMA promotions. They are not going to get crazy with the possible limitations hanging over their head.
I have a question maybe someone can answer. We are just recently getting these contract numbers. Was this the final numbers of a back and forth bidding war? Or was this a 1 time UFC offer that Bellator match? was the UFC/Alverez limited to one offer?
The reason i ask is this. Why didnt Bellator beat the numbers? UFC does 70 and 70. Why not do 75 or 80? They wouldnt cost that much but would beat the UFC offer without controversey. Maybe add 5,000 to every number even the signing bonus. It seems to me Bellator doesnt really care if they get Alverez. They didnt do anything to keep him when he wanted out of tournaments or to renew while he was under contract. Then pass up the chance to actually BEAT the UFC contract. With their inclusion of a PPV bonus they knew this would drag out in courts. So it sounds to me they wanted this battle with Alverez and later the UFC to make news and get their name out there at the same time as they move to Spike. Because of this their name will be all over all MMA news sites for months to come and also attacked to the UFC name for a while.
Alverez is their first and only real commitment to spending money on talent. Now it seems they dont even really want Alverez and know the wording and the PPV cut will assure they never have to pay the Alverez contract. They did nothing to put this court battle in their favor and they could have easily done so but choose to “match”.
Bellator has access to MTV, BET, and SpikeTV ad slots for promotion of the brand which I have already seen promo for across all these channels.
The marketing value that doesnt create any significant extra overhead is what benefits Viacom over UFC. I bet they have funding set aside to acquire some big names. One or two big names gets Bellators brand on the map quickly.
Hell.. they could.probably put on King Mo vs. Kimbo and draw over 2 million viewers
@Sampson Simpson
Alvarez will be co-headlining the GSP vs Diaz card. So we are talking north of 700K PPV buys. With the numbers the UFC are offering Alvarez: “$1 per buy between 200,000 and 400,000 buys. That would go up to $2 per buy between 400,000 and 600,000 and $2.50 for each buy over 600,000”.
Alvarez is looking at a potential payout of over a $1M here – assuming the fight does 700K buys. Note, G$P does those numbers in his sleep. Add Diaz to the mix, and the figure is headed towards 800K buys.
Bellator can’t come close to even offering a fighter an opportunity to make that kind of money .
Bellator will not attempt a PPV in 2013; they are ambitious, but not stupid. As they say in America, “the numbers don’t lie”.