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How a $1.6 Billion Lawsuit May Change the UFC Forever - YouTube
Channel: Bloomberg Quicktake: Originals
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When I was 24 years old,
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I saw the UFC on a pay-per-view on TV.
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And I was so overwhelmed by
the athleticism, the skill.
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And then at the end of the
fight, the combatants hug,
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they shook hands, and I
just fell in love with it.
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Part of UFC's appeal is it doesn't
[28]
look like a balletic display
of marshal talent and mastery,
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as much as it looks like a bar fight.
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We choose to do this
because we love the sport,
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but it is a business.
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And if you do not treat
it like a business,
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I guarantee you that the promoter is.
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And you will be left broken,
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broken at the end of your career.
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Each of us have an individual story,
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but as with anything,
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you take enough of
these individual stories
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and you see not only crossover,
but intersectionality
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A group of former UFC fighters
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that are suing the UFC
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scored a key legal victory on Thursday
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when a federal judge said he would grant
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their lawsuit class-action status.
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There have been in fights
in every major US sport
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about workers' power in the labor market.
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I don't think there's a guy in the sport,
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from the guy who just got his first fight,
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all the way up to the Conor McGregor's,
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that is pleased with the
way the UFC treats fighters.
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The way we've been strong-armed,
the way we've been coerced.
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Fights over unionization in some sports,
[102]
fights over free agency in baseball.
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And in boxing, the Mohammad Ali Act,
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which restricts the
kinds of contract terms
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that can be imposed on boxers.
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The fighters who brought this lawsuit
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see it as the continuation
of a tradition in sports
[121]
of athletes fighting to have agency
[125]
and power in the terms of their work,
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and who they do it for.
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Mixed martial arts used
to be pretty culturally
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and legally fringe in the United States.
[142]
It was banned by most states.
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John McCain had famously
called it human cockfighting.
[149]
There are some rules in the
UFC, but to a large extent
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all sorts of body parts,
and tactics, and attacks
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are on the table, and people
get seriously injured at times.
[164]
My nose has been broken multiple times.
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I had my right pectoral torn off,
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had to get that reattached.
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I've had my jaw broken in two places.
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I've had my neck broken.
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I had my left ankle broken,
had to get that repaired.
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I've had a torn right
labrum in my shoulder.
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He broke my eyeball.
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I mean, the bone that holds up my eyeball.
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I've had my left eye
orbital fracture twice,
[186]
where my I caved in.
[187]
I was swallowing my own blood.
[188]
And I knew, don't blow your
nose or both eyes will blow.
[192]
At the time that UFC was
bought for just $2 million
[197]
by the former boxing coach,
Dana White, and a casino owner
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he'd been friends with, Lorenzo Fertitta,
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and his brother, Frank
Fertitta, UFC was struggling,
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as were other mixed
martial arts promoters.
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It was pretty much a fixer upper.
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The money that they spent
to actually purchase it
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for $2 million was much
less than the money
[221]
they quickly had to sink into
it in order to revitalize it.
[226]
They pulled off a multi-pronged strategy
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that was quite successful.
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First, they did what White has referred to
[234]
as running towards regulation.
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They found ways to make
compromises with state regulators
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so that the sport would not be illegal.
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And at the same time,
they also popularized it.
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They made gambles like paying
[251]
the production costs themselves
[253]
for the first season of a reality TV show,
[256]
"The Ultimate Fighter" on Spike TV.
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It's all over, it is all over!
[261]
Diego Sanchez is the ultimate fighter!
[265]
UFC, under Dana White,
had a gift for weaving
[269]
compelling personal
narratives and rivalry.
[272]
People throwing shoes,
[274]
a guy coming to the octagon with
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"Who Let the Dogs Out" playing
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while he was dragging
another guy on a leash.
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♪ Who let the dogs out? ♪
[283]
♪ Woof, woof, woof, woof ♪
[286]
My first contract with the UFC
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is kind of an interesting story,
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because here I am on this reality show,
[291]
"The Ultimate Fighter,"
[293]
and they started to realize
how big of a stepping stone
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this was going to be for the UFC.
[298]
Sat us all down individually,
[300]
put a contract in front of us and said,
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hey, we realize that
this is gonna be huge.
[305]
And we really wanna have you all a part of
[308]
the UFC family moving forward.
[310]
So we wanna go ahead and
get this out of the way.
[312]
Just sign this simple contract
[314]
and we'll be able to
move forward as one unit.
[317]
But as I'm looking at this thick contract
[319]
and wondering what I should do,
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Dana White looks at me
and says, don't worry.
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If this thing takes off
we'll take care of you.
[328]
The fighters would say, at
the heart of UFC's power
[332]
is the contracts that
it signs with fighters.
[337]
Before boxing had competition
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boxing used to be dominated
by a few dominant promoters.
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And the contracts were
ported over from boxing.
[344]
And the contracts are basically designed
[346]
to control every aspect
of a fighter's career.
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They're long-term.
[350]
They last multiple fights.
[352]
Fighters, under these contracts,
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are bound to fight only for
UFC for a period of time.
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And UFC can extend that time
[365]
if a fighter declines a match,
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or if a fighter gets injured.
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They control who the fighter fights,
[372]
they control when the fighter fights.
[374]
And then they have a
number of different clauses
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that make it very difficult for a fighter
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to ever break free from the UFC
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if that fighter ever did
want to become a free agent.
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Contracts are so one-sided,
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there really is no negotiation
room for any of the things,
[390]
especially as you're coming
up, and as their stranglehold
[393]
on the sport of MMA got so much stronger.
[398]
Part of what's at the
heart of this lawsuit
[401]
is the ways that UFC successfully
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took other competitors off the board.
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The UFC has such a stranglehold
[411]
on mixed martial arts.
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And as they were buying up
so much of the competition,
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shutting them all down, they
really became the only option
[420]
for anybody that wanted
to do this professionally.
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If you follow Dana White's Twitter,
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or watch him on YouTube,
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you could've seen Dana
White calling himself
[432]
the Grim Reaper, and bragging about
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how he has defeated, or
derailed, or acquired
[440]
one after another company
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that tried to compete with the UFC.
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In 2011, UFC acquired
Strikeforce, which at the time
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was the most prominent
rival still standing.
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Cung Le is unbelievable.
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It was a great fight.
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Let's hear it for them one more time.
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Scott Smith and Cung Le!
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The CEO of Strikeforce, Scott Coker,
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has said in the past that he
saw himself like Luke Skywalker
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up against the Death Star,
trying to compete with UFC.
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Eventually, when Strikeforce
was bought out by UFC,
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my only option was go to UFC
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'cause they had the rest of my contract.
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Now I'm under a contract where it's only
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an 18 month contract with six fights.
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But five years later, I'm
still stuck in the contract.
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Dana White, president of--
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The month before UFC's
parent company, Zuffa,
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completed its acquisition of Strikeforce,
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a UFC executive sent an email.
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And the subject line of
that email was, We Own MMA.
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And the UFC has admitted in documents
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that have now become
public, that they've almost
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never lost a fighter
that they wanted to keep.
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In internal UFC emails we now know
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the company referred to what it was doing
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as choking off oxygen to the competition.
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The most important
oxygen that UFC allegedly
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ran afoul of the law by
cutting off to its competitors,
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is the fighters themselves.
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And not only did they make it clear to us,
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they made it clear to the
whole mixed martial arts world.
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There is no negotiating.
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These are our very strict,
never-ending contracts.
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And that's the case to this day.
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UFC just says, oh, you wanna fight for us?
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You sign here.
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If you don't want to,
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we've got 20 other guys
that'll take your spot.
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They have 70, 80, 90% of the top fighters
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under exclusive contract.
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Meaning that those
fighters are not available
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to any other MMA promoter.
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And fighters, even if
they wiggled their way out
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of the very restrictive contracts
that UFC imposed on them,
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didn't have another professional
mixed martial arts option
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because there weren't robust rivals
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to go sell their work to.
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On Tuesday afternoon,
a class-action lawsuit
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was filed in US district court in San Jose
[585]
against the Zuffa LLC with
fighters Cung Le, Nate Quarry,
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and Jon Fitch attached to the suit.
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Rampage Jackson came to
me, he says, hey Cung,
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I know this lawyer.
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He will help get some
fairness for the fighters
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in the marketplace.
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And I decided I wanted to step up
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for all the fighters
that are being affected.
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At the end of 2014, more
than six years ago now,
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a group of now all former fighters
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filed a anti-trust class-action
lawsuit against UFC.
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And in broad terms, the
case is an anti-trust case,
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where we're claiming that the UFC
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is both a monopoly and a monopsony.
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Usually when we talk about monopoly,
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we're talking about the
power that a company has
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when it becomes the only
one selling something.
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Monopsony is about the power of being
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a monopoly purchaser of something,
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and particularly a monopoly
purchaser of labor.
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A key argument in this
lawsuit has been about,
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as UFC succeeds, and its revenue soars,
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how much should we expect
that, absent illegal conduct,
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the fighters pay would soar as well?
[665]
In UFC, year after year,
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the share of the company's revenue
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that goes to actually paying the workers
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doing the fighting has
hovered around or below 20%.
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And what this analysis shows
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through complex statistical
regression modeling
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is that if the UFC was competitive,
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and did not allegedly
violate the anti-trust laws,
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it would pay its fighters 50% or more
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of the revenues it's
generated, just like baseball,
[697]
just like hockey, just
like basketball, boxing.
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If instead of paying 20%
of the revenues generated
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it paid 50% or more of
the revenues generated,
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the fighters would have
made $1.6 billion more
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during the period that we
measured, 2010 to 2017.
[716]
Sometimes when you write about allegations
[720]
against companies, and
particularly about lawsuits
[723]
against companies, those companies
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don't wanna say a whole lot about them,
[730]
or are pretty dismissive
of the significance
[733]
of litigation against them.
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UFC, in their comments to me,
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has been pretty feisty about this.
[740]
Saying that they see this lawsuit actually
[743]
as a threat to the ability of businesses
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to take risks and succeed.
[748]
And that they don't wanna roll over,
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that they want to fight it,
and they want to defeat it.
[756]
The fighters I talked to
described having side jobs,
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being reliant on UFC in part because,
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after taxes and expenses, they weren't
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making enough money to
feel financially secure.
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The overview of my career
from a financial perspective
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is something I've had a
challenge in admitting.
[780]
I can tell you now that I lived
in my mom's detached garage
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the entire time I was fighting,
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and I had a second job as
a bouncer and a bartender,
[787]
a third job as a personal
trainer, just to make ends meet.
[790]
Nate Quarry told me that
over his time in UFC
[794]
he fought fights while he was
tens of thousands of dollars
[799]
in debt coming into the fight.
[801]
It gets so disheartening
because I've seen fights
[805]
that are called the fight of the year.
[807]
This is just this brutal war.
[810]
And they battled for
four and a half rounds
[813]
until one guy's body just gave up.
[815]
And then you find out, oh,
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that guy made $60,000 for that fight.
[821]
In one of the hearings in this lawsuit,
[824]
UFC's attorney argued that
[827]
if the fighters were really the product,
[829]
if all that UFC were
selling were the fighters,
[832]
then the fighters
wouldn't need UFC at all.
[834]
That a fighter is not
themselves the UFC product,
[840]
any more than an Apple engineer
[843]
who makes a cool iPhone is the product
[846]
that Apple is selling.
[848]
We the fighters make
this whole thing happen.
[851]
And it's been driven by Chuck Liddell,
[853]
it's been driven by Randy Couture,
[854]
it's been driven by Conor McGregor,
[855]
it's been driven by Brock Lesnar.
[857]
It's been driven by all
the greats that have walked
[859]
before us and that walk
this path right now.
[862]
We are the product.
[863]
If the fighters are not the product,
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then go ahead and release
us from our contracts.
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You'll do fine without us, clearly.
[870]
It's the identity, and
rank, and popularity
[873]
of those fighters that
attract the eyeballs
[876]
and make the sport what it is.
[877]
And if you can lock all those up
[879]
and keep them from other promotions.
[886]
William Isaacson, a lawyer for UFC,
[888]
said in a statement that
UFC has spent many years
[891]
building a world-class organization,
[893]
enhancing the brand of our athletes,
[896]
and championing the sport of MMA.
[899]
UFC pays its fighters more
than any other MMA promoter,
[902]
with average fighter compensation rising
[904]
by over 600% since 2005.
[908]
Our efforts have raised
the global popularity
[910]
of the sport and the
overall revenue potential
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of all MMA organizations and athletes.
[916]
In December of 2020,
[921]
the judge announced a
crucial step in this lawsuit,
[925]
which is that he is going to
certify it as a class-action.
[930]
Class certification makes this lawsuit
[933]
a much more significant threat to UFC.
[937]
And the judge made clear long before
[939]
saying how he planned to rule,
[941]
that he expected whatever
he did to be appealed
[944]
into Federal Appeals Court,
[946]
and on from there to the US Supreme Court.
[949]
So we are likely in for many more months
[953]
and years of wrangling over this.
[960]
Kyle Kingsbury said that he
doesn't think any settlement
[964]
would be acceptable unless it includes
[967]
a change to the restrictive
contracts that UFC uses
[971]
to keep fighters bound to the UFC.
[975]
My son's about to turn six years old
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and it started when he was in the womb.
[979]
You know, we're in this thing to the end
[981]
to change the sport forever.
[983]
We want the same freedoms that are offered
[985]
in any other major sport.
[987]
We are, every other major
sport has gone through
[989]
what we're going through right now.
[991]
People tell fighters,
you know, just shut up,
[994]
look at how lucky you are.
[997]
Well no, actually, we're
fighting for what we believe in.
[1002]
We're gonna continue being fighters.
[1003]
And that's how we're made.
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