Suit over pay may cost UFC billions

Suit over pay may cost UFC billions

NEW YORK • A federal judge said on Thursday that he would make an important procedural ruling in favour of a group of mixed martial arts exponents who are suing the Ultimate Fighting Championship (UFC), accusing it of abusing monopoly power to suppress fighter pay.

The lawsuit, which will be granted class action status on Monday, could eventually cost the UFC billions of dollars, fundamentally alter the world of MMA and establish new antitrust case law.

The lawsuit was filed against the UFC’s parent company, Zuffa, in 2014 by Vietnam-born American Cung Le and a handful of other former UFC fighters.

The ruling by Judge Richard Boulware means every fighter who competed in the UFC between late 2010 and 2017 – around 1,200 – will be a part of the lawsuit unless they opt out.

However, in a small victory for the UFC, Boulware declined to allow a smaller part of the lawsuit to go forward, choosing not to grant class action status to the fighters’ claims the UFC also suppressed earnings from their image rights.

If the plaintiffs succeed, experts estimated total damages may be in the range of US$2.5 billion to US$5 billion (S$6.7 billion).

At an evidentiary hearing in 2018, one expert for the plaintiffs said the fighters were deprived of US$1.6 billion in pay because MMA lacks a competitive labour market, and in antitrust cases, damages are trebled.

That figure was determined by a formula comparing the UFC, where less than 20 per cent of total revenue has historically been paid to fighters, to major team sports like the National Basketball Association and National Football League, where players receive about 50 per cent of total revenue.

The fighters are also seeking structural remedies, like a ban on long-term contracts, that could make it easier for potential challengers to the UFC to arise.

While there are other professional MMA organisations, like Bellator and One Championship, the UFC’s dominance has been undisputed since it bought over and folded at least five competitors beginning in 2006.

Controlling fighter pay is key to the UFC’s business. It was bought in 2016 by Endeavor, a Hollywood-based entertainment, sports and media conglomerate backed by private equity money, for US$4 billion.

At a hearing in September, lawyers for the UFC indicated they would appeal against any ruling granting class action certification. The UFC has also filed a motion for summary judgment that the judge must rule on, essentially arguing that the fighters have no case and that the suit should be thrown out.

The case is one of the most significant efforts to deploy century-old antitrust law to attack “monopsony” power, the leverage companies can wield by cutting off workers’ ability to find work elsewhere, but is expected to still take years to resolve unless there is a settlement.

BLOOMBERG, NYTIMES