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Antitrust Class Action Suit Threatens to Put UFC in Choke Hold

When people talk about mixed martial arts ("MMA"), it is likely within the octagonal context of the Ultimate Fighting Championship ("UFC"). UFC exploded onto the domestic sports scene over 20 years ago and has since firmly established itself as the premier MMA league in the United States with an estimated value between $2 and $4 billion. UFC's parent company, Zuffa, LLC, rakes in nearly $500 million in annual revenue through the promotion of live events, merchandising, licensing fees, sponsorships, advertising fees, video game fees, and digital media revenue streams.

One way that UFC has maintained its industry dominance is by absorbing its competitors. The MMA behemoth successfully tag-teamed its way to capturing approximately 85-90% of the total revenue derived from live elite professional MMA bouts. Unfortunately for UFC, the league's dominance has prompted several disgruntled MMA fighters to punch back.

In a complaint filed on December 16, 2014 in the United States District Court in San Jose, California, three former UFC fighters contested the legality of UFC's business practices, which allegedly contributed to the league's dominance in MMA. The plaintiffs, Jon Fitch, Nate Quarry, and Cung Le (the "Plaintiffs"), claim that UFC violated Section 2 of the Sherman Antitrust Act by using overarching anticompetitive schemes to maintain and enhance its monopoly and monopsony power in the market for live elite professional MMA fighter services. (Le, et al. v. Zuffa, No. 14-05484 (N.D. Cal. filed Dec. 16, 2014)).

The complaint identifies UFC's alleged monopoly and monopsony power – a veritable double leg takedown – as the driving forces behind fighter compensation suppression and the inappropriate expropriation of UFC fighters' identities and likenesses. According to the complaint, UFC's industry dominance enables the league to pay fighters a mere fraction of what they would make in a competitive market. The Plaintiffs claim that UFC fighters earn approximately 10-17% of the revenue generated from a bout, compared to the nearly 50% revenue earned by athletes in the four major sports leagues.

The Plaintiffs highlight UFC's exclusivity contracts with several major physical venues for their MMA bouts as additional evidence of the league's illegal monopoly power. As a result of these contracts, the Plaintiffs claim that other MMA leagues are precluded from hosting their events in these venues, which purportedly suppresses revenue and prevents growth by eliminating channels for international exposure. The Plaintiffs further claim that UFC forces prospective UFC fighters to sign contracts that bar them from working with would-be rival MMA promotion companies.

The case against UFC might have some traction, at least in part, due to the league's social media presence. In 2012, UFC president Dana White delivered a below-the-belt blow to the industry by uploading a video of himself to YouTube holding a tombstone with the names of former MMA competitors along with their "dates of death." White refers to himself as the 'Grim Reaper' in the video, which has since been taken down. White has also made comments on Twitter and in interviews boasting about the lack of competition in MMA.

The legal battle between the Plaintiffs and UFC is only in the first round, but the stage has been set for a potentially long and brutal fight. UFC has not yet filed an answer to the complaint, but affirms that it will "vigorously defend itself and its business practices." While the Plaintiffs have been waiting for class certification for their suit, two similar lawsuits have been filed (an undercard of sorts) on behalf of four different MMA fighters.

Fighters and enthusiasts alike are sitting ringside, popcorn in hand, anxious to see how this lawsuit will affect the future of MMA. Until then, the industry eagerly awaits the judge's scorecard.

© 2020 Proskauer Rose LLP. National Law Review, Volume V, Number 35


About this Author

L. Robert Batterman, Labor, Management, Sports, Attorney, Proskauer, Law Firm

A partner since 1974, Bob Batterman has considerable experience representing both individual employers and multi-employer groups in union relations and collective bargaining. Much of Bob’s time is spent in day-to-day contact with clients, often in “crisis” situations where a rapid resolution of union-related problems is vital.

Bob is a senior member of our nationally recognized Sports Law Group, serving as labor counsel to the National Hockey League, Major League Soccer and the National Football League. He has extensive experience in collective...

Michael Cardozo, Commercial Litigation Attorney, Proskauer, Law Firm

Michael A. Cardozo is a Partner in Proskauer’s Litigation Department and the former Corporation Counsel for the City of New York. As the city's 77th and longest serving Corporation Counsel, he was the city’s chief legal officer, headed the city's Law Department of more than 700 lawyers, and served from 2002 through 2013 as legal counsel to Mayor Michael Bloomberg, elected officials, the city and its agencies.

Michael’s experience managing large litigations in both the private and public sectors provides him with unique insight into litigation assessments, risk management and mitigation issues. In his role as head of the New York City Law Department, he effected numerous changes that resulted in significantly increased efficiency. He achieved this by greatly expanding the use of technology and statistical data allowing for effective risk/cost analysis of cases.

Robert L. Freeman, Technology, Media, Sports, Attorney, Proskauer, Law Firm

Robert E. Freeman is a Partner in the Corporate Department and a member of the Sports Law Group and Technology, Media & Communications Group.

Rob began his career as an intellectual property litigator before shifting the focus of his practice to intellectual property-related transactions. Today, he helps lead a team of media, sports and entertainment attorneys representing clients such as Time Warner Cable, Discovery Communications, the WTA, the Orlando Magic, Scripps Networks, Armstrong Cable, the PAC-12, Insight Communications and CBS Sports. Rob’s work for these clients...

Howard Ganz, Sports, Employment Attorney, Proskauer, Law Firm

Howard Ganz is co-head of the Sports Law Group and former co-Chair of the Labor & Employment Law Department.

Howard represents and counsels clients with respect to a wide variety of labor and employment matters, such as employment discrimination, sexual harassment, wrongful discharge, defamation, breach of contract, discipline, and large-scale reductions-in-force. His litigation experience has run the gamut, from single plaintiff lawsuits to major class actions, in federal and state courts in New York and elsewhere. The clients Howard has represented include the National...

Wayne D. Katz, Finance, Sports, Attorney, Proskauer, Law Firm

Wayne D. Katz is a Partner in the Corporate Department, specializing in the sports industry.

Wayne's experience includes the representation of the National Basketball Association and National Hockey League in their various corporate matters, including team ownership transfers and team financings. Major transactions he has worked on for the leagues include the NBA’s purchase and sale of the New Orleans Hornets; the NBA's grant of expansion franchises to Toronto, Vancouver and Charlotte; the NHL's grant of expansion franchises to Nashville, Atlanta, Columbus and Minnesota; the NBA’s $...