Culinary Workers Union Local 226, the group at the heart of the cockblocking of MMA legalization in New York issue, has issued a four-page letter encouraging the FTC to investigate Zuffa, LLC’s actions as possible antitrust violations. (At this point we are supposed to go volunteer for duty as Anderson Silva’s punching bag until we forget that the FTC is already investigating Zuffa.) Among other things, they allege that the UFC:
- Has bought out its key competitors to increase its market share
- Refuses to co-promote events
- Uses contractual restraints, including automatic renewal clauses (the “champion’s clause”), exclusive negotiating, and matching clauses to limit athletes’ freedom of movement
- Institutes merchandising and likeness rights agreements that last FOREVER and therefore deprive athletes of a chance to capitalize on their success
Perhaps we should expect this from the organization that funded funded New York State Assemblyman Bob Reilly’s campaign. After all, they have been at war with the Fertittas’ casino company for quite some time over their anti-union stance. And they have to deal with cranky restaurant patrons whining about flies in soup all day. So the fact that they are trying to Gerard Gordeau the UFC in any way possible is really no surprise, but this letter in and of itself has about as much significance as the incarcerated Joe Son has in the heavyweight division. It is pretty much just a publicity stunt crossed with an amicus curiae brief, which is a letter to a court from a third party that is commonly swatted away like a fly ogling Matt Lindland’s delectable stench. This document does, however, have the potential to cast light on some issues that the FTC may already be investigating.
A discussion of these issues after the jump!
What is the culinary union bitching about?
The net effect of the UFC’s cold, prickly actions, says the culinary union, is to force fighters to sign their labor, corpses, and souls away to the Great Satan that is the UFC, ultimately limiting their pay and opportunities. They quote some figures such as an estimation by the Mixed Martial Arts Fighters Association (whatever the fuck that is) that UFC fighters received only 5.7% of the total gate plus PPV revenues at five UFC events in 2009. (How they selected those five events, and whether they are actually full of shit, they don’t say.) According to the culinary union’s reasoning, if the UFC wasn’t such a mean and grumpy dirty-old-man type of organization, fighters would get a bigger share of the profits and the market would provide more competition for their services.
The fate of Zuffa, LLC has been largely separate from that of Station Casinos ever since the UFC first turned a profit and became independent of retarded gamblers’ dollars, so hurting Zuffa would have virtually no repercussions on the culinary union’s war against the Fertittas’ casino company. But the fact that the UFC does not have anything to do with the culinary union is a side issue that they see as largely besides the point. These are people who cut up flesh for a living, and they want blood. BLOOD! One big problem, however, is that the majority of the issues the culinary union is complaining about seem to have no possible solution that would meaningfully change things other than the forcible pan frying of the Fertittas’ testicles. And really, that wouldn’t change much either in terms of how the UFC would do business, but it would cause the Fertittas an immense amount of pain, and it would probably be delicious, both of which are outcomes desired by the culinary union.
Eliminating the competition
The fact that the UFC has bought out (or buried alive) the majority of its serious competitors over the last several years is easy to see. From the IFL to the WFA to PRIDE to the WEC to Affliction to StrikeForce, the UFC has never met another MMA organization with serious cred that it didn’t want to bury under a pile of shit. Even Yuki Nakai could see that the UFC has made itself “the only game in town” when it comes to offering big paydays on a consistent basis without bankrupting the organization.
The only problem is, the FTC can probably do precisely jack shit about it according to their own antitrust laws and legal precedents. As I have stated before, the UFC most likely cannot be penalized for the sole reason that it currently has the vast majority of the MMA market in its evil demon thrall. In order for the UFC to be penalized for that, it would have to be proven that the UFC, alone or in concert with competitors, shovels shit on top of anyone who attempts to run a show, or that the barriers to promoting MMA shows are so high that it is impossible for any competition to exist. This would, of course, be foolishness. The existence of midget cage fighting is all we need to prove that the barriers for entry into the MMA market are relatively low. (All you have to buy is a padded chicken cage!) Even Dana White has said that “anyone who can rub two nickels together” can try to get into the fight business, and the market contains so many local promotions that this path of investigation seems highly unlikely to bear any fruit.
Sure, the UFC may have tried to make it impossible for Affliction to do business in Vegas, but if no one will talk about it, then there’s no proof. And smart money says that no one will talk about it. The UFC might have tried to recruit fighters away from Affliction and Bellator, thereby making it harder for those two companies to run shows, but those allegations will probably be impossible to prove: both Affliction and Bellator have been “prevailed upon” to allow their fighters to compete in the UFC, and the issue of Jonathan Brookins’ Bellator contract is a subject of separate ongoing litigation.
Refusing to co-promote
The UFC’s refusal to co-promote shows is another issue brought up by the culinary union. The UFC’s massive cyber-wang would be magically shrunk to be comensurate with others’, the union says, if the UFC would just lighten up and co-promote with the charming, non-sleazy individuals in charge of M-1 Global. They claim that the UFC’s failure to play paddy cake with Vadim Finkelstein could be a violation of section 2 of the Sherman antitrust act, which outlaws conspiracies to monopolize trade in an industry. The culinary union believes that it would also be nice if half the cans in a case of Coca Cola said “Pepsi” on them.
The impression that this argument gives off is the same as that which we get when Ken Shamrock always promises us that he’ll win. It’s impossible to force the UFC to spend its money to dilute its own brand in order to legitimize other promotions. Sure, Microsoft may have been sued because bundling MSN Messenger with Windows made it hard for other IM clients to sell, but even though the court ruled that Microsoft acted illegally, no damages were even awarded because that other IM software sucked ass and was a fucking ripoff. The judge never even considered ordering Microsoft to distribute third-party software along with Windows, and the judge also did not require Microsoft to start sneaking copies of the latest Tandy OS into Windows boxes.
One of the reasons why it will be difficult if not impossible for the FTC to prove that the UFC is illegally conspiring to shut others out of the market is precisely because they refuse to co-promote. If they were to co-promote with, say, M-1 Global, and M-1 Global and the UFC became the only promotions around due to the strength of this collaboration, then that could be illegal under antitrust laws, and the cooperation would most likely leave an indictable paper trail that would make them much more likely to get caught. If the UFC acts on its own to dominate the market, it is much easier for them to claim that they are simply trying to be the best promotion they can and having success at it.
The culinary union also takes exception to “automatic extension clauses” in UFC contracts. The UFC’s “champion clause” does have the potential to limit a fighter’s mobility and negotiating power, but has as much practical effect as tits on a bull. Sherdog reported in 2007 that the standard Zuffa contract provides for an “extension term” of one year or three fights, whichever comes first:
Sherdog.com has confirmed the existence of a so-called champion’s clause, which provides that “if, at the expiration of the Term, Fighter is then UFC champion, the Term shall be automatically extended for a period commencing on the Termination Date and ending on the earlier of (i) one (1) year from the Termination Date; or (ii) the date on which Fighter has participated in three (3) bouts promoted by ZUFFA following the Termination Date (“Extension Term”).
Even though Zuffa pretty much never uses this clause because they consistently steer clear of offering title fights to fighters who have only one fight left on their contract, the culinary union contends that this hurts fighters’ bargaining power and is generally sticky and icky. The UFC’s automatic contract extensions for champions are slightly reminiscent of Don King’s “I get to represent the winner no matter who wins” clauses, but the bigs at the UFC have never been accused of being quite as unconscionably evil as Don King, and both fighters have already voluntarily signed UFC contracts before taking the title fight. There are no independent sanctioning bodies in MMA (RIP WAMMA… at least you can buy their belt on eBay), so the Muhammad Ali Act’s prohibition on requiring fighters to sign away future promotional rights as a condition of fighting in a mandatory title defense are largely moot. And although Don King inspired the creation of new federal laws with some of his abuses, even he was never accused of violations of antitrust law.
The culinary union letter states that courts have deemed certain restrictions on athlete movement as anticompetitive. The US Supreme Court did indeed overrule the old Rozelle rule in the NFL, which once forced a team signing a free agent to compensate the player’s old team. (Wait a minute… franchise tags, restricted free agency, and salary caps still exist… WTF? *head explodes*) However, a look at the long-ass legal document that the union uses as a source (do not click) reveals that professional sports organizations who are defendants usually receive analysis of the issue under the “Rule of Reason”, which states that only actions unreasonably restricting trade are subject to action under antitrust laws. Therefore, some actions that restrict trade, and even some cooperation between business entities, such as when Scott Coker gave Dana White a hand party in the bathroom in order to convince Zuffa to buy Strikeforce, may be allowed.
Regarding the issue of the contract clauses that entomb the best fighters in a maximum-security UFC hoosegow, lasting change being brought about by the FTC investigation is about as likely as Tank Abbott winning the Nobel Prize for physics. A 12-month extension is not likely to meet legal criteria for being considered “unreasonable”, especially when the champion still gets to fucking fight during the extension term. Non-compete clauses are par for the course in many industries, and a standard 24-month noncompete clause for someone in another business is like unlubricated anal fisting compared to the champion clause. The 120-day exclusive negotiation and matching period that the UFC recently enforced on Alistair Overeem is also unlikely to be dismissed as “unreasonable”.
… And the insane likeness rights agreement
The merchandising and likeness rights issue is perhaps the most compelling thing in the culinary union’s letter. By forcing fighters to sign their digital likeness rights away until they become worm and tree food, the UFC definitely makes it difficult for other companies, such as EA, to create video games and other MMA-related merchandise. This also prevents the fighters from having a fair shake at getting the best possible deal for themselves. When the UFC cuts an entire team because one guy expresses reservations about the deal, it indicates that without Gestapo/Hulk Smash tactics, the deal might have had many more problems getting over with fighters.
The terms of the UFC merchandising agreement are almost unfathomable in terms of the rights that they force fighters to sign away. The UFC gets the right to a fighter’s likeness in perpetuity, even after he is cut, and it’s an exclusive deal, meaning that ONLY the UFC gets to profit off the fighter’s likeness in the marketplace. The agreement pays the fighters only 10% of Zuffa merchandise sales and 20% of third party merchandise sales. It provides no slice of video game or DVD revenue, and fighters get no guaranteed minimum amount of compensation. Furthermore, there is no auditing mechanism to make sure that the payments are fair. It’s difficult to see how this is the best agreement the fighters could have gotten if they were permitted to have a voice in the negotiations besides whimpering “yes, master” while a stiletto heel dug into their balls.
The only problem is, no fighters will probably be willing to talk about feeling victimized by this contract because they know that anyone who “doesn’t support the UFC” is promptly cut from the organization. And in any event, they “voluntarily” signed the contract. So it will probably end up as EA whining that they weren’t able to convince more fighters to be in their video game with nothing more than hearsay to back it up.
What the fuck happens now?
Most likely, the answer to that question is “a whole lot of nothing”. The FTC will conduct its investigation, but the threat of revenge by the UFC is simply too great for its own fighters to give the FTC the evidence it needs to find the UFC guilty of serious misconduct. The UFC’s reputation for rash action is well deserved, and a grumpy Dana is a destructive Dana. See my other article on the subject for some possible consequences of pissing the UFC off, including but not limited to death.
The UFC buying out its competition is probably not even illegal, and the purchased entities seem happy with the deals they got. ($65 million for the hollowed-out shell of a bankrupt PRIDE FC ain’t bad.) Refusing to co-promote is probably also not illegal, and M-1 would look like a bunch of fucking babies complaining to the FTC that the UFC won’t play nice with them. UFC fighters know better than to go on record criticizing the terms of their UFC contracts at this point. The likeness rights agreement issues would be the easiest thing to find fault with, but at this point all they’ve got is EA possibly whining about not being able to sign more fighters and a bunch of fighters swearing that the thought of signing with EA never crossed their minds. This leaves the FTC with as many actionable items as Dan Henderson has front teeth.
Let’s not forget that the NFL Players’ Association and the NFL have been periodically at each others’ throats for over five decades, but even though the NFL has been declared an illegal monopoly by courts, it keeps right on trucking, and no amount of antitrust litigation has ever impacted the NFL’s stature as the premier organization in its sport. At the end of the day, the NFLPA has a vested interest in working with the league. Similarly, although the UFC may be evil, at times, and although its fighters may not be unionized, having a happy and healthy UFC around really is the best thing for fighters. And not JUST because a happy UFC will refrain from stomping their guts out. They also offer a dental plan.