As the class-action, antitrust lawsuit filed against the UFC by former fighters makes its way through a slow period, small pieces of new information make their way out. On Monday, it was the first deposition excerpts of a high-level UFC executive – former CEO Lorenzo Fertitta.
As part of a motion to seal a discussion of an old lawsuit and confidential settlement agreement – which appears to be related to the 2008 dispute between Mark Cuban’s HDNet MMA and the UFC over Randy Couture’s contractual status – UFC attorneys included two pages of Fertitta’s Mar. 23 testimony under questioning from fighter attorneys.
After a redacted section, fighter attorney’s questioned Fertitta about billionaires attempting to start competing MMA promotions, which then fed into a critical topic for the case: promoter barriers to entry.
In their complaint, fighters claim UFC tactics made it more difficult for other MMA promoters to compete, allowing the UFC to maintain and enhance monopoly power in the output market to consumers and monopsony power in the input market for fighter services. High barriers to effectively starting a new MMA promotion would support their side of the case.
When asked about the barriers to entry for competing with the UFC, Fertitta mentioned obtaining a license and a venue, neither of which he believed to be very significant. And lastly, “…there’s various levels of capital that could be required.”
From this point, Fertitta’s likely preparation by UFC attorneys begins to show. Since fighters will need to show antitrust injury, he noted that the capital requirements are no different from other businesses, “You know, it’s the same in most businesses. If I want to get into the gaming business and go get a license, I guess it’s not that high barrier of an entry, other than I have to have a clean background. If I choose to compete with or borrow 15 machines, there’s a different barrier than competing with the Golden Nugget that’s right behind us.”
When asked about other barriers, Fertitta pointed out that any new entrant to the market would also compete with Bellator, One FC, Fight Night, KSW, and the World Series of Fighting.
He then moved into a clear, targeted attack on one particular ingredient of the fighters’ monopoly broth theory: television distribution. Monopoly broth is the fighters claim that the UFC’s conduct as a whole with fighter, sponsor, television, and venue contracts caused harm. The UFC believes each element should be analyzed individually and Fertitta clearly set his sights on the television distribution element in the now-public portion of his deposition.
“Part of the competitive landscape historically has been distribution would be the final stage,” he said under oath. “And as I mentioned before, and it’s just fact based on what has happened historically, promotions can enter with very little barriers to entry and go from literally never have promoted a fight to being on CBS, like EliteXC.
“Or you can go from what, in your terms, was a regional promoter in Strikeforce to getting at the old Showtime, and at the flip of a switch, you’re a major player in the industry.
“You can go from being a startup in World Series of Fighting to getting a multi-fight media contract with NBC Sports and become a major player in the industry. You can go from being a startup now to going and doing a deal with ESPN, HBO.
“I guess when you think about how many channels there are on television, it gets to be hard to get your arms around because there’s so many points of distribution.”
The plaintiff fighters believe other MMA promoters are “minor leagues” and long-term UFC contracts made it more difficult for competing MMA promoters to access sponsors, television networks, and venues, as well as fighters.
And when asked about the equality of access to high-quality fighters, Fertitta’s answer is what would be expected from the side that will be arguing 2-3 year contracts are not long term and the market for fighter services should be considered global.
“There are thousands, maybe multiple thousands of fighters around the world,” Fertitta stated, “because, once again, this is a global sport in a global market, that have the aptitude and the capability to compete at the highest level. There’s no question about that.
“When you talk about – and I say this with my experience from being the CEO of the UFC. There is so much talent in markets like Brazil, Russia, now starting to evolve in Asia and of course North America given the level of talent and training that now exists. It’s literally an endless number of fighters that have the ability to compete at the highest level and be the highest level fighters.”
Questioning by fighter attorneys no doubt took the entire day and touched on all key areas of the case. In the little that could be seen, Fertitta appeared collected and composed, and gave strong answers to support his side.
Time may possibly tell what happened during the rest of his questioning, depending on how the case progresses.
The current case schedule was recently pushed back with the next major hearing on class certification scheduled for May/June 2018, summary judgment the following September/October, and a possible trial sometime afterwards – probably very late 2018 or early 2019.
Bloody Elbow will keep readers updated as the case progresses.
Paul covers MMA business and analytics for Bloody Elbow and is a former provider of expert witness support in antitrust cases. Follow him @MMAanalytics.
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