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The UFC antitrust suit has been in motion for more than eight years, and three of those were spent waiting for class certification. The plaintiffs finally achieved that in early August with the honorable Judge Boulware also issuing his written opinion which was strongly worded with pointed references to the stranglehold the company has on MMA.
The community has been abuzz about what will happen next and what Boulware’s comments mean. One of the lead attorneys for the plaintiffs — the person who in fact came up with the idea for this lawsuit — Rob Maysey, stopped by the Hey Not the Face! Podcast to answer some of those questions and fielded plenty of others ranging from how predatory managers impede progress to the Herculean task of trying to get the Muhammad Ali Boxing Reform Act applied to MMA.
Debunking UFC’s appeal: Owners had massive payouts
According to reports from Jason Cruz and Paul Gift, longtime hosts of Bloody Elbow’s Show Money podcast, the UFC filed an appeal with the the U.S. Court of Appeals for the Ninth Circuit on August 23, 2023.
The MMA promotion cited that the ruling could “unleash a new breed of antitrust class actions” that pose “drastic and unprecedented consequences” and “put courts in the role of effectively setting compensation” for workers. They argue that the $1.6B in damages (which would be trebled up to $4.8B) the plaintiffs are seeking is excessive, noting the figures far exceed the $235 million net income the UFC made during the class period.
According to Maysey, the defendants don’t have a solid stance here because they put themselves in that position.
“We had a fourth expert report that I believe was entirely sealed, or for the most part, entirely sealed. That was the Guy Davis report. His report is basically an accounting of cash in versus cash out. So, you’ll see one of Zuffa’s arguments in the petition of appeal was, if plaintiffs win, they’re going to destroy Zuffa as a company because that’s basically their damage award,” Maysey told Bloody Elbow.
“‘Our revenues are only 5% of that.’ Well, if you follow their cash in, cash out model, you’ll notice the reason their net income is showing low is because they’ve paid out billions in advance to the owners, which they fund with loans. That’s not operating costs, that’s not operating expense, that’s them taking money from the future to pay prior owners.”
John Nash reported on this four years ago with citations discovering through the course of his deep dive into the documentation the UFC sale and antitrust suit provided that UFC owners received large payments financed mostly through loans.
“It is worth noting that in addition to whatever distributions the owners were paid from the promotion’s profits, they also received large payments that were mostly financed through loans. $199 million of the original $300 million, 2007 loan was earmarked as a dividend payment to Zuffa’s owners.
“Another $305 million in distributions was paid out in 2009, according to Dana White’s deposition. During that year, Zuffa had taken out another $100 million loan of which $70 million was reportedly going to be used to pay the owners. The Fertittas and White also sold 10% of Zuffa to Flash Entertainment that year for an undisclosed amount.”
Clear conscience
Because the damages are so high, if the plaintiffs won, the UFC could end up losing everything that made them such a valuable property. When asked if this was a bother to his conscience or that of his team, Maysey offered,
“We don’t care at all. In fact, we strongly believe the UFC isn’t going away. Their brand is too big, sort of too well-known,” he said. “But to your point, what could happen is instead of being worth $12 billion, it could be worth $200 million, which is what it should be worth. That’s what a large boxing promoter is worth. They are worth $12 billion because they’ve monopolized the sport and get the vast majority of the revenue.
“If we undo their mechanism for getting 85% of the dollars, of course, their evaluation should fall, but they still have a very powerful brand that the public will still have some attachment to. They will still be able to sign fighters. The guys that you kind of blame for putting this together, the Fertittas and Endeavor, they’re not going to be paying the damages. The damages are likely going to come from the pockets of shareholders that are going to be buying the company when it goes public.”
What about the MMAFA?
Maysey also spoke about why he thinks his MMAFA (MMA Fighters Association) has been around for so long (15 years). It’s seen entities like Project Spearhead, PFA (Professional Fighters Association) and the MMAAA (MMA Athletes Association) come and go, while it remains stalwart in its mission to help fighters organize and prosper in their MMA careers.
“I would say another great source of frustration is there’s a reason we’re the only ones left. We’re the only ones working on the solution. All these other efforts are spinning nonsense and seeking press. And I honestly believe that. If they understood this industry, they would know fighters cannot be employees. Cannot. It’s not an option. Let’s make them employees so we can bargain. No, no, no. They cannot be employees. And if they can’t be employees, that takes out union.
“Second, if they understood how unions worked in league sports, they would know it’s not the union that provides wage growth, it’s free agency. Where is free agency in League UFC? The fix that we have to do is we have to make MMA just like every other sport where all parties have to compete against each other. And the way you do that is you have to separate rank and title from the promoter,” Maysey opined.
“That is a recipe that never should have been allowed for UFC monopoly. It’s right in the congressional history of the Ali Act. If you allow promoters to control rank and title or to require long-term exclusivity to fight for their belt, you get just one. You end up with monopoly. The UFC knew this. This was their plan right from the jump. I am convinced of that. It took them until Strikeforce’s purchase to finalize their control, but it was the intent all along.”
Managers who serve their UFC masters
Maysey also spoke about the problems predatory MMA managers create when they abandon their fiduciary responsibility to their clients by taking the path of least resistance or outright serving UFC needs ahead of their client’s needs.
“I’ve said many times our biggest impediment is not Dana, it’s the managers. The managers want to keep us, for whatever reason, away,” Maysey said. “There’s a big fear about being affiliated with us, so much so that there’s even been occasions when I’m trying to do educational meetings with groups and I have trouble getting into the gyms simply because it’s me.
“I have to find a neutral location somewhere. At times it’s been hotel conference rooms because I can’t do it in the gym, they don’t want me there. I hope that’s going to change as they start seeing more concrete changes. And again, there’s only one group making these changes, it’s nobody else, it’s not managers that are doing this, it’s us, it’s just us.”
A worst case scenario option for the UFC
With the threat of injunctive relief, the unveiling of another spate of previously sealed documents and a fast-track class action settlement, the UFC is in a precarious space. Zach Arnold of Fight Opinion pondered another option the UFC might have in a worst case scenario.
“Ari Emanuel will sell UFC to the highest bidder. The question is whether it’s sooner rather than later. In a short time span, he took an outrageous valuation of $4 billion dollars and turned it into a $12 billion dollar valuation. He managed to de-risk a business that is infamous for a 99.4% failure rate in combat sports. It’s a monumental achievement. However, the fallout from the antitrust lawsuit could dramatically change the way UFC does business in the future. Does he want to stick around and do business in a completely different environment than the one he invested in?
The biggest challenge – and reward – for Ari Emanuel moving forward is showing the highest bidder that UFC is not simply a sports property. It’s not an entertainment property. It’s a political operation of the highest order. What the Saudi Public Investment Fund thought they would get through LIV Golf or a partnership with the PGA is what they really could get if they bought out the UFC.”
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