Last week the Plaintiffs filed their opposition to Zuffa’s motion for summary judgement in the ongoing antitrust lawsuit alleging unlawful business practices by the UFC.
Zuffa is trying to have the lawsuit tossed before trial arguing that, now that discovery is complete, no genuine issue of material fact remains and the case has no chance of success even if the evidence is viewed in a light most favourable to the Plaintiffs. The Plaintiffs opposition disputes this and if successful clears the path towards trial where major damages are at stake.
In the course of the lawsuit the Plaintiffs antitrust allegations have been refined and the latest filing reveals their current argument. In short the Plaintiffs say that the UFC acquired/maintained monopoly/monopsony power by acquiring a critical mass of top fighters and foreclosing competitors from being able to acquire a necessary stable of fighters to compete through the use of improper contracts and heavy handed business practices.
The fighters argue that the UFC is the only “major league” MMA promotion and no other competitor can acquire a critical mass of top talent to become one making true competition impossible. Its suggested that this position was acquired by locking in talent with contracts whose terms effectively exceed the average fighter’s career length thus keeping top talent from true free agency.
Fighters suggest the following terms work together to help them maintain their market position and foreclose genuine competition –
a. The Exclusivity Clause – prevents UFC Fighters from appearing for other promoters and the better the Fighter the longer the term
b. The Right to Match Clause – gives Zuffa the right to match any offer made to a Fighter by another promoter after the exclusive contract term expires and after any exclusive negotiation period expires
c. The Exclusive Negotiation Clause – gives Zuffa the exclusive right to negotiate with Fighter after the term, typically for 3 months
d. The Champions Clause – gives Zuffa the right to extend the contract of a Fighter who is the champion of any weight class at the end of the term
The picture painted is Zuffa using these clauses and their market position to “to make exclusive contracts effectively perpetual” by using heavy handed tactics such as forcing “fighters to renegotiate before the end of the existing contracts term to prevent te Fighters from ever becoming free agents”. The Plaintiff suggest that fighters who refuse faced “coercion, threats, and aggressive contractual enforcement” in essence sidelining their career for critical periods.
A business model emerges of Zuffa being able to sign up and coming top talent to long term contracts. From there they are able to release fighters who don’t succeed and lock the emerging cream of the crop to even longer term deals keeping them away from true free agency.
Only time will tell if the claim survives this motion and if Zuffa indeed are liable for antitrust violations. What is clear, however, is that Zuffa use heavy handed contracts with onerous restrictions on fighters accessing free agency. The Court will need to grapple with the key question of why Zuffa is able to persuade up and coming talent from around the world to sign such draconian contracts. Did they do so from superior business acumen or by unlawfully cornering the market?