UFC president Dana White revealed earlier this year that the biggest obstacle to MMA legalization in New York is not any actual opposition to the sport of MMA, but a grudge that the Culinary Workers Union holds against Station Casinos — a non-union casino company which is owned and operated by the Fertitta brothers, who also own and operate the UFC’s parent company Zuffa, LLC.
Unable to succeed in unionizing Station Casinos, White believes that the CWU is attacking the Fertittas through other avenues, namely by doing their best to obstruct their other business, the UFC. Whether or not White’s theory holds water, the CWU’s recent letter to the Federal Trade Commission requesting an antitrust investigation of the UFC seems to lend it credence.
BloodyElbow.com got their hands on the CWU’s letter, which alleges that the UFC is in violation of antitrust (competition) laws and is a business bordering on monopoly.
The CWU detailed their primary issues with the UFC’s business practices, focusing on the freedom-restricting terms that the promotion places on the fighters it employs and the fact that they corner the MMA market and essentially force fighters into those unfair contracts.
The CWU takes issue with:
a) “Automatic renewal” contract provisions such as the “champion’s clause,” which extends the contract of an athlete who becomes a champion. Such clauses effectively prevent some athletes who sign contracts with Zuffa from becoming free agents and negotiating for higher pay.
b) Exclusive negotiation and “right to match” clauses that lock athletes into negotiating with Zuffa for a period after their contracts have expired. These clauses diminish the ability and incentive of smaller promotions to bid for top mixed martial arts athletes.
c) Merchandise and ancillary rights agreements that require athletes to forfeit their image and likeness rights “in perpetuity,” or forever. These far-reaching agreements deprive athletes of the freedom to make money from their own success and further bind them to Zuffa indefinitely.
The CWU allege that the UFC’s business practices are not conducted with any interest in competition, but only with the goal of further dominating a market which they far and away control.
Professional sports leagues have sought to justify restraints on athlete mobility by arguing that such restraints are necessary to maintain a competitive balance among teams, and thereby maintain spectator interest. In some cases, courts have agreed. In American Needle v. the National Football League, the U.S. Supreme Court ruled that competitive balance is “unquestionably an interest that may well justify a variety of collective decisions made by the teams.”
However, Zuffa does not operate as a professional league, and thus cannot justify its restrictive behavior as being necessary to preserve a competitive balance in mixed martial arts. Zuffa is a private limited liability partnership that promotes and produces professional mixed martial arts events for the benefit of its owners. The anticompetitive restrictions it imposes on athlete mobility serve no legitimate business justification beyond stifling competition and increasing Zuffa’s already dominant position in the market.
There have been rumors for some time that the UFC would soon be the subject of an antitrust investigation; those rumors were bolstered by the fact that the promotion recently hired a law firm which specializes in antitrust cases.