Ask the Cage Counsel: Is UFC-Strikeforce a monopoly? Could a fighters' union follow? - MMA Forum - UFC Forums - UFC Results - MMA Videos
UFC The Ultimate Fighting Championship (UFC) is a U.S.-based mixed martial arts organization, recognized as the largest MMA promotion in the world. The UFC is headquartered in Las Vegas, Nevada and is owned and operated by Zuffa, LLC. This promotion is responsible for solidifying the sport's postion in the history-books. UFC is currently undergoing a remarkable surge in popularity, along with greater mainstream media coverage. UFC programming can now be seen on FOX, FX, and FUEL TV in the United States, as well as in 35 other countries worldwide.

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Old 03-16-2011, 11:08 AM   #1 (permalink)
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Ask the Cage Counsel: Is UFC-Strikeforce a monopoly? Could a fighters' union follow?

http://mmajunkie.com/news/22848/ask-...ion-follow.mma

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The MMA world is still abuzz about the UFC's parent company, Zuffa LLC, acquisition of Strikeforce.

Although the purchase has far-reaching implications for both fighters and fans, the legal ramifications are not as significant as one might think.

In our latst Ask the Cage Counsel installment, legal columnist David Nelmark dives into some of the particulars, including whether this constitutes an MMA monopoly and whether a fighters union is a possibility.

What happens to the contracts that Strikeforce has with fighters, Showtime, Frank Shamrock, etc.?

Not much.

Unless a contracts has a provision prohibiting its assignment to a new owner of Strikeforce (which is highly unlikely), both sides still are bound by the terms of the contract. Zuffa can certainly choose not to <i>renew</i> a particular Strikeforce contract – or to exercise its right to terminate a contract if certain conditions are met (such as a fighter losing a bout) – but officials cannot simply decide not to honor a particular contract.

Does Zuffa now have a monopoly?

Maybe.

A loose definition of a "monopoly" is an enterprise that has enough power in the relevant market to control prices. The key question here is how the relevant market is determined.

If the market is "entertainment," Zuffa definitely is not a monopoly due to other entertainment options such as video games and movies. If it's narrowed to "sports entertainment," Zuffa still competes with other big-time professional sports such the NFL.

Even if it's narrowed to "combat-sports entertainment," there are lots of other options out there, especially boxing.

If the market is defined as "mixed martial arts," it starts to become a closer question. But Zuffa still can point to the hundreds of regional MMA promotions around the country. Restricting the market even further to "televised MMA" still would include Bellator Fighting Championships, MFC and others.

Thus, for Zuffa clearly to have a monopoly, the market probably has to be defined as "pay-per-view MMA." In that arena, Zuffa does have a truly dominant market share, notwithstanding the internet PPV offerings of companies such as Shark Fights and the occasional televised PPV from companies such as Shine Fights.

Additionally, UFC president Dana White thinks the few barriers are easily overcome for someone to launch a competing entity.

"All you've got to do is go out and raise some cash and jump into the business," White said. "All you've got to have is some big balls – some big balls and some money behind you."

Is having a monopoly illegal?

Not necessarily.

If a company creates a new product and happens to be so good at delivering it that no one else enters the marketplace, it means the entity is successful. It doesn't mean officials are breaking the law. To be liable for antitrust violations, a company with market power needs to engage in "anti-competitive conduct."

In some cases, a merger or acquisition that creates a monopoly can itself be considered anti-competitive conduct. That said, if a court determines that Zuffa only has a monopoly when the market is defined as "pay-per-view MMA," the purchase did not increase Zuffa's market share because Strikeforce was not yet putting on PPV events.

How does the purchase impact the likelihood of a fighters' union?

Hardly at all.

The inability to use the threat of going to Strikeforce as a bargaining chip in negotiations with the UFC might increase fighters' desire for a union, but it does not impact (positively or negatively) their ability to create one.

On a federal level in the U.S, the National Labor Relations Act governs employees' rights to unionize. Generally speaking, it dictates that if at least 30 percent of a company's employees express interest in unionization in a document submitted to the National Labor Relations Board, the NLRB will oversee an election.

At that time, if more than 50 percent of employees then vote in favor of a union, the employer then must engage in "collective bargaining" with the union, a process in which the union can secure certain rights for all employees rather than each employee having to negotiate for something on an individual basis.

The first obstacle for a "Zuffa fighters' union" is the fact that fighters are not presently classified as Zuffa "employees." Rather, they are "independent contractors." White and the Fertittas have said that it's up to the fighters whether they want a union.

"I think that's up to the fighters if ... [they] do a fighters' union," White said. "The problem in the fight business is this isn't really a team sport. I don't think you're going to see some of the guys who are making the big, big money wanting to kick some of their money down to these guys who might never make it or might never be. But that isn't up to us; that's up to them."

But I find it unlikely that Zuffa voluntarily would reclassify fighters as employees because it would have negative tax consequences for the company.

Setting aside the independent contractor issue, Zuffa fighters hoping to unionize still would face many more hurdles than, for example, employees at a manufacturing plant. Fighters do not all live in the same town, which makes education and coordination difficult.

Additionally, the fighters with the clout and money necessary to spearhead an international unionization effort have the least to gain from doing so because they are already at the top of the pay scale.

The fighters who would most benefit from a union are those who toil away for small, sometimes-unscrupulous promoters. But even a national union might not help those competitors much.

As a comparison, the Actors Equity Association, which represents stage actors, has critical mass in New York such that it can negotiate minimum-wage scales for everyone who steps on a Broadway stage. If a producer failed to adhere to AEA rates, he would have difficulty getting enough quality performers because all AEA members have to agree that they will not work on any non-union project.

The local playhouse in the Midwest does not face the same pressure. Similarly, your local Xtreme Mortal Combat Caged Fury Fighting League likely can fill out a card by just hiring non-union fighters.
Interesting read I thought.

Last edited by Adam365 : 03-16-2011 at 11:10 AM.
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Old 03-16-2011, 11:57 AM   #2 (permalink)
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Yeah, one of the big things I have mentioned before when people say the fighters should start a union is that they are all contractors.

Still good read, +rep on the find.
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Old 03-16-2011, 12:35 PM   #3 (permalink)
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Well they will need one , because when SF is gone and Dana has some personal vendetta against you, who is to say he cant axe you without any reason.

Without one i can see fighters being paid alot less on average since fighters like Henderson and Werdum who went to SF before now wont have any option if similar cases happen and just forget negotiating a new deal unless you have GSP stardom because you will be booted asap, and i can see fighters being cut for 1 or 2 losses rather than the usual 3.
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Old 03-16-2011, 05:03 PM   #4 (permalink)
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Sure itīs a monopoly, the deal would never go ahead in the EU.
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Old 03-16-2011, 05:11 PM   #5 (permalink)
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Originally Posted by Sambo de Amigo View Post
Well they will need one , because when SF is gone and Dana has some personal vendetta against you, who is to say he cant axe you without any reason.

Without one i can see fighters being paid alot less on average since fighters like Henderson and Werdum who went to SF before now wont have any option if similar cases happen and just forget negotiating a new deal unless you have GSP stardom because you will be booted asap, and i can see fighters being cut for 1 or 2 losses rather than the usual 3.
Actually a union wouldn't control their ability to be cut. As long as the UFC still uses them as contractors all the union could do is set the price tag for the fighters, how soon you would be able to have them fight again, etc.

One bad thing for young fighters is that Unions are very controlling and very rule centric. They would get paid more, but they would have to pay a portion of their winnings to the union which may mean they make the same or less, but they also would be limited on how often they could fight and who they could fight for. We would never get a chance to see someone like Leben fight 2 fights so close together ever again, or last minute replacements may become a thing of the past, etc.

The best thing that would come out of the union would probably be health benefits, but the UFC does cover for any injuries that occur during a fight. But outside the fight things like training accidents are a personal expense. But who knows, maybe the UFC has a pretty good health plan that fighters are allowed to buy into?
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Old 03-16-2011, 05:24 PM   #6 (permalink)
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Sure itīs a monopoly, the deal would never go ahead in the EU.
did you read the OP?
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Old 03-16-2011, 05:52 PM   #7 (permalink)
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Well they will need one , because when SF is gone and Dana has some personal vendetta against you, who is to say he cant axe you without any reason.
Because ZUFFA is the real boss, not Dana. When Dana tried to axe Fitch for not giving the UFC a video game exclusive, Dana's decision was quickly mediated and Fitch was brought right back.

If you're a revenue producing fighter in any capacity, ZUFFA wants you around. If you're a no-name fighter with zero revenue generating power and Dana axes you, then that's just real life. In a giant company, you're worth what you can produce.
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Old 03-16-2011, 09:44 PM   #8 (permalink)
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Because ZUFFA is the real boss, not Dana. When Dana tried to axe Fitch for not giving the UFC a video game exclusive, Dana's decision was quickly mediated and Fitch was brought right back.

If you're a revenue producing fighter in any capacity, ZUFFA wants you around. If you're a no-name fighter with zero revenue generating power and Dana axes you, then that's just real life. In a giant company, you're worth what you can produce.
Fitch is different when i refer to fighters being axed im not speaking of the Top guys the elites im speaking of the Duffee's, cut because of their "ATTITUDE" after one defeat.
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