SAN JOSE (CN) – The Ultimate Fighting Championship pushes out rival promoters to maintain iron-fisted control over the mixed martial arts market, crushing fighters’ earnings, three athletes claim in a federal class action.
UFC middleweight Chung Le and former UFC fighters Nathan Quarry and Jon Fitch sued Zuffa LLC, the parent company of UFC, under the Sherman Antitrust Act on Tuesday.
The UFC said in a statement that it is “aware of the action filed today but has not been served, nor has it had the opportunity to review the document. The UFC will vigorously defend itself and its business practices.”
The fighters accuse the UFC of an “overarching anticompetitive scheme” to monopolize the MMA marketplace and restrict athletes’ earnings.
“By dominating the market for live elite professional MMA fighter bouts, defendant makes the UFC the ‘only game in town’ for elite professional MMA fighters who want to earn a living in their chosen profession at the highest level of the sport of MMA,” the 63-page lawsuit states.
UFC fighters are paid about 10 to 17 percent of the revenue generated from UFC bouts, and all fighters have had their pay “artificially reduced” due to the UFC’s monopoly, according to the lawsuit.
In comparison, athletes who compete in other professional sports, such as football and baseball, generally earn morn than 50 percent of league revenue, the lawsuit states.
The UFC also expropriates rights to the fighters’ names and likenesses, limiting the athletes’ ability to license themselves for commercial products or promotions even after their contracts with the UFC expire, the fighters claim.
The UFC’s annual revenue from Oct. 1, 2012 to Sept. 30, 2013 was about $483 million, with $256 million generated by live events and another $227 million from merchandising, video game fees and digital media, according to the lawsuit.
The fighters claim that “the UFC’s worldwide profit margins are among the highest, if not the highest, in professional sports.”
The UFC controls more than 90 percent of the revenue derived from live elite professional MMA bouts nationwide, and gained its monopoly on the sport by buying up or driving out other viable promoters, according to the lawsuit.
The company has the ability to preclude new rivals from entering the market, to raise the would-be rivals’ costs, impair their opportunities and control prices, the lawsuit states.
The UFC also forces major venues for MMA bouts to supply their services exclusively to the UFC and requires MMA sponsors to work only with the UFC and UFC fighters, the fighters say.
“Without access to key sponsors, venues, or major television distribution outlets, would-be rivals cannot put together sufficiently attractive events either to attract elite professional MMA fighters to work with them or to gain the kind of audience that could challenge the UFC’s dominance,” the complaint states.
Fighters who sign with the UFC must enter into restrictive contracts that prevent them from working with other MMA promoters during and after their time with the UFC, according to the lawsuit.
Because the UFC retaliates against fighters who work or threaten to work with would-be rival promoters, the fighters “have refused offers to fight for actual or potential rival promoters, even those that offer higher compensation, out of fear that the UFC would retaliate against both the promoter and the fighter,” the lawsuit states.
Fighters are deterred by the threats because being banned from UFC fights substantially diminishes their ability to earn money in the sport, according to the complaint.
Furthermore, the UFC has control over key sponsors and threatens to never work with those sponsors if they contract with a MMA fighter against the UFC’s wishes, the fighters say.
“As a result, the only remaining promoters of MMA bouts are either fringe competitors – which, as general matter, do not and cannot successfully compete directly with the UFC – or entities that have essentially been conscripted by the UFC, through the scheme alleged herein, into acting as the UFC’s ‘minor leagues,’ developing talent for the UFC but not competing directly with it,” the fighters say.
The fighters claim the UFC has publicly touted its success at squashing the competition.
“For example, in November 2008, following the UFC’s acquisition of the assets of MMA Promotion companies International Fight League, Elite Xtreme Combat, and Affliction Entertainment, UFC President Dana White uploaded a pre-bout video blog to YouTube in which he held up the following mock tombstone prominently displaying the letters ‘RIP’ as well as the logos and ‘dates of death’ of those MMA Promoters – IFL, Elite XC and Affliction. Each promotion had been put out of business by the UFC’s anticompetitive conduct,” the lawsuit states.
White then took credit for the companies’ deaths by saying, “I’m the grim reaper, motherf***ers,” according to the complaint.
The fighters seek treble damages for antitrust violations, but did not put a figure on the amount.
Their lead counsel is Joseph Saveri, of San Francisco, with co-counsel from four other law firms, in Phoenix, Philadelphia, Sherman Oaks, Calif., and Washington, D.C.
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