One of the masterful things Zuffa (the parent company of UFC) has managed to do with the Randy Couture situation is change the focus of the topic at hand within the timespan of a week.
Instead of the focus being on how much broad power UFC has over a fighter with their contracts, the media perception and storyline now is that Randy Couture is the next Terrell Owens, the next "poster child" of a spoiled sports brat.
What we, as writers and insiders, should be focusing on are the actual contracts that Zuffa LLC is using right now to sign fighters. Last week on Fight Opinion Radio, I asked a simple question with a very complex answer: Could a Zuffa LLC contract hold up under rigorous scrutiny in the American court system?
Before I turn my focus on the legalities of what Adam Swift at Sherdog says is a standard UFC contract, let's focus for a minute on the financial sacrifices that fighters are making just to have a career in this business. Whether you are fighting in UFC, IFL, or Pro Elite, the deal they offer you makes you an independent contractor and not an employee. (This is an important distinction to make.) As an independent contractor, you have all the financial and tax burdens that a business owner has. In essence, the business owner is passing on the tax liability to you for certain items that Uncle Sam wants to collect.
As an independent contractor and not an employee, you likely will have to pay taxes quarterly instead of yearly. Anyone who has ever tried to figure out an estimated quarterly tax payment knows the pain that one goes through (good luck on approximating what 90% of your estimated income in the quarter will be). Second, you have to pay for your own insurance and put money aside to invest into an IRA, 401k plan, etc. on your own accord. Third, you have to pay a high amount of tax and the sticker shock is bound to floor you.
Let's say that you are a UFC fighter that is based out of California. Your Federal tax rate can vary anywhere from 25-35% depending on how much you make. On top of that, you have to pay a SE (self-employment) tax for social security and medicare (15.3%). If you live in California, there's a state income tax that starts at 9.6% (one of the worst state tax rates in the nation). When you add the taxes up at the end, a mid-level or high-level UFC fighter could conceivably pay over 50% of their income on taxes alone.
Then, consider all the costs that fighters incur in paying for training, representation (agent/manager), nutrition, etc. It adds up real fast.
Let's turn our attention back to the earlier question I asked about the legality of Zuffa's supposed standard contract. Baseball pitcher Curt Schilling yesterday detailed the process that he had to go through to become a free agent. In the post Schilling wrote, he stated that the team he played for (the Boston Red Sox) have 15 days to exclusive negotiate with him. After those 15 days are up, he's free to sign anywhere he chooses.
According to Adam Swift at Sherdog, a UFC fighter doesn't have bargaining power close to what a baseball player has. According to Swift, UFC has an exclusive negotiating timetable of 60 days with a fighter after their contract is fulfilled. Plus, Zuffa has up to one year to match any offers after the contract is already fulfilled.
So much for the 'independent' in independent contractor, right?
Let's continue. Swift's Sherdog article also claims that Zuffa has a clause which, in effect, claims perpertuity over a fighter if they retire, get injured, or don't make a booking for an unsatisfactory reason. This is where Dana White thinks he can claim that Randy Couture has 'retired' while Couture argues that he has 'resigned.' Couture thinks the clock will run out on his deal, while Zuffa believes that they will be able to retain Couture's rights past the initial shelf-life that Couture thought the deal was in the first place.
The most intriguing part of Swift's article is this item:
Perhaps most importantly, in the event of a legal challenge to the provisions of the contract, the standard contract also includes a severability clause, which provides that if any part of the contract is found to be "illegal, invalid, or unenforceable as to any circumstance," the entire contract would not be void as a result.
My personal opinion about the Couture/UFC situation is that UFC is hoping they don't have to get into a protracted court battle with Couture. It would certainly hurt Couture and possibly end his career, but it could also damage the way UFC does business because there's a chance that a judge in Clark County, Nevada would invalidate one or more provisions of the standard UFC contract.
That is the bigger story to pay attention to in the Couture/UFC mess. Forget the spin and media storylines about both UFC & Couture and focus on the bigger picture here.
Unlike many of the undercard fighters working in UFC, Randy Couture has the financial resources to get into a court battle with Zuffa LLC. One of the challenges Couture would likely have is finding local legal representation in Las Vegas, as the Fertitta Brothers have done a lot of litigation in the town with a lot of different law firms. Couture would probably have to bring in legal representation from outside the state of Nevada and have them take on Zuffa's legal counsel in civil court.
Curt Flood challenged baseball's reserve clause and helped the sport establish free agency, while Marvin Miller helped strengthen the MLBPA. Should Couture choose to challenge UFC in court, he could have a dramatic effect on how Zuffa LLC currently does business with its fighters. I disagree with fellow colleague Luke Thomas in thinking that Couture has no chance of winning in court. It would put a lot of stress on UFC, in my opinion.
UFC has been able to get away with using a WWE-type model of employing fighters as independent contractors while maintaining a lot of creative and business control over them (similar to how employees are treated). Wonder how the IRS would feel about this situation?
Zach Arnold is the owner of FightOpinion.com.