UFC Legalization Will Be Subservient to New York Budget Debate

This is a guest post from Zak Woods formerly of WatchKalibRun.

Last Thursday, Zuffa called a press conference to begin their latest push for regulation in New York. Once again the economic benefits of a legalization were rolled out to the media: 70 mixed martial arts events per year, $23 million annually of economic activity, the creation of 212 jobs, etc.

To many in the MMA community the issue of regulation appears an open and shut case. Yet, regulation consistently remains out of reach. So why has it been so difficult to pass MMA legalization in New York?

"There's a lot of issues last year in the state of New York," Lorenzo Fertitta told MMA Fighting's Ariel Helwani.

"Forget about the issues we [Zuffa] had. But just the ability for the state of New York to pass a budget to keep the state running. I mean, That took forever." 

In fact the budget was the principle policy issue that sucked all the oxygen out of the room. Last year New York was facing a budgetary short fall of $21 billion or 38.8% of the total budget (Table 4). While Governor Patterson's initial budget proposal included tax revenue from regulating MMA events the provision would eventually be removed in the long, hard political battle to pass a budget.

Despite last year's issues Mr. Fertitta put on an optimistic face about this year's legislative process. "We're hoping that although there is a big budget deficit this year that the process will be more stable."

New York is currently facing its third short fall in three years.

The Center on Budget and Policy Priorities, a non-profit think tank, estimates a $9 billion budget shortfall (16.9% of the total budget)  (Table 3) . However new estimates put the shortfall closer to $11 billion.

On the surface it might appear that this year's short fall is far more manageable than the previous year's. But that ignores the previous years' cuts. There might not be any easy political fat left to cut. That means the muscle of the state machinery and subsidizes with entrenched political protection must go. A daunting task for a state government that newly elected Governor Andrew Cuomo called "a government of dysfunction, gridlock and corruption" in his State of the State address. 

New Yorkers may remember in 2009 when the state senate shut down over a political coup and the subsequent procedural battles over cloture took place for days when a member of the state senate got a cup of coffee.

While this might be an extreme example of the dysfunction that has existed in Albany over the past few ears there is also the unfortunate reality that the state legislature is only in session for six months of the year. That can leave little time to tackle other problems when politically difficult issues like passing a balanced budget with a 16.9% shortfall exist.

Governor Cuomo is making several unilateral cuts that do not require the approval of the legislature, such as laying off 900 state employees and threatening to freeze salaries to the state employees for one year. The latter will only save a modest $200-400 million and will certainly raise opposition from state unions, causing the Governor to expend his political capital.

The real culprit in woeful budget shortfall is years of bad accounting practices, a drop in tax revenue from the the 2008 financial collapse and the slow economic recovery, unfunded initiatives and the ever expanding cost of healthcare like Medicaid and Medicare (health care spending makes up 38% of the 2010 budget).

Within this turbulent storm of slow economic growth, hyper-partisan politics and the move towards austerity we have Zuffa and their economic impact study on regulating mixed martial arts. While every little bit helps the New York ship of state is being threaten with capsizing and Zuffa is offering an eyedropper to get the water off the decks when a firehouse is required.