The expert report of Dr. Hal J. Singer, an expert witness for the plaintiffs in the UFC anti trust class action lawsuit, has produced a bevy of interesting information regarding how the UFC does business. Revelations from Singer’s report, which recently had a number of passages unredacted, include:
- Brock Lesnar’s championship pay-grade
- Lyoto Machida’s massive stoppage bonus
- The formula used to determine pay-per-view revenue sharing with fighters
- Joe Silva’s negotiation toolbox, including contracts that were extremely favorable to the UFC
The report also includes plenty of information regarding how the UFC strategized to compete against other promotions, such as Bellator, Strikeforce (before ZUFFA purchased it), and smaller organizations such as Cage Warriors and the now defunct International Fight League (IFL).
The report presents evidence of the UFC targeting their competition with a number of different tactics; including counter-programming, non-competes, lawsuits, takeovers and flat-out threats.
These findings are being presented to support the plaintiffs’ arguments that ZUFFA has created a monopsony in MMA; a market-state where only one buyer exists. With ZUFFA and the UFC being such a powerful entity within MMA, the plaintiffs say, that fighters have an unfair playing field while trying to find buyers for their services.
The practice of counter-programming by the UFC, which is hardly a secret, is covered at length in the report.
In the exert below, produced from court filings acquired by Bloody Elbow’s John S. Nash, Singer’s report states that, “evidence shows that the UFC engaged in counter-programming in attempts to suppress demand for events of other MMA promoters.”
That page then further details the UFC’s actions:
The UFC had a simple strategy for limiting the growth of its competitors; it scheduled free counter-programming at the same time as their competitors with the intention of stealing revenues. And although this approach was not profitable in itself, it worked by preventing new competitors from both achieving profitable operations and recouping their investments in high-profile fighters.
Singer’s report suggests that UFC counter-programming efforts were conceived in 2006 and that the World Fighting Alliance (WFA) was the first target. WFA would eventually be purchased by ZUFFA, but not before the UFC counter-programmed WFA’s last pay-per-view event, on July 22nd, 2006.
WFA: King of the Streets boasted Quinton ‘Rampage’ Jackson vs. Matt Lindland in the main event and also featured Bas Rutten, Lyoto Machida, Jason Miller, Ivan Salaverry, Ricco Rodriguez, Marvin Eastman, and Martin Kampmann.
A month before the event Kirk Hendrick, then one of the UFC’s top legal counsels, wrote to Lorenzo Fertitta, Dana White and Craig Borsari (UFC Vice President of Operations & Production) informing them that Spike TV had agreed to air a compilation of past UFC fights on the night of the WFA event.
“Obviously the idea would be ‘free UFC on Spike TV ... versus whatever WFA charges for PPV,” wrote Hendrick. Singer’s report offers evidence that the UFC made little, if any money, from Spike TV for airing this content.
In 2008 Borsari wrote in an email that, “Dana [White] wants to counter program Afflication[‘s pay-per-view event on] January 24 ” using a replay of a past UFC pay-per-view.
The Affliction event was Affliction: Day of Reckoning. That event was headlined by Fedor Emelianenko vs. Andrei Arlovski and also featured Josh Barnett, Vitor Belfort, Renato Sobral, and Antonio Rogerio Nogueira.
The report features a section detailing a 2009 ESPN article where White’s discusses counter-programming Afflication.
UFC President Dana White openly admitted to counter-programming in a May 2009 ESPN article, according to which, White had “thrown together the card [for Saturday’s Fight Night 14] in five weeks in an attempt to choke out a dangerous upstart promoter, Afflication, which is staging its first event.” White clarified that “I’m doing this fight for one reason, to make Affliction spend money. If they’re in business in January, I’ll be horrified.”
Singer’s report also includes a number of references to counter-programming efforts by the UFC against Bellator MMA. In a 2014 email UFC Senior VP Peter Dropkick wrote the following to other UFC executives:
Bellator just announced a Live MMA Event featuring Brennan Ward vs. James Irvin at Mohegan Sun in CT on Sept 5th, the same night as our FS1 event at Foxwoods (10 miles down the road). It looks like Bellator goes on-sale June 6. I spoke to Felix at Foxwoods and they’re still 110% committed. And issues moving forward as planned? I think we should announce our event before their on-sale. We’ll crush them at the gate.”
UFC CFO John Mulkey responded to this message with, “Let’s price it right and scare them out of town.”
Scott Coker, President of Bellator, has filed a declaration stating that the “UFC has frequently counter-programmed Bellator’s event ... by choosing venues or scheduling high profile matches to draw audience away from Bellator’s own key matches.”
In addition to counter-programming, Singer’s report has evidence that the UFC has gone even further to try and diminish the success of rival shows. In August, 2009 then UFC head matchmaker Joe Silva wrote to White and Lorenzo Fertitta to say, “I have stolen the following fights out from underneath Strikeforce in the last couple of days: Joey Villasenor[,] Riki Fukuda[,] ... Phil Baroni[,] Dennis Hallman[.]”
But ‘stealing fights’ doesn’t seem to have had as big an impact on Strikeforce as counter-programming. Singer’s report quotes an internal UFC study conducted into counter-programming which estimated that, “counter-programming could reduce Strikeforce’s viewership by as much as 40 percent.”
Other organizations targeted by UFC counter-programming, according to the report, were EliteXC, Cage Rage, King of the Cage, and Cage Warriors.
In the case of Cage Warriors, the British promotion’s CEO Graham Boylan resorted to messaging UFC executive Gary Cook to ask if they could come to a confidential agreement to avoid scheduling events around the same time and in the same area. Cook responded to that overture with a simple, “We need to have a conversation about this when you get a chance.”
According to Singer’s report, lawsuits and the threat of lawsuits have — in addition to counter-programming — been reliable tools of trade for the UFC.
Record evidence indicates that Zuffa also used the threat of litigation to impair would-be rivals.
To support this statement, Singer’s report focuses on the International Fight League (IFL), which featured a team based competition format. The IFL ran from 2006 to 2008 and included teams such as Lions Den, Team Quest, American Top Team, Miletich Fighting Systems, and Team Tompkins.
The IFL collapsed in 2008 due to financial difficulties, thanks in part to costly lawsuits with ZUFFA.
Before the IFL held its first event in 2006 ZUFFA sued it — alleging that the company had, “illegally hired some of its former employees who took with them confidential trade secrets.”
In response to this IFL co-founder Kurt Otto stated:
Rather than having to do with “confidential” information or purported trade secrets, I believe that, to the contrary, as described below, this lawsuit has everything to do Zuffa’s effort to stifle and stamp out perceived competition in the Mixed Martial Arts (“MMA”) marketplace in a transparent attempt to put the IFL out of business before it ever gets off the ground.
IFL then counter-sued the UFC alleging that it had threatened Fox Sports with a lawsuit if Fox were to sign a deal with IFL.
During the suing and counter-suing process, Pat Miletich gave a sworn statement where he alleged that White had directly threatened him with repercussions should he continue to work with IFL. Singer’s report states that White allegedly said, in two separate instances, that “he was going to f-cking crush these [the IFL] guys,” and that “when the dust settles, anyone associated with the IFL would not be associated with the UFC.”
Miletich’s statement on White’s alleged threats included the following passage:
[A] threat to me and to my fighters who count on me to represent them and obtain opportunities for them to fight in the MMA industry. Because of the virtual monopoly that Zuffa has in the MMA industry, Mr. White clearly knew that cutting me and my fighters off from the UFC would have a devastating economic impact...
Knowing Mr. White the way I do, I can honestly say that Zuffa’s intent in bringing this litigation has nothing to do with protecting any confidential information. Rather, I believe this litigation is about one and one thing only — stamping out legitimate and, indeed, healthy, competition.
Another method the UFC used to impact their rivals involved non-compete agreements. Singer’s report points out that ZUFFA reached such an agreement with Mark Cuban’s HDNet in 2010. That agreement ensured that Cuban, “would not engage in direct competition with Zuffa’s line of business until November 9, 2014.”
According to the report, the UFC also attempted to diminish rival promotions through its controlling of fighters. They did this through agreements with third-parties and contracts that were extremely favorable to the UFC.
Singer’s report states that, “There is also evidence suggesting that Zuffa and other MMA promoters sometimes worked together to prevent Fighters from fighting bouts with other MMA promoters.”
The report further states that the UFC, “deliberately utilized its exclusive contracts with Fighters to prevent other MMA promoters from gaining “traction” by keeping Fighters “locked up” or “tied up” and hence unavailable to other MMA promoters.”
Examples of these practices are given in the report, accompanied by text messages between Lorenzo Fertitta and Dana White:
In a February 2014 text message discussion between White and Lorenzo Fertitta regarding re-signing Gilbert Melendez, Melendez’s contract with Zuffa was ending and he had come to an agreement with Bellator. In response, Zuffa exercised the right to match clause to re-sign Melendez. Fertitta texts White: “We gotta keep taking these f-ckers oxygen till they tap out. We have sacrificed too much to let anyone get traction now.” At his deposition, Lorenzo Fertitta testified that the term “f-ckers” referred to Bellator, while the “oxygen” referred to fighters Gilbert Melendez and Eddie Alvarez.
The practice of ‘locking up’ fighters seems to have extended beyond re-signing active fighters. According to the report a retired Mark Bocek was on the receiving end of a UFC tactic to prevent him from signing with any other promotion.
When Mark Bocek retired and requested that Zuffa release him from his contract in August 2014, Joe Silva wrote in a text message: “Bocek was sent a retirement letter but now he is asking for a complete release. He’s coming off a win so I would not give it to him. He could end up fighting for Bellaforce.” Bocek then asks Lorenzo Fertitta, “I’m retired and have nothing to gain by being under UFC contract for life. Please release me permanently.” Lorenzo replies, “That’s not really how it works Mark. Every fighter from Chuck Liddell, Mark Coleman, etc. that retired in the middle of their contracts are still under contract. You can do anything to make money, you just can’t fight anywhere else.”
The tactics described above have undoubtedly helped the UFC develop into a $4 billion company and the world’s most dominant mixed martial arts promotion. The UFC will likely argue that its actions against other promotions can be chalked up to aggressive competitive behavior. The plaintiffs in the lawsuit are arguing that these are examples of anti-competitive behavior. Which side of the argument a judge lands on could lead to dramatic changes in the future fortunes of the UFC and the rest of the MMA industry.