By Zach Arnold | April 18, 2012
There’s been a lot of crazy things going on in the lead-up to UFC 145 this weekend in Atlanta, Georgia. The press conference today featuring Rashad Evans and Jon Jones was rather subdued. There has been an extensive paid advertising campaign by UFC to move the needle on this fight. On that front, the company has done just about everything possible. You know the fight is happening on Saturday. The question is whether or not you’re interested in purchasing the PPV. The reported internal estimate target for buys is 800,000. Given that I think fans see the fight as so one-sided, I have reservations about what the buy rate will be. If I had to come up with an over/under PPV buy rate figure, I’ll say 600,000.
While the focus is in Atlanta this weekend, there have been three interesting & curious events that have taken place in Zuffaland that I think reveal the current psychology of the company. All of them may not interest you, but I think at least one of the three will be revealing to you for your own reasons.
1. Dana White goes nuts over Cage Potato joke about betting on a fight
If UFC had not thrown a fit about this joke online, I would have never known about it. However, Dana White & UFC ratcheted up the legal bombasticity (I made this word up) and demanded a retraction from Cage Potato in regards to the site’s joke that Dana is betting money on Jones beating Rashad this weekend.
What made the backlash from UFC so random & out of nowhere is that Dana White had an infamous bet with PRIDE front man Nobuyuki Sakakibara over Chuck Liddell. The price tag of said bet was $250,000. However, Dana says that doesn’t count because the bet was about Chuck vs. Wanderlei — and that fight didn’t happen.
So, I’ve been trying to figure out why Dana threw such a public fit against Cage Potato. The obvious answer is that UFC is making sure the media stays in line in terms of subservient behavior. Given that UFC has not been able to control recent stories (Overeem’s drug test failure, Rampage pushing testosterone), it’s got to be creating a sense of paranoia for the micromanagers to not be able to fully control a media narrative. In my opinion, the easiest way to crack the whip and get the press back into sycophant mode is to use your leverage. For UFC, that leverage is money and their legal team. Going after Cage Potato over a dumb ‘betting’ joke is like shooting fish in a barrel.
There may be another reason UFC is very hyper-sensitive about the Cage Potato betting joke. UFC recently cut a league sponsorship deal with Jon Jones for his upcoming Atlanta fight. The reason? Because Form Athletics, which had been sponsoring Jones, shut down. Other UFC fighters have had sponsorship money troubles. Muscle Pharm, which still backs UFC fighters, had sponsorship issues with the WEC. Jonathan Brookins recently went on social media and said he was having problems getting his sponsorship money. What makes this curious is that sponsors now have to pay UFC a ‘tax’ (fine) in order to have the ‘right’ to sponsor a fighter. So, UFC is getting their money but fighters are publicly making statements saying they’re having difficulties getting sponsorship money from deals previously agreed to.
You can see why UFC is ultra-sensitive about the Cage Potato betting joke on Jon Jones given that they’re sponsoring Jones for his fight. The ultimate ‘conflict of interest’ storyline. With that said, none of us would have paid any attention to the Cage Potato joke if UFC hadn’t overreacted with the bluster they did in the first place.
2. Corporate Chael’s testosterone troll job on UFC Tonight
After blasting Alistair Overeem on Twitter over his failed ‘random’ drug test in Nevada, Chael Sonnen has decided to do a testosterone troll job on the ‘MMA media.’ His new favorite whipping boy is HDNet and Kenny Rice.
To me, I’m not even going to give what he said here credence because that’s playing into his game. However, the message being sent does fascinate me in a couple of different ways.
First of all, if Dana White & UFC didn’t want this commentary to air on Fuel TV, they would have put the kibosh on it. After all, UFC Tonight was the promotional vehicle Dana used to announce Shogun vs. Rampage even though Rampage had not signed a bout agreement. This announcement was made during his Testosterone preaching period. Rampage then went back on Twitter and said he couldn’t fight right away because he needed double knee surgery but then admitted that he was going to do things on his own terms.
So, the idea that UFC wanted Sonnen to send the message that he did is intriguing. Sonnen, a poster boy for testosterone usage in MMA, has fought in Texas and Illinois since returning to action. His next fight against Anderson Silva is in Brazil, which means a UFC-regulated drug testing environment. Having Sonnen defend someone over drug testing T/E ratios is foolish, but UFC let this air on their TV platform.
Second, Sonnen going after the ‘MMA media’ is another message to various MMA sites to ‘get back in line.’ I’ve long said that testosterone usage is a loser of an issue for promoters and an even bigger loser for fighters. It’s not just the media who UFC is getting chippy with either over the issue. When Ben Askren went on Twitter and said that Dana’s claims that fighters couldn’t be randomly tested was a ‘bold faced lie,’ Dana went out of his way to bury Askren for being the most boring fighter around.
3. UFC’s reaction to California’s AB2100 bill to give MMA fighters more rights
Last week, we noted amended legislation making its way through the California state Assembly by Assemblyman Luis Alejo (D-Salinas) that would dramatically change the contractual rights that MMA fighters have. As we noted when we first saw the proposed changes, the amendments to AB2100 sure sounded like a direct challenge to the structure of contracts that Zuffa (UFC & Strikeforce) currently use with fighters.
The reader reaction we got to these changes was overwhelmingly negative. The readership viewpoint is that UFC & Bellator will simply not run shows in California and that local California promoters will move all of their MMA events to Indian casinos, which would therefore take away money to finance the California State Athletic Commission.
A hearing on the amended changes to AB2100 was supposed to take place on Tuesday (4/17). However, that hearing was postponed by the committee in which is overseeing the amendment changes to the bill (the Assembly committee on Arts, Entertainment, Sports, Tourism, and Internet Media).
Coincidentally or not, the hearing on amendments to AB2100 was postponed on the same day that UFC sent off a three-page letter to Assemblyman Alejo in objection to the proposed changes. Here is the text of Lorenzo Fertitta’s letter to Assemblyman Alejo. I will highlight any key words or phrases that I think should be commented on.
Re: Assembly Bill 2100 (Alejo) – As Amended – OPPOSE
On behalf of Zuffa, LLC, d/b/a Ultimate Fighting Championship, and Forza, LLC, d/b/a Strikeforce, we write to respectfully oppose Assembly Bill 2100.
Zuffa, LLC (Zuffa) first became a licensed promoter in the State of California in February 2006. Zuffa’s subsidiary, Forza, LLC, (Forza) became a licensed California promoter in March 2011. Over the past six years, Zuffa and its affiliates have promoted over 20 mixed martial arts (MMA) events in the State of California, and to our knowledge, we are one of the highest tax-paying promoters of unarmed combat in the state.
As a licensed promoter, Zuffa has paid well over a million dollars in direct taxes to the California State Athletic Commission (CSAC). In addition to the direct taxes, UFC events have generated millions of more dollars for the State of California in indirect revenue through tourism, retail shopping, restaurants, hotels, car rentals, etc. Zuffa is proud that our professional sporting events create work and jobs for so many Californians, and that we generate an enormous economic impact for cities like Los Angeles, Anaheim, San Diego, Oakland and San Jose.
Zuffa has enjoyed bringing world class events to California because the state’s regulatory system has provided certainty in how events are regulated, overseen and taxed. Indeed, the California legislature was one of the first states to specifically pass legislation encouraging promoters to bring major events to California. Such legislation requires the CSAC to regularly solicit input from its stakeholders to determine what actions can be taken to entice major events to come to California. In addition, recognizing that financial certainty is critical to California’s economic competitiveness, existing law caps the taxes on ticket sales and television broadcasting that promoters pay to the CSAC when events are held in California.
It is therefore troubling that AB2100 would specifically impede bringing business to California and would intentionally drive the business to states with a more reasonable tax and regulatory framework. Indeed, AB2100 would remove the economic certainty of television taxes and would place an undue and unacceptable burden on all promoters of televised unarmed combat. Thus, the proposed tax structure would actually result in fewer events in California, and would directly harm California’s athletes, arenas, hotels, restaurants, shopkeepers, and all of their respective employees and families.
The proposed gross tax on promoters is purported as a means to bolster the boxer’s pension fund that has been identified as trouble for many years. In fact, SB 543 (Steinberg), which was just signed into law in October 2011, requires the CSAC to report to the Legislature on the condition of the Boxers’ Pension Fund by July 30, 2012. By statute, this report must ‘include a recommendation on whether the fund should be continued and, if so, whether it should be expanded to include all athletes licensed under this chapter and approrpriate fees paid into the fund.’ Consequently, to insert MMA athletes into a system whose future is uncertain is clearly premature.
In a similar vein, the proposal offered to prevent alleged ‘coercive’ contracts will not benefit athletes, but rather will simply interject the government into private contract matters. Zuffa is only one of approximately 30 MMA promoters licensed by the CSAC. However, Zuffa has paid more to MMA athletes, and has generate more opportunities for MMA athletes, then any other promoter in history. More, Zuffa routinely and voluntarily pays bonuses and other compensation that is above and beyond the written agreements with its athletes. Since Zuffa purchased the UFC in 2001, compensation for UFC athletes has increased over 35-fold, and more than 50 UFC athletes have received compensation over $1,000,000 directly from Zuffa. Beyond pure monetary compensation, Zuffa was also the first and, to our knowledge, the only promoter to provide accident insurance for its roster of athletes; a costly benefit that was believed to be impossible for combat sports. Furthermore, it bears noting that most of the professional athletes at the UFC level have skilled management and legal counsel that assist with contract review and negotiations, and alleged ‘coercive’ contracts are not based on reality.
Finally, the CSAC is a well-respected regulatory body that has done a fine job of overseeing more unarmed combat events than probably any other athletic commission in the country. As a result, promotional companies like the UFC voluntarily choose to bring MMA events to California, which has helped grow MMA into a worldwide sport, a sport that literally did not exist 15-20 years ago. It is through thoughtful oversight and regulation by state athletic commissions that the sport of MMA will continue to grow, AB2100 will stifle that growth and will drive events, tax revenue and economic impact outside of the State of California.
The above reasons are only a brief summary of why AB2100 is not in the best interests of the State of California and its citizen; additional information and evidence can and will be provided. For the foregoing reasons, we respectfully oppose AB2100.
Chairman of the Board
Chief Executive Officer
Where do we begin here in response?
Obviously, you knew the letter was going to be heavily slanted towards the way UFC sees the sport and how they see themselves as the sport in the first place. What was striking about the tone by UFC in this letter is how they don’t think the legislation that currently applies to boxing should apply to them. You see still boxing shows happening in California on a big scale. However, Zuffa doesn’t think the rules that are applied to boxing should be applied to their shows.
Which leads me to the first bolded sentence, the remark about stakeholders. The California State Athletic Commission is a bureaucratic agency that’s supposed to take care of managing regulation that ensures the health & safety of fighters at events. It is not a corporate Board of Directors of a publicly-traded Wall Street company where their number one responsibility is a fiduciary responsibility. UFC labeling itself as a stakeholder in the letter is just the height of haranguing haughtiness.
The second bolded sentence about laws capping taxes on ticket sales & TV broadcasting fees is basically UFC drawing a line in the sand. We saw what they just did in Florida and Oklahoma over taxes. Out of nowhere, UFC went after both states over whether or not such taxes were constitutional. It created a crisis in Oklahoma to the point where Oklahoma’s commission, headed by Joe Miller, had to temporarily shut down business in the state until they could get emergency funding to start operating again as a commission. Things got so bad that Miller called Jim Ross (WWE) for his help.
After Florida announced the tax repeal, UFC announced a show for South Florida. I don’t know if there is any relationship between the tax action and UFC coming back to Florida or not.
So, if the amendments to AB2100 do pass, will UFC sue California? Given recent actions, it’s a possibility for sure.
The third bolded sentence about the government interjecting into private contracts is too funny. The UFC clearly sees the AB2100 amendments the same way I do, which is a direct attack on their fighter contracts. The fact that Zuffa crows about giving fighters bonuses on a voluntary basis is even more humorous. My best guess is that Assemblyman Alejo is not impressed with Zuffa’s self-touted generosity about the way they pay fighters through a bonus structure.
However, the last bolded sentence about UFC fighters having skilled management and legal counsel is a giant knee-slapper. Despite the UFC signing with Fox and their business model supposedly growing, we have simply not seen the skill level of representation in MMA increase. Just compare the quality of agents in MMA to other sports like baseball, football, or basketball. There are no agents like Scott Boras or Drew Rosenhaus in MMA. You still have fighters who are being represented by uncles, fathers, or sisters. How UFC could think that Assemblyman Alejo would be impressed by these remarks is beyond me.
The question the Assemblyman is probably asking is why UFC doesn’t want the Muhammad Ali act to apply to MMA fighters. But as we just learned in reading UFC’s letter to the Assemblyman, the CSAC serves at the behest of their ’stakeholders’… right?