By Zach Arnold | January 19, 2017
The news: Starting in March 2017, ESPN will air Golden Boy events on ESPN2 and ESPN Deportes. 18 events in 2017, 24 events in 2018, ESPN has an option in 2019. Similar to Fox Sports 1 series except ESPN will not pay Golden Boy a rights fee. Tecate will be the main sponsor.
The big takeaways
First, ESPN’s rationale for doing a TV deal with Golden Boy is being publicly stated as a result of the anti-trust settlement in Los Angeles Federal Court between Bob Arum and Al Haymon to have PBC ditch the TV exclusivity clauses in their deal.
This acknowledgement certainly will be a major component in the Golden Boy/Al Haymon trial in Los Angeles Federal court this March should the judge allow it to proceed. The motion for summary judgment happened in late November and both parties are proceeding, my opinion based on court records, as if this thing is going to trial. Al Haymon attorney Michael E. Williams filed a motion in court on Tuesday to be replaced by attorneys Howard Weitzman and Barry H. Berke. Weitzman is a famous entertainment attorney in Santa Monica who has represented Michael Jackson, Justin Bieber, Britney Spears, and was formerly with OJ Simpson.
Second, ESPN curiously stated that they were negotiating this Golden Boy TV deal over the last six months. That would put the timetable around July of 2016, a couple of months after the big shareholder derivative lawsuit was filed in Kansas state court against the hedge fund that backed Haymon’s PBC venture. Haymon had a big run of shows in the Spring & Summer of 2016. Things changed after that shareholder lawsuit to try to recover the alleged $525 million dollars remaining in the Media Holdings LLC shell that the hedge fund that put cash into for PBC.
Third, Golden Boy desperately needs television oxygen to recruit fighters. Once Richard Schaefer left, we saw the different direction Golden Boy was heading in with Eric Gomez and Robert Garcia. TV exposure matters and so does having a business kingpin on your side.
Fourth, ESPN signing the new TV deal with Golden Boy is proof that the network is still interested in boxing but only on a limited, no-risk scale due to the company bleeding households by the millions. The fact that ESPN is publicly acknowledging that they are going to give Golden Boy production control is quite an admission — and one that UFC no doubt is paying close attention to.
With Joe Tessitore doing college football and Todd Grisham doing UFC, it will be interesting to see if Golden Boy will go with reliable hands like Bernardo Osuna or Beto Duran… or if they are willing to hire someone with a bigger profile.
Fifth, Fox Sports 1 should have never allowed Golden Boy to sign a deal with ESPN. They need all the programming they can get. The Golden Boy shows were unspectacular but solid on FS1. Golden Boy could have meant a lot more to Fox than to ESPN, especially given the Southern California connections. Fox blew a chance to make this work.
By Zach Arnold | January 11, 2017
Brock Lesnar’s smile at the Winnipeg Jets game on Tuesday got wiped away in a hurry after Mark Hunt officially filed a lawsuit in Federal court in Las Vegas for fraud, unjust enrichment, and racketeering.
Hunt, along with his attorney, curiously telegraphed their impending lawsuit for several months. From our vantage point, it seemed to be a transparent attempt to reach some sort of settlement before the lawsuit was ever filed. When UFC didn’t reportedly implement the kind of contractual clauses that Hunt wanted for future fighters caught doping, it became a game of chicken between UFC & Hunt.
Mark Hunt had no choice but to file a lawsuit against UFC & Brock Lesnar. If he didn’t, he would have lost all face in the matter. The good thing for Hunt is that the attorneys on his side are excellent at what they do and their first complaint filed in court is well-done in terms of length (27 pages) and writing style. Attorneys often fall into a trap of prosecuting their entire case in the complaint. Complaints get 60, 80, sometimes 100 pages long and leave lots of room in the motion game to get sliced & diced. The point of a complaint is to make your allegations that cover the elements in the various causes of action to prevent a motion to dismiss from succeeding without trying your whole case up front. Let the discovery & deposition provide the future evidence for you.
What to look for
In October of 2016, we previewed what Mark Hunt’s lawsuit would look like and it largely played out as predicted.
The first, naked twist in the complaint is the attempt to file suit in Federal rather than state court in Nevada. Hunt’s attorneys attempt to make this work by filing for the Federal cause of action regarding racketeering. Nevada has its own state version of racketeering which is similar. What makes the racketeering attempt look so transparent in trying to play the jurisdictional game is that Hunt filed for a conspiracy for racketeering COA on the state level but then cited the Federal RICO statute. The point is to keep this lawsuit out of state court, where there is a perceived advantage for UFC.
An additional point: Nevada’s racketeering law covers the last five years of business activity. The Federal statute covers a time period of 10 years. That certainly comes into play when you look at the era of the testosterone hall passes and the Chael Sonnen debacle with Anderson Silva as background for the plaintiff to rely upon in court for racketeering allegations.
What’s next: UFC’s first move will likely involve a motion to transfer from Federal to state court. If the case gets transferred to state court, then it’s onto a motion to dismiss or a motion to strike the causes of action. The success of that will likely be limited in scope. As the motion game plays out, the clock will begin immediately for discovery although UFC’s side will try to stall for as much time as possible with extensions (professional courtesy or court motions).
Why didn’t UFC pay Mark Hunt before this lawsuit got filed?
Now that Hunt has officially filed the lawsuit against UFC & Brock Lesnar, they really don’t have much of a choice but to settle this thing quickly and pay the attorney’s fees. Otherwise, this time bomb is going to produce terrible discovery for UFC’s side. The general public won’t get to see that discovery if it’s under seal but certainly could get a sneak peek if there are future amended complaints detailing the evidence discovered to buttress Hunt’s COAs.
And that’s the larger point here — Nevada has some great attorney-friendly causes of actions. California has some doozies like the nebulous Unfair Competition Law but the old-school unjust enrichment COA remains potent in states like Nevada and Florida. The principle is simple — if you’re profiting from ill-gotten gains, that’s unjust enrichment. Just as one can be criminally prosecuted for receiving stolen property or embezzlement/conversion, one can be sued for unjust enrichment. It’s a wide-ranging COA that really is a big, big problem for UFC.
UFC’s testosterone-era garbage left them vulnerable to doping lawsuits
They deserve everything they’re going to get in court and more for the last decade of anabolic steroid policy.
The established track record for UFC makes them extremely vulnerable in deposition. From Lorenzo Fertitta to Keith Kizer to Dr. Tim Trainor to Dr. Jeff Davidson to Marc Ratner, all of these people would be put under very uncomfortable depositions regarding who gave permission to which fighters and under which pretenses. Can you imagine the internal company memos produced during the testosterone era explosion in 2010?
None of this will likely come to fruition in reality. Maybe a 5% chance but perhaps I could be wrong. Perhaps UFC could be stupid enough to fight this out, thinking that the legal bills will mount and that Hunt will have to give up. But what if the attorneys are taking this case at a discounted rate (for publicity) or on a contingency? There’s a lot of money to make here on a settlement, let alone a trial. Sounds delicious for a trial attorney to me.
But what about Brock Lesnar?
Mark Hunt’s lawsuit is against UFC, Brock Lesnar, Dana White, and Does 1-50. Any of the parties involved can settle at any time. It would be in their best interest to do so and in a hurry.
What happens, though, if one of the parties involved doesn’t want to settle while the others settle?
The UFC made their money off of Brock Lesnar. Dana White indicated recently that Lesnar’s not likely to return to active MMA fighting. If UFC settles and leaves Lesnar on his own, what’s his leverage over them?
Which brings us the scenario that Team Hunt probably would dream of the most — Brock Lesnar racing to settle first and providing damning evidence that can be used against UFC to ramp up for a larger settlement.
The lawsuit contends that UFC made ill-gotten gains for UFC 200 because Brock Lesnar’s fight made the event such a success at a time when the company was in the process of being sold. The same company that gave Lesnar a USADA waiver that allowed him to immediately fight rather than engage in multiple months of pre-fight drug testing.
There are millions of reasons for the UFC to race to settle first before Brock Lesnar. There are also millions of reasons for Brock Lesnar to race to settle first and possibly help Team Hunt bolster their case to squeeze UFC by the balls to get more money and get the contractual provisions they wanted all along.
By Zach Arnold | January 5, 2017
Ari Emanuel reportedly wants to give TV networks more production & creative control over UFC for the next big television package. Be careful what you wish for.
Ronda Rousey, the UFC’s golden child whom WME-IMG had the double squeeze of juice on as both promoter and manager, is getting savaged by the UFC’s television partner. The hit men of Jamie Horowitz are ripping through the carcass.
Lorenzo Fertitta would have never let this happen under his watch. In six months time, things have dramatically changed for the UFC and not all for the better. Creative control was an absolute core belief under Zuffa’s tenure that helped sell UFC for $4 billion dollars. There was a reason that this was so important. Anyone who watched WCW a generation earlier and read the voluminous reports about Turner’s “standards and practices” knows all too well how powerful creative control is.
A week after Ronda Rousey’s decisive loss to Amanda Nunes, the verbal insanity has gone through the roof. The millionaire sports pundits smell blood in the water.
Voice #1 – Dana White
Within 45 minutes of Amanda Nunes retaining her UFC Bantamweight title, Dana White went on Fox Sports 1 television and made an ass out of himself. He bragged about how big the crowd at T-Mobile Arena in Las Vegas was and went on one of his “this is why I’m the promoter and you’re not speeches.” And during his rant, White stated that he could have spent $100 million dollars in advertising on Amanda Nunes for UFC 207 and nobody would have known who she was.
Dana’s theory? Fighting Ronda Rousey would make Amanda Nunes a bigger star than any ad buy UFC could ever deliver. In other words, purposely push Amanda Nunes as the b-sider and expect that defeating the A-level face of the company would instantly transfer the energy over to the b-sider. If this strategy worked, Holly Holm wouldn’t have been fighting on free television and Al Haymon would be the king of boxing.
So where was the Ronda bashing here? It wasn’t Dana bashing Ronda so much as it was a media portrait being painted after the fight of a prized former champion who somehow is an emotionally stunted little child crying for 45 minutes with boogers and snot coming out. Paired with Ronda’s refusal to deal with the media leading into the fight and it was the reddest of red meat possible for the critics. I was flabbergasted that Dana managed to weave in Godfather Promoter Dana with Uncle Dana the therapist in one interview segment.
Voice #2 – Clay Travis
Nobody smells blood in the water faster than Clay Travis. The Nashville attorney who claims that he voted for Barack Obama twice but has no qualms going after “PC Bromanis” (Bomani Jones) who view themselves as social justice warriors and speech police.
Travis scorched Rousey after her UFC 207 loss as a fraud who was propped up by white liberal feminists and social justice warriors in sports media pushing women’s empowerment. He called Ronda Rousey the Bernie Madoff of female athletes. Three months earlier, Travis proclaimed Rousey to be the most powerful female athlete ever.
Clay’s ability to make your head explode is par excellence. The problem is that if you attack the hyperbolic part of his arguments, it forces you to confront the other issues where there’s grains of truth.
Ronda Rousey did not invent women’s MMA. Gina Carano and Cris Cyborg were tearing the house down long before she came on the scene. ESPN called her a trailblazer. She was (and is). But it was embarrassing to see ESPN try to make Ramona Shelburne into Ronda’s Ahmad Rashad. It was laughable to see Ring Magazine put Ronda Rousey on its cover and ask if Ronda would take over women’s boxing as well as women’s MMA.
Ronda Rousey was great for Ronda Rousey and great for UFC.
Voice #3 – Jason Whitlock
In a scorching hot take on Thursday, Jason Whitlock refined Clay Travis’s argument and made it significantly more expolosive. Whitlock buttressed Clay’s argument that white liberal feminists, social justice warriors, and the PC police were the ones building up the myth of Ronda Rousey by adding that this same crowd intentionally pushed Ronda Rousey at the expense of powerful black women athletes like Serena Williams. Whitlock noted that when Miss Williams had her Serena (Grand) Slam in tennis, it was Rousey who ESPN gushed over for awards and their body issue.
Where do you begin to attack or unpack this argument? You can’t attack hot takes with logic and facts. Logic and facts don’t persuade people. Emotion does. How you feel is what makes an impact. Scott Adams, the Godfather of 2016 American political analysis, wrote the book on this – How to Fail at Almost Everything and Still Win Big.
This is why you don’t give creative control over your sports product to television networks.
By Zach Arnold | December 30, 2016
This is one of the most emasculating, shaming come-uppances I've ever seen a historic, elite MMA fighter get. Garbrandt is wilding on Cruz.
— Jordan Breen (@jordanbreen) December 31, 2016
This was a very, very bad night for Dana White & Ari Emanuel. WME had the total juice on Ronda Rousey in both management & ownership and rolled snake eyes.
UFC 207 results
- UFC women’s 135 pound title match: Amanda Nunes defeated Ronda Rousey in R1 in 48 seconds by TKO.
- UFC men’s 135 pound title match: Cody Garbrandt torched Dominick Cruz after 5R by unanimous decision.
- TJ Dillashaw defeated John Lineker after 3R by unanimous decision.
- Dong Hyun Kim defeated Tarec Saffiedine by split decision after 3R.
- Neil Magny defeated Johny Hendricks after 3R by unanimous decision.
The big takeaways
Ronda Rousey showed up in better physical shape. Nothing changed in her fight style. She got torched by Amanda Nunes. Miesha Tate predicted this all week long but somebody must have gotten to her at the last minute because she did a 180 on TV and said Ronda would win based on how she looked at the weigh-ins.
Cody Garbrandt torched Dominick Cruz in the cage as much as Cruz torched Garbrandt in their vocal talk battles. Now we get Garbrandt versus a cockier TJ Dillashaw. The ghost of Urijah Faber remains omnipresent.
This was the farewell show for Mike Goldberg and Joe Silva. No fan fare on the way out. WME blew it.
Chael Sonnen defended Dana White not giving out salaries for fighters in the past because it would give greedy friends, family members, and hangers-on a chance to steal money from UFC talent. This was in response to the disclosure of Ronda Rousey getting a $3 million paycheck for the UFC 207 fight. The disclosure was from the Nevada State Athletic Commission. They regularly disclose base salaries for fighters.
Sonnen isn’t sure that this was Ronda Rousey’s last fight. When you’re winning, fans beg you to stay and keep going. When you’re losing, fans aren’t begging.
Sonnen said that judo is a terrible base to transition from for modern MMA. Hidehiko Yoshida made a fair chunk of change, thank you very much.
By Zach Arnold | December 17, 2016
Saturday’s UFC event at the Golden-1 Center in Sacramento put a lot of egg on the faces of management.
The marketing and hype packages by Foxified TV consultants in conjunction with WME certainly felt different than the Lorenzo Fertitta-era UFC. UFC went all-in on Paige VanZant. They treated viewers as children by hyping VanZant for going to multiple high schools and filming a Bissell commercial at age 13. There was the nauseating Erin Andrews interview spot. Fox Sports 1 spent the whole week focusing on VanZant, including PVZ not wanting to fight in front of her mother because she bled during fights. And right on cue, Fox aired a 4G LTE commercial with Paige VanZant after VanZant’s fight ended.
The problem, of course, is that VanZant got choked out and destroyed by Michelle Waterson. It was an adult vs. a child in the cage. Waterson was in the main event and you wouldn’t have known it until fight night. Someone from production was barking at Waterson to hurry her ring walk by giving second-by-second instructions. She was viewed as the B-side of the main event by the powers-that-be. Of course they would treat Michelle Waterson like that.
The bloodletting continued with Sage Northcutt getting worked over by CM Punk slayer Mickey Gall. Fox hyped Northcutt as being discovered by Dana White on his Fight Pass show looking for a fighter. The prodigal son got beat up. It’s a good thing the focus was on Dana discovering this young man. Too bad Dana wasn’t actually there on camera to watch the festivities.
Dana White and Joe Rogan were nowhere to be found for Urijah Faber’s retirement fight. It’s entirely valid to point out that Faber was not a Dana creation and became his own star outside of the UFC universe. Even by that measure, White not showing up on camera to pay respects to Faber sent a rather interesting message to the fans at home. Faber was the clear cut star on this show along with Nick Diaz getting his ringside cameo.
Faber had a chance to submit Brad Pickett in round one of their fight but couldn’t pull it off. I joked that Skip Bayless would give a hot take on Fox saying that WEC Faber would have finished the fight but that UFC Faber just didn’t have the clutch gene to do it. An hour later, Fox was airing a Skip Bayless hot take skeptical of Ronda Rousey having success upon her return in two weeks to fight Amanda Nunes. It was the basest of Jamie Horowitz plays and to the average viewer came across as a copy of the horrible Monday Night Football half-time First Take shoutfest between Stephen A. Smith and Max Kellerman.
UFC barely acknowledged Fabricio Werdum (recently punished for comments) vs. Cain Velasquez (now associated with Bjorn Rebney’s association) coming up in two weeks.
And to cap off the WME Foxified TV consultant crapfest, UFC went into promo mode with a one-sided insult fest between Dominick Cruz and Cody Garbrandt. Another man vs. child scenario, this time on the microphone.
Speaking of childish, California State Athletic Commission main athletic inspector and Andy Foster point man Mark Relyea was in his camera-hogging glory by getting in on the TV shots before and after the Urijah Faber fight. Nobody is a bigger mark for Mark than Mark himself.
If this is what the WME era of UFC on Fox is going to be, the folks at Viacom should be very, very happy with their growing position.
New data shows that without Al Haymon & WWE’s cash, California’s athletic commission would be hurting bad
By Zach Arnold | December 13, 2016
A deep dive into a recent financial document dump by the California State Athletic Commission reveals some alarming conflicts of interest and troubling financial realities for the state agency.
Without cash from WWE and Al Haymon, the athletic commission would be dealing with financial problems. And in both cases, not coincidentally, the state agency is skirting the law in how they deal with both entities.
On page 48 of the document dump, there is a list of taxes regarding how much the commission has made from various sports. Here is how the breakdown looks for the first four months of Fiscal year 2016-2017:
Boxing – $114,953.27
Wrestling gates – $124,797.25
Radio/TV tax – $85,619
Commission fines – $18,304.41
MMA taxes – $24,293.22
The numbers are worth highlighting for a number of reasons.
- Andy Foster was brought in as an MMA revolutionary to California four years ago. Today, MMA is struggling for relevancy in the state of California as a big-ticket attraction.
- WWE is, in essence, being extorted. There is no regulation of their events. The Athletic Commission is sending a couple of inspectors to go to the box office of the arenas WWE is running and demanding, through the power of the state, a check of 5% per event on the gate plus demanding a TV tax check (of up to $35,000) for a TV/PPV event. No other wrestling company is treated in the same manner as WWE. WWE refuses to file for an injunction against the Athletic Commission to stop the disparate treatment. Without WWE’s money, the Athletic Commission would be in the red.
- By a nearly 5-to-1 margin, boxing revenue surpasses MMA revenue in California.
This data sets the stage for more claims presented by the Athletic Commission in their financial document dump. On page 77, there is an executive summary. Of the 140 shows regulated in 2016, 90 of them are boxing and 44 MMA. Of the total revenues brought in, 18% of the total pie comes from Al Haymon shows via front man Tom Brown. 15% of the revenue comes from UFC. 13% from Golden Boy. 12% from Tom Loeffler.
Now you have a possible financial motive as to why the state of California has refused to consider bringing any criminal or civil action against Haymon on behalf of the Athletic Commission.
If Al Haymon’s operations slow down or halt completely, California is beholden to UFC for financial stability. We’ve detailed just how dependent Andy Foster is on UFC. After Andy gave Conor McGregor a boxing license, a media frenzy ensued. California got some free publicity for giving McGregor his boxing license. Then came the heat. And now the ass-kissing is underway. At this week’s commission meeting in Sacramento, the Athletic Commission will celebrate UFC:
Ultimate Fighting Championship (UFC), a world renowned Mixed Martial Arts (MMA) promoter licensed by the California State Athletic Commission (Commission), promotes many high profile MMA champions and contenders, such as California residents Cain Velasquez, Ronda Rousey, Urijah Faber, and Dominick Cruz. These events have allowed greater opportunities for California licensees to participate in major professional MMA contests in California.
In just the last 4 years, UFC has promoted a total of 10 events in California, totaling $773,480.88 in Commission revenue. One example of the positive impact to the California economy is that ticket sales alone for these events generated approximately $11 million dollars. Additional revenues are generated from television contracts, concessions and promotional items. Most significantly, UFC has demonstrated a commitment to California MMA fans and we know they are planning to hold many more high profile events in California.
Accordingly, to show the Commission’s appreciation to UFC for holding their events in California and in the spirit of Business and Professions Code 18640.5, Chairman Carvelli has requested that the Commission recognize UFC.
You can’t put the toothpaste back in the tube after giving Conor McGregor a boxing license.
The financials for California’s commission are not as solid as they appear on the surface. Once Al Haymon’s activity slows down, there goes a chunk of revenue. If WWE decides enough is enough and puts up a fight in court, that would stop a significant flow of cash. And if UFC decides to play political hard ball, they can not only limit revenue flowing to California but also put the clamps on the help of their lobbyists whom the Athletic Commission relies upon for political power in Sacramento.
UFC’s three economic weapons for retaliation against Andy Foster for giving Conor McGregor a boxing license
By Zach Arnold | December 1, 2016
Things are about to get chilly between California State Athletic Commission Executive Officer Andy Foster and Dana White. With an upcoming show in Sacramento, it remains to be seen if UFC will read the riot act to Mr. Foster for granting Conor McGregor a boxing license.
What we can likely guess is that McGregor getting a boxing license does not sit well with UFC management.
By granting Conor McGregor a boxing license in California, Andy Foster has opened the door for Conor McGregor to get a boxing license in other states. This would automatically create a scenario of leverage for McGregor to fight outside (or under) the UFC banner in a boxing exhibition or legitimate contest. It opens the door for issues relating to the Ali Act since McGregor would be acting in a capacity as a boxer, not an MMA fighter. The Ali Act for MMA is dead. It’s not dead for boxing. What kind of legal rights could McGregor assert if his UFC contract prohibits him from boxing?
Regardless of how slim the odds are for Conor McGregor fighting Floyd Mayweather, McGregor being granted a boxing license by Andy Foster escalates the business tension between the Lightweight champion and UFC. Adding intrigue to the story is this reported claim that the Nevada State Athletic Commission refused to give Conor McGregor a boxing license.
The co-dependent relationship between UFC & Andy Foster
Andy Foster’s biggest ally since taking over the job at the California State Athletic Commission has been UFC. We’ll elaborate later on just how significant that relationship is and what the pressure points are.
And if you remember, Andy Foster was prepared to move from Sacramento to Las Vegas due to various reasons if it meant getting the Executive Director job at the Nevada State Athletic Commission after Keith Kizer’s departure. For both personal and political reasons. Andy and his wife were having a child. The Athletic Commission was coming off of a reported extortion attempt by crooked California senator Leland Yee in order to keep the agency alive. Yee was exposed for having connections to famous Chinatown organized crime boss Shrimp Boy. Yee was given tickets to a UFC event in San Jose.
Andy Foster ended up as one of the finalists for the Nevada job. He didn’t get it. The interview, which was done publicly, didn’t go so well. For the purposes of UFC, having Andy Foster remain in California allowed them to maintain power over both California and Nevada.
A funny thing happened, though — MMA revenues have steadily declined in California. Boxing revenue is king. The second top revenue source remains taxation on WWE, a gross abuse of the athletic commission’s authority. Taxation without real regulation. Confiscatory. WWE could easily appeal such disparate confiscation in court but have chosen not to do so. Without wrestling revenues, the California State Athletic Commission would face a financial squeeze despite the reserves they have built up in the bank.
UFC’s pressure points on Andy Foster
Andy Foster has granted a lot of people boxing licenses over the last few years. Some of them never deserved a license in the first place, like a nearly 60-year old 200-pound female boxer. Comparatively-speaking, it’s a hell of a lot less dangerous having Conor McGregor in a boxing ring than a 60-year old amateur. But granting Conor McGregor a boxing license is politically explosive with UFC.
If McGregor can parlay his boxing license into something bigger that drags UFC into a business situation they don’t want to be involved in, they’re going to reasonably point the finger at Andy Foster for giving Conor McGregor a boxing license. If UFC wants to retaliate, they have three significant economic attacks they can launch against Andy Foster.
1. Pull shows out of California
This is the easiest weapon of choice for UFC retaliation. UFC just pulled their PPV from Anaheim. Their events are the only significant MMA money makers for the state. The members of the Athletic Commission board love to act like celebrities at these events and one member in particular loves acting like a barking gloryhog with authority they do not possess. Take the fame and money away by not having as many shows in the state.
2. Stop helping the Athletic Commission with cash on lobbying efforts
This is the mutually-assured destruction option that would really screw over Andy Foster.
UFC has top Sacramento lobbying firm Platinum Advisors on a retainer. They’ve spent over $750,000 on lobbying efforts in California, with $200,000 of that cash over the last seven reporting quarters. Without UFC’s lobbyist cash, Andy Foster wouldn’t be able to get things in Sacramento at the Capitol. He just wouldn’t.
WME-IMG also spend an inordinate amount of cash on lobbying efforts in Sacramento. If WME wants to pull the plug on helping out the Athletic Commission in advancing statutes regarding weight cutting, taxes, and other safety regulations, they can do it. Nothing would destroy Andy Foster’s political power faster than UFC not spending their lobbying cash to push his agenda.
3. Remove any chance of a post-Athletic Commission golden parachute with UFC
It’s unlikely that Andy Foster is going to land another major athletic commission job given the current political terrain. Who would want to work in New York? Florida has their own bureaucratically-controlled attorney in place. Texas has new leadership. Nevada is a mess.
Which means that California is likely his last destination for an job with an Athletic Commission. If he retires or quits or gets removed from his California job, landing a golden parachute from UFC would make sense. Or at least it would have used to make sense. Lorenzo Fertitta took care of Marc Ratner and Armando Garcia.
Now with WME-IMG? That open door policy isn’t so open, especially if Ari Emanuel and Dana White see Andy Foster as helping out Conor McGregor obtain leverage in a labor spat.
When you have a family to feed and bills to pay, UFC employment used to be a very secure option with Lorenzo Fertitta. That security blanket is gone now. The venture capitalists have taken over. Andy Foster needs to keep his job in California. He can’t afford to have UFC screwing him over financially or politically. Once he’s out, he’s out.
By Zach Arnold | November 30, 2016
The realization of a Donald J. Trump presidency has set in for proponents of reforming the MMA business.
The season of Trump means death to the Ali Act. There are 30 days left to try to pass an Ali Act during the Congressional lame duck session. Highly unlikely, especially with Trump appointing Senate Majority Leader Mitch McConnell’s wife to the Department of Transportation.
With no Ali Act to fight for, Rob Maysey’s anti-trust lawsuit may lead to a result that attorneys dread: mootness. Rob’s biggest fear is fighters unionizing in order to establish a Collective Bargaining Agreement, which would (in essence) nuke the anti-trust route and close the door permanently on amending the Ali Act for MMA.
Ari Emanuel’s blood rivals, Hollywood powerhouse agency CAA, are throwing down the gauntlet with their (un)official support of Dana White nemesis Bjorn Rebney by organizing a group called the MMA Athletes Association. This group potentially has the muscle that PFA, the attempted group by sports agent Jeff Borris, does not.
Interestingly, Bjorn Rebney says this new Association will not be a union. Which means this will be a competing venture against Maysey and Borris. Most intriguingly, former Bellator employee Zach Light is with the new Association. He sued Bellator for wrongful termination and they sued him back. That fight is ongoing in Los Angeles Superior Court.
Which brings us to this question: what is the value of an Association if the Ali Act isn’t going to be amended for MMA in order to establish legal rights for fighters for freer movement & a private right to sue to get out of an adhesive contract?
@mikedyce If they don't want NLRB certification then no but if you withhold services (strike) w/o that – subject to anti-trust violations
— Lucas Middlebrook (@lkmiddleb) November 30, 2016
Vulture capitalism primed the conditions for organizing fighters
We knew that Ari Emanuel would hollow out UFC in order to launch an IPO or flip the venture Bain Capital-style. Our concern is that the hollowing out process could result in more of a Cumulus dumpster fire.
Consider the following developments over the last week:
- Rumors of WME-IMG wanting $450 million USD a year for UFC TV rights
- Rumors that as part of the $450M/yr deal that UFC’s video library/Fight Pass could be licensed or sold altogether
- Rumors that WME-IMG could give up in-house production of UFC and offload it to the highest bidder
- Rumors of WME willing to give the highest bidder a % of PPV buys and ditching “hype men” like Joe Rogan & Mike Goldberg
- ESPN, one of the likely possible landing destinations for a UFC TV package of sorts, has reportedly lost 1.2 million households in the last two months and is in a death spiral
- UFC stripping Conor McGregor of the featherweight title and creating yet another interim title belt
In none of these developments do you see any benefit whatsoever for fighters. More and more fighters are publicly voicing their displeasure about comp tickets, show money, canceled fights, and issues with drug testing.
Once Lorenzo Fertitta got out and an official price tag was slapped on the UFC, the dam broke. Before Trump takes office in late January, there will be a mad rush for organizing fighters & filing lawsuits. Once Trump hits DC, everything changes — no more Ali Act, a change in the composition of the National Labor Relations Board, and UFC ownership having a direct phone line to the White House.
By Zach Arnold | November 15, 2016
The UFC feared the movement to amend the Ali Act for MMA so much that they were willing to risk significant political capital in order to win the battle even if it meant losing the labor wars in the long term.
Proponents for amending the Ali Act to cover MMA now have two months in the Congressional lame duck session to get something passed before the door is permanently slammed shut. Once that legislative door is slammed shut, there will only be two paths left for labor to fight UFC:
- Wait and see how the MMAFA anti-trust lawsuit plays out in Las Vegas court with a potential settlement or
- Organize quickly under the PFA banner with Jeff Borris and Lucas Middlebrook
The latter option would likely result in a Collective Bargaining Agreement which would probably kill any future antitrust litigation.
You know which way the winds are blowing. So does the UFC, which makes their public gamble in backing Donald Trump all the more breathtaking in hindsight. They calculated a medium-risk, high-reward play. Get Trump in the White House and the return on investment would equal the power brokers in the fight industry enjoying the most political power ever. Trump has spent decades promoting and celebrating the likes of Don King, Vince McMahon, and UFC. It’s in his blood. And now he’s going to return favors in a big way, starting with UFC & WWE as big beneficiaries. Linda McMahon may even land in Donald Trump’s cabinet.
Whether you like or loathe UFC’s political power play here, UFC was going to be fighting on behalf of Trump one way or another. If Lorenzo Fertitta had retained ownership of UFC, he and casino owners like Sheldon Adelson & Steve Wynn would have found themselves in a nasty proxy war against Bob Arum and the Culinary Union in Nevada. It would have been a statewide bloodbath. Once Lorenzo Fertitta sold UFC to Ari Emanuel, then the next political strategy came into the equation: triangulation. WME-IMG & the Emanuel family are tight in the world of the Clintons. If Hillary Clinton had won the Presidency, she wouldn’t have changed the Ali Act to cover MMA. UFC made the gamble that Dana White backing Donald Trump at the Republican National Convention would cover their ass on both ends. They executed their triangulation strategy perfectly.
The two major flashpoints since WME-IMG bought UFC
Once the price tag was announced of $4 billion dollars for the purchase price of UFC, fighters suddenly started getting friskier and less respectful of ownership despite the fact that WME-IMG is way more powerful than Lorenzo Fertitta ever has been in the business world. What Lorenzo knew best was manipulating the emotions of fighters & managers. He made fighters feel like they were building equity in UFC that everyone would share in. A family atmosphere.
That all changed when there was an actual sticker price attached to UFC.
Fighters are either speaking out about wanting a piece of ownership or extra cash because “they know their value”. Fighters are considering retirement at an earlier age. More fighters are not making weight for fights because the repercussions aren’t serious enough. UFC will likely have to address this later on with liquidated damages clauses in new contracts. With heavy pressure to cut costs due to a high debt load, WME-IMG will be in Mitt Romney mode to try to shed as many financial obligations as possible in order to either setup an IPO situation or flip the company like a typical venture capitalist after obtaining a new television deal in a few years. With the landscape of sports television collapsing due to plummeting household numbers, it’s not going to be as easy to cash in as first thought. With ESPN losing 600,000 households a month and Fox Sports 1 losing 300,000 households a month, how much are the biggest corporations willing to spend on UFC? WME-IMG is hoping to end up with a Bain Capital result instead of a Cumulus dumpster fire bottom line.
And now the other shoe is about to drop because of UFC’s public support of Donald Trump.
The activist Left is pissed. They’re organizing new strategies through ANSWER, George Soros (Democracy Alliance), and other powerful Democrat Party entities. If history is any indicator, they’re going to raise hell for at least the next four years. The same campaigns that targeted advertisers associated with Rush Limbaugh, Glenn Beck, and Bill O’Reilly will now be pointing lasers at Dana White, Vince McMahon, & Peter Thiel. The last time McMahon was politically targeted, he infamously came up with the Right to Censor group.
UFC took the risk of backing Trump in order to destroy the bipartisan attempt of amending the Ali Act for MMA. What makes this move such a fascinating calculation is that it conflicts with a good portion of their audience. UFC’s online audience in the 18-to-34 demographic is as rabid as you will find with any sports property in the world. It’s also heavily liberal and the media writers that cover UFC are heavily liberal. It’s very similar to what the NBA online fan & media base looks like. The issue is that the offline UFC fan base, much like the offline NBA fan base, is a whole lot different politically than the online fans & media consuming the sport.
This is going to create some tension for UFC. The stakes got bigger after UFC ran their monster event at Madison Square Garden. There’s a whole new cast of political activists paying attention now. Black Lives Matter, backed by George Soros, is sabre-rattling their intentions on targeting UFC. You know that David Brock, integral hatchet man in the world of the Clintons, will be looking for his pound of flesh (despite the Emanuels being involved) and UFC will easily become one of his new targets. Things are about to get hairy for UFC.
I don’t know what the internal political & financial calculations were for UFC killing an Ali Act for MMA but they must have assumed that such a change to their business model would have seriously impacted their bottom line. Dana White was rather flippant in his latest response to the idea of fighters organizing. You can act that way when you have cashed out for a few hundred million dollars and have an exit strategy ready at your disposal. The UFC won this political battle but they may lose the labor war in the long term. The question is whether Dana White & WME-IMG will stick around to see those potential concessions before they pull the rip cord and leave the mess for someone else to deal with.
By Zach Arnold | November 13, 2016
“I’m aware of my worth.”
Conor McGregor has always prodded the bear for more money. This time around, he’s prodding Ari Emanuel instead of Lorenzo Fertitta. Who will blink?
Before you give the predictable answer, consider the business environment we’re in right now with UFC. Dana White took a huge gamble in publicly backing Donald Trump. It was obvious what the motivation was: kill any attempt of amending the Ali Act for MMA. He’ll end up with his wish — and more. If it wasn’t for the fact that Secret Service reportedly kept Trump away from MSG, we probably would have had a bizarre clash of words involving Trump, Conor, and Madonna. It would have been a rather fitting ending to the circus on Saturday night.
If there’s no Ali Act for MMA, then it becomes publicly harder to argue to the masses against fighters wanting a collective bargaining agreement to achieve minimum business standards with UFC. Rob Maysey has argued that a CBA is incompatible with the Ali Act in giving fighters leverage to fight for different promoters. He’s right. The problem is that with no Ali Act for MMA, you run into the issue of mootness. Whoever organizes fastest, wins. The race to the courthouse principle. Jeff Borris and Lucas Middlebrook are racing to get organized in order to establish a collective bargaining argument. That would likely nuke any impact from the pending anti-trust lawsuit in Las Vegas Federal court.
So what’s the best way to squash any attempt of organization? Kill the head of the snake. Give someone like Conor McGregor a minor piece of the overall pie and load it full of options to get out as quickly as possible. It was easy for Lorenzo Fertitta to use Dana White as his laser to go after fighters. Now the Vegas muscle is gone. Lorenzo didn’t have nearly the business muscle as Ari Emanuel but what Lorenzo did have was an incredible ability to work all the psychological angles. Despite being a billionaire, Lorenzo made fighters feel as if UFC was family. That emotional stigma is completely obliterated now. Fighters are showing less respect to someone they should theoretically fear more than Lorenzo but really don’t. That’s the fight business. There’s no manual or playbook to be successful in an ultrahazardous venture like this.
Expect modifications to UFC contracts regarding fighters missing weight
Donald Cerrone should have had the time of his life at MSG. Instead, he became another victim to a growing trend of fighters dealing with opponents who aren’t even making the attempt to make weight. We’re not talking a couple of pounds over the weight limit — we’re talking 8, 10, sometimes 12 pounds over limit.
The initial penalty was a 20% fine. Now some fights are getting canceled but that clearly isn’t enough of a deterrent.
I fully expect the next phase of UFC contracts under WME-IMG management to feature liquidated damages provisions for breach of contract. Missing weight is a breach of your professional duties as a fighter. While liquidated damages can only be pegged to a certain reasonable % of a fighter’s overall pay, it’s easily the next step in what will be become a legal war.
Andy Foster at the California State Athletic Commission, along with other members of the Association of Boxing Commissions, want a significant modification in the weight class structure. They want more weight classes. In theory, I agree with their assertions. The problem is that no matter how many weight classes you have, fighters are always going to push the limit regarding what weight class they want to fight at versus what weight class they really should be fighting at. Until more weight classes are added, I expect the promotions to start laying the hammer down through contractual provisions to make a much needed point.
How much longer will Mike Goldberg last with UFC?
The UFC finally made it to MSG. The company’s largest gate in history. The fighters reacted differently and understood the magnitude of the event. They got it. The energy and violence was intense. They stepped up to the plate.
Unfortunately, if you watched Mike Goldberg on the Fox Sports 1 telecast for UFC’s debut at Madison Square Garden, you would have thought it was just another UFC event. Low energy, subdued, robotic. You could have taken his commentary from any standard Fox telecast and plugged into the MSG broadcast on Saturday and it would have sounded exactly the same. The tone did not match the historical moment at hand.
Joe Rogan will be around for at least a year but it would be no surprise to see him move onto other things. I wouldn’t be surprised to see Goldberg do the same.
On their last legs
Raquel Pennington put Miesha Tate into retirement. That’s a bombshell. Yoel Romero finished Chris Weidman and now Weidman has to seriously contemplate what’s next for his career.
Dan Henderson is retired. Rashad Evans has a few fights left, at most. Georges St. Pierre is coming back… maybe. Johny Hendricks is on the rocks. Ronda Rousey was talking about the end coming soon for her career during a TV appearance.
A lot of big name fighters are suddenly at the end of their careers and it’s going to take UFC some time to really develop new star power. It will be very interesting to see WME’s strategy for building stars with Lorenzo Fertitta & Joe Silva out of the picture. WME has all the resources to go big. It will be a very interesting process to watch play out.
For the first time, Al Haymon admits he’s a boxing manager (in court) & here are his past contract details
By Zach Arnold | November 10, 2016
Quick & dirty summary:
- In a Federal court filing, Al Haymon’s attorney repeatedly admits that he’s a boxing manager and not “an advisor”
- Public record requests reveal that Haymon is a licensed manager in Nevada but not in California
- Legal admission of Haymon being a manager raises the stake for Ali Act legal issues
- A review of one of Haymon’s prior management contracts reveals consummation in California but “choice of law” provision in Nevada with mandatory arbitration
- Prior Haymon contract required five year minimum term (seven year maximum term) with automatic two year extension for any fighter in a title fight or any fighter who signed a promotional contract with a TV outlet
The financial struggles of the hedge fund backing Al Haymon have been revealed over the last year. More financial secrets will be coming out after a shareholder derivative lawsuit was filed in Kansas to try to get a judge to recover money a hedge fund allegedly put in a shell LLC for Haymon’s Premier Boxing Champions entity.
However, most of the questions regarding Al Haymon’s business practices remain unanswered mysteries. Until now. For the first time, thanks to a combination of Federal court filings & public record requests & confidential sources, it can now be revealed how Haymon’s various entities have entered into contracts with boxers and what his legal strategy has been to navigate the waters of the Muhammad Ali Act.
Haymon’s admission – I’m a manager
In Golden Boy’s anti-trust lawsuit against Al Haymon, GBP accused Haymon of violating the Ali Act by allegedly acting as both a manager of boxers and as a promoter (through Premier Boxing Champions). Haymon’s attorneys argued that he is not a promoter and that PBC is a “packager” that assists television networks who act as the real promoters. Take note of who owns what of the various Haymon Entities according to Haymon’s deposition in the Golden Boy lawsuit:
According to Al Haymon depo: Haymon owns Haymon Development which co-owns Haymon Holdings w/ Waddell which wholly owns Haymon Sports.
— Paul Gift (@MMAanalytics) November 10, 2016
In public, Haymon has long been noted as an “advisor” rather than a manager. Managers are legally required to do deals with state athletic commission forms.
Now, attorney Michael E. Williams for Haymon Entities is arguing in Federal court that Haymon is not a promoter because he is a manager.
This argument carries important legal significance on two fronts. Keep in mind that the court filing says Haymon Sports LLC is in charge of the management contracts. Remember this for later on in the article.
First, Haymon argues in his motion for summary judgment against Golden Boy that they do not have legal standing to sue Haymon for an Ali Act violation because the law only gives boxers or government agencies the standing to pursue civil or criminal action against offenders. Since Golden Boy is neither a boxer or a government agency, Haymon claims they can’t sue him using the Ali Act.
Second, boxing managers are required to be licensed by athletic commissions in the states in which the manager does business in. California’s Business & Professions Code 18642 explicitly states that “no person shall participate in any contest or serve in the capacity of a booking agent, manager, trainer, or second, unless he or she has been licensed for that purpose by the commission.” The Athletic Commission’s Code of Regulations specifically says “no licensee shall enter into any agreement under the jurisdiction of the commission with any unlicensed person, nor shall any licensee have any such dealings related to boxing with any person or club whose license is currently under suspension, or revoked, or whose application for a license has been denied.”
With Al Haymon doing most of his business in four states (California, Nevada, Texas, New York), we filed public records requests with all four Athletic Commissions regarding managing licenses for he and his Haymon Entities. Haymon lives in California, is involved in shows in California, and has negotiated & entered into contracts in California. According to the California State Athletic Commission, Haymon has had no California boxing manager’s license on record for the past five years.
We turned next to Nevada. Nevada explicitly states that “all contestants, promoters, managers, seconds, trainers and ring officials must be licensed by the Commission. No person may participate, directly or indirectly, in any professional contest or exhibition of unarmed combat unless the person has first procured a license from the Commission.”
After filing a records request regarding managing licenses for Haymon, we hit the jackpot.
Al Haymon’s silver state tongue
It turns out that Al Haymon has been filing for a Nevada boxing manager’s license for several years now.
With this news, we made an educational guess that Haymon getting licensed in Nevada meant that his “advisory” agreements with boxers were in fact management contracts based on Nevada law. Thanks to a confidential source who provided us with a prior copy of one of Haymon’s contracts from Al Haymon Development, our suspicions were confirmed.
The contract we saw used a “choice of law” provision to directly state that even though Haymon is negotiating and entering into a contract based in California, Nevada law takes precedence. Additionally, either party (athlete or manager) had to give 30 days notice for a breach in order to cure the breach, and that legal disputes are to be dealt with in binding arbitration with a single arbitrator from Judicial Arbitration and Mediation Services (JAMS).
The contract we saw had a minimum five year time period with an automatic two year extension if a fighter is involved in a title fight or ends up signing a promotional contract with a television network. The agreement is capped at a seven year term limit with a 10% management fee. One provision in the contract states that the selection of the promoter shall be at the discretion of the manager (Haymon).
This is very important to highlight because Haymon’s own attorney in Federal court argued that Golden Boy had unclean hands in California business dealings by using promotional contracts with duration clauses longer than five years, which is in violation of California law. Haymon’s attorney said California law on duration clauses pushed Golden Boy to build their promotional contracts on Nevada law in order to avoid the five year rule. Now we see that a prior Haymon management contract used Nevada law to do exactly the same thing with a seven year maximum duration period.
The other important legal issue to highlight is the “choice of law” provision. Haymon, a licensed boxing manager in Nevada, is supposedly unlicensed in California. He is negotiating and entering into a boxing management agreement with licensed California boxers reliant on Nevada state law. Does the California State Athletic Commission have jurisdiction over such a management contract even with the “choice of law” provision? Remember the California code of regulations section we cited (§ 392)?
“No licensee shall enter into any agreement under the jurisdiction of the commission with any unlicensed person, nor shall any licensee have any such dealings related to boxing with any person or club whose license is currently under suspension, or revoked, or whose application for a license has been denied.
In this scenario, it’s extremely unlikely to see the California State Athletic Commission go after a licensed boxer for signing a management contract in California with someone who appears to be an unlicensed manager (Al Haymon) in the state. But what if the Athletic Commission wanted to pursue action against Haymon? Since Haymon appears to not be licensed with the California State Athletic Commission, their options are limited. Unlike the Contractor’s board or the Medical board, there doesn’t appear to be any code sections giving the Athletic Commission the option for a criminal referral in a competent jurisdiction.
The closest legal option the California State Athletic Commission could possibly pursue against Al Haymon would involve a civil referral citing Business & Profession Code section 17204, which gives a right of action under California’s unfair competition law to have a board or agency send a referral to an Attorney General or District Attorney to pursue a court case. This is the same law Golden Boy is using as a cause of action against Haymon in their current Federal antitrust lawsuit.
That’s not happening any time soon.
What does Haymon’s deposition testimony mean?
Who owns what now?
In the prior AHD contract we read, there was an assignment provision that allowed Haymon to transfer his management contracts “to any other entity in which he shall have ownership interests.” Haymon Sports is, according to Haymon’s testimony, owned by the hedge fund backing PBC. AHD is owned by Haymon. AHD and Haymon Sports co-own Haymon Holdings LLC.
Al Haymon has made millions of dollars in boxing by flying under the radar and keeping a low profile. Once he made the jump into the TV arena with Premier Boxing Champions, he made himself a huge target. Once you make yourself a huge target for lawsuits, the business secrets start getting revealed. Thanks to Haymon’s own words in discovery & deposition in Federal court filings combined with public record requests and confidential sources, for the first time in Haymon’s boxing career we are starting to get a peek into how he has made his millions and the legal tactics he has used to shield himself from his competitors.
Al Haymon argues he’s not liable for predatory pricing because he spent 9-figures & can’t make the money back
By Zach Arnold | November 7, 2016
Attorneys representing both Al Haymon personally and the various Haymon Entities are trying to kill off Golden Boy’s anti-trust & unfair competition lawsuit. In our first article on Haymon’s motion for summary judgment, we analyze Haymon’s attempt to defend the actions of Premier Boxing Champions and the hundreds of millions of dollars he has spent.
In carefully reading the motion for summary judgment Federal court briefings filed on behalf of Al Haymon against Golden Boy, Haymon made a major concession that will impact his future business dealings in order to win the legal war with Oscar De La Hoya. We’ll focus on that concession and its legal impact in a separate article.
This article is about Haymon’s narrative of playing the role as outsider challenging the “oligopolists.”
Lead by attorney Michael E. Williams, Team Haymon’s bigger-picture argument about why Premier Boxing Champions did nothing wrong can be summed up in the following: I got the cash, I paid for TV time on networks you weren’t doing business with, so how can you say that I interfered with boxing’s business model which is reliant on HBO, Showtime, and PPV?
Al Haymon continues to argue that he’s not a promoter. He calls himself a “packager.” In the same way that he has avoided calling himself a manager by calling himself an “advisor,” Haymon has managed to build a multi-million dollar empire and huge roster of fighters. Managers and promoters are required to be licensed to do business. Athletic commissions must approve of contracts on official state documentation. But what if nobody goes after you for being an advisor or a packager?
Haymon argues that he’s made fighters wealthier because he has directed them into situations where they don’t sign long-term deals with promoters like Golden Boy with odious contracts featuring clauses such as fighters not being able to talk to a manager, consultant, or advisor to help them out without GBP’s permission or else face a substantial fine.
Haymon claims that the PBC business model was built on the concept of paying for TV time on networks like NBC, drawing a “substantial” audience, and then convincing those same networks to pay him rights fees. That plan hasn’t exactly panned out.
The legal defenses
Sherman anti-trust argument
In order for Golden Boy to prove that Haymon’s liable of violating anti-trust, Golden Boy has to show: 1) specific intent to control prices or destroy competition; 2) predatory or anti-competitive conduct directed at accomplishing that purpose; 3) a dangerous probability of achieving ‘monopoly power’; and 4) causal antitrust injury.
Haymon’s attorneys cite the case of Rebel Oil Company vs. Arco regarding a determination of a market. Haymon argues that PBC buying time on networks like NBC and CBS isn’t restricting competition because none of the other major boxing players were on those platforms. The Arco case dealt with the gasoline company offering self-serve gasoline at a lower price and Rebel claiming that Arco drove out competitors by discounting their product at a cut-rate in order to turn around, gain substantial market share, and then jack up the prices after taking over the market. The issue of predatory pricing.
Arco won the case based on the ruling that Rebel failed to show that barriers to entry prevented others from entering into that retail market and that Arco “lacked the power to charge supracompetitive prices to recoup any losses from predatory pricing.”
This is the Haymon argument in a nutshell. PBC did business on networks others weren’t. He took the risk with the hedge fund cash. Golden Boy and Top Rank could continue to do business on their traditional platforms and they could also do business with him. PBC expanded the number of TV platforms airing boxing programming.
Anti-competitive policy involving PBC having “exclusivity” with NBC
Team Haymon cites Omega Environmental Inc. vs. Gilbarco Inc case law to argue that deals involving exclusivity with distributors are not anti-competitive. In this case, PBC’s exclusivity with NBC & CBS isn’t anti-competitive because Golden Boy can still do business with HBO and on PPV. Plus, Haymon argues the TV contracts were of “short duration” with “easy terminability” options.
Team Haymon also argues that Haymon Entities has waived the exclusivity provisions in the TV agreements after Golden Boy sued, therefore resulting in no foreclosure or attempted monopolization. Arguing mootness after Golden Boy sued is a curious play here.
Haymon argues that his boxers are not obligated to sign long-term promotional agreements with Golden Boy and cites a recent Aerotec vs. Honeywell court decision regarding Aerotec failing to prove antitrust violations because Honeywell had a parts shortage which caused Aerotec’s repair business to tank. Aerotec alleged that Honeywell’s part shortage was done on purpose to kill their company. The 9th District Court of Appeals said there was no evidence to prove this assertion. Haymon’s arguing that his fighters refusing to sign contracts with Golden Boy isn’t evidence of intent of anti-competitive or unfair business practices.
Haymon’s attorneys argue that Golden Boy has unclean hands because a judge ruled that contractual extensions for Golden Boy going beyond five years in length were illegal under California law and that Golden Boy then changed its promotional contracts to be governed under Nevada law.
Offering PBC for free is not anti-competitive, it’s the opposite
Haymon cited Matsushita Electric Industrial vs. Zenith Radio Corporation, a 1986 Supreme Court decision regarding Zenith claiming that Matsushita artificially kept prices high in the Japanese market but undercut them in the United States with cut-rate pricing to obtain market share by driving out the competition. The Supreme Court ruled that offering competitive pricing is not an automatic sign of predatory pricing. Predatory pricing involves 1) below cost pricing and 2) “a reasonable expectation of recovering, in the form of later monopoly profits, more than the losses suffered.”
The argument here is that Haymon offered PBC fights for free on network television. He spent hundreds of millions of dollars in hedge fund cash by “packaging” fighters he advises to TV networks and promoters in order to make them more money than they would have by signing with Golden Boy. His attorneys argue that “without the probability of recoupment,” his product on network TV increased the welfare of consumers by giving away a product and increasing exposure for boxing and therefore it isn’t an issue of predatory pricing. Intriguing legal argument but still amazing to read, nevertheless.
The 1993 Supreme Court case involving cigarette manufacturers Liggett and Brown & Williamson is cited. Liggett made generic cigarettes and Brown & Williamson countered by making their own generic cigarettes at below-cost pricing with volume rebates. A rebate war broke out between the two companies before a generic cigarette was even sold. Liggett claimed the price rebates from Brown & Williamson were discriminatory in order to manipulate the margins on both the generic and retail branded smokes. On appeal, Brown & Williamson won because a judge said Liggett couldn’t prove a causal link for damages between the price rebates and Liggett’s alleged economic injury.
Given Team Haymon’s classification of Golden Boy as part of a boxing oligopoly, their arguments about losing money not equaling predatory pricing makes for a very interesting court argument and a likely scenario that Haymon will be able to strike some portions of Golden Boy’s anti-trust & unfair competition court complaint.
The most audacious Al Haymon court argument yet: the TV networks are the promoters, don’t look at me
By Zach Arnold | November 1, 2016
The anti-trust court war in Los Angeles between Golden Boy and Al Haymon has gotten nasty in a hurry.
There have been depositions involving Al Haymon, Eric Gomez (Oscar’s matchmaker), Bob Diaz, Bernard Hopkins, and Oscar De La Hoya.
Last week, we noted that Haymon’s attorneys were moving for summary judgment in the case. Summary judgment is an attempt to ask the judge in the case, after discovery & deposition, to make a determination as to whether or not the case should go to trial. Factual questions go to a jury. Legal questions go to the judge. That hearing will take place on November 28th.
The last week has seen a crazy amount of motions & court filings ranging from Golden Boy filing a motion to strike Haymon’s designation of expert witnesses to Haymon’s side filing a motion for sanctions against Golden Boy’s attorneys.
Al Haymon’s two main legal arguments
First argument: the TV networks are the promoters
Haymon’s attorneys grilled Oscar De La Hoya over the role of HBO in helping produce boxing events. DLH called HBO a producer because they help with the television broadcasts. Haymon’s attorney asked if HBO is helping as a producer, how can you not call them the promoter?
The counter to this argument was illuminated by Golden Boy during deposition of Haymon regarding his “advisory” contracts with fighters. According to the deposition, Haymon admitted that changes were made to agreements in September 2015 regarding “promotional agreements” and that provisions were rescinded regarding restrictions. Haymon reaffirmed his position that he simply steers fighters into promotional agreements but that it’s up to the fighters to make the decision.
Court filing: “Defendants have never sought to enforce and have agreed to waive the contractual provision that allows them to select the boxer’s promoter.”
Haymon also waived PBC TV exclusivity with all the major broadcast networks and his commissions for his fighters in PBC fights.
This is hugely important to focus on. Haymon must convince a Federal judge that he’s not a promoter because he could face important legal issues regarding the Ali Act if a judge rules that Haymon is a promoter and not a middleman. This legal determination means everything!
Second argument: GB is using the same restrictive tactics they accuse me of
This court filing argues Haymon’s claim as to why his fighters can’t fight for Golden Boy:
In fact, in what is clearly designed to prevent a boxer from retaining a manager such as Haymon Sports that may fully protect the boxer’s interests, during the Covered Period, GBP has added language in its promotional agreements that its boxers will not “retain, hire, consult with, include, or involve any person or entity as a manager, advisor, consultant or any type of representative … not previously disclosed to Promoter … without first obtaining the express written consent and approval of Promoter” and a violation of this provision results in liquidated damages against the boxer. Thus, there exist ample alternative market-based explanations for why Haymon Sports-managed boxers would not want to sign GBP’s standard promotional agreements.
Haymon’s legal argument boils down to fighting with fire: you can’t say I’m restrictive in telling guys where to fight when your promotional agreements don’t allow fighters to get new representation without your permission. Unclean hands.
The battle of “experts” becomes a circus
Kerry Davis in his words:
“First, Mr. Shaw is incorrect in broadly asserting that boxing promoters take significant financial risk. While some promoters are willing and able to take financial risks, the business model pursued by many promoters is to first secure television license fees and sometimes site fees that cover most or all of their expenses in promoting a fight card. In this respect, many of these companies operate more as “packagers” than as actual promoters.”
The number of boxing promoters who have spectacularly failed is voluminous. There is a proverbial graveyard full of them. Ask athletic commissions how many promoters come and go, especially in California. The risk associated with making money as a fight promoter is ultrahazardous. Why do you think, historically speaking, old time promoters were stable? They were stable because of organized crime laundering money. The underlying fundamentals of risk have always been tremendous in promoting fight sports. It’s one of the most risky business endeavors you could possibly undertake.
Al Haymon is the perfect example of this. He’s burned through tens of millions, if not hundreds of millions of dollars in hedge fund cash and has floundered. His entire business model with PBC would look so much different if he relied upon the standard pay TV business model that Golden Boy & Bob Arum have been navigating. After losing tons of cash, Haymon’s business model is starting to shift into what a “normal” high-end promoter model looks like in the modern era rather than his audacious attempt to flood every broadcast channel with prepaid programming.
“Third, Mr. Shaw is incorrect in asserting that it is the exclusive province of the boxing promoter to deal with television networks in connection with televised boxing events. While I was at HBO, several prominent managers dealt directly with HBO on behalf of their star fighters. Mr. Haymon, who also dealt directly with HBO, was not at all unusual. Negotiating with a television network on behalf of a boxer does not make one a promoter.”
If Al Haymon is not a promoter, then HBO is a promoter. And promoters are required to be licensed in each state with athletic commission and abide by the provisions in the Ali Act.
“Fourth, Mr. Shaw is incorrect in asserting that the PBC series and its creators somehow have an unfair advantage over existing industry stakeholders like HBO, Showtime, Top Rank, and Golden Boy, or that the PBC series’ business model is somehow bad for the boxing industry. The PBC series certainly has made the boxing business more competitive, which may be uncomfortable for those who were content with existing arrangements. But if Haymon Sports succeeds in growing the audience for professional boxing by broadcasting fights on network television, broadly speaking that should help, not hurt, other industry players.”
Kerry Davis’ argument is undermined by the fact that Haymon’s side supposedly waived exclusivity clauses. If PBC contracts had exclusivity clauses, that would automatically stifle competition for other promoters.
But what if the TV networks are legally considered to be promoters? Accepting that legal argument would nuke the exclusivity argument because each TV network would be viewed as their own promoter while classifying Haymon/PBC as “packagers” selling a fighter service to the networks. Look at the legal definition of “promoter” in California’s Business & Professions Code:
18622. The words “club” and “promoter” are synonymous, may be used interchangeably, and mean a corporation, partnership, association, individual, or other organization which conducts, holds, or gives a boxing or martial arts contest, match, or exhibition.
This legal argument completely flips the script on classifying Haymon as a promoter because he’s arguing that it’s the networks who are making the money, giving the OK on which fights to book, and producing the events at the arenas. He’s supplying the fighters but it’s the TV networks who are really running the show as promoters.
On the other hand, Haymon has a huge number of fighters in his stable under the PBC umbrella and some big names have been woefully inactive when they could have, theoretically speaking, been fighting big name opponents associated with other promoters.
Which leads us to argument two. Haymon argues you can’t accuse him of restrictive, anti-competitive tactics when Golden Boy has fighters signing contracts barring fighters from consulting or hiring representation without their permission.
If Haymon can convince a Federal judge that TV networks are the real promoters, the legal consequences could be enormous regarding athletic commissions, the Ali Act, and contracts. TV networks would find themselves in an entirely different legal position of responsibility.
If Al Haymon is legally arguing that he’s not a promoter, doesn’t that legally make him a manager? Maybe? Managers are supposed to be licensed with various athletic commissions. It’s our opinion that Haymon would gladly take this concession in exchange for getting a judge to legally shift the burden of “promoter” away from PBC and onto the laps of the TV networks for the sake of this anti-trust and unfair competition lawsuit filed by Golden Boy.
There are other legal issues brewing for Al Haymon’s PBC
The real legal action remains in Kansas with the shareholder derivative lawsuit against the hedge fund financing Haymon. If that lawsuit survives the motion to dismiss on November 10th, then the war begins with discovery and deposition on information regarding the financing of Al Haymon. That is the nuclear bomb.