Conor McGregor’s (empty) threat to not fight in Nevada exposes how vulnerable Athletic Commission is
By Zach Arnold | October 12, 2016
Dana White is playing the public role of “peacemaker” with Conor McGregor threatening to not fight again in the state of Nevada after getting fined
$150,000 $75,000 for the water bottle incident with Nate Diaz.
White made it clear, during an interview with Jason Whitlock on Fox Sports 1, that he wanted Conor McGregor to fight again in Nevada. It’s where UFC is headquartered and where they get rights fees from casinos for big events.
McGregor’s threat to not fight again in Nevada may be hollow but it underscores the new reality facing the increasingly abusive Nevada State Athletic Commission. After the state of Nevada yanked the Athletic Commission from general funding, the Athletic Commission has been forced into self-financing and budgeting. The response to this new reality by the Athletic Commission has been to brazenly transform itself into a money-grabbing asset forfeiture operation with a mentality of criminal authority it does not possess.
For every action, there is a reaction. The reaction to behavior of the Nevada State Athletic Commission has created the following openings:
- An opportunity for an attorney to make a full-time living in a niche field of suing the Nevada State Athletic Commission for arbitrary and capricious rulings, thus creating an avenue to win attorney fees for each petition for judicial review
- The threat of big name fighters no longer fighting in Nevada in order to head to other no-income tax states like Texas or Florida
The Nevada State Athletic Commission has no one to blame but itself. Instead of fully processing the new realities of self-financing, the Athletic Commission went into Sheriff Joe Arpaio mode. Someone should explain the concept of capital flight to the board members. The UFC has new owners who have a world to conquer. Floyd Mayweather is retired. Al Haymon is dealing with major legal & financial issues. There simply aren’t as many guaranteed mega-money fights for Las Vegas as there used to be.
Fighters choose to fight in Las Vegas because it’s the entertainment capital of America and has no state income tax. Fighters aren’t choosing to fight in Nevada because of the regulatory quality of today’s Athletic Commission. It’s not as easy to conduct business in the state of Nevada today as it was during Marc Ratner’s tenure. Fighters have more options now. Fighters can go to South Beach or Orlando if they want to fight in a state with entertainment options and no state income tax. There’s Jerry World in Dallas. Options are no longer limited.
Without political and business pressure from the UFC, the Nevada State Athletic Commission would be financially on the rocks. The Nevada State Athletic Commission needs the UFC and its fighters for self-financing their operations. Instead of understanding how vulnerable their position is, the Athletic Commission has gone all-in as regulators with powers they do not truly possess. They can ask their next door neighbor in California what happens when major fighters don’t want to come to your state.
By Zach Arnold | October 11, 2016
Wow, look at the new 'judicial' look of the NSAC pic.twitter.com/7VKkjVf9uF
— Erik Magraken (@erikmagraken) October 10, 2016
“Conor McGregor was fined $150,000 and sentenced to 150 hours of community sentence.”
This was the text message viewers watching Comcast Sportsnet saw Monday night in the United States. If you didn’t know the details of the water bottle fiasco involving Conor McGregor and who was punishing him, you would have been under the impression that he was being hauled in a court room for a criminal hearing.
The Nevada State Athletic Commission is an administrative civil body. It is not a criminal court. However, that is no longer the image the public agency wants to portray to the public. The Athletic Commission is visually and administratively acting as a tribunal with authority for criminal punishment. Last Spring, we documented the significant changes that the Athletic Commission made to its rules and regulations. A major symbolic change that nobody picked up on was the fact that the Athletic Commission changed the wording in their rules and regulations to remove text stating that they are a civil body. It was a red flag for intent and motive of what was coming in the future.
When the Nevada State Athletic Commission brought Bob Bennett on board as its new Executive Director, it promised significant changes were coming for drug testing and administrative procedure. Those changes were implemented. The war on doping was ramping up. What the Athletic Commission didn’t count on was the state of Nevada cutting off general funding to finance the Athletic Commission. The Nevada State Athletic Commission, generating millions of dollars a year for the state’s general fund, now found itself put into a situation of self-financing in order to pay their own bills. They got hit with years of back-dated claims from the state’s Attorney General office in legal bills.
The end result is that the Nevada State Athletic Commission, once considered a gold standard in athletic commissions, has resorted to extortionary money-grabbing tactics against fighters in order to pay administrative bills that the taxpayers in the state of Nevada used to pay for.
By Zach Arnold | October 8, 2016
America’s Federal Reserve and Goldman Sachs have long had a revolving-door relationship. That relationship is now getting tested by Janet Yellen and the Obama Administration in regards to banks pitching high-leveraged business propositions.
Bloomberg News reported on Thursday that Federal Reserve supervisors have sent Goldman Sachs a warning letter regarding promises they supposedly made to prospective buyers for the UFC.
- Goldman Sachs allegedly marketed UFC as a business property that could generate nearly $300 million USD in yearly EBITDA. However, the current EBITDA for UFC is reportedly less than half – $142 million EBITDA.
- Reportedly in August, there were buyers interested in buying high-yield UFC debt. $1.8 billion dollars in UFC debt was purchased.
These figures have allegedly alarmed Federal regulators because of the net debt to EBITDA ratio. Using these figures, UFC would have a ratio of 12 — which would be alarming. Bloomberg reports that numerical adjustments lowered UFC’s ratio to 6.
This information comes at a time where word is spreading about new UFC ownership wanting to create multiple television deals with different cable & broadcast networks when the Fox Sports deal expires in 2019. Exclusivity of UFC’s product has kept Fox Sports 1 afloat as a fledgling cable sports channel. Without UFC programming, FS1 struggles to attract programs that draw 6-figure ratings. UFC is the network’s lifeline.
The financial pressure for UFC’s new venture capital owners to maximize profits is high. The financial pressure for Fox Sports to keep FS1 going is meaningful. Big changes could be coming for both parties in two years.
By Zach Arnold | October 6, 2016
A recently passed California state law mandates that anyone under the age of 18 participating in a school-based sports or youth sports organization program who suffers a concussion or head injury must be removed from further activity and receive medical clearance from a doctor.
The big question is how much teeth there is going to be in enforcing this law.
The new law, Assembly Bill 2007, requires that anyone under 18 who suffers a head injury must take at least seven days to be slowly phased back into activity rather than immediate clearance. The law applies to anyone participating in baseball, basketball, motocross, boxing, cheerleading, diving, football, martial arts, gymnastics, hockey, rodeo, skateboarding, softball, soccer, swimming, and amateur wrestling.
Coaches and trainers involved in youth programs will also be required to undergo educational training on concussions before being allowed to supervise athletic activities. Sports programs will also be required to create concussion & head injury information sheets that athletes and their guardians must sign before being allowed to participate in activities.
It will be interesting to see how this law is implemented with the United States Fight League (pankration), USA Boxing, and CAMO and whether or not the legislation is worth the paper it’s printed on. This will be a topic of discussion at the October 18th Los Angeles meeting for the California State Athletic Commission.
By Zach Arnold | September 13, 2016
Despite below-average UFC 203 prelim ratings (870,000 viewers) and Ultimate Fighter viewership (370,000 viewers), UFC’s overall success on Fox Sports 1 has ripped the mask off of some very uncomfortable truths about the future of Rupert Murdoch’s suicide sports pact with ESPN.
The two sports properties saving the Fox Sports 1 ship from sinking are UFC and NASCAR. In the words of Dan Patrick, they don’t have “ESPN muscles” — they have their own muscles and have demonstrated to be capable, portable television properties.
For non-live event programming, the most successful shoulder programming on Fox Sports 1 is the daily NASCAR race hub show that attracts around 150,000 viewers. That number is only “good” relative to how else Fox Sports 1 performs. Colin Cowherd’s radio simulcast draws around 100,000 viewers. The Skip Bayless Experiment is drawing between 70,000 and 90,000 viewers. Cowherd & Whitlock average around 60,000 viewers.
You can’t build a major sports network on those kinds of figures and expect cable & satellite companies to pay hefty carriage fees like ESPN is asking for right now. The great heist ESPN has pulled off for years getting $7 a month from each cable subscriber for having shoulder programming that draws a few hundred thousand viewers has been exposed. Fox Sports 1 emulating ESPN in 2016 makes little sense.
Which brings us to the uncomfortable truths about Rupert Murdoch’s attempt to compete with ESPN:
First: Without UFC and NASCAR, there is little (if any) justification for cable & satellite providers to carry Fox Sports 1.
If ESPN executives warmed up to the idea of poaching UFC away from Fox, it would severely hurt Murdoch’s ability to demonstrate the long-time viability of Fox Sports 1.
Second: UFC and NASCAR drawing solid ratings on Fox Sports 1 while the rest of the programming tanks demonstrates that plenty of sports fans are aware of what Fox Sports 1 and they simply don’t want to watch the channel.
It also demonstrates that your average American sports fan is really only interested in one 24/7 TV sports channel. ESPN’s declining fortunes are due to self-inflicted wounds. There are sports fans who hate how hollow the network’s daily programming has become. It’s empty. It’s political. It’s a poor attempt at becoming a dumber, less sharper version of MSNBC. For the average American, sports programming is supposed to be a reprieve from politics. Instead, ESPN has gone full-throated on one-way politics.
Rupert Murdoch thought he could capitalize on this opportunity with his own sports network. He didn’t in the past with Fox Sports Net and he can’t now with Fox Sports 1. Best Damn Sports Show Period remains his greatest daily sports show accomplishment. Murdoch’s inability to capture sports fans who are sick of ESPN’s political agenda is a manifestation of two problems:
- Murdoch simply doesn’t know how to create a smart alternative to ESPN
- Americans don’t want two full-time 24/7 sports TV channels — they just want ESPN to clean their act up
In Rupert Murdoch’s world, politics are transactional. Murdoch wasn’t the driving force behind Fox News — Roger Ailes was. Outside of immigration issues, Murdoch largely has maintained a hands-off approach to Fox News. Murdoch maintains the New York Post simply as a matter of convenience if he has an axe to grind. He used the paper to shuttle Ailes out the door during the major sexual harassment scandal.
The great irony? The blueprint that made Murdoch the most money on American cable & satellite TV is the one he’s most resistant to use in competing with cable TV’s biggest giant in ESPN. Murdoch could have attacked ESPN by presenting Fox Sports 1 as the conservative alternative. He could have driven that wedge. Murdoch has chosen not to. In his 20+ years of trying to compete with ESPN, he’s used *every* tactic except the Ailes business model.
As a result, Murdoch is left with a sports channel that is wandering aimlessly and being single-handedly saved by a Mixed Martial Arts boss who is a full-throated Trump supporter. Without UFC, there is no reason to watch Fox Sports 1 and no reason for cable/satellite providers to keep the channel for a high carriage fee. The best Murdoch can do is fail with his channel while inflicting damage to ESPN. ESPN could wipe out his venture by poaching away UFC programming rights. UFC is in the catbird’s seat and can demand as much cash as they want from Murdoch in order to keep his channel alive.
Exit question: Would Murdoch consider making a deal with TNA if Dixie Carter’s out of the picture?
By Zach Arnold | September 10, 2016
All of the latest political trends represent a real roadblock in amending the Ali Act to cover MMA. If there is to be action on this front, the timing to make it happen needs to happen during the lame duck session of Congress from November 2016 ~ January 2017.
Let’s start from the top and work our way to the bottom.
Trump & Hillary will not be naturally inclined to support amending the Ali Act
If Trump wins the election, the political power of Dana White and Vince McMahon grows. They’re tight with Trump. He speaks their language. They know his language. Not only are they his friends, they’re entertainment bosses in ventures he has great personal interest in.
If Hillary wins the election, it gets more complicated but also more negative for the forces advocating change. The new owner of UFC is Ari Emanuel, brother to forever Clinton-fixer Rahm Emanuel. The Clinton Machine sticks together, especially when there’s a lot of money changing hands. It would not be surprising to see Rahm Emanuel leave Chicago and head back to DC under a Hillary Clinton administration. Additionally, there isn’t a national vocal outcry on a mass scale to amend the Ali Act for MMA. Politicians are not going to spend their political capital on this front.
The UFC will spend money to kill this attempt to amend the Ali Act
UFC has reportedly spent $100,000 in lobbying efforts to stop House Resolution 5365. Given UFC’s brutal lobbying experience in Albany, the company understands that DC lobbyists will play the game and ask for more money in order to stop momentum that may or may not exist.
The threat posed to UFC has nothing to do with giving athletic commissions more power. It has everything to do with giving fighters a private right of action to file a lawsuit in Federal court to get out of an adhesive contract. That alone is worth millions of dollars to UFC. Our initial estimate for UFC lobbying efforts in New York was $7 million dollars.
If UFC is going to spend $7 million dollars lobbying in a state like New York, it means they will spend that kind of money lobbying for business interests involving athletic commissions.
For two major reasons, athletic commissions don’t want an Ali Act for MMA
Without UFC events coming to states like California or Nevada, it means lost revenue. Boxing is still king but Al Haymon’s business model has brought a lot of uncertainty as to what the financial model for boxing will be in the future.
UFC has power because they are a promoter that runs big events. However, standard promoter power is not the reason athletic commissions want to keep in the UFC in their good graces. There are two significant reasons why athletic commissions do not want to see the Ali Act amended for MMA.
First, the major source of UFC’s political power involves their efforts in lobbying state capitals across America. They have top lobbying firms, like Platinum Advisors in Sacramento, on retainer. The minute something needs to get done on behalf of Andy Foster of the California State Athletic Commission or the powers-that-be at the Florida Boxing Commission, UFC writes the check to their lobbyists to get things done.
This is the undercovered story of the new century regarding the rise in UFC’s power. Bob Arum, Oscar De La Hoya, Richard Schaefer, and Al Haymon do not play the lobbying game. Much to their own detriment, they have sacrificed building political power because they are cheap. UFC had to hire powerful lobbyists in order to build political influence and build their business model. That pro-active approach has now put UFC in a political position that boxing stakeholders cannot obtain overnight.
UFC is the power broker for the Andy Fosters and Bob Bennetts of the world. Without UFC, they don’t have job security and stability. Without UFC’s lobbyists, these athletic commission bosses wouldn’t possess the ability to promote and enact their agenda. Self-preservation matters. If UFC doesn’t want the Ali Act amended for MMA, then the commission bosses better get on board if they want gainful employment — especially after they retire from athletic commission work and want a job with UFC.
A terrible but useful analogy: Look at the athletic commission bosses as combat sports versions of Bashar al-Assad and look at UFC as Vladimir Putin.
Russia has every interest in keeping Assad in power for their business interests. The Russian Navy is in Tartus. In return, Assad wants the Russian fleets to help him in military matters in order to keep his political power in Damascus. This kind of symbiotic relationship is exactly the kind of business and political relationship UFC maintains with the major athletic commission bosses.
Second, athletic commission bosses do not want to see the Ali Act amended to cover MMA because they don’t possess the legal backgrounds to make sound decisions when contract & arbitration disputes land on their desk.
The minute there is a contract dispute, athletic commission bosses call the state’s Attorney General’s office. The AG’s office immediately starts racking up the billable hours and what should be a simple task ends up in a costly fight. California recently attempted to shift the costs of arbitration hearings onto the participants involved. Nevada has recently used commissioner Pat Lundvall, a licensed attorney, to help in contractual disputes involving Nevada fighters and promoters.
In short, the bosses appointed to run athletic commissions do not possess the knowledge or confidence to make the right legal decisions. In California, the commission has the right to appoint independent legal counsel separate from the Department of Consumer Affairs or the AG’s office. Andy Foster has chosen not to go down this path.
For politicians in state capitals who grossly interfere in commission matters for little rhyme or reason, having non-state agency attorneys who possess legal knowledge as executive directors on a athletic commission is considered a dangerous thing and immediately makes such individuals a target for getting axed. See: New York.
Conclusion: Without financial assistance from the UFC, athletic commission bosses fear instability and lack of job security because of UFC’s willing to spend money on lobbyists to keep the current political system in place. The same athletic commission bosses fear that expanding the Ali Act would bust their budgets in legal disputes. The UFC fears that an expanded Ali Act would weaken the strength of their contracts. The major politicians have individual reasons as to why they would naturally be inclined to reject amending the Ali Act for MMA. The clock is ticking.
By Zach Arnold | August 31, 2016
Joe Rogan signaled that he would leave UFC after the company was sold to Ari Emanuel. He decided to stick around for at least one more year. Now veteran matchmaker Joe Silva is reportedly leaving.
WWE discovered that you can move on when wrestlers leave but when management & on-air talent like Jim Ross & Pat Patterson leaves, you’re left with the Michael Coles of the world.
A change in personnel is natural given the $4 billion UFC sale but there is something to be said for a brain drain. Yes, Dana White is the top matchmaker and face of UFC, but Joe Silva and Sean Shelby micro-managed a roster with hundreds of fighters and were put in a position of constantly looking for the next diamond in the rough. Try booking 800 fights in a calendar year and see how you hold up.
These changes come against the backdrop of UFC looking for a new television rights deal. The odds seem strikingly in favor of UFC staying married to Fox Sports. UFC isn’t just a cornerstone for Fox Sports 1 — they’re practically the damn reason the channel still exists. Top flight Fox Sports 1 programming is barely able to hit 6-digits for cable ratings. UFC programming on Fox, for a disappointing show, draws 700,000 viewers. The numbers UFC is able to pull on Fox Sports 1 are nothing short of incredible.
What it exposes is that there is plenty of awareness of Fox Sports 1 but nobody wants to actually watch the channel. The Colin Cowherd & Jason Whitlock experiment has gotten off to a rough start. The Skip Bayless & Shannon Sharpe era will likely do the same. Take a look at the amount of retweets and reader activity on Skip Bayless’s Twitter account now versus what it was when he had his ESPN muscles. It’s striking. Without UFC programming, there really isn’t a justification for Fox Sports 1 to exist as a channel.
Ari Emanuel knows this. Dana White knows this. It’s why the $4 billion price tag isn’t as big of a gamble as you might think. The business side looks prospectively great but change is coming. Our UFC comfort creatures are departing. The whole business of MMA is rapidly changing. We are now in a world where Sherdog no longer employs Sherdog (Jeff Sherwood) or Greg Savage.
Corporate MMA is here to stay. Just ask the boxing promoters in New York how the new MMA insurance law is going to cripple their business. Here come the anti-trust lawsuits.
By Zach Arnold | August 17, 2016
Ticket sales weren’t so hot heading into the Conor McGregor/Nate Diaz re-match at UFC 202. There was more interest online than locally in Vegas. That changed.
Then there was the water bottle session at the Wednesday presser, resulting in Dana White claiming he would fine both fighters “massively” and efforting settlement offers with spectators.
The weigh-ins Friday featured police all over the stage when McGregor and Diaz did their celebratory posing for the media and fans. WWE wrestlers went after McGregor verbally, including Brock Lesnar who said that his turds are bigger than McGregor.
Heading into fight time, Conor McGregor was a very slight favorite. The late money from bettors started to come in on his side, making him a -130 favorite. And then the fight happened and it was everything you expected it to be. The 170 pound weight distinction made this a challenge for both men. They went the distance, they went 5 rounds, and McGregor won a majority decision in a fight that could have been genuinely scored either way.
The fight played out exactly the way that the EA Sports simulation on ESPN on Friday demonstrated. Scarily so.
— Matt W (@MattTheRaider) August 21, 2016
Gate was $7.7 million with 15,600 in the arena.
This fight saved Conor McGregor’s career. It also made Nate Diaz, bizarrely, an almost sure-fire lock for the UFC Hall of Fame. For UFC, their hopes of pushing McGregor back into Featherweight at 145 and Diaz at LW (155) just got postponed again. They cannot resist promoting a third and final fight between these two men. There’s too much money at stake.
Everyone walks away making money with an option of making even more money. The question is what the agenda is after the trilogy. Those thoughts will have to be delayed now.
By Zach Arnold | August 11, 2016
The irony of Nick Diaz’s attorney being part of a new UFC Fighters Union is super delicious. Lorenzo Fertitta cashed out just in the nick of time, as he always does.
The Professional Fighters Association is being headed by Barry Bonds’ agent, Jeff Borris. It allegedly has the support of former baseball Godfather, Don Fehr, who is the king of hardball.
The question then becomes: where do fighters race to first? PFA or Rob Maysey’s MMAFA organization and his fighters engaged in an antitrust lawsuit against UFC?
After you answer that question, then there’s a next series of questions:
- Would UFC even recognize or do business with an organization like PFA? There are thousands of fighters willing to fight for peanuts.
- Would UFC be willing to ice out booking any fighter aligned with PFA… even if it involves their top names and even if it means significantly hurting their own quality of product?
- What would a group like PFA mean for USADA drug testing? Collective bargaining agreements handle drug testing. How do you get a CBA with a company like UFC if UFC wouldn’t recognize and accept the existence of a PFA?
- How would a proposed union like PFA manage to clawback ancillary rights for fighters on marketing likenesses if the current UFC contracts signed by fighters gave away those rights in the first place?
- Why would UFC give up their Reebok contract and revert back to fighters being able to obtain their own sponsorships? It goes against the business theory of a 360-style contract to give a powerhouse agency like William Morris the power to market fighters into pop and business culture.
- Why would any fighter with ties to WME or aspirations of ties to WME agree to join a union like PFA?
Bonus question: Should unionization become successful, how much longer before UFC starts raising prices on everything in order to justify rising costs of doing business?
By Zach Arnold | August 8, 2016
The fight business is littered with skeletons of dead corporation bankrolled by money marks but Gary Shaw took it to the next level. Gary Shaw spent over $50 million dollars in Elite XC but at least we got Kimbo Slice, Nick Diaz, and Gina Carano out of the deal. Megane Super, the Japanese eye glass company that bankrolled Japan’s top independent fight promotions in the early 90s, burned through tens of millions of dollars.
Never in Gary Shaw’s wildest dreams could he imagine a rival boxing promoter finding the mother of all honey holes and ending up with a result comparable to Rupert Murdoch’s $580 million dollar purchase of MySpace.
Noted fight writer and Pepperdine professor Paul Gift dropped a gigantic stink bomb on Monday:
According to Mr. Gift, Kansas hedge fund Waddell & Reed has supposedly lost $434 million dollars in their boxing venture with Al Haymon in a single year. Addendum: The professor stated that he is basing this off of the recent financials/valuations released by Waddell and off of claims from the shareholder derivative lawsuit.
Al Haymon settled a lawsuit with Bob Arum and has an antitrust lawsuit with Golden Boy which appears to be on the back-burner for the time being. While both of those lawsuits undoubtedly revealed interesting information in discovery for amended complaints, neither lawsuit posed the kind of serious threat to Al Haymon’s financial backing like the recently filed shareholder derivative lawsuit in Kansas against hedge fund Waddell & Reed.
The shareholder derivative lawsuit, which we wrote about three months ago, features some of the biggest legal heavyweights from New York City and Los Angeles fighting over Waddell & Reed shareholders petitioning a Kansas court to order the hedge fund to recover investor money set aside for Al Haymon’s assorted companies in an LLC shell called Media Group Holdings. The lawsuit claimed that Waddell & Reed put $925 million dollars in the LLC to do business with Haymon.
A major court hearing will take place on October 26th regarding a motion to dismiss the shareholder derivative lawsuit. If the motion to dismiss fails, a discovery & deposition bonanza will take place. Even under an agreement of confidentiality, the pressure will build on the hedge fund and Haymon.
Paul Gift’s bombshell of the hedge fund reportedly re-evaluating their investment in Al Haymon’s companies by $434 million dollars in a year is going to rattle some very important decision makers. The clock is ticking.
- How much longer can Al Haymon stick around on that kind of burn rate?
- If the shareholder derivative lawsuit survives or even if it fails in the beginning stages, how much longer can Al Haymon stick around before he completely alters his business format or files for bankruptcy protection?
- At what point does Haymon hit PPV and who does he end up partnering with?
- What is Al Haymon’s exit strategy if he can’t turn PBC around within the next 18 months?
- Can fighters contracted to Haymon get out of their contracts with him if PBC goes belly up?
The network television suits taking Haymon’s money bought into his dream of a UFC-style operation for boxing. They believed that Haymon was the guy who had the cash and the fighters to take out the establishment players in the boxing industry. With an alleged $925 million dollars in funding, there wasn’t much (if any) risk for networks to do business with Haymon. Haymon had the perfect marketing pitch for the suits and the masses — he was going to be the guy who would cure all of boxing’s political and business failures. Take Bob Arum and Oscar De La Hoya out in order to book the super fights that the public wasn’t getting.
And now reality has sat in, confirming the worst suspicions a lot of boxing fans had when Al Haymon made his push on network TV and ESPN. Antitrust lawsuits, allegations of Ali Act violations, and now a mother of a shareholder derivative lawsuit amidst Paul Gift’s claim that the hedge fund backing Haymon reportedly re-adjusted their investment valuation by $434 million dollars in one year on his venture.
By Zach Arnold | August 7, 2016
Confirming the suspicion of many fans, Marc Raimondi at MMA Fighting is reporting that UFC’s drug testing agent USADA did not request an expedited drug testing result for Brock Lesnar’s pre-UFC 200 fight tests. Combined with the previous news of UFC giving Lesnar a waiver from USADA’s four-month drug testing window before fighting in the UFC and Lesnar reportedly not being drug tested by WWE in his contract because he’s not a full-time performer… you have the perfect storm that permanently tainted UFC 200.
Jeff Novitzky is quoted in the MMA Fighting as stating that the cost of UFC’s yearly drug testing program would double if every fighter had their drug testing samples expedited for analysis. While this logic may be grounded in mathematical fact, it doesn’t address the elephant in the room — we’re talking about Brock Lesnar.
Brock Lesnar was the rainmaker that made UFC 200 palatable on a mainstream scale. He was the guy. To not expedite his drug testing results in particular and reportedly give him a USADA four-month waiver from drug testing immediately created the kind of “us vs. them” ill will that we have seen on display from fighters like Mark Hunt since Lesnar failed two USADA test for estrogen blockers.
As more questions are answered surrounding what happened with Brock Lesnar at UFC 200, it becomes that much more difficult for ownership to scapegoat Lesnar and put 100% of the blame on him for this mess.
What can fighters do to attack other fighters from drug usage? This question creates constant fear and frustration. Michael Bisping is a UFC champion now. Could he have become a champion much sooner in a UFC environment with more aggressive drug testing? As for Mark Hunt, what can the guy do other than publicly protest? It was allegedly the only way he could even get a phone call to try to ease his fears and dampen his raw anger. Hunt could theoretically turn around and sue Lesnar for negligent misrepresentation in Federal court but does he have the appetite for such a fight?
The worst part of this story involving UFC, Lesnar, and Hunt is that Hunt has to sit around and wait to see what the administrative punishment and/or remedy is going to be long after the fight took place. Since UFC 200, the company has been sold, Lesnar is back in WWE land, and Hunt can’t wipe away the image of his loss no matter what an athletic commission says regarding an L on his record.
By Zach Arnold | August 2, 2016
It sounds innocuous enough — Senate Bill 1195. A peak inside the bill reveals a fascinating but nebulous venture to protect California’s Department of Consumer Affairs from anti-trust violations.
The question is why UFC, according to Sacramento lobbying records, spent $40,000 through their lobbyist Platinum Advisors in Sacramento to get involved in a fight involving powerful nursing associations.
The Department of Consumer Affairs is one of California’s most powerful bureaucratic behemoths and the State Athletic Commission is under DCA’s umbrella. So is the board for registered nursing, the medical board, the contractor’s licensing board, and many other powerful agencies. The state’s governor chooses the political appointments of who oversees DCA.
Senate Bill 1195 in California is a response to try to protect the board and bureaus under Consumer Affairs’ umbrella from anti-trust lawsuits. The impetus for such action is based on a 2015 Supreme Court case called North Carolina Board of Dental Examiners vs. Federal Trade Commission. The FTC targeted the North Carolina Board for having active dental licensees occupy a regulatory board that made business decisions that the Feds viewed as anti-competitive and suppressing business competition. The FTC attacked North Carolina’s claims of legal immunity from Federal anti-trust claims.
SCOTUSBlog explains the questions at heart:
Antitrust immunity generally covers non-state actors only if the state both (1) clearly articulates the anticompetitive policy, and (2) actively supervises the policy. This case deals with the second requirement. If a professional licensing board is a state agency, must another state actor supervise the agency in order for the agency to be immune from the antitrust laws?
California’s Senate Bill 1195 attempts to address the Supreme Court ruling by offering the following:
- No more active licensees in a certain profession can become the Executive Officer of a board of bureau which manages that certain profession (e.g. an active fight promoter or matchmaker cannot be Executive Officer of the State Athletic Commission)
- Adding a layer of decision making participation by ordering the Director (boss) of DCA to approve, modify, or veto any newly approved regulations from a board or bureau and explain in writing why each decision was rendered (addressing the “supervision” question from the Supreme Court ruling)
- Categorizes that treble damages from anti-trust actions brought against boards and bureaus “are not punitive or exemplary damages”
SB 1195 initially zoomed through the state Senate but stalled out in early June after the California Nurses Association protested the bill for prohibiting active licensees from being active on their professional board. SB 1195 was placed in the state Senate’s inactive file
Why is UFC getting involved in a California anti-trust fight?
UFC’s lobbying records in California do not state a reason as to why they spent $40,000 last quarter to lobby for SB 1195. Therefore, the following is an educated guess as to what is happening here.
The Supreme Court decision in the North Carolina/FTC case attacks immunity for not only states but also personal liability protections for any state board or bureau member involved in an anti-trust lawsuit. This would include both members and Executive Officers.
In Sacramento, UFC is Andy Foster’s lobbying muscle. The UFC fuels the political fire. UFC carries great clout in California even if they don’t bring major shows to the state. Without their money and top lobbyist Tim Lynch at Platinum Advisors, Andy’s political power would be minimal at best. How significant is the lobbying power of Platinum Advisors? 35 year old former PA lobbyist Melinda McClain was appointed to Governor Jerry Brown’s office two weeks ago after being the deputy director of legislative and regulatory review at… the Department of Consumer Affairs.
Connect the dots. The State Athletic Commission often goes along with what UFC wants introduced or enforced on regulatory matters. If a licensee or a business in California thinks they are getting screwed by the State Athletic Commission on behalf of UFC’s business interests, the Supreme Court ruling opens the door for anti-trust lawsuits against the state of California and individual Athletic Commission board members or operatives. The motive becomes very clear as to why UFC would spend the cash to lobby for SB 1195. They are already dealing with one anti-trust lawsuit and don’t want a second potential anti-trust case involving political players they control.
SB 1195 is a largely cover-your-ass measure to re-introduce state immunity from such anti-trust lawsuits. What the politicians didn’t count on was the powerful California Nurses Association jamming things up. CNA and other powerful entities see SB 1195 as a “camel’s nose under the tent” bill that would strip the state boards of their power and concentrate all the decision making in the hands of one person who would be under enormous political pressure. That man is Awet Kidane.
You would think that a compromise will eventually arise to address this anti-trust immunity issue raised by the Supreme Court. However, the state and members of its various boards are now vulnerable to anti-trust lawsuits until a legislative fix is passed to address immunity. The longer this drags out, the more paranoid businesses like the UFC will become in how they politically operate in states like California.
By Zach Arnold | July 24, 2016
The state of California abused due process and inflated a drug suspension against Bellator fighter Alexander Shlemenko for failing a steroid test, this according to Los Angeles Superior Court judge Robert O’Brien.
One year ago, the California State Athletic Commission in conjunction with the Department of Consumer Affairs and the Attorney General’s office (Jim Ledakis) administratively prosecuted Alexander Shlemenko on four different nine-month charges in order to construct a three-year steroid suspension. This suspension technique was unheard of for past California drug suspensions.
It was a classic case of disparate treatment in order to go after Shlemenko on moral grounds under the color of law. Shlemenko initially received one suspension notice and requested for an appeal in front of the Athletic Commission board. After requesting an appeals hearing, Andy Foster and the state of California increased the penalties for Shlemenko’s suspension to 3 years and a $10,000 fine. They gave Shlemenko only five days of notice of these increased penalties.
The California State Athletic Commission made it very clear during an acrimonious appeals hearing that they knew Shlemenko was going to file a petition in Los Angeles Superior Court for a writ of mandate to appeal the increased suspension of three years after he had appealed his initial drug suspension. Athletic Commission chairman John Carvelli, a major state dental political player (Liberty Dental) and point man for Governor Jerry Brown, railed against Shlemenko and his attorney Howard Jacobs:
“The commission has upheld the violations and the ruling of our Executive Officer. You did not come and ask to work with us. You did not come and present any mitigating circumstances or information for us to consider. You chose to have an attorney come and lay down a bunch of conclusions and accusations and propositions on processes and missing samples. Perhaps it may have not been the best, and I’m giving you my subjective analysis now, best way to approach this body. You certainly have your rights in a court in law. I wish you all the best.
Shlemenko was forced to file a writ of mandate and pay all of the attorney fees up front in order to fight the state of California for abusing his due process rights. Most fighters do not have the financial means to pay that kind of a bill. Last week, Los Angeles Superior Court judge Robert O’Brien issued a seven page ruling that slapped down the state of California for knowingly abusing Shlemenko’s due process rights in order to make a moral statement about his drug suspension. Judge O’Brien hammered Andy Foster, John Carvelli, Gary Duke (DCA), and Jim Ledakis (AG):
In their initial letters imposing discipline, the Commission stated that Petitioner’s license was suspended for the remainder of its term, or until February 28, 2016 (i.e. just under one year), and imposed fines totaling $10,000. The Commission, after a hearing, eventually imposed a three-year suspension in addition to the fines.
Petitioner argues that this violated “fundamental administrative principles” because the Commission increased the punishment following his appeal. The Commission counters that the imposition letters did not create a penalty “ceiling”, rather, the Commission was free to increase or decrease the penalty at will. The Court agrees with Petitioner’s contentions.
Petitioner has not identified any authority requiring the precise penalty to be disclosed. However, at least one appellate decision has held that a court can vacate administrative penalties where there has not been fair and adequate notice. See Tafti v. County of Tulare (2011) 198 Cal. App 4th 891, 901. The Court agrees that under the circumstances of this case, it violated Petitioner’s due process rights to increase the proposed penalty by three years. Petitioner could not have known that by appealing the suspension of his license he was reopening the issue of the length of suspension. The Commission does not cite any authority or precedent that would allow them to increase the penalty from the original term of approximately one year. Indeed, a three-year penalty was not even discussed until the closing briefs on the penalty issue, and by that time Petitioner was unable to respond. Accordingly, the Commission violated Petitioner’s due process rights by imposing a suspension that was longer than originally noticed.
Shlemenko will be eligible to fight in the United States. He had been fighting overseas while being suspended by California.
Two weeks ago, Andy Foster received a raise to a little over $120,000 by the Department of Consumer Affairs and the state of California (level H for Exempt employees).