By Zach Arnold | June 5, 2016
— WWE (@WWE) June 5, 2016
What was supposed to be a tepid Southern California UFC event turned out to make major news – for all the right and wrong reasons.
UFC & WWE announced that Brock Lesnar will fight at the UFC 200 event next month. It’s a one-off fight that benefits all the parties involved. Brock makes money, which keeps him happy. UFC gets a marketing bang for their UFC 200 event which needed some buzz from a UFC 100 legend. WWE gets to stay in the mainstream sports headlines and holds onto Lesnar loosely but doesn’t let go.
This news, along with news of a contract being signed to promote the Conor McGregor/Nate Diaz rematch, was broke by Ariel Helwani. Helwani, along with members of his MMA Fighting team for SBN, were credentialed for the UFC 199 event. They supposedly got the heave-ho before the main event and Helwani reportedly has been “banned for life” by UFC. This got Mr. Helwani trending on Twitter. Front Row Brian then publicly claimed that Helwani had been allegedly choked out by a UFC body guard at a prior event for asking certain questions. That’s a serious accusation to make.
All of this was the back-drop for a rather eventful UFC 199 fight card where large underdog Michael Bisping defeated Luke Rockhold by KO in 216 seconds to win the UFC Middleweight title. This now sets up a fight between Bisping and Jacare Souza. Bisping has reached the top of the mountain in the most circuitous way possible. Think about how far he has rebounded after that infamously brutal knockout by Dan Henderson at UFC 100. Henderson fought on Saturday’s night undercard and KO’d Hector Lombard.
Bisping and Rockhold had a wild public relations week heading into the fight and an unfortunate spat after the fight with some crude and course remarks. The Englishman had quite the interview on Fox Sports 1 this past Thursday where he joked that one of his kids may end up in a ditch. Rockhold nearly got his title fight canceled after claiming he had an MCL tear.
Dominick Cruz took care of business with an easy, unanimous decision win over Urijah Faber.
Cole Miller, who was supposed to face BJ Penn (before his USADA suspension due to IV usage), lost by unanimous decision to Bruce Leeroy. A rough business.
By Zach Arnold | June 2, 2016
When the Nevada State Athletic Commission told the public that big changes were coming after being transitioned from the state’s general fund to self-funding for budgetary purposes, they weren’t joking. A review of the 104-pages of proposed changes to the commission’s rules and regulations shows dramatic changes and cost increases for drug testing infractions, sanctioning of third party drug testing organizations, revisions in fighter/management contracts, questionnaire disclosures, bans on energy drinks, medical examinations, increased licensee fees, extra ambulances at fight events, electronic score cards, and more.
This is the 104-page document of proposed changes that are about to be implemented in three weeks. The changes are the work product of both the state’s Attorney General office and Pat Lundvall, the long-time attorney on the Nevada State Athletic Commission board.
I read the document carefully. It took me approximately two hours of undivided attention to digest. If you are an active licensee in Nevada, you must read this document. If you can’t, hire an attorney who can help you digest the information. The sweeping changes will dramatically impact the way business is handled in Nevada.
Nevada has long had a reputation of being promoter-friendly for all shows, big and small. These new changes are likely to drive away some club shows from the state. The changes will impact smaller promoters, although not on a scale as draconian as New York’s new combat sports bill which goes into effect in September.
One of the changes is to now characterize the Nevada State Athletic Commission administrative hearings as civil, not administrative, hearings.
NAC 467.936 “Hearings before the Commission are civil proceedings.”
For informational (and not legal) purposes, we have developed a summary of some of the major changes that Nevada is about to implement.
By Zach Arnold | May 31, 2016
Nothing sabotages trust faster than when a promoter tries to pull a fast one on administrators for an athletic commission.
Nevada went ballistic over Roy Englebrecht filling out a fighter application for boxer Zab Judah allegedly without identifying that he owed back child support of $275,000. Nevada threw the book at Roy and ended up with a compromise punishment of an 18 month suspension for perjury. This was important to note because perjury is considered an act of moral turpitude, which is often enough to kill your chances for holding onto a professional license for serving alcohol, doctor services, attorney services, and so on. California’s Department of Consumer Affairs, which oversees the state Athletic Commission, is notorious for hammering licensees over acts of moral turpitude.
The on-the-record response we received last Friday from Athletic Commission Executive Officer Andy Foster on whether or not he would honor Nevada’s suspension of Roy Englebrecht was interesting.
“I don’t have any comment at this time. We are still looking into this.”
There’s really not much to look into. Englebrecht admitted to providing false and misleading information to Nevada’s Athletic Commission. Nevada’s commission suspended him. The ball is in California’s court to administratively suspend Englebrecht’s license and to put him in front of the commission board for suspension or revocation.
Instead, none of that appears to be the case. Englebrecht has a show scheduled for next week and staffers working on behalf of the Athletic Commission are getting their work assignments for the event. It appears California will not honor Nevada’s suspension, which will stir up a real political hornet’s nest. Money talks. The political fallout between California and Nevada will intensify.
This development, juxtaposed to last week’s court allegations in a wrongful termination lawsuit about Bellator fighters supposedly submitting medical records to California’s athletic commission from an unlicensed doctor, raises serious questions in regards to how soft the authorities are against California-based promoters and managers.
In the legal complaint filed against Bellator, there was something largely overlooked in media circles about Zach Light’s claim of invalid fighter medical records being submitted in California.
By Zach Arnold | May 31, 2016
William M. Crosby (SBN: 49357)
13522 Newport Avenue, Suite 201
Tustin, California 92780-3707
Telephone: (714) 544-2493
Fax: (714) 544-2497
SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF LOS ANGELES, CENTRAL DISTRICT
ZACHERY LIGHT vs. BELLATOR SPORT WORLDWIDE LLC, a Delaware LLC; VIACOM INC., a Delaware corporation; DOES I through X, inclusive
COMPLAINT FOR WRONGFUL TERMINATION BASED ON PUBLIC POLICY; JURY TRIAL DEMAND
SUMMARY OF CLAIMS
This is an action for damages by plaintiff against defendants based on an egregious bad faith course of conduct toward plaintiff due to plaintiff’s having protested certain illegal practices jeopardizing the health and safety of professional fighters and mixed martial artists all for defendants’ profit and financial gain. As a result plaintiff was shunned, harassed, slandered, and demeaned in an attempt to discredit and sabotage plaintiff. Consequently, plaintiff was forced to go on an extended medical leave and was thereafter wrongfully terminated when he attempted to return from such medical leave. Plaintiff seeks compensatory damages, including economic damages for past and future loss of earning and benefits, general damages for emotional distress and reputational harm, and punitive damages.
PARTIES & AGENCY
[starting on page 5]
Plaintiff was exclusively responsible for the sale of tickets through fighters to these events, often selling thousands of tickets per event. Through 2014, plaintiff had sold over $2.5 million in ticket sales, in part through the use of local fighters on consignment. In addition, plaintiff recruited and signed fighters and performed numerous other vital duties for the company.
VIACOM’S ACQUISITION OF DEFENDANT BELLATOR AND THE CHANGE IN DEFENDANT BELLATOR’S CULTURE FOLLOWING A CHANGE IN MANAGEMENT:
Defendant VIACOM acquired a controlling stake in defendant BELLATOR in or about January of 2013. In June of 2014, (Bjorn) Rebney left the company and was replaced by Scott Coker as CEO. Thereafter defendant BELLATOR closed its Orange County office and moved its office to the Los Angeles County VIACOM office in Santa Monica, where plaintiff remained employed until his wrongful termination. Contemporaneous with this change in management, there was a marked change in defendant BELLATOR’s management practices. Gone were the regular and recurring mandates from prior management to obey and exceed the high standards of adherence to state and national rules and regulations governing mixed martial arts events. The marked change in management practices was also evidence by a disregard for well established business protocols in the accounting for consignment tickets and income from events. Plaintiff also noted a lack of communication regarding important issues such as status of upcoming events and fighters contracts.
DEFENDANT BELLATOR’S MULTIPLE VIOLATIONS OF STATUTES ENACTED TO PROTECT THE HEALTH AND SAFETY OF MIXED MARTIAL ARTS FIGHTERS:
Beginning in September of 2014, plaintiff became aware of a number of instances in which defendant BELLATOR failed to observe and knowingly disobeyed laws enacted to protect the health and safety and mixed martial arts fighters. California Business and Professions Code 18711 requires a medical clearance examination by the licensed physician for participants in a mixed martial arts fight. Plaintiff learned from a reliable source at an event refereed to as Bellator 126 in September of 2014, that fighter Ryan Martinez’ state-mandated blood and eye medicals submitted to the state of Arizona were admittedly forged. At an event in San Diego referred to as Bellator 131 in November of 2014, plaintiff learned from reliable sources that a number of fighters on the card had submitted California state-required medicals by one Adam Rendon, who was not a licensed physician, in violation of Business and Professions Code 18711 and 17500.
PLAINTIFF’S COMPLAINTS TO DEFENDANT BELLATOR MANAGEMENT REGARDING FORGED MEDICAL REPORTS:
Approximately 48 hours prior to Martinez’ scheduled fight at Bellator 126, plaintiff promptly reported what he had learned to Rich Chou, defendant BELLATOR’s Vice President of Talent. Chou assured plaintiff that he would follow up and that plaintiff should focus on his job. When plaintiff heard nothing further from Chou, he approached Coker regarding Martinez’ impending fight based on forged medicals, in violation of Arizona law. Coker told plaintiff to “do what Chou told you to do,” without addressing these issues. Thereafter, plaintiff again brought the subject up to Chou. Chou threatened plaintiff with termination if he kept pushing the issue. Plaintiff later learned that after losing his bout, Martinez never resumed his mixed martial arts career.
Prior to the Bellator 131 event, plaintiff told Coker that fighters had been suspended for using Rendon to sign their medicals because Rendon was not a licensed physician. Coker told plaintiff, “a lot of people at Bellator are going to lose their jobs next week. Do you want to keep yours”> Coker added, “then stay in your lane and stop making waves!” Fearful of losing his job, plaintiff said nothing further regarding the falsified medical reports.
COKER PRESSURES PLAINTIFF TO PROMOTE COLLUSIVE FIGHTS IN VIOLATION OF THE SARBANES-OXLEY ACT:
In the fall of 2014, Coker was award that two of defendant BELLATOR’s most popular fighters, Rampage Jackson and Cheick Kongo, were managed by Anthony McGann. Coker disliked McGann and referred to him as a “fucking terrorist.” Coker told plaintiff that there were “huge problems” negotiating new BELLATOR promotional agreements for Jackson and Congo. Coker was aware of plaintiff’s long-standing friendship with Kongo and instructed plaintiff to use that friendship as a basis to convince Kongo to fire McGann as his manager. Plaintiff told Coker that in addition to being friends with Kongo, he had also previously worked for McGann and did not want to intentionally interfere with the manager/client relationship that existed between McGann and Kongo. Coker instructed plaintiff to negotiate directly with Kongo to sign a bout agreement which was not consistent with his promotional agreement. Plaintiff was not allowed to see Kongo’s promotional agreement. Kongo told plaintiff that the amount of his compensation in the proposed bout agreement was not correct. Coker specifically told plaintiff that if he wanted to keep his job, he should do what he was told and “get rid of McGann.” In fear of losing his job, plaintiff convinced Kongo to fire McGann and pressured him to sign the bout agreement.
The fight under this new bout agreement occurred in September of 2014 against Lavar Johnson at Bellator 123. Kongo was angry upon learning that he would be paid much less than he was contractually entitled to pursuant to his promotional agreement. Plaintiff’s relationship with Kongo was permanently ruined. Chou later acknowledged mistakes and agreed to pay Kongo additional sums for the next bout. Plaintiff suffered lasting harm to his reputation in the mixed martial arts community.
Coker was also enraged with McGann that Jackson had signed a promotional agreement with the UFC while Coker believed that Jackson was still under contract with defendant BELLATOR – a fact contested by Jackson and McGann. This act on McGann and Jackson’s part was a substantial embarrassment to Coker, as it would mean that defendant BELLATOR’s biggest star was leaving defendant BELLATOR for the UFC. In addition to Jackson, McGann had a number of additional fighters under contract at defendant BELLATOR. Coker told plaintiff to “get the terrorist’s fighters beaten and beaten badly,” thereby allowing Coker to cut ties between defendant BELLATOR and McCann. Plaintiff was required to arrange fights between McGann’s fighters and opponents who would convincingly defeat them. Such outcomes would then enable Coker to have a convenient pretext to terminate McGann’s fighters’ promotional contracts with defendant BELLATOR. Such collusive matches were tantamount to fight fixing and constituted a fraud on ticket buyers, fight patrons, television viewers, advertisers, and the public at large, as well as McGann and the professional fighters he managed.
Under the Sarbanes-Oxley Act (“SOX”) whistleblowers provisions, employees in privately held subsidiaries of publicly traded companies who assist in an investigation into an employer’s violation of SOX are protected from employer retaliation (18 U.S.C. 1513(e) and 1514A(a)). This conduct also violates California Business and Professions Code 17500 which proscribes misleading statements concerning professional services.
In late 2014 and early 2015, a close friend of Coker, Mike Kogan, was hired by defendant BELLATOR in an executive capacity. Plaintiff knew that Kogan represented numerous mixed martial arts fighters, many of whom were under professional agreements with defendant BELLATOR. Plaintiff is informed and believes and thereon alleges that Kogan was paid management commissions for fighters he represented in bouts that occurred with defendant BELLATOR. This was a serious conflict of interest in violation of California Business and Professions Code 18878, 18897.27, 18897.47, as well as California Code of Regulations, Title 4, section 243. Plaintiff, aware of and concerned about this glaring conflict of interest that existed when an executive of defendant BELLATOR also managed fighters competing for defendant BELLATOR, expressed his strong concerns regarding these conflicts to Chou. Chou responded, “leave it alone, he’s on our team.”
PLAINTIFF’S COMMUNICATIONS REGARDING AN EMPLOYEE OF DEFENDANT BELLATOR DRIVING ON A SUSPENDED LICENSE:
In June of 2014, plaintiff spoke to Coker and Chou regarding an employee of defendant BELLATOR who was continuing to drive defendant BELLATOR’s owned and branded transport vans to transport BELLATOR fighters, fight managers, commission officials and other employees of defendant BELLATOR to and from airports and to various BELLATOR event related locations even though his driver’s license had been suspended due to a DUI. When plaintiff noted that the employee had not stopped driving, he brought the problem again to Coker’s attention. Coker told plaintiff to “stop making waves” and “just do your job.”
PLAINTIFF’S STRESS-RELATED MEDICAL LEAVE AND TERMINATION:
From September of 2014 through April of 2015, plaintiff experienced increasing anxiety, depression, insomnia, and mental and emotional distress as a result of Coker and Chou’s refusal to follow applicable laws and regulations and by requiring plaintiff to engage in illegal practices as a condition of keeping his job.
On April 10, 2015, following the Bellator 136 event at the Bren Events Center in Irvine, California, plaintiff suffered an anxiety attack which resulted in emergency care at a hospital. Plaintiff was medicated and diagnosed with severe depression and anxiety. Thereafter he was placed on an extended medical leave, prescribed psychoactive medications, and underwent therapy with a physician.
Due to his consequent loss in income, plaintiff was forced from his rented home into a small apartment. On March 10, 2016, plaintiff was cleared to return to work without restrictions. By letter of March 17, 2016, plaintiff was advised of his termination and that his job was no longer available.
FIRST CAUSE OF ACTION
(Wrongful Termination Based on Public Policy Against Defendants BELLATOR and VIACOM)
On March 17, 2016, defendants BELLATOR and VIACOM wrongfully terminated plaintiff in violation of a substantial and fundamental public policy, in that defendant BELLATOR, a wholly owned subsidiary controlled by defendant VIACOM, engaged in conduct that required plaintiff to participate in and authorize violations of statutory law based on the Acts and Statutes cited at paragraphs 12 through 20 above. The wrongful conduct of defendants BELLATOR and VIACOM created such intolerable working conditions for plaintiff that plaintiff was forced to take an extended medical leave. When plaintiff tried to return from such medical leave, he was terminated. Plaintiff was accordingly wrongfully terminated in violation of public policy.
As a direct and proximate result of said wrongful termination, plaintiff sustained economic damages for past and future loss of earnings and benefits, according to proof.
As a further direct and proximate result of said wrongful termination, plaintiff sustained general damages for severe mental and emotional distress.
Defendants BELLATOR and VIACOM acted with malice and oppression toward plaintiff and with conscious and wanton disregard of plaintiff’s rights, and defendants BELLATOR and VIACOM should therefore be assessed punitive and exemplary damages in sums sufficient to punish them and set an example in view of their respective financial conditions.
WHEREFORE plaintiff prays judgment against defendants as follows:
1. For economic damages, according to proof;
2. For general damages, according to proof;
3. For punitive damages, according to proof;
4. For costs of suit incurred; and,
5. For such further relief as the Court deems proper.
Dated: May 24, 2016
WILLIAM M. CROSBY
Attorney for Plaintiff ZACHERY LIGHT
By Zach Arnold | May 25, 2016
In America, there are three major bodies of law: criminal, civil, and administrative. Commissions like the Nevada State Athletic Commission are administrative but often get carried away in regards to what the scope of their authority is.
Last month, we detailed major changes coming to Nevada’s commission in regards to both their financial & legal obligations. Nevada’s state budget is transitioning the commission from general funding to self-funding, meaning there is no longer a blank check for funding expenditures. The Athletic Commission got hit with a fat legal bill for years of work the Attorney General’s office did for them in the past.
As a result of the funding mechanism being changed, the Athletic Commission is backed against the wall. With out-of-competition drug testing, disciplinary hearings, administrative costs of handling paperwork & medical records, and all the drama surrounding combat sports, a lot of resources are required. Nevada’s commission has always prided itself on having a lean, efficient, prompt operation.
Now the money’s drying up and without Floyd Mayweather fights on the horizon, a change in philosophy is occurring in Las Vegas. For fighters and their due process rights, it may not be for the better.
By Zach Arnold | May 25, 2016
The Nevada State Athletic Commission officially suspended California promoter Roy Englebrecht for 18 months after he provided false & misleading information to the commission regarding information put on boxer Zab Judah’s fighter application form regarding child support he owed to the state of New York. Additionally, Englebrecht will be put on one year’s probation when he re-applies for a Nevada license, be obligated to pay attorney fees for his disciplinary hearing, and make restitution to fighters who lost money due to a Las Vegas show getting canceled by the Athletic Commission a few months ago.
The big question, unresolved, is whether or not California will recognize Nevada’s suspension. Unlike fighters, there is no reciprocity provision mandating state athletic commissions honor promoter suspensions. Given that Englebrecht’s base is California and the majority of his business is done in California, the Nevada suspension is more or less toothless if California decides to ignore Englebrecht’s suspension over acts of moral turpitude.
The war to settle the score
Rarely do you see “liar, liar, pants on fire” anger on display from an Executive Director towards a promoter but Nevada boss Bob Bennett and state AG Caroline Bateman held nothing back in Wednesday’s disciplinary hearing against Roy Englebrecht. They didn’t call him a liar but used as many words as possible to insinuate he was one.
- Zab Judah was scheduled to fight in Las Vegas
- On the fighter application form, it stated that he did not owe back child support
- New York authorities claimed Judah owed $274,000 in back child support but reached an agreement with him in February which would allow him to fight and his purse money to be forwarded to NY authorities
- When Bob Bennett found out about the back child support, he pulled Judah from the Vegas card promoted by Roy Englebrecht
- Englebrecht told Bennett that he had filled out Judah’s fighter application form
- Bennett immediately contacted Nevada’s commission chairman regarding the admission of perjury and forgery
What Wednesday’s disciplinary hearing revealed was an incredible tale of multiple parties involved in an event collapse built on numerous promises not honored.
By Zach Arnold | May 17, 2016
The Nevada State Athletic Commission’s next meeting is on Wednesday, May 25th, and the hammer is coming down on promoter Roy Englebrecht. The Attorney General’s office has filed their official administrative legal complaint against Englebrecht. Amongst the charges outlined in the administrative complaint:
- On February 13th, 2016, the commission received a license application for Zab Judah and that Englebrecht, under penalty of perjury, forged Judah’s signature on the Application.
- Unknowingly, Englebrecht signed Judah’s application not realizing that he owed back child support.
- Englebrecht used Judah’s date of birth and social security number on the forged application, violating Nevada’s identify theft law (NRS 205.463).
The AG’s office had the option of pursuing criminal charges but opted for the administrative route instead.
During a March 23rd meeting regarding an extension of a temporary Nevada suspension, Englebrecht admitted under oath that he was guilty of the charges being presented against him. The 3/23 meeting was not a disciplinary meeting but he decided to fall on the sword without legal representation present.
The administrative complaint was filed against Englebrecht on May 3rd, giving him 20 days to respond before the meeting on May 25th. Nevada wants action taken against Englebrecht’s promoter license along with investigative costs & attorney’s fees.
The major question after May 25th is whether or not the California State Athletic Commission, which is Roy’s home turf, will enforce Nevada’s license suspension. There’s a lot of money at stake and California is legally not obligated to follow the suspension of a boxing promoter in another state. If California chooses to ignore Nevada’s suspension, it will spark political tension between the two states.
By Zach Arnold | May 15, 2016
When we last checked in with a boxing doping scandal, VADA produced a positive test result of clenbuterol for Francisco Vargas. The California State Athletic Commission did not suspend Vargas since they weren’t the ones who administered the drug test.
The NFL Players Association came out and warned their athletes not to each too much Mexican or Chinese meat because clenbuterol could show up in their drug test results.
VADA has been trying to get their foot in the door in regards to worldwide drug testing in boxing. They managed to take a page out of the UFC/USADA playbook but on a much, much larger scale with the WBC sanctioning body. The end result is the Clean Boxing Program project, where all fighters ranked 1 through 15 for WBC titles are required to register for VADA drug testing.
The latest fighter to get busted by VADA is Alexander Povetkin, who was scheduled to fight Deontay Wilder in Moscow. Povetkin tested positive for… meldonium. This Bloody Elbow article on meldonium is a good starting point if you don’t recognize the name of the drug.
Povetkin’s camp reportedly claims that the fighter stopped taking meldonium last September. According to ESPN’s Dan Rafael, that story doesn’t hold up because Povetkin took multiple VADA drug tests in April and tested negative until April 27th when he supposedly got busted.
The WBC initially “postponed” the fight. Wilder’s camp abruptly ended and he went back home. Now it appears the fight is “off” and will not happen.
We have a lost fight. We have lost purse money for both guys, which means litigation is likely. But the fight was scheduled to take place in Russia. How will money get recovered in the Russian legal system?
The major legal ramifications of the WBC & VADA tag team
It’s highly unlikely that standard American state athletic commission drug testing would have caught what VADA caught with Alexander Povetkin. VADA has an established track record of catching certain fighters (think: Lamont Peterson) microdosing but not getting any sort of results in suspension or canceled fights. The Nevada State Athletic Commission did not want to cancel Peterson’s fight.
UFC changed the landscape by partnering with USADA and unilaterally enforcing drug suspensions. It just happened this past weekend with their mega Brazilian event. The end result has been largely positive. The UFC acts as their own sanctioning body for titles in MMA. Boxing already has sanctioning bodies. The WBC is the most famous sanctioning body of all. VADA attaching itself to the WBC for drug testing has proven to be a genius move… for now.
There are serious legal and business questions that must be asked.
First, we know that the text of the Ali Act specifies transparency for sanctioning body rankings. OK. I couldn’t answer to you how rankings are currently formulated. It’s arbitrary and at the whims of the powers-that-be. Fighters have no say in how they are ranked by the sanctioning bodies.
So the WBC decides to name 15 ranked fighters for each of their title belts. Let’s say a fighter doesn’t want to cooperate with the WBC on the VADA testing and wants nothing to do with the WBC. What statutory authority does the WBC have to punish a fighter other than publicly shaming a fighter in the press and preventing that fighter from fighting in WBC-sanctioned fights? Will the WBC rely on TV networks and business partners to pressure fighters into cooperating with the WBC or else get iced out?
Scenario two: Let’s say Fighter A is scheduled to face Fighter B and both fighters agree to VADA testing but the fight has two title belts from two different sanctioning bodies on the line, e.g. WBC & IBF titles. What happens if Fighter A tests positive? Does the WBC have the power to cancel the fight? What about the purse money involved given IBF involvement?
Second, if Fighter A tests positive for a WBC title fight in a state like Nevada, would Nevada’s athletic commission accept the result of the VADA drug test? They currently don’t. Why would state athletic commissions change drug testing enforcement policy now?
Third, when the money is large and the stakes are high, how solid will WBC’s backbone be? The Wilder/Povetkin fight was on the rocks until Wilder went back home and then the fight was “postponed.” What if Wilder had said that he wanted the fight to continue so that he could earn the purse money?
What will the TV networks backing cable & PPV fights do if they lose multiple fights? Slash boxing budgets further?
Fourth, given the new legal liability at stake with the WBC/VADA drug testing tag team, will there be momentum amongst promoters to avoid booking WBC fights due to fears of getting sued for breach of contract or other economic tort claims when their fighters test positive?
In the name of advancing an agenda for a clean sport, it appears the biggest winners will be the attorneys.
By Zach Arnold | May 10, 2016
The rumors of Zuffa selling UFC have been hot and heavy, thanks to reporting from Front Row Brian. Private Equity firm Blackstone has long been thought to be the primary buyer in play.
So it comes as no surprise that Darren Rovell’s ESPN report about Zuffa getting ready to sell UFC has stirred up passionate responses from all corners. Dana White has issued a blanket denial about UFC being for sale but the Fertitta family has stayed silent.
According to Rovell’s report:
- God of Wall Street, Goldman Sachs, is representing UFC in sales talks
- The asking price is believed to be in the $3.5 to $4 billion USD range
- Goldman Sachs is reportedly telling buyers that UFC made $200 to $250M USD EBITDA in 2015
- The four finalists in contention to buy UFC are: William Morris/IMG, China Media Capital, Blackstone Group, and Wang Jianlin’s Dalian Wanda Group
It is believed that Jianlin is the leader in the clubhouse. He’s the richest man in Asia at nearly $29 billion dollars. Given his power in China, you could see why buying UFC would be a seductive investment. He would have the political and business clout to clear hurdles in communist China that others do not possess. No Ali Act to worry about outside of America. A favorable legal situation where fighters simply would not have the cash to fight in international courts.
I'm told that Dana White's status actually a negotiating point in at least one of the offers for #UFC. Not everyone keen on him staying on.
— Jonathan Snowden (@JESnowden) May 11, 2016
While Dana White has denied UFC being for sale, he did not deny that Goldman Sachs is representing UFC and he did not deny the $200-250M EBITDA figure.
Why would Zuffa want to sell UFC now?
There are lots of reasons for Zuffa wanting to flip UFC soon.
First, the MMA economy is extremely volatile. One year you have a golden goose and the next year you have a goat.
Second, lawfare. The anti-trust lawsuit is producing illuminating discovery. Depositions are coming soon. UFC is vulnerable. The company is also vulnerable to the kinds of concussion-style lawsuits that plagued the NFL. The difference is that the NFL has already settled their pending cases for a relatively small amount of cash.
Third, the business isn’t as fun of a joy ride as it used to be. The Fertittas put up over $40 million dollars before recovering their investment thanks to The Ultimate Fighter. Ownership has put up with thousands of talent-related headaches that they would have never had to put up with in another kind of sporting venture. UFC was a great way for the Fertittas to meet politicians, celebrities, and rich business leaders. They’ve maxed out on that front. They relied on rich people and entities to do their heavy lifting. There are limits to where they stand internationally.
The fourth and most intriguing reason deals with the Fertitta family wanting to shift into other business ventures. A fascinating connect-the-dots scenario:
If Fertittas sell UFC, wouldn't be surprised to see them try to buy piece of Raiders if team is headed to Las Vegas.
— Darren Rovell (@darrenrovell) May 10, 2016
The Fertittas just did their Red Rock IPO and cashed out big. Now they’re buying out the Palms in Vegas for $312.5 million dollars. But the real main event coming to Las Vegas involves the Oakland Raiders. Sheldon Adelson wants to build a major sports complex. Mark Davis, the son of Al Davis and current Raiders majority owner, is the poorest of the current NFL owners. He’s going to need cash to pull off the move to Las Vegas. Davis has promised to contribute $500 million dollars to the cause.
What’s a better way to get into the elite business inner circle of the NFL than attaching to the Raiders in Las Vegas? Selling off UFC in order to get a piece of the Raiders is a no-brainer business transaction. It would immediately elevate the political and business clout of the Fertitta family and do so in a sport that produces significantly more revenue with fewer headaches than MMA. From the proverbial outhouse to the penthouse.
It is no coincidence that UFC tried to clean up their testosterone scandals with the USADA drug testing program. It is no coincidence that Dana White has taken a back seat publicly. It is no coincidence that fighters have been strapped into the one-size-fits-all Reebok sponsorship model. Cleaning up the loose ends to sell UFC to a private equity firm is the end game. It will be a great Return on Investment for the Fertittas but it does not guarantee an automatically great result for MMA fans:
In most instances, you’re looking at a 5-7 year period where the PE firm wants to grow revenue, reduce costs and get out w/ the FUCK MONEY.
— FrontRowBrian (@FrontRowBrian) May 11, 2016
It won’t be just the folks in Las Vegas popping the champagne corks. The executives at Spike TV will be throwing their own party.
Dana White: The Fertitta's are not looking to buy a football team (Note: They would have to get out of casino business to own NFL team)
— Jason Floyd (@Jason_Floyd) May 11, 2016
There will be an exit strategy. Only a matter of how it is structured.
By Zach Arnold | May 2, 2016
Al Haymon envisioned a UFC-like scenario for boxing. As the Zuffa Myth goes, the Fertittas lost $44 million dollars before hitting it big with The Ultimate Fighter. Little did the Fertittas know how much Al Haymon would make their $44 million dollar “investment” in UFC look like chump change. Forget $44 million dollars. Forget the amount of cash organized crime spent in Japanese pro-wrestling, boxing, and MMA. Al Haymon trumped all of them with a $925 million dollar cash infusion into PBC.
Who on Earth would think that pouring $925 million dollars into combat sports would be a good idea? This is the basis of the latest prong in the nationwide legal attack against Al Haymon and the two investment trusts that have gone all-in with him.
First came the plea from the Association of Boxing Commissions to the Department of Justice to go after Al Haymon. Addendum: New ABC president Mike Mazzulli refuted the allegations made in the letter sent by ABC last year.
Then came the unfair competition & anti-trust lawsuits in California by both Golden Boy & Top Rank in Los Angeles Federal court. Haymon’s legal team couldn’t stop the plaintiffs from discovery & depositions, which will surely provide evidence to allow GB & TR to amend their initial legal complaint to add more defendants and more causes of actions.
Now comes the lawsuit against the two trust vehicles financing Al Haymon’s PBC. It’s a shareholder derivative lawsuit, meaning shareholders are suing the trust vehicles they invested money in and they’re doing so based on allegations that the corporation won’t fulfill their responsibility to the shareholders in getting their money back on an investment that supposedly violated the promises made in the investment prospectus.
Read Paul Gift’s article at Bloody Elbow titled $925 million lawsuit filed over investments with PBC’s ‘shady entrepreneur’ Al Haymon. Here’s the zinger from the article:
“According to Waddell’s website, as of Mar. 31, 2016 these six funds now have a total market value of only $357,747,414, which implies that the funds allegedly used to finance the PBC have collectively lost over $567 million in a little less than three years.”
The legal teeth for trying to choke out Al Haymon’s funding
Now I will point out some very interesting items you might want to focus on from this latest legal attack.
If the schmuck throwing tacos at Victor Ortiz used a bottle instead, California would be lawyering up
By Zach Arnold | May 1, 2016
StubHub Center and the California State Athletic Commission avoided a catastrophic confrontation on Saturday night and should be counting their blessings.
Victor Ortiz was knocked down twice in his loss to Andre Berto on the Al Haymon Fox show. After getting knocked out, Ortiz was attacked by a spectator after the fight. The attacker hit Ortiz in the face with tacos and started a brawl.
You can watch the video of the attack for yourself and spot all the problems:
- Attacker hits Victor Ortiz in the face with tacos at point blank range
- The video clearly demonstrates premeditation on the part of the attacker
- No one in the crowd stops the premeditated attack on Victor Ortiz
- After battering Ortiz, attacker touches an athletic inspector trying to halt the confrontation
- A ring second, in defense of Ortiz, throws something at the attacker and the attacker punches him
- Attacker has second altercation with another cornerman and squares up to punch
- Attacker throws a punch at cornerman and touches two more athletic inspectors
- Attacker continues to instigate others after Ortiz is escorted away
You don’t have to be a genius to see how dangerous this situation could have gotten. Here is a close-up image of the attacker:
We are offering a cash award to anyone who can provide identification of the attacker
By Zach Arnold | April 29, 2016
The last two days have been a real test of Executive Officer Andy Foster:
- Boxer Francisco Vargas, booked to fight Orlando Salido on June 4th at StubHub Center, tested positive for clenbuterol
- The drug test was administered by the Voluntary Anti-Doping Agency
- The two boxers paid for VADA drug testing, not California’s athletic commission or Golden Boy
- Golden Boy quickly went into damage-control mode for Vargas, using the “home cooking” defense
- 24-hours after news of the VADA test failure went public, California granted Francisco Vargas a temporary license dependent on a modified drug testing program
The differences between enforcement of UFC & USADA drug testing versus independent VADA testing are substantial. Athletic commissions do not have to honor third-party drug testing results. California will honor only their drug testing results. UFC made a choice to honor USADA results since they are paying the bill for it. If UFC wanted to stop honoring USADA results at any time, that’s their prerogative. To their credit, they have hung tough and enforced drug testing failures. VADA, on the other hand, is paid for by fighters. In addition to state athletic commissions, promoters also can ignore such drug testing results and not lift a finger. Golden Boy clearly fell into this camp with Francisco Vargas.
I don’t like this situation but I can’t say anything negative about what California is up to right now. The failed VADA test makes Francisco Vargas look like a schmuck.
Francisco Vargas is currently working with trainer Rodrigo Mosquera. Mosquera was suspended in late 2013 for manipulated boxing gloves but managed to work a December 2013 event. Mosquera then went to work a New York fight in January of 2014 while on temporary California suspension. Mosquera was scolded by a California athletic inspector for trying to give a boxer advice from the crowd of a show in Montebello. Mosquera was granted a new license shortly thereafter. Mosquera will be working with Vargas for his June 4th fight against Orlando Salido.
By Zach Arnold | April 26, 2016
UFC is now stuck on a sports network building around Colin Cowherd, Jason Whitlock, and Skip Bayless. Really in tune with MMA's audience.
— FightOpinion (@FightOpinion) April 26, 2016
The murder-suicide pact between Fox Sports 1 and ESPN is going to financially reward those who deserve it the least. It’s going to torture sports fans and sports executives alike. ESPN created the fertile conditions for the ugliness ahead and the Fox empire is going to inflame an already polarized playing field.
With fees for sporting events escalating to an unmanageable monstrosity, sports networks are slashing & burning budgets for production staffs while shifting their cash into opinion talkers. Spend less on hard news, more on blather. Go for emotion, tribal identity, and analogies over reason & logic on the persuasion scale. We’ve reached a point in television consumption where Skip Bayless is considered as iconic, if not more so, than Mike Tirico.
UFC is likely going to stay with Fox Sports, although ESPN certainly would have interest under any normal circumstance. We’re not living in normal times. ESPN is bleeding talent. They’re slashing & burning production employees. Disney, which is making money hand over fist, is scared to death of what is going to happen to ESPN in the future. UFC should be a sure-fire target for ESPN acquisition. The acceleration of losing personalities could play either way here for Bristol.