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A question for legal eagles…
By Zach Arnold | March 16, 2009
… regarding this MMA Payout item on UFC wanting a cut of all sponsorship money fighters make and determining who gets to sponsor whom…
- How much of this would hold up in a court battle if a big sponsor wanted to fight UFC over the right to sponsor a certain fighter?
- Could a fighter represented by a big agency be able to fight UFC on this?
- What is the lifespan of UFC’s control over a fighter’s sponsors? Life of the contract or in perpertuity?
- Does the fact that UFC hire fighters as independent contractors put them on shakier ground in a court battle as opposed to if those fighters were treated contractually like employees?
Topics: Media, MMA, UFC, Zach Arnold | 22 Comments » | Permalink | Trackback |
The UFC has the right to control what is seen on its shows.
I’m no legal eagle…
Athletes in sports like Football and Baseball can be sponsored by anybody they want to (I believe). For the most part, they can’t bring those sponsors into the actual games unless it is approved by the leagues.
The NFL, MLB, and NASCAR are the sanctioning bodies whereas in for the UFC events it’s NSAC, CSAC, etc.
So, legal question is interesting.
Also, if a fighter is in the main event will the sponsorship fee for the UFC change compared to that to a fighter on the undercard?
Will fighters with less sponsorship monies be relegated to the undercard or left off cards altogether?
Seems like this is more of a step toward WWE.
While not a legal eagle I’ve had some dealings with this topic. UFC has every right to say yea or nay on sponsorships. As do boxing promoters or the producer of any lve TV show ie “Deal or No Deal” or “Survivor”. They have the right to say you can or can’t wear something. What I don’t know is can they demand a peercentage. My gut feeling is yes. What they could also do is say in order to wear a brand name you have to pay $X. Then fighters would need sponsorships greater than $X.
In the major sports players can sign deals with any company they want. But they can’t wear sponsor brands in game (unless it is league approved equiptment ie shoes or gloves). If a player does a commercial he brand must pay a high fee to the league for the right to use league or team logos. That’s why you see athletes in blank uniforms in ads sometimes.
What I think UTC is doing and hat I think they should be doing because ads on shorts look cheap is elminating them altogether.
No brand would fight UFC on taking a cut from fighters. Than would be a waste of money. All they want to do is get exposure on TV why do the care if the fighter loses money to UFC. The best a fights can do to prtest a to throw a temper tantru
and say h won’t fight. We’ve sen how that works out.
Sorry fir the typos damned iPhone keypad.
The UFC controlling which sponsors can be seen on their telecast is on thing. But actually negotiating the deal with sponsors just strikes me as unethical. They are basically stepping in and operating in a role that’s supposed to be filled by a fighter’s management team or attorney.
This is another example of how the UFC likes to blur the line between treating fighters as employees, and treating them as independent contractors. When the UFC chooses to cut a fighter from his contract without compensation, the fighter is an independent contractor. But when it comes to sponsorship or licensing agreements’, the UFC likes to behave like an employer.
I remember Brian Urlacker getting a huge fine (around 50,000 USD or so i think it was more) for wearing a vitamin water cap during pres day at the super bowl 3 yrs ago.
I am a L1 this year and am in my second semester of contracts. I don’t feel super confident I can give the right answer but I can make an educated guess.
First off as people have pointed out the UFC can control their product. Banning Affliction at events or asking for a fee to use their trademarks seem like it would fly in court. Deciding what a fighter can and can’t endorse, not so much.
Of course the way that the UFC would enforce such a ban would be to cut the fighter that did not go along with it and there’s the rub. Fighters don’t have a legal right to work for the UFC so if the UFC wants to part ways, than oh well.
There are certain protections that fighter would have. For example if a fighter was cut for being black, or gay, the UFC could face serious problems as there are laws on the books to protect employee’s from discrimination.
I don’t know enough about the law yet but it is my feeling that a fighter that sued because he was fired for endorsing the wrong product would have a tough row to hoe in court. But he could make an argument. Courts like economic freedom. If a fighter had a contract and the UFC breached that contract by firing him I think that the UFC would need to show better cause than he took money, on his own time, from the wrong source.
The real issue is the contract itself. And this is one place that a fighter could attack the UFC. Contracts of adhesion-“take it or leave it” type contracts- are not well loved in court. A fighter should be able to negotiate on a somewhat level playing field. I know that employees have been able to fight such clauses in court.
As for the life time rights to a likeness, I see no reason that a court would uphold this. Maybe the UFC logo in connection to that likeness – so Ken Shamrock can’t refer to himself as “UFC fighter Ken Shamrock when he is pitching his doll. But if Ken went into the car business he would be able to put is mug up on the billboard advertising his lot.
I’m actually reading contracts right now so if I get a better clue I’ll make sure to chime in.
Thinking about it some more, I’m pretty sure that a fighter could fight the “take it or leave it” clauses.
There are cases where a employee signs away a right in order to get the job. That is the boss says in effect “sign this contract or I won’t hire you” and in cases where the employee had very little to no input into the formation of the contract or ability to change it courts have found that the contract was not valid.
I was a 1L a LONG time ago. A really long time ago.
Potential First Amendment issue?
I can’t tell from the MMAPayout story exactly what the UFC has in mind. If all the policy pertains to is what fighters can and cannot wear in the Octagon during UFC broadcasts, I don’t think there’d be any First Amendment issue. It is perfectly constitutional for employers–even of independent contractors–to impose certain conditions on uniform, conduct, etc., on their employees while they’re on the job.
However, it’s a totally different thing if the UFC tries to regulate what the fighter wears or promotes outside of UFC programs. A UFC fighter could contractually agree to limit what he promotes outside the broadcasts, but as far as the UFC trying to limit or threatening to fire fighters who are already have contracts and whose contracts don’t include such provisions–I’d imagine that could create a constituional cause of action for the fighters.
This is all just knee-jerk speculation, mind you, so take it a salt shaker.
On second thought–duh–UFC is not a government actor so there’s no direct first amendment problem. But given the presumptions of Free Speech I’d imagine the UFC would have to modify existing contracts in very careful ways if it wanted to regulate fighters’ endorsements, etc., outside the Octagon.
Direct quote from the article:
“The UFC would negotiate the deal for the fighter and charge the sponsoring company a promotional fee for the right to have its brand on display on fighters in the octagon.”
I just graduated law school and I’m currently clerking for a judge in family law, but contracts isn’t exactly my strong suit, but I can give you my best educated opinion.
A lot of this seems like novel legal issues, and I’m not sure where else it would have come up before, since the MMA business model is so new and unique, and there really isn’t anything to compare it to, except maybe nascar.
Now before you read my opinions further, I must admit to you that I missed passing the bar by 0.95 points the last time (and first time) I took it, so don’t take this as actual legal advice…and I didn’t do any actual legal research on this. That would probably take more than a few days.
1) If a sponsor really wanted to sponsor a fighter, I think that sponsor and fighter would be able to have a valid contract without the UFC’s permission. However, the UFC can control what sponsors they want on their broadcasts, and I’m struggling to see how the UFC can block the sponsorship of fighters outside of UFC related events, much less take a cut of their sponsorship. The issue I’m seeing is lets say an advertiser does sponsor a fighter without the UFC’s permission, how can that sponsor use the fighter’s image without envoking the UFC brand name or image. My instinct tells me that a clause such as this might be an unfair restraint on a fighter’s ability to make a living, and a lawyer might have an easier time arguing his case for a lower tier fighter than a big name fighter. These would be some legal briefs that I’d actually want to read.
2) A fighter that is represented by a big agency can absolutely fight this type of a contract, and depending on where the contract was formed, you might get different results in different jurisdictions.
3)I highly, highly, highly doubt the UFC can control a fighter’s sponsorship rights in perpetuity.
4) I also think that the fact that the UFC hires fighters as independent contractors put’s them on shakier ground than if they hired them as individual employees. One thing I know is this, the law tends to favor the freedom of contract, and the UFC seems to be in a much better bargaining position than the fighters, so the courts will tend to read contracts in the fighter’s favor.
I agree with the 1L’s analysis of the situation. Just make sure you don’t forget what you learn two years after you’re finished with your contracts class. 🙂 When you study for your bar you’ll find that it feels like your learning some information for the first time again.
Some side notes:
1) These appear to be complex and novel legal issues. To fully answer these questions would probably take a 30-40 page well researched brief. My answers is just what my legal instinct tells me, but one thing law school teaches you is that you can usually find case law that supports your legal instinct. I’m just not that familiar with contract law to give a full answer. I’m sure other legal eagles out there could come to different conclusions than I did with reasonable answers. Thats the thing about the law….the answer is always grey.
2)I’m actually starting to think it might be in the UFC’s interest to HAVE a union, especially if strikeforce becomes a major force and competitor. I know this might raise some eyebrows…perhaps I’ll address it further later.
3) One of the things I learned in negotiation class is that its a common stragey to start negotiations by asking for as much as possible, and work down from there. The UFC might be doing this with these contracts now….its just going to take the right fighter with the right management and strategy to fight the UFC with these clauses.
Money always comes into the equation, and court battles take time, and money! Time away from the cage while fighting an uncertain battle in court will always affect the fighter’s decision on whether or not he wants to fight certain clauses. A fighter being repped by a big agency might help ease those fears.
When I read the article on mmapayout.com I thought of a few things
1) While this isn’t in the fighter’s best interest, this might be what some sponsors (the big sponsors such as bud light, harley, etc) want. A fighter is more valuable as an endorser if you can use the UFC image/logo with it.
2)It seems the UFC is trying to act as the promoter and business manager for their fighters with this business model…
Anyways fellas I’m writing this from an airport in Korea, waiting to catch my connecting flight to Manilla. So I didn’t take a lot of time in preparing an answer, but these are just my initial impressions.
I’m curious to hear more thoughts on this…
About a year ago, Tecate beer wanted to sponsor Roger Huerta to the tune of six figures per event. UFC declined this sponsorship because they already had an exclusive beer sponsor.
It’s definitely in UFC’s interest to have a union, because it makes it easier to negotiate these kinds of deals, you do it once with the appointed bargaining representatives, it results in a union agreement, and there are no lawsuits.
As to whether UFC can stop someone wearing a logo or cause them to wear a logo, the answer is definitively yes, we’ve seen it time and time again from the Olympics to NASCAR.
Could a fighter with major bargaining position fight UFC? Sure, ask Fedor. Would anyone else try to fight UFC? Probably not, that’s where the money is.
Lifespan of the contract, unless it involves UFC IP, as noted above.
I actually think that the Independent Contractor issue is to the benefit of the fighters in this case. If they were employees they would have significantly reduced ability to refuse fight dates etc, but legally these all seem to be cut and dried issues to me, so it won’t matter.
It’s in Zuffa’s interest to have a weak to moderate union. One that would make everything uniform for fighter contracts and rights.
It would not be in Zuffa’s (or the sports) best interest if it was a “Tito Ortiz Style Union”. What I mean by that is a union kind of the way Tito Ortiz negotiates his own contracts. To basically bleed a company dry. That would probably be bad for the sport.
Given my failure to secure legal employment for the summer I might well try to turn this subject into a law review article.
It’s not in any union’s interest to ensure that they bargain so hard that none of their members can ever work again.
Which is where Tito has put himself, to all appearances.
Tito would have had CBS footing the bill for him in EXC and he couldn’t even fight at that point, were it not for the Kimbo/Petruzelli fallout. He’ll probably end up with Strikeforce or Affliction once he’s healthy and fight for them in events that everyone will bitch about not being pertinent to the title scene (in the UFC, of course) but will sell lots of tickets and get lots of people to watch on TV. Its not as if he’s Tim Sylvia and no one is interested in paying out the nose for him.
insecure much?
“However, Penn’s recent complaint, which was written in a legal style similar to a lawsuit, will not serve to stimulate any formal disciplinary proceedings on Tuesday against the accused trio, said Kizer.
Kizer said Penn and his representatives have no authority to file a disciplinary complaint against a fellow combatant per Nevada’s statutes.
“That’s my job,” said Kizer. “You can complain to me, small ‘c,’ and then it’s up to me as the executive director whether I’ll file a disciplinary complaint.”
but then in the next paragraph it says Keith Kizer “said he hasn’t and doesn’t plan to file a complaint against St. Pierre and his camp at this time”
so basically they made a lot of noise when this happened and theyll make a lot of noise later today but actually do nothing about it
I think a better question is if a champion who is stuck in his champions clause gets a massive sponsorship by an unapproved company, one that pays more than his salary in the UFC, can he then go to court and get his contract voided as the UFC is preventing him from making money via his sponser.
I doubt it, at least not going forward.
The transition period would have some interesting questions, but over a year or two they would fade away.
Tiger can make money whether he’s allowed to wear Nike to his sporting event or not, the same holds true for any fighter of sufficiently large notoriety to gain that type of sponsorship.