Expert witnesses calculate damages at up to 1.6 billion in UFC lawsuit
A class-action lawsuit against the UFC has been underway since 2014. As part of the latest step, the plaintiffs secured the services of experts to calculate damages from the alleged monopsony. For an excellent breakdown, check out this article from Forbes. What follows below is a brief excerpt from John S. Nash‘s excellent article at BE.
The plaintiffs argue that …
The Scheme includes three categories of conduct: (1) Contracts: Zuffa used long-term exclusive contracts with Fighters to limit their mobility and prevent or substantially delay free-agency; (2) Coercion: Zuffa used its market dominance to coerce fighters to re-sign contracts, making its contracts effectively perpetual; and (3) Acquisitions: Zuffa acquired and closed down multiple MMA promoters. The contracts and coercion deprived potential rival MMA promoters of an essential input—the marquee Fighters they needed to compete with Zuffa. The acquisitions eliminated any potential remaining competition. Zuffa became the “major league” for MMA events and reduced other promoters to “minor leagues.”
The most startling aspect of Friday’s filing is the size of the damages calculated by three experts:
•Dr. Andrew Zimbalist: $981 million for December 16, 2014 through December 31, 2016.
•Dr. Hal Singer: $811 million to $1.6 billion for December 16, 2010 to June 30, 2017
•Guy Davis: ZUFFA could have paid fighters $706 million more without going into debt or impacting their financial obligations for December 16, 2010 to December 31, 2016.
Dr. Zimbalist based his estimate on the share of revenue enjoyed by athletes in the NBA, NFL, NHL, MLB, and boxing. UFC attorneys oddly countered that the comparison is not apt, because the first four enjoy a union, and that, rather than a monopsony, is why the number is so high. However, Zimbalist counters that the unions can demand a more competitive market for top talent via for example free agency.
These estimates have been challenged by the UFC. Dr. Zimbalist’s in particular were characterized by ZUFFA attorneys as “junk science.”
Dr. Singer’s argument is based on several points:
•A comparison between ZUFFA when it was less dominant vs. the period in question. No reference is made to today, where Bellator MMA has emerged as an actual rival for top talent.
•The share of revenue that Strikeforce paid out – which was said to be 63% – before it was shuttered.
•The UFC’s stranglehold on top talent, or what he terms “headliners.” And if one entity has all the headliners, it is problematic for another to develop new ones, as to even think about being Jesse James, you have to kill Jesse James.
•The UFC keeping fighters under contract than they had fights to give them, to keep them from other promotions, which is particularly significant given the short career of fighting at the elite level.
Davis calculated that ZUFFA could have compensated fighters 38% of revenue without going into debt or interfering with obligations. Davis argues the revenue instead went to, “discretionary distributions, excessive aviation expenses, and management fees.” ZUFFA argues that that has no relevance to the anti-trust suit, and could mislead the jury.
Friday’s filing was for the class to get certified. If it is not, the individual plaintiffs could file individually, or a mass tort could be initiated. If the class is certified, the likelihood increases that there will be a settlement, although in all likelihood it would be less than the estimates. But if the case goes to trial and the ruling is for the plaintiffs, damages are tripled, and the theoretical $1.6 billion could theoretically become $4.8 billion. That’s a lot of reasons to settle for something.