First Things First

After years of legal back and forth, ex-Zuffa athletes were set to receive 335 million dollars from the UFC. At the last minute the judge decided that wasn’t enough.

Today we’re going to review the biggest fight in mixed martial arts history, UFC fighters’ fight for legal protections.

The Origins Of The Antitrust Lawsuit

Nine years ago, a group of UFC fighters sued Zuffa, the UFC’s old parent company, for anticompetitive behavior. The UFC’s legal team has done everything they could to delay, delay, delay the trial, but now a judge is hearing the case.

The fighters allege that Zuffa’s success is due to violating section 2 of the Sherman Act because Zuffa:

1. used exclusive contracts with specific provisions to retain fighters within the UFC

2. used its market power in both the input and output markets to render its fighter contracts effectively perpetual

3. acquired or drove out rival promoters

The fighters claim that Zuffa’s violation of the Sherman Act resulted in their pay needlessly being suppressed. Now the court is looking at fighters and their pay from December 2010 to June 2017.

Right about now you’re probably wondering, what does the management of the UFC make, and how much is left for the athletes?

The Impact Of Anticompetitive Behavior

In 2013 Lorenzo Fertitta, then CEO of the UFC, contracted consulting firm Mercer to see how UFC athletes’ pay compared to other leagues. This came after claiming that UFC athletes’ revenue share was close to the NFL, NBA and MLB. The study’s results have been released as part of this lawsuit.

It’s hard to read so here are some highlights:

• The UFC’s revenue share came in last at 18.6%

• The NFL, NBA, and MLB all more than doubled the UFC’s revenue share

• The boxing event used as a comparison more than tripled the UFC’s at 62.5%

Other evidence from the lawsuit includes a report from Guy A Davis, CPA, CIRA, CDBV, CFE. Davis performed forensic accounting on Zuffa’s financials from 2005 - 2016 to produce four important data points; Net Revenues, Fight-Related Compensation, Fighter Benefits, and EBITDA.

Below I combined “Fighter Benefits” with “Total Fight Related Compensation” to create the “Total Compensation As % of Revenue” figure. That’s the most generous way to look at UFC athlete revenue share and it still never breaks 21%.

When asked about what it would take to increase fighter pay, former UFC President, now CEO, Dana White said, "It's never gonna happen while I'm here.”

One Buyer, One Seller, And More Problems

Since the periods of the lawsuit the UFC has continued to grow. In 2016 Zuffa sold to WME-IMG for $4 billion dollars. In 2021, Endeavor, formerly WME-IMG, launched an IPO and fully bought out Zuffa. Then, in 2023, The UFC merged with WWE to form TKO Group Holdings, a publicly traded company.

According to TKO Group’s Full Year 2023 report the UFC’s revenue ballooned to $1.14 billion in 2022 and $1.675 in 2023. The UFC’s EBITDA grew to $680.6 million in 2022 and $755.7 million in 2023.

The settlement offered by the UFC would be multiple tax deductible payments paid out over time, and total less than a year of their net income. This news drove TKO Group’s stock price up five points immediately.

The lawsuit was incorrectly labeled a case about fighter pay. It’s bigger than that. This lawsuit was about maintaining a free market that allows athletes to test their worth.

Recently, former UFC champion Alexander Volkanovski re-negotiated his contract to become one of the UFC’s highest paid fighters. Per the California State Athletic Commission, Volkanovski’s contracted pay was $750,000 for his most recent fight. We can contrast Volkanovski with another former champion, Francis Ngannou, for an interesting case study.

Ngannou’s contract ended while he was a champion due to a “sunset clause”, allowing him to test the market. He chose the promotion PFL because they allow him to pursue boxing along with MMA. In Ngannou’s second boxing match he collected $20 million, sixteen times his former colleague’s pay.

The UFC has since replaced the sunset clause in Ngannou’s contract with a clause requiring athletes to settle contractual disputes in arbitration instead of going to court. This is one of the many legal barriers that the UFC spent decades creating to consolidate the industry and remove athletes’ leverage. They even lobbied states to avoid releasing fighter pay numbers.

Not everyone can command a payout like Ngannou. That’s not the point. Athletes should have the liberty to negotiate for a piece of the valuable spectacle they are creating so they don’t leave their profession brain dead and broke.

Since Zuffa bought the UFC, pay-per-view prices have risen from $29 to $79, they regularly set live gate records, and keep signing new sponsors. That sponsorship revenue, added from the broken bodies of fighters, does not flow back to them. Some athletes are contracted to make as little as $10,000 to fight.

Before the settlement, UFC light heavyweight Tyson Pedro retired to make headlines.

This is what a monopoly is. There is no one forcing the UFC to innovate nor compensate better to retain premier talent, but they can continue to increase prices, rake in resources, and further consolidate their industry.

It’s never been a worse time to fight for a better life.

Interestingly, the only person that actually can impact change has serious concerns about the UFC’s business practices, their control of the industry, and their proposed solution.

No Solution, No Story

Now I have a small confession to make.

I originally wrote this article months ago. I pitched a story on a fight for labor rights and was contracted to cover the financial implications of Zuffa’s antitrust lawsuit.

After getting submitted the article it was politely pushed off during editing.

Essentially the editor told me that the athletes’ pay was poor, but that doesn’t make a story that their readers are interested in. “There was no smoking gun.”

I decided to hold onto the story until the day the settlement was accepted and the broader news cycle started. That day never came. Now I can’t help but take a step back and look at the relative lack of media coverage on the issue.

The overwhelming majority of the reporting on the UFC’s lawsuit has come from MMA journalists like John S. Nash, Luke Thomas, Paul Gift, and Zach Arnold. Their work is great but none of their related projects are affiliated with the top MMA outlets nor major media companies.

Why isn’t a major American publication providing regular updates on a court case that could force a multinational sports property to pay billions in damages and redefine an entire industry and the emplooyes that populate it?

You’d think that larger publications would cover the biggest story of the decade with at least as much enthusiasm as they dedicate to Conor McGregor’s toe.

At first I assumed the lawsuit’s lack of coverage was because MMA is still the redheaded stepchild of the sports world. Combat sport still sit in society’s shadow. As Gerald Early says about boxing, it’s a “moral eyesore”.

Many viewers don’t want to acknowledge this reality. Those that do like to divorce themselves from the idea that people are punishing themselves for their entertainment while the people performing make pennies on the dollar with next to no legal protections.

The judge presiding over the UFC’s antitrust case kept raising eyebrows and concerns. Just over a week ago he announced he rejected the settlement outright and I can’t help but think about how insanely ironic this situation is.

The UFC is as close to a ruleless sport as you’ll see. Refs routinely ignore fouls and during the last PPV one even told a fighter not to make them enforce the rules.

Almost no one, and I mean no one, acts like they care about athlete health and safety. And fewer people seem to care about the lawsuit other than the one person that has influence over the case; the judge.

Now a trial is tentatively set for October 28th. The UFC has more opportunities to offer settlement terms but it appears unlikely Judge Richard Boulware will accept anything less than structural changes to how the UFC operates.

2024 isn’t even done yet but we can already say it will be remembered as a history defining year for combat sports. Next week we’ll be talking about how this year is changing professional grappling, and who’s set to lose the most.

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