Former UFC Fighters have filed a class action antitrust lawsuit against the Ultimate Fighting Championship (UFC) alleging that the UFC had a monopoly on fighters as well as a monopoly on their labor (monopsony). Before a class action is permitted to go forward, however, the class must be certified.
Allegations of Monopoly and Monopsony
The plaintiff fighters allege the UFC engaged in an anticompetitive scheme purportedly to create and maintain dominance in the market. This dominance, the plaintiffs allege, allowed the UFC to provide their fighters with significantly lower compensation than they would have obtained if the market were competitive. While the case has been ongoing for some time now, the question of certification remains pending. The plaintiffs seek to establish two classes — the “Bout Class” comprised of fighters who competed in qualifying bouts, and the “Identity Class” comprised of fighters who claim their identities were expropriated with little or no compensation.
While the public version of the class certification documentation is currently redacted, the plaintiffs’ arguments for class certification cite the following as evidence of the alleged monopoly and monopsony:
- Requiring fighters to sign long-term, exclusive contracts
- Coercing fighters to resign contracts
- Both acquiring and subsequently shutting down other Mixed Martial Arts (MMA) promoters
The plaintiffs argue, in part, that increased MMA compensation would allow fighters to promote themselves better. Additionally, they assert competitive pay leads to better training, higher quality fighters, and, at the end of the day, better events.
As with many class action lawsuits, the issue of damages is central to the analysis. Both the plaintiffs and the UFC have engaged experts to evaluate the situation. Not surprisingly, the experts disagree on the appropriate measure of damages. However, this battle of the experts has application beyond MMA and the UFC, and thus, is instructive for other potential class action plaintiffs.
The Plaintiffs’ Evaluation of Damages
The plaintiffs have engaged several experts to evaluate the UFC’s conduct, and what impact, if any, it has had on the fighters seeking to become part of the class. Dr. Hal Singer, an expert in antitrust and regulation, evaluated fighter compensation using a regression analysis. According to Singer, more than 75% of a fighter’s compensation comes from variables that are objectively measured. Objective variables reviewed by Singer include:
- Weight class
- Placement on the card
Much of Singer’s analysis also focused on wage share. Wage share refers to the comparison of compensation for the fighters as a percentage of the total revenue. Singer couples this calculation with a measure referred to as a foreclosure share. Singer asserts higher foreclosure rates have led to lower wage shares. Singer has estimated damages to be between $811.2 million to $1.6 billion.
Another plaintiff expert, economist Andrew Zimbalist, employed the yardstick method to compare other businesses and the wages they pay to the wages paid by the UFC. Zimbalist compared the average labor share of revenue of boxers, Major League Baseball (MLB), the National Basketball Association (NBA), the National Football League (NFL), and the National Hockey League (NHL).
The UFC’s Response
The UFC’s dispute with Singer’s analysis has to do, in part, with Singer’s reliance on wage share. The UFC asserts that Singer should have instead relied on wage levels. Wage levels refer to the actual wages themselves. The UFC notes that its revenues have increased substantially since 2006. As such, wage share will necessarily decrease. Using wage levels (which have increased over time) instead of wage share, the UFC’s expert labor economist Dr. Robert Topel found no damages.
The UFC acknowledges the yardstick method employed by Zimbalist is one that is generally accepted. However, it alleges Zimbalist employed a basis for comparing firms that was “previously unknown.” The UFC noted, for example, that players for MLB, the NBA, NFL, and NHL are unionized, which necessarily increases wages. Further, as to boxing wage comparisons, the UFC criticizes Zimbalist’s methods, as Zimbalist relied on the work of a single boxing promoter, despite the fact that there are at least 20 boxing promoters who work on nationally televised events. Further, the UFC asserts the data relied on for the boxers’ comparison was based on another lawsuit, and claims the data should not be relied upon without independent verification of the data used.
The UFC previously filed a motion to exclude Singer’s testimony under Daubert.
In December 2018, Judge Richard Boulware scheduled three days of evidentiary hearings. The testimony from these hearings is expected to provide the basis for the court to determine whether UFC’s summary judgment motion should be granted, or whether, alternatively, the plaintiff’s class certification should be granted. This testimony will largely come from the experts who performed the calculations. It has been reported that Judge Boulware stated in a previous hearing, “If I don’t accept some of the modelling from Dr. Singer, then this case is effectively over.” And so, the battle of the experts continues.
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