In Le v. Zuffa, LLC , 11 professional mixed martial arts fighters are pursuing antitrust claims in the U.S. District Court for the District of Nevada against Zuffa, LLC, who operates the popular professional mixed martial arts league known as the Ultimate Fighting Championship, or UFC. Brought as a class action, plaintiffs seek monetary damages and injunctive relief because the UFC allegedly denied them other avenues to sell their services. The UFC is alleged to have gained market dominance by acquiring competing promoters and shutting them down. The plaintiffs also claim that the UFC forced them to enter into contracts prohibiting them from working with rival companies, thereby depriving them of access to talent to promote.
Indeed, this is not the first time that labor unrest in professional sports has resulted in antitrust litigation. Major League Baseball has been subject to numerous antitrust suits, going as far back as the famous Supreme Court decision in Federal Baseball Club of Baltimore v. National League, 259 U.S. 200 (1922), which established baseball’s well-known “antitrust exemption.” In another case, Supreme Court Justice Harry Blackmun famously waxed poetic about the national pastime, quoting from “Casey at the Bat” in Flood v. Kuhn, 407 U.S. 258 (1972).
Now the UFC finds itself as the target of an extensive antitrust class action for the first time in mixed martial arts history, likely attributable to its meteoric rise in popularity. UFC’s most recent blockbuster event of McGregory vs. Mendes generated $7.2 million for live gate attendance, a record for the organization. The UFC even has a popular reality television show, The Ultimate Fighter, which has enjoyed a run for 10 years and counting.
Le and other sports-related antitrust suits are distinctive because they highlight the dual-sided nature of Section 2 of the Sherman Act, which is typically invoked where defendants firms “monopolize, or attempt to monopolize” an output market. The flip side of a monopoly is a monopsony, where a purchaser of a product or service wields market power. Every sports league not only markets the sport it represents, but also purchases the services of its professionals. The MMA fighter-plaintiffs in Le not only allege that the UFC monopolized the sport of mixed martial arts, but also claim that the UFC has control over the compensation it pays individual fighters for bouts or for using their likenesses in advertisements, and thus exercises a monopsony. The NBA has been the target of similar actions, going back to a suit filed by Oscar Robertson, and the NFL has lost several such cases, one of which resulted in player free agency. McNeil v. NFL, 790 F. Supp. 871 (D. Minn. 1992).
Another takeaway from the Le complaint is that a business must be careful about its marketing or promotional efforts as all statements touting a business’ market dominance is prime fodder for an antitrust claim. The plaintiffs in Le quoted several statements of the flamboyant UFC president, Dana White, in their pleadings. The complaint prominently displayed White’s Twitter post gleefully proclaiming: “[competitor league] pride is dead dummy! I killed em!!!” White is also quoted in the complaint comparing the UFC’s position to the dominance of the NFL in professional football:
- “We are like the football and the NFL. The sport of mixed martial arts is known by one name: UFC.” (Complaint ¶ 8)
- “There is no competition. We’re the NFL.” (Complaint ¶ 8)
Whether deliberate self-promotion or simple chest-beating, such boasting may be seen as harmless at the time, but can cast an organization in an unflattering light if it ever defends itself against a Sherman Section 2 monopolization claim. Given the ubiquitous nature of social media and communications in general these days, exercising a little restraint might be a sound business strategy.