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Culinary Union Requests Formal Zuffa Investigation By FTC

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grappler0000

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Yesterday, the Culinary Workers Union Local 226 sent a letter to the Federal Trade Commission requesting that a formal investigation into whether business practices by Zuffa LLC, the corporate owner of the Ultimate Fighting Championship (UFC), violate U.S. antitrust laws.

The letter goes on to point out that since 2001, Zuffa has acquired four of its key rivals (Pride Fighting Championship, World Extreme Cagefighting, the World Fighting Alliance, and most recently Strikeforce earlier this year. They also state that through some independent research performed in 2008, Zuffa controls 80-90% of the mixed martial arts market.

Specifically, the letter points out that Zuffa has preserved and strengthened its dominance in the market through their unwillingness to co-promote events as well as anti-competitive contractual restraints placed on their contracted fighters...


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Post #1   9/3/11 11:23:17PM   

jae_1833

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This.could be the start of something real bad!

Post #2   9/3/11 11:58:32PM   

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I saw "Culinary" and I thought Hells Kitchen on FOX

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Post #3   9/4/11 12:18:11AM   

grappler0000

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Posted by jae_1833

This.could be the start of something real bad!



I don't know...I don't think anything is any worse as a result of this. It's not like the Culinary Union is bringing anything new to the table. The case that they're presenting is already either common knowledge or at the very least already being stated by UFC detracters. Not to mention, they obviously don't know completely what they're talking about. Pride and Strikeforce were the only true competitors that they bought out...namely Pride. They bought out the WEC and WFA for other reasons, but were never even a remote threat to their business model. And obviously they haven't done their research if they truly believe the numbers they are providing for fighters' pay. I'd say even the vast majority of fans know about PPV percentages and non-disclosed pay/bonuses.

It's already been rumored that the FTC was already doing an investigation, so it's possible that something is already in motion...but I don't think this really does a whole lot to convince them of anything new. If anything, I bet the FTC would be wondering what the hell this union has to do with fighting to begin with.

The thing that gets me is...how do the people paying union dues feel about this? I can say that I wouldn't be happy that my dues were going to lobby against a sport in New York and to try and break up a company that does not "directly" impact me.

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Post #4   9/4/11 12:20:06AM   

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Posted by grappler0000


Posted by jae_1833

This.could be the start of something real bad!



I don't know...I don't think anything is any worse as a result of this. It's not like the Culinary Union is bringing anything new to the table. The case that they're presenting is already either common knowledge or at the very least already being stated by UFC detracters. Not to mention, they obviously don't know completely what they're talking about. Pride and Strikeforce were the only true competitors that they bought out...namely Pride. They bought out the WEC and WFA for other reasons, but were never even a remote threat to their business model. And obviously they haven't done their research if they truly believe the numbers they are providing for fighters' pay. I'd say even the vast majority of fans know about PPV percentages and non-disclosed pay/bonuses.

It's already been rumored that the FTC was already doing an investigation, so it's possible that something is already in motion...but I don't think this really does a whole lot to convince them of anything new. If anything, I bet the FTC would be wondering what the hell this union has to do with fighting to begin with.

The thing that gets me is...how do the people paying union dues feel about this? I can say that I wouldn't be happy that my dues were going to lobby against a sport in New York and to try and break up a company that does not "directly" impact me.



You're right that nothing much will come of this except a pretty detailed FTC report that could be used as a building block in an anti-trust suit in the future.

It is important to note that they are not suing anyone or asking that the FTC do anything in particular. This is all about fact-finding.

Zuffa does have some cause to be concerned here. 90% market share with a history of takeovers + going against what is standard practice for the rest of the industry and not co-promoting + those champion's clauses + fighter pay compared to similarly situated professional athletes = some explaining is necessary.

High market share can be explained by them offering a superior product, but buying out all major competitors is a sign that there might be something more going on. Bellator is Zuffa's best friend here, because they can point to a competitor with a TV deal and say, see, we have competitors, it is not that people can't get into the market, its just that most fail when they do so.

Not co-promoting is a sneaky issue. There is nothing that says a business has to co-operate with its competitor. But, if they can show that co-promotion is a standard business practice in the industry, it could be used against Zuffa.

The champion's clauses are probably the worst thing going against Zuffa. The situation is not good for them here, and again, Bellator is their best friend. Bellator also champion's clauses, so Zuffa can point to them and say, no, these contracts are not unusual restraints of trade, Bellator, our biggest competitor, uses them too. They are just standard practice in the industry.

Related to the harsh contracts is the state of fighter's pay. Most of the fighters are not getting anything from Zuffa besides what is reported. Zuffa can pull out the few fighters that do get a PPV cut or other payment and show that they do pay some of their athletes quite a bit.

As far as the members and their dues. . . I bet they are happy knowing their dues are being used to put pressure on the last non-union employer in one of the world's largest markets. And it actually is a smart move by that side. If you want someone to move (in this case change their stance against unions), apply pressure where they are weak (the relative lack of precedential law dealing with mma, questionable business practices). This of this as a kick in the balls of Zuffa by the local culinary union. They don't even care about MMA, this is about labor and employment in Las Vegas. I wonder if Zuffa really does better being anti-union at Station casinos. From a business perspective, does it pay off when they are sacrificing being able to do cards in NY and facing heat from the feds?

Nothing much will come of this investigation, but Zuffa should be concerned because their well-known aggressive business practices can have negative legal consequences.

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Post #5   9/4/11 12:06:08PM   

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I'm glad this is happening. This is good for the Fans and for the Fighters. The UFC controlling such a large percentage of the MMA market gives fighters no leverage during contract negotiations. I was disappointed when the UFC bought SF. I really enjoyed having those additional cards during the year.

Post #6   9/4/11 12:20:10PM   

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UFC is huge, but they do not control 80-90% of the mma market, that's just ridiculous. If a fighter gets cut by the UFC, they are almost guaranteed a fight elsewhere. Will the paydays not be as good? No, but anti-monopoly laws are not about determining payouts for employees, it's about maintaining the health of the market, and the MMA market is fine. No skilled fighter has trouble finding work.

Post #7   9/4/11 12:44:35PM   

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Posted by ncordless

As far as the members and their dues. . . I bet they are happy knowing their dues are being used to put pressure on the last non-union employer in one of the world's largest markets.



I actually find that hard to believe. I live in an area that has a ton of union work. The vast majority of people I know absolutely hate how much money is taken from them to go towards things they don't really believe in or feel is important. And for something that is so indirectly affecting them, I think there would be major issues from most. I understand why it is happening, but I just don't see the majority of people being on board with this. As this gets more publicity, I guess we may hear the individuals' true feelings on the issue though.


Most of the fighters are not getting anything from Zuffa besides what is reported.


Yes, only the top guys get the PPV cuts. To my understanding though, virtually everyone gets additional pay though...it's pretty much expected unless you get the PPV cut. Obviously missing weight or doing what Bisping did in the Rivera fight will keep those from happening, but those are practically guaranteed otherwise. The point though is that the percentages that the union is reporting are way off as a result of them not knowing this.

Last edited 9/4/11 1:28PM server time by grappler0000
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Post #8   9/4/11 1:23:52PM   

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Posted by grappler0000


Posted by ncordless

As far as the members and their dues. . . I bet they are happy knowing their dues are being used to put pressure on the last non-union employer in one of the world's largest markets.



I actually find that hard to believe. I live in an area that has a ton of union work. The vast majority of people I know absolutely hate how much money is taken from them to go towards things they don't really believe in or feel is important. And for something that is so indirectly affecting them, I think there would be major issues from most. I understand why it is happening, but I just don't see the majority of people being on board with this. As this gets more publicity, I guess we may hear the individuals' true feelings on the issue though.


Most of the fighters are not getting anything from Zuffa besides what is reported.


Yes, only the top guys get the PPV cuts. To my understanding though, virtually everyone gets additional pay though...it's pretty much expected unless you get the PPV cut. Obviously missing weight or doing what Bisping did in the Rivera fight will keep those from happening, but those are practically guaranteed otherwise. The point though is that the percentages that the union is reporting are way off as a result of them not knowing this.



My understanding is that bonuses beyond the announced ones and ppv cuts are not the rule, but rather a special thing held out to fighters who please Zuffa. Part of the problem is they keep it secret. The other part of the problem is that extra-contractual payments put the fighters even more at the mercy of the company.

Different unions have different attitudes. 226 is one of the more politically active unions in the country. I have done some work for unions, and my experience is that many of them like the idea of pooling their resources together to affect policy changes that they wouldn't be able to do by themselves. Given that Zuffa owns the only non-union casinos in 226's territory, I highly doubt most of the members have too many qualms having their dues go to changing that.

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Post #9   9/4/11 2:05:18PM   

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this is a ploy to get back at the UFC cause the UFC well Fertittas are against the casino and hotel unions in Vegas...And are forcing out the unions...

Post #10   9/4/11 3:04:50PM   

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hoping i do not sound like a noob when asking this....

What is the difference in UFC having 80-90% of market share & NFL having just as much if not more in their market?

Am i missing something?

did i read the article wrong?

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Post #11   9/4/11 4:44:37PM   

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Posted by Poor_Franklin

hoping i do not sound like a noob when asking this....

What is the difference in UFC having 80-90% of market share & NFL having just as much if not more in their market?

Am i missing something?

did i read the article wrong?



no. that is a very valid point.

Anti-trust laws have not been applied evenly across industries. Its not just the NFL, but the NBA, MLB, NHL...ect...ect....ect


Most major sports are dominated by one organization. I am of the opinion that this is actually good for the industry. Look at boxing for an example of why.

However, I do think the athletes need a union. When you have one large org. they have no where else to go.

Post #12   9/4/11 4:57:47PM   

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Posted by Poor_Franklin

hoping i do not sound like a noob when asking this....

What is the difference in UFC having 80-90% of market share & NFL having just as much if not more in their market?

Am i missing something?

did i read the article wrong?





The biggest difference is that Major League Baseball and the NFL have anti-trust exemptions granted to them by Congress. The baseball one has been in effect for a long time and my understanding is because at the time the exemption was granted, Congress saw baseball as a "sport" for entertainment and not as a business (which it obviously is). I believe the NFL exemption is mainly for broadcasting purposes but I will be honest and say that I don't know the whole story behind either exemptions. I just know that they prevent any un interested parties from suing either league under anti trust laws. It does not eliminate competition and as I understand it, if a new league started up and the NFL or MLB directly interfered with the growth of the new league they could be subject to anti trust laws.

Again, that is off the top of my head, someone with more knowledge please chime in.

Post #13   9/4/11 8:42:25PM   

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Posted by ncordless


My understanding is that bonuses beyond the announced ones and ppv cuts are not the rule, but rather a special thing held out to fighters who please Zuffa. Part of the problem is they keep it secret. The other part of the problem is that extra-contractual payments put the fighters even more at the mercy of the company.



Zuffa does give out bonuses to guys who do something spectacular, which is sort of an additional OTN bonus for those that receive it. There is a standard bonus that the guys receive though. It doesn't get talked about very much, but it does get mentioned from time to time. Dana has talked about it several times, but usually stops short of explaining it. Dana and Chael both made mention of it when talking about Bisping's punishment following the Rivera fight. McCorkle talked about it in detail to the UG. According to him, every fighter on a PPV gets the bonus.




Different unions have different attitudes. 226 is one of the more politically active unions in the country. I have done some work for unions, and my experience is that many of them like the idea of pooling their resources together to affect policy changes that they wouldn't be able to do by themselves. Given that Zuffa owns the only non-union casinos in 226's territory, I highly doubt most of the members have too many qualms having their dues go to changing that.



Well I don't know anyone in that union, but I think I have maybe one other family member within 300 miles of me that's not in a union...they all seem to share similar opinions. If they were using funds to do something a bit more direct, I think it would be different. I guess I can sort of see filing the complaint with the FTC. At least while you're kicking sand in your enemy's face, you could potentially cause some long term damage, which has the potential to change some things within their other business...it's possible, I guess. The lobbying in NY though? Spending hundreds of thousands of dollars that will do absolutely nothing more than be a temporary small thorn in the enemy's side...well, that's just reckless. And I can't imagine anyone thinking that would be a good idea...aside from the folks at the top trying to throw their weight around.

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Post #14   9/5/11 10:30:18AM