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Inside the novel antitrust case that could kick UFC in the teeth

The lawsuit offers fighters a puncher’s chance at raising wages.

Inside the novel antitrust case that could kick UFC in the teeth
Jon Fitch [Photo: Matt Sullivan/Getty Images]
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To be in contention for the Ultimate Fighting Championship (UFC) crown, you’d better have a powerful punch, sturdy abdominals, and a jaw of steel, and the stamina to fight through blindness, broken arms, and collapsed lungs. But, you’ll also require the resilience to endure an overbearing company that promotes all the league’s players, controls the rankings and belt titles, and pays you a considerably low wage relative to the amount it brings in.

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In a market so slim and specific as mixed martial arts (MMA), the UFC consistently emerges as world champ. By most economic measures, it’s a monopolist in the industry and, free of any significant competition, it exercises its dominating power to sustain lower compensation for its fighters. That’s the claim made by six ex-UFC fighters, who launched an antitrust lawsuit against the company in 2014.

“All I knew was things were fishy, because it didn’t feel like a sport,” says Jon Fitch, one of those original plaintiffs. “Things just didn’t feel right.” The cause of that fishiness was, broadly, a lack of infrastructure that most pro sports have. Unlike in boxing, the UFC serves as the promoter for all fighters, meaning when two competitors engage in a bout, they’re represented—and paid—by the same promoter. Even in the NFL, where that single league dominates, teams are owned by different entities that have independent interests. The UFC also effectively controls rankings and titles, rather than an independent governing body, like FIFA. For Fitch, that means MMA fighters can’t vie for a serious world title. He complains that it even stipulates the required uniforms. “Nascar doesn’t force all the Nascar drivers to drive the same color car,” he says by way of contrast.

The suit is a slow-moving slog, as U.S. antitrust cases tend to be. But, in December 2020, six years on, a judge indicated that he would likely grant it class action status, meaning that, unless they exclude themselves, the 1,200 UFC fighters who participated between 2010 and 2017 would become plaintiffs in the case. On top of damages to correct past undercompensation, which may top $5 billion, the lawsuit is a chance for collective bargaining, absent a union. Because the fighters are independent contractors rather than employees, it’s harder for them to unionize, and past organization attempts have been sternly dealt with by the UFC.

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The setup is sort of a vicious circle (well, “Octagon,” actually). The UFC, without proper competitors, can keep wages low, knowing that serious fighters in their prime wouldn’t stray. “If you are a real fighter who wants to test your mettle, and wants to play for the biggest title, you have no other option than signing a deal with the UFC,” Fitch says. “I don’t think there’s a single UFC fighter who would leave to fight for another organization’s title.” So, they can keep contracts restrictive and exclusive, making fighters dependent on them and the fights they offer them, however unattractive they may be. Rival leagues can’t emerge as a result, and in turn, wages stay down. “That’s the way they wanted it,” Fitch says. “They wanted us desperate, so that’s one of the reasons why they heavily tried to control our income streams.”

In a statement to Fast Company, William A. Isaacson, lead counsel for UFC and a partner with the law firm Paul, Weiss, says, “UFC has spent many years building a world-class organization, enhancing the brand of our athletes, and championing the sport of MMA. UFC pays its fighters more than any other MMA promoter, with average fighter compensation rising by over 600% since 2005. Our efforts have raised the global popularity of the sport and the overall revenue potential of all MMA organizations and athletes. We are proud of the company we have built, and we are confident that the court will ultimately recognize that the claims outlined in this lawsuit are legally and factually meritless.”

There are other MMA leagues; in fact, Fitch himself now fights for Bellator, and another plaintiff for Singapore-based ONE Championship (the remaining claimants have retired; Cung Le has moved into acting). Other leagues include King in the Ring, Shooto, and Cage Warriors. Still, there’s consensus that these are merely minor or feeder leagues. “There are lots of minor league teams in professional sports like baseball,” says Eric Cramer, one of the lawyers who represents the lead plaintiffs, and may also be co-counsel for the class of 1,200. “But nobody really thinks that the Reading Phillies compete with the Philadelphia Phillies.” In that sense, the UFC does retain a monopoly—or, to be accurate in this case, a monopsony, the term used for a market-dominating buyer, because it’s buying fighting services.

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Antitrust lawsuits are practically a rite of passage in major American sports. Previous ones have served to improve pay, competitiveness, and growth. “We see the UFC case as part of that tradition,” Cramer says. In football and basketball, both of which have gone through those antitrust motions in past decades, athletes get paid close to 50% of what their leagues bring in, whereas UFC pay is closer to 19%. Still, this case is slightly more “legally innovative,” says Marshall Steinbaum, an economics professor at the University of Utah who has researched labor and market concentration. It’s a case of vertical market restraint, meaning that the UFC controls the entire supply chain, from recruitment and promotion to events to distribution.

One of the closest examples to this comes from outside the world of sports, namely the 1948 United States v. Paramount Pictures, Inc. case. In the Golden Age of Hollywood, the five major film studios not only produced, made, and distributed movies but also controlled the exhibition: They owned theater chains where they’d screen only their own films. The Paramount Decrees that resulted generated long-lasting reform on the entire infrastructure of the movie industry, allowing independent movie theaters and film studios to be established, spurring competition and more creativity to emerge in the decades that followed.

Fitch wants his lawsuit to similarly trigger structural changes in the MMA world. “If there’s no reform, it’s just going to be more damages,” Fitch says. “I have a hard time wanting to train and coach people and put them back into that system.” He wants less onerous, shorter-term contracts with real exit clauses. He’d like to see a governing body control rankings and belt titles. He likes being an independent contractor rather a bona fide employee, but he wants that to work as it’s intended so he can shop around freely for the best fights and promoters, who’d compete against each other. He argues more competition will make for a better sport, even for the fans.

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For now, those involved are waiting for the case to pick back up. It could take several more years, when you take into account trials and appeals. Any further, more radical labor reforms from the lawsuit specifically seem unrealistic, Steinbaum says. “In this case,” he says, “I think we’re not there yet.” It’s especially ambitious to think that it could create precedent for contractor rights in other industries, such as among Uber drivers.

That said, the suit could spread awareness of labor issues surrounding gig workers, especially with a high-profile case about a sport that has a consistent audience, which has been rising during the pandemic, averaging at 1.17 million viewers per pay-per-view event. That public consciousness could lay the groundwork for legislative reform. In 1999, Congress passed the Ali Act to help protect boxers’ rights and welfare, and provide more oversight in boxing. Recently, Markwayne Mullin, an Oklahoma congressman who’s a former fighter (and who once challenged Stormy Daniels’s lawyer Michael Avenatti to a fight), called for an Ali Act for MMA. During Andrew Yang’s presidential campaign, he dedicated a whole platform page to empowering MMA fighters.

For Fitch, the need for changes to the model is crucial because, ultimately, the UFC—no matter how heavy-handed and robust it seems—is just a company. That company could simply go out of business one day. And when it does, “the next company that takes over,” he says, “is going to still develop, over time, a monopoly. Because of the way the system is.”