Nearly a decade after filing a federal antitrust lawsuit against the Ultimate Fighting Championship, more than 1,000 former and current professional mixed martial artists should begin receiving payments from a pool of $260m starting next June.
Federal judge Richard F Boulware granted preliminary approval of a negotiated settlement between the two parties on Tuesday. Once final, the $375m agreement would end the proceedings in Le, et al v Zuffa LLC, one of two classes Boulware certified last year that cover UFC fighters from the end of 2010 through the present day. The other, Johnson, et al v Zuffa LLC, represents the interests of fighters beginning in July 2017, and is ongoing.
The fighters’ co-lead class counsel, who are expected to receive close to a third of the Le settlement in fees and expenses pending Boulware’s approval, will have a chance to collect more than a hefty sum in Johnson since hard questions about the UFC’s contract and business model are on the table.
What is the UFC?
Founded in 1993, the Ultimate Fighting Championship is the world’s foremost mixed martial arts promotion featuring more than 600 fighters from nearly 80 countries on its current roster. In January 2001, an ownership group led by brothers and Las Vegas casino magnates Frank and Lorenzo Feritta embarked on a journey that lifted the UFC and the sport of MMA from the shadows to the global mainstream.
After purchasing the struggling company for $2m from its original owners, Semaphore Entertainment Group, the Fertitta-owned Zuffa LLC, spearheaded by president and CEO Dana White, began knocking down doors and building its business. Fifteen years later, the Fertittas sold the UFC to sports and entertainment giant Endeavor in a $4.2bn deal. Under the publicly traded TKO Group Holdings, the UFC lives alongside the WWE and is valued at more than $12bn.
Why was the UFC sued in a class-action federal antitrust case?
On the way to becoming a politically and culturally important business, the UFC proudly outlasted numerous would-be rivals, often absorbing their assets in the process, namely valuable fighter contracts. Many UFC stars from the past 20 years joined the company as a result of the misfortune of another promoter.
This consolidation gave Zuffa tremendous leverage over the MMA labor market. For most people watching the sport, the one way a fighter could be perceived as a “world champion” is to hold a UFC belt, meaning only fighters who signed a promotional contract with White’s company were eligible.
The original civil suit was filed in 2014, by former UFC fighters Cung Le, Nathan Quarry, Jon Fitch, Brandon Vera, Javier Vazquez, and Kyle Kingsbury. According to the plaintiffs, Zuffa schemed to lock fighters into restrictive long-term contracts while capping the revenue paid to the athletes, effectively suppressing wages.
Fighters represented in the lawsuit – 1,952, all told – allege that Zuffa pulled this off by eliminating options on the buyer side, absorbing and shuttering the competition, while paying no more than 20% of UFC revenue to the athletes – a significantly lower wage share than those found in major US-based professional sports (in the NFL, for example, players receive around half of league revenue).
Combining restrictive contracts and business tactics that limited fighters’ mobility in the marketplace (technically, they are independent contractors but are exclusively bound to the UFC), the labor side amounted to an industry dominated by a single buyer, making the UFC a “monopsony” in violation of Section 2 of the Sherman Antitrust Act.
Why did the UFC pay $375m to fighters?
In his 80-page order granting the fighters’ class status in 2023, Boulware wrote the plaintiffs had established that they “suffered economic injury as a result of defendant’s anti-competitive conduct.”
Throughout the litigation process, during hearings, and in the language of the settlement document, lawyers for the UFC echoed White by disputing the notion that the company had done anything wrong. Nonetheless, Boulware denied a motion to dismiss the case and allowed it to survive summary judgment. Before the decade-long litigation battle was originally set for a jury trial in April 2024, a settlement agreement materialized through a mediator.
Maintaining that they are not liable for the claims and that they would have a good defense in front of a jury, attorneys for the UFC said it had agreed to settle, in part, to “avoid further expense, inconvenience, and the distraction of protracted litigation.”
The global settlement in July would have delivered $335m to fighters and resolved both the Le and Johnson lawsuits.
For the UFC, the tax-deductible settlement payments carried significantly less risk than a jury trial, where a guilty verdict in Le had the potential of $811m to $1.6bn in damages, which could have also then been trebled by the court.
But in mid-July, Judge Boulware balked and declined preliminary approval, saying he wanted to see “life-changing money.” He described the payout, split 90/10 between the two cases, as insufficient and declared that the interests between the two classes were actually in conflict.
Where Le became solely about damages, Johnson has the potential for injunctive relief, namely concrete changes to contracts and the UFC business model.
What made fighters from 2010 to 2017 settle instead of present their case to a jury?
Based on 158 declarations filed with the court as part of the revised settlement agreement, the disbursements can’t come fast enough for many fighters who are among the more than 1,000 members of the Le class.
Boulware said the sheer volume of declarations was unlike anything he had seen during hundreds of antitrust cases he previously presided over, calling the heart-wrenching statements a “quite significant” factor in his decision.
Pushing forward to trial, which was set for February 2025, would have presented an all-or-nothing situation for the athletes. Even victory could have led to lengthy appeals by the UFC.
Instead, Le class members will receive 25% more than under the prior agreement. The gross settlement amounts to roughly 70% of the total compensation the UFC paid to the entire roster of fighters during the class period ($375m out of $538m), and more than 40% of the estimated damages, which the plaintiffs attorneys noted “is better than any other worker-side monopsonization case in the history of class action jurisprudence in this country.”
A formula that factors a fighter’s competitive compensation plus $14,000 per bout determines the disbursement, which comes out to around 30% of what he or she made during the class period. Payments to fighters will vary. Thirty-five are in line to net over $1m. Five hundred will receive in excess of $100,000. Nearly 800 can expect more than $50,000.
Meanwhile, members of the Johnson class, including hundreds of fighters covered in the Le settlement, can still pursue additional damages and, crucially, injunctive relief as that case moves forward.
Why did it take nearly a decade to set a trial date?
Pursuing an antitrust class action lawsuit was always going to take time. Fighters were told five to six years as a estimate when they were pitched by attorneys in 2013. No one could have foreseen the pandemic. Nor could they have known that before Bouleware could issue a key ruling in Le v Zuffa LLC, the Barack Obama appointee would have to wait while another case involving the price-fixing of tuna worked its way through an appeals court.
Does the settlement impact UFC’s business practices?
No. Anyone hoping for hard and fast changes to the UFC’s contract and single-entity business model will need to wait for an outcome in the Johnson case, which is early in the discovery phase and remains years away from resolution.
Injunctive relief – the discretionary power of the court to restrain or require certain remedies to prohibit the kind of restrictive conduct that the fighters alleged UFC was guilty of – went out the window in Le as a consequence of delays and the addition of the Johnson case. When Boulware denied the previous settlement, he made it a point to say that the two classes had different stakes and had to be untangled from one another. A new class counsel has been added to the case to help address the judge’s concerns.
Is any of this legally significant?
The initial settlement included minor changes to contracts, but that “prospective relief” left a lot to be desired. Those issues are on the table in Johnson, though many fighters in that class became party to class-action waivers when they signed contracts with the UFC.
After a US supreme court ruling in 2018 that deemed such waivers constitutional, more than half of the fighters in that class have those clauses in their contracts.
Boulware sounded keen on seeing these clauses challenged by the plaintiffs, and the Johnson action could put the issue in front of an appeals court.
Writing in support of the fighters, professor Eric Posner of the University of Chicago Law School noted that Le “is the first [labor-side claim under Section 2 of the Sherman Act] ever to survive summary judgment, reach class certification, or even survive a motion to dismiss,” therefore the “plaintiffs secured important judicial opinions that will help litigants and future courts adjudicate Section 2 [Sherman Act] labor antitrust cases.”
Counsel for the fighters declared that the case and settlement are “remarkable, groundbreaking achievements” compared to other cases. While the monetary awards in the Le settlement should prove meaningful, the chance for structural changes to the UFC business as a result of the Johnson action could go a long way in determining whether or not that’s true.
