After a lull in the antitrust lawsuit against the UFC, we now see some activity. Late Friday, the plaintiffs filed their Motion for Class Certification, along with several supporting expert reports and rebuttals, while Zuffa’s attorneys filed a Daubert Motion to exclude some of the Plaintiffs’ expert testimony. All in all, a few hundred pages of material were filed, so I’ll probably spend the next few days going over them in greater detail before posting a more comprehensive summary and analysis. For now, here are a few excerpts that I found immediately noteworthy.
The Scheme
The “Scheme” is
how, according to the Plaintiffs, Zuffa attained a monopoly and monopsony over MMA in North America. Reading the Motion for Class Certification I couldn’t help but think they had listened to Paul Gift and incorporated his criticisms of what he called the “
Carlos Newton.”
The Scheme includes three categories of conduct: (1) Contracts: Zuffa used long-term exclusive contracts with Fighters to limit their mobility and prevent or substantially delay free-agency; (2) Coercion: Zuffa used its market dominance to coerce fighters to re-sign contracts, making its contracts effectively perpetual; and (3) Acquisitions: Zuffa acquired and closed down multiple MMA promoters. The contracts and coercion deprived potential rival MMA promoters of an essential input—the marquee Fighters they needed to compete with Zuffa. The acquisitions eliminated any potential remaining competition. Zuffa became the “major league” for MMA events and reduced other promoters to “minor leagues.”
Quick reminder that having monopoly or monopsony power is not illegal by itself, but acquiring it and maintaining it through anticompetitive practices is. The Plaintiffs allegation is that Zuffa did the latter.
$1.6 Billion with a "B"
What quickly caught my attention was the size of the damage estimates by the Plaintiffs' experts. Prof. Andrew Zimbalist came up with a sum of $981 million for the period December 16, 2010 through December 31, 2016, while Dr. Hal Singer came up with an estimate of $811 million at the low end and $1.6 billion at the high end during the period of December 16, 2010 to June 30, 2017, which would place 1,214 Fighters into the affected Bout Class. A third expert for the Plaintiffs, Guy Davis, didn't work on an estimate for damages but instead on how much more Zuffa could have compensated their fighters without impacting their financial obligations. His hypothetical concluded that they could have paid an additional $706 million from December 16, 2010 until the end of 2016 without additional borrowing or equity raises.
Zuffa is obviously contesting these estimates, claiming they are derived from poor models (or even "junk science" in the case of Zimbalist) or irrelevant.
Read the rest at the link at the beginning of the article....
UFC Lawsuit: Expert for Plaintiffs sets damages at up to $1.6 billion
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