Are UFC's Practices Anti-Competitive?

[PabloZed]

The UFC is currently offering Bellator's Eddie Alvarez a deal that would make him the highest paid in the division. Previously, the UFC signed Hector Lombard, whose Bellator contract had expired, to a deal that paid him $700,000 + for his first fight, a disappointing loss. He has since rebounded. Bellator's Rebney said that Bellator could not afford to match the Lombard offer, but seems to be trying to match the UFC's offer to Alvarez. It is difficult to imagine them succeeding.

Lombard and Alvarez are both exciting and highly ranked fighters, but I do not believe either is an actual contender. The only way to measure their worth is not by what the UFC is willing to pay them, but by what the UFC pays its own fighters. If Alvarez is worth what the current offer is alleged to be, it is difficult to argue that the current top 2 or 3 UFC fighters deserve less. Put another way, is Alvarez worth more to the UFC than its current champion in the division?

There is, unfortunately, another possible explanation, which is that the bid for Alvarez and the one for Lombard are attempts to monopolize the sport. Instead of fighting over Alvarez's contract, Rebney should hire an anti-trust attorney. The UFC's practices have been anti-competitive for awhile now. To pre-empt the obvious question, the anti-trust claim would be for predatory bidding. A predatory bidding claim alleges that the predator (UFC) overpaid for talent and caused prices to rise to drive Bellator out of business. Once Bellator (remember Strikeforce is already basically gone) is out of business, the UFC can reap monopoly profits and pay fighters what it wants, making up for what it overpaid earlier.

This is a very difficult claim to prove, particularly when the other possible claimant, Strikeforce, is in the UFC fold. But that might actually work in Bellator's favor because it shows UFC's intent. But it all comes down to whether the UFC is intentionally overpaying Bellator fighters. If I were on the jury, I would vote yes.

 

[kmasonbx]

Don't understand why you would want some of the best fighters in the world fighting in other orgs against much weaker opposition than in the UFC.

Your argument is no different than the argument that can be made against the NBA, NFL, or MLB. These are sporting organizations and it's responsibility is to offer the best product to it's fans and sponsors. It is not like a company where if it were the only game in town it would have no need to go all out to offer the best products it possibly could. Simpy by having the best athletes, the UFC like the other pro sports organizations is giving the public the best possible product.

 

[eiyuu]

Well for one thing, the UFC was already investigated by the Gov't for anti-trust violations (it started right after the Strikeforce aquisition.) The Feds ended their investigation a year or two ago with no charges brought up against the UFC.

In the case of Alvarez, the UFC made their offer, Bellator matched, but it's Alvarez who is not complying with the contract. So Bellator is suing him.

I don't see what the UFC did wrong here.

 

[BeendsnoShaddal]

I would call this trying to make your organization the best it can be. Also, if a business isn't acting anti competitive they're doing it wrong.

 

[johnsq316]

And you would be wrong on the subject, but that's the most intelligent post I've seen on the subject by far.

Zuffa would argue (successfully, in my view) that they are willing to pay Alvarez more precisely because he is a free agent. The situation being roughly analogous to what happens every year in NFL free agency when some decent but not all-pro WR gets a bigger contract than the best in the game. He's the guy that's on the market right now, so he's going to get the next biggest contract.

While people are complaining on behalf of Bendo, once Bendo talks to his agent he will be thrilled. Alvarez's contract offer will be the floor for what Benson Henderson asks for when his deal comes up.

It isn't considered anti-competitive (legally) to offer large contracts to snap up other companies talent - that's the way the free market for salaries works. If you're doing a great job for your advertising agency a competitive agency might offer you a huge salary, more than they are paying people in comparable positions currently in their employ, to entice you to switch companies. That is as legal for Zuffa as it is for anyone else.

 

[PabloZed]

Don't understand why you would want some of the best fighters in the world fighting in other orgs against much weaker opposition than in the UFC.

Your argument is no different than the argument that can be made against the NBA, NFL, or MLB. These are sporting organizations and it's responsibility is to offer the best product to it's fans and sponsors. It is not like a company where if it were the only game in town it would have no need to go all out to offer the best products it possibly could. Simpy by having the best athletes, the UFC like the other pro sports organizations is giving the public the best possible product.

Your argument is tautological because you claim the other orgs are weaker, but they are weaker because they are losing their best fighters.

The UFC is not the NBA much less the NFL.

 

[Heat13]

I don't think the UFC thinks Alvarez is worth more than Bendo, it's just a matter of getting even more talent so like what other people are saying the UFC is trying to be the best.

 

[random nerd]

I don't think the UFC thinks Alvarez is worth more than Bendo, it's just a matter of getting even more talent so like what other people are saying the UFC is trying to be the best.

alvarez might be worth more than Bendo if getting him means Bellator closes its doors in a year or two.

 

[Non]

Well for one thing, the UFC was already investigated by the Gov't for anti-trust violations (it started right after the Strikeforce aquisition.) The Feds ended their investigation a year or two ago with no charges brought up against the UFC.

In the case of Alvarez, the UFC made their offer, Bellator matched, but it's Alvarez who is not complying with the contract. So Bellator is suing him.

I don't see what the UFC did wrong here.

Apparently the simple act of making offers to free agents is monopolizing.

 

[clayj]

Instead of fighting over Alvarez's contract, Rebney should hire an anti-trust attorney.

I think Bellator might want to avoid anything having to do with that considering how much scrutiny their contracts have been getting for their high-level of anti-competitiveness and general shadiness

 

[Mikedh]

alvarez might be worth more than Bendo if getting him means Bellator closes its doors in a year or two.

That is a bit dramatic. Eddie fought twice in 2012 for Bellator, one fight against Aoki, which was on of their lowest rated and once more against Patricio Pitbull that did alright by their standards.

 

[slavomir]

Be happy for anyone at LW if Eddie will be signed. All fighters who will renegotiate their contract will have more leverage and prolly will get more money then Eddie if they are above him in rankings.

 

[PabloZed]

And you would be wrong on the subject, but that's the most intelligent post I've seen on the subject by far.

Zuffa would argue (successfully, in my view) that they are willing to pay Alvarez more precisely because he is a free agent. The situation being roughly analogous to what happens every year in NFL free agency when some decent but not all-pro WR gets a bigger contract than the best in the game. He's the guy that's on the market right now, so he's going to get the next biggest contract.

While people are complaining on behalf of Bendo, once Bendo talks to his agent he will be thrilled. Alvarez's contract offer will be the floor for what Benson Henderson asks for when his deal comes up.

It isn't considered anti-competitive (legally) to offer large contracts to snap up other companies talent - that's the way the free market for salaries works. If you're doing a great job for your advertising agency a competitive agency might offer you a huge salary, more than they are paying people in comparable positions currently in their employ, to entice you to switch companies. That is as legal for Zuffa as it is for anyone else.

Thanks for the compliment. And I am probably wrong because as I say, it is a hard claim to prove.

The comparison to a profession like advertising or banking does not work because the talent pool is so much greater. There may be a real hot shot that everyone bids on, and someone may overpay. But no one is going out of business because they are being outbid for talent. There are just too many lawyers, bankers, etc. The market generally sets the price for their talents. With these fighters, the market is very small. There are two orgs bidding for his talent and I suspect neither believes he is worth what they are offering. Bellator is overbidding because it wants to keep a marquee name and frankly UFC is overbidding because they want to take another big name from Bellator. That is anti-competitive.

 

[johnsq316]

I would call this trying to make your organization the best it can be. Also, if a business isn't acting anti competitive they're doing it wrong.

There is a legal difference between technical "anti-competitive" or monopolistic practices and simply attempting to beat the competition out of business.

What Zuffa does isn't any more "anti-competitive" than what the NFL, NBA, etc do on a regular basis.

 

[karatefish]

Don't understand why you would want some of the best fighters in the world fighting in other orgs against much weaker opposition than in the UFC.

Your argument is no different than the argument that can be made against the NBA, NFL, or MLB. These are sporting organizations and it's responsibility is to offer the best product to it's fans and sponsors. It is not like a company where if it were the only game in town it would have no need to go all out to offer the best products it possibly could. Simpy by having the best athletes, the UFC like the other pro sports organizations is giving the public the best possible product.

I'm not entirely familiar with the NBA, NFL business models but surely it's the teams, which are run as individual companies, who pay for the players not the sport org?

In England we have Football (Soccer) teams who pay over-inflated prices and wages for players which does effectively price smaller teams out of the market. This has been looked at by the governing bodies (UEFA & FIFA) who have introduced a Financial Fair Play system, though I don't see how this would work in the MMA game.

 

[Mad Jitsu]

The UFC competes not only with Bellator but also with Boxing, Kickboxing, the NBA, NFL, MLB, NHL, Concerts, the Olympics, Movies, ect. It's the entertainment business, and no one has a monopoly.

 

[CorkscrewPunch]

Obviously this whole mess could have been avoided if Eddie was a member of the Culinary Union Local 226.

 

[Berdugo***]

Apparently the simple act of making offers to free agents is monopolizing.

...and like another poster said. The Govt has been there, done that and found nothing.

 

[kmasonbx]

I'm not entirely familiar with the NBA, NFL business models but surely it's the teams, which are run as individual companies, who pay for the players not the sport org?

In England we have Football (Soccer) teams who pay over-inflated prices and wages for players which does effectively price smaller teams out of the market. This has been looked at by the governing bodies (UEFA & FIFA) who have introduced a Financial Fair Play system, though I don't see how this would work in the MMA game.

There have been rival organizations that have tried to start up but were all eventually crushed by the NBA and NFL, remember the ABA, AFL, XFL, CFL (which is still active)? These organizations are similar to the WECs, Bellators, Strikeforces, and Prides of the world. They are all promising, have some stars but eventually just don't have the name value and/or backing to compete with the big dog on the block. Thus the fans win because we get a higher quality product.

Saying the UFC is violating anti-trust laws simply because they can offer the best talent the most money simply isn't accurate, and is not in the spirit of those laws.

 

[johnsq316]

Thanks for the compliment. And I am probably wrong because as I say, it is a hard claim to prove.

The comparison to a profession like advertising or banking does not work because the talent pool is so much greater. There may be a real hot shot that everyone bids on, and someone may overpay. But no one is going out of business because they are being outbid for talent. There are just too many lawyers, bankers, etc. The market generally sets the price for their talents. With these fighters, the market is very small. There are two orgs bidding for his talent and I suspect neither believes he is worth what they are offering. Bellator is overbidding because it wants to keep a marquee name and frankly UFC is overbidding because they want to take another big name from Bellator. That is anti-competitive.

The size of the talent pool does not prove anti-competitive (in a legal sense) practices. There is a similarly small talent pool for football players (relative to the number of players required to field a team/fill a fight card). Many NFL players are also drafted by the CFL. The NFL "out-bids" the CFL team for the player 99.9999999% of the time. This is not, in and of itself, anti-competitive. It's simply a fact of the relative bankrolls of the two leagues.

In order to prove an anti-competitive claim Bellator would have to be able to prove that the signing of Eddie Alvarez had nothing to do with his in cage talent and was intentionally designed to cripple Bellator. That's a tough claim to prove on a number of levels. They would have to prove that there was intent, which could be proved through discovery if they got their hands on an e-mail from Lorenzo to Dana saying as much. They would have to prove that the loss of Eddie Alvarez would demonstrably cripple their business, which would also be hard - they've thrived without him and have a new TV deal.