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FTC INVESTIGATION OF UFC IS NO RUMOR

Posted on | June 14, 2011 | 10 Comments

By: Rich Bergeron

 

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The three letters that changed the mixed martial arts landscape and put the sport on the map in the first place are U-F-C. Not only do those three letters stand for Ultimate Fighting Championships, but they also have been used by many fans to represent and encompass the entire sport of MMA. All too often I’ve heard even small-scale local shows that have no affiliation with the UFC referred to by patrons as “UFC fighting.” Across the world MMA is also known as “Ultimate Fighting.”

These realities were present long before the parent company of the UFC purchased the outfit’s most powerful competitors, yet it seems that Zuffa’s always been intently focused on maintaining and improving their top-dog status in the world of Mixed Martial Arts. Over the years this juggernaut has grown from an obscure, barbaric, and controversial outfit into a widely accepted and heralded business model working on gaining world MMA domination by any means necessary.

No pinnacle Zuffa reaches ever seems to be enough, and the initial $2 million investment in the company by Frank Fertitta III and his brother Lorenzo Fertitta has since been paid back more than 1,000 times over. Three little letters started it all, though they were three letters the Fertittas and their friend Dana White never actually created themselves. The UFC actually started as someone else’s vision, someone who didn’t have the friends or partners with the tens of millions of dollars it would take to turn the fledgling, struggling sport into a ruthless, all-powerful business.

Three other letters are now looming large to threaten the UFC’s complete supremacy and question how the Zuffa banner came to corner the entire market. Those letters are FTC, and they stand for Federal Trade Commission. There have been some articles and blog posts in recent days speculating on supposed “rumors” of an FTC investigation regarding potential anti-trust violations and monopoly concerns that could target the UFC’s parent company Zuffa, LLC. Let’s put the rumors to rest right now and stop the speculation once and for all.

The Federal Trade Commission has plenty to be concerned about regarding Zuffa’s business practices. Sources I speak to regularly confirmed to me last week that the FTC already started an intense investigation into Zuffa and will likely come up with sufficient evidence to file a complaint. Even though it seems that it’s mainly boxing industry insiders being blamed for dumping on the UFC’s parade, Dana White’s openly complained that some of his loudest pugilism-oriented critics are simply copycats and “cry-babies:”

Ariel Helwani, the masterful interviewer who may well be the most recognized MMA reporter on the planet, also broke the story regarding the Zuffa buyout of Strikeforce. During the exclusive one-on-one session with Dana White that helped the UFC explain the Strikeforce purchase, Helwani managed to get White to say the words “business as usual” a total of ten times. This all seemed like Deja Vu to many of the MMA media members who are not on Dana White’s top ten list of go to guys he calls to get the word out on a big development.

White’s hollow Strikeforce promises sounded strikingly similar to what he said would happen when Zuffa purchased PRIDE from that ciruit’s Japanese owners. Instead of holding “Superbowl” events featuring UFC fighters facing PRIDE vets, Zuffa wound up dissolving PRIDE amid a torrent of controversy and legal wrangling. The really dedicated MMA journalists out there like Zach Arnold of Fightopinion.com are not out to please the Zuffa brass enough to get exclusive access. They simply want to educate the fan base and keep them in the loop about what’s actually happening behind the scenes rather than simply spouting what White and the Fertitta brothers may want you to hear.

Notice how Dana White would not answer Helwani’s question about the government’s interest in Zuffa’s business practices. Helwani, to his credit, made sure White addressed the question but didn’t go far enough to press him for a yes or no about whether White’s been approached by anyone in the government. Whether Dana’s been given the third degree by investigators or not, the fact is the FTC has a long list of potential avenues to travel down in their investigation. Officials from that agency are already interviewing key witnesses to contract issues and other antitrust and monopoly concerns that continue to play second fiddle to the burgeoning debate about New York state’s refusal to regulate mixed martial arts.

My own piece of the pie relating to Xyience shows beyond any reasonable doubt that Zuffa’s principals have been using Xyience sponsorships and the intimate relationship with their sponsor to perpetrate insider dealing. The Xyience stable of UFC fighters is expanding rapidly, and since Fertitta Enterprises is the actual owner of Xyience at this point the company policy actually forbids sponsorship of any other league or sport. Though the company is still embroiled in an ongoing bankruptcy litigation steaming toward a trial date later this year, some of the UFC’s top level fighters sport the Xyience brand proudly and seem to get preferential treatment for doing so. Meanwhile, a bevy of fighters sponsored by Xyience prior to the bankruptcy are conspicuously absent from the current company roster of marquee fighters. Misrepresenting the strength of Xyience is also an issue at the heart of a senior secured credit facility that allowed the UFC to borrow the money to acquire PRIDE in the first place.

There are multiple reasons for the FTC to look into Zuffa’s conflicts of interest regarding the Fertittas’ ownership of Xyience. At the same time this intriguing sponsorship push by the reorganized Xyience is taking place, other sponsors have been locked out of the UFC cage for one reason or another. If certain fighters are perhaps being forced to enter into sponsorship agreements to gain special treatment from Zuffa brass or forced to drop other sponsors that compete with preferred sponsors like Xyience, the FTC and the Justice Department should take a close look at this unhealthy scenario. It’s called “tortious interference” when a business inserts itself into a contract unfairly and/or exerts undue influence to make or break a contract.  Looking back through the UFC’s history it’s not hard to find multiple examples where fighters were forced into making certain agreements to appease the bosses. One example is Dana White’s ultimatum to the UFC organization’s fighters forcing them to sign over lifetime rights to their likenesses to a video game manufacturer or be fired. If that isn’t textbook tortious interference, I don’t know what is.

The UFC did not gain top-dog MMA league status through acquisition alone. They also sold a slice of the business to an Abu Dhabi entity that has endless financial resources. Additionally, the Zuffa brass employs an army of lawyers in numerous venues who seem to be retained in order to sue competitors for even the slightest appearance of impropriety. Few brave souls who sued on their own or counter-sued have been able to gain much ground filing suit against Zuffa, though, especially in light of the Fertitta family’s influence on the Nevada judiciary and political landscape.

The Fertitta family and their Station Casinos chain provides regular political campaign donations, and Nevada is a state where many judges are elected to office rather than appointed. The Nevada wheels are thoroughly greased in favor of the UFC due to the Fertitta connection and their generosity to the campaigns of judges, including the first judge to oversee my own case brought by Xyience. Judge Timothy C. Williams was endorsed for the bench by Station Casinos, which also helped distribute election pamphlets on his behalf. It’s no surprise Judge Williams was recently over-ruled by an appeals court in another case which had the potential to damage a Station Casinos entity. Not even Mark Cuban’s money could stop Nevada from favoring the Fertittas in the case of Randy Couture’s contract dispute that Cuban attempted to assist with. Cuban’s now a bondholder on the UFC’s Senior Secured Credit Facility that paid for the PRIDE purchase and provided huge dividends for Dana White and the Fertitta Brothers.

Initial reports regarding the FTC’s potential to come after the UFC seem to focus exclusively on antitrust and monopoly concerns stemming from the Strikeforce purchase. The reality is there are countless bigger picture issues, and the FTC and Justice Department won’t hesitate to explore the possibility of filing a major, comprehensive complaint that considers various charges that go far beyond the Strikeforce deal. Some witnesses are being interviewed for hours at a time by a panel of investigators and interrogators who want to know the whole story behind Zuffa’s operations, and that tells me these government employees are serious and committed to going full circle on this effort. They won’t simply stop at inquiring about the issues currently being aired in the “lamestream” MMA media. Consider the FTC’s stated powers by law:

The Commission may” prosecute any inquiry necessary to its duties in any part of the United States” (FTC Act Sec. 3, 15 U.S.C. Sec. 43) and may”gather and compile information concerning, and to investigate from time to time the organization, business, conduct, practices, and management of any person, partnership, or corporation engaged in or whose business affects commerce, excepting banks, savings and loan institutions * * * Federal credit unions * * * and common carriers * * *.” (FTC Act Sec. 6(a), 15 U.S.C. Sec. 46(a)).

Odds are there will be plenty of dirt to dig up through talking to the people who know where all of Zuffa’s bodies are buried. Though the FTC will likely never publicly admit they’re taking a hard look at Zuffa before a complaint drops, it can’t be a coincidence that so-called “rumors” are being spread about their curiosity. Where there is smoke there is fire, and if the FTC goes after Zuffa with all of their resources it will only be a matter of time before the resulting inferno burns Dana White’s bald head and the rest of the company brass. For once they might be in a situation where their political campaign donations and lobbying efforts won’t help in the long run. For once their opponent across the courtroom won’t have less money to spend pressing their case. Whether it becomes a civil case or a criminal one–or both–remains to be seen, but a case will most surely materialize in due time.

The only problem seems to be that whatever happens as the saga unfolds, it seems exceedingly impossible to conceive a scenario in which any complaint will result in any actual accountability shown by the Zuffa powers that be. Perhaps the company will pay a hefty fine or a select few high-level co-conspirators will get into a bind with potential criminal charges, but slick lawyers with huge retainers will make sure  to save the day either way. Whatever changes might be mandated due to the crackdown will likely make minimal difference since so much of the damage has already been done. Only in a perfect world will we see any public congressional hearings or any corporate crooks in silver bracelets.

What’s far more likely is fighters will continue to be screwed by Zuffa management into conceding better benefits and pay days in order to stay under the UFC/Strikeforce banner. Rather than rely on fair compensation from the league, these cage warriors will continue to rely on sponsorships for day to day expenses for training and costs of living. Many of those sponsors will also continue to be forced to jump through hoops and pay out of deep pockets to be in a position to even approach and deal with Zuffa’s stable of combatants. Dana White will go right on calling his critics “idiots” and be seen as an everyman who speaks his mind and tells it like it is. He’ll keep denouncing unions and making moves to prevent his fighters from ever considering creating their own union, which they may need now more than ever. But…the real journalists who come from the kind of background that only leads to blacklisting for truth-telling will always know the real story too many others are afraid to tell for fear of losing access. That tale casts Dana White and his cronies in a light that makes Don King look like a saint.

 

I, for one, hope the FTC proves me wrong.

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10 Responses to “FTC INVESTIGATION OF UFC IS NO RUMOR”

  1. Robert Ford
    June 14th, 2011 @ 6:15 pm

    Right, exactly what I want my government to be spending time and money on right now: trying to find fault with a professional sports league that generates piles of revenue for business in and around the cities in which it promotes. Thanks.

    And I guess the best way to not be part of the “lamestream” MMA media is to have sweet animated gifs of punching and AdultFriendFinder ads? Should I click on “Cougar” or “Tits”?

  2. rich.bergeron
    June 14th, 2011 @ 6:23 pm

    Point taken, Mr. Ford. I would re-design my site, but I do this for the love of the game and can’t afford a better designer than myself.

  3. Robert Ford
    June 14th, 2011 @ 8:24 pm

    In hindsight I feel a little dickish, so I do apologize for coming off as I did. I stick by my comments as far as the issue of the article is concerned, but the stuff about the site design was out of line.

  4. Longtime Fan ; Team Takeover
    June 14th, 2011 @ 10:11 pm

    @ Robert
    Youre right , you were TOTALLY being DICKISH and ignorant as well.

    1) Don’t you realize that if found guilty , zuffa wouldn’t have been building the ufc into a profesional sport , just monopolizing their brand/company through tortious interference , hostile financial takeovers , security credit fraud , media bribery , betting odds scandal and racketeering. There is nothing profesional about that , if that were the case, zuffa would just be profesional criminals.

    2) You said “my government” as to imply they are yours and out to do a service for it’s people. What world do you live in ? what would you rather they spend their time doing? Further instating laws that take away our freedoms like the patriot act? Carry out false flag operations on it’s own land , killing it’s own people like 9/11 ? Or continue to hold back vital existential information about our past , present and future by occulting crashed UFO landings in Roswell , New Mexico?

    You seem a little too festicious complaining about mainstream ads on this site , you’ve been probably programmed beyond “mk ultra brainwashed levels” to realize that you are the type those are intended for.

    Get better sources . Go read.

  5. rich.bergeron
    June 14th, 2011 @ 10:58 pm

    There is no argument as far as the UFC helping to open a lot of doors for the sport and doing some great things for its development. The problem is they’ve been far too ruthless and pompous in pushing their agenda to pad their bottom line. The idea that an FTC investigation is out to get good people who’ve done nothing wrong is simply foolish. The argument that an FTC investigation means the UFC won’t continue to make “piles of revenue” that in turn benefits other people and businesses is also absurd. My whole conclusion is that any investigation will most likely result in a slap on the wrist as far as punishment. Even if the punishment happens to be severe by some miraculous twist of fate, the UFC will weather the storm. The league as a whole will become even stronger as a result of any changes implemented to appease the FTC. So, while the government might be better suited to go after more concrete examples of corruption that affect a wider array of U.S. citizens, that doesn’t mean their work won’t force the UFC to change for the better.

  6. Anthony
    June 15th, 2011 @ 2:06 am

    The funniest part was where you refer to Helwani as ‘masterful’. I can think of better adjectives for this sycophantic one trick pony. The reason he got the Strikeforce scoop is clearly because he’s on the Zuffa payroll now and that’s also why he never presses white or asks White any real journalistic questions but instead congratulates him in said interview!

  7. rich.bergeron
    June 15th, 2011 @ 12:19 pm

    I said he was a masterful interviewer. I didn’t conclude that he’s much of a journalist, though. On that point I agree with you.

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  10. Marquee Letters
    December 22nd, 2011 @ 7:24 pm

    Hey There Unlimitedfightnews,
    Interesting Post, The check came back with several people in another state using his social. They were checking to see if there were any illegals working under fake socials (my husband was born in US). She said that she did the check because there was a ‘red flag’ next to his name (on a list, I guess). He asked for a copy of the list of names that were being used with his social to give to the FTC and to police for their investigation. She said that she could not give it to him as it was private information? Wouldn’t that be HIS private information? He thinks that she may be lying about the other people using his social and that’s why she won’t give him the names, because there aren’t any! She was caught looking him up by another manager (my husband is a manager too) who asked her WHY she was looking up his manager and she said because of the ‘red flag’ by his name. Wouldn’t they be obligated to give the names? What if there were no ‘red flag’, would that be illegal? If she is lying, what can we do?
    Keep up the posts!

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