Explained: why the UFC is set to pay $260m to fighters after a decade-long lawsuit

Nearly a decade after filing a federal antitrust lawsuit against the Ultimate Fighting Championship, nearly 2,000 former and current professional mixed martial artists are expected to start receiving payments from a $260 million pool starting next June.

Federal Judge Richard F. Boulware on Tuesday granted preliminary approval to a negotiated settlement between the two sides. Once finalized, the $375 million agreement would end proceedings in Le, et al v. Zuffa LLC, one of two classes Boulware certified last year, covering UFC fighters from late 2010 to the present. The other, Johnson, et al. v. Zuffa LLC, represents fighter interests as of July 2017 and is still ongoing.

The fighters’ co-lead counsel, who is expected to receive nearly a third of the Le settlement in fees and expenses pending Boulware’s approval, will have the opportunity to collect more than a hefty sum in Johnson, as there are 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 premier mixed martial arts promotion, with 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 brought the UFC and the sport of MMA from the shadows to the global mainstream.

After acquiring the struggling company for $2 million from its original owners, Fertitta-owned Semaphore Entertainment Group, Zuffa LLC, led 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 $4.2 billion deal. Under publicly traded TKO Group Holdings, the UFC lives alongside the WWE and is valued at more than $12 billion.

Why was the UFC sued in a class action federal antitrust lawsuit?

On its way to becoming a politically and culturally significant enterprise, the UFC proudly outlasted countless would-be rivals, often taking their assets, namely valuable fight contracts. Many UFC stars from the past 20 years joined the company as a result of another promoter’s misfortune.

This consolidation gave Zuffa enormous influence in the MMA labor market. For most people who watch the sport, the only way a fighter can be considered a “world champion” is by holding a UFC belt, which means that only fighters who have signed a promotional contract with White’s company can compete in qualify.

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. Prosecutors say Zuffa schemed to tie the fighters to restrictive long-term contracts while limiting the revenue paid to the athletes, effectively suppressing wages.

Fighters represented in the lawsuit – 1,952, all told – claim Zuffa accomplished this by eliminating buy-side options, absorbing and shutting down the competition, while giving no more than 20% of UFC revenues to the athletes paid – a significantly lower wage share than those found in major professional sports in the US (in the NFL for example, players receive approximately half of league revenues).

Combining restrictive contracts and business tactics that limited fighters’ mobility in the marketplace (technically they are independent contractors but tied exclusively to the UFC), the labor side amounted to an industry dominated by a single buyer, leaving the UFC became a ‘monopsony’. in violation of Section 2 of the Sherman Antitrust Act.

Why did the UFC pay fighters $375 million?

In his 80-page order granting the fighters class status in 2023, Boulware wrote that the plaintiffs had established that they had “suffered economic harm as a result of Defendant’s anticompetitive conduct.”

Throughout the litigation process, at hearings and in the language of the settlement document, UFC attorneys echoed White in disputing the idea that the company had done anything wrong. Nevertheless, Boulware denied a motion to dismiss the case and allowed it to stand for summary judgment. Before the decade-long lawsuit was originally scheduled for a jury trial in April 2024, a settlement agreement was reached through a mediator.

The UFC’s lawyers argue that they are not liable for the claims and that they would have a good defense before a jury. They said they had agreed to a settlement, in part, to avoid “further expense, inconvenience and the distraction of protracted litigation.”

The global settlement in July would have given the fighters $335 million and resolved both the Le and Johnson lawsuits.

For the UFC, the tax-deductible settlement payments carried significantly less risk than a jury trial, with a guilty verdict in Le having the potential of $811 million to $1.6 billion in damages, which could then also have been tripled in court.

But in mid-July, Judge Boulware dithered and denied preliminary approval, saying he wanted to see “life-changing money.” He described the payout, split 90/10 between the two cases, as insufficient and stated that the interests between the two classes were in fact in conflict.

While Le was solely about damages, Johnson has the potential for interim measures, namely concrete changes to contracts and the UFC business model.

What made fighters from 2010 to 2017 settle instead of taking their case to a jury?

Based on 158 filings with the court as part of the revised settlement agreement, the payouts cannot come soon enough for many fighters who are among the more than 1,000 members of the Le class.

Boulware said the sheer number of depositions was unlike anything he had seen in hundreds of antitrust cases he previously chaired, calling the heartbreaking depositions a “pretty significant” factor in his decision.

If the trial, which was scheduled for February 2025, were to continue, it would have created an all-or-nothing situation for the athletes. Even the win could have led to lengthy calls from 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 paid by the UFC to its entire roster of fighters during the class period ($375 million of $538 million), and more than 40% of the estimated damages, as per the plaintiff’s attorneys noticed. is better than any other employee-side monopsonization case in the history of class action jurisprudence in this country.”

A formula that calculates the total compensation paid to a fighter by the UFC plus the number of fights a fighter has played determines the individual payouts, which amount to about 30% of what each fighter earned during the class period. Payments to fighters will vary. Thirty-five are in line to earn more than $1 million. Five hundred will receive more than $100,000. Nearly 800 people can expect to receive more than $50,000.

Meanwhile, members of the Johnson class, which includes hundreds of fighters covered by the Le settlement, can still seek additional damages and, crucially, injunctive relief as the case progresses.

Why did it take almost a decade for a trial date to be set?

Pursuing an antitrust class action lawsuit was always going to take time. When pitched by lawyers in 2013, the fighters were told an estimated five to six years. No one could have foreseen the pandemic. They could not have known that before Bouleware could make an important statement Le v Zuffa LLCBarack Obama’s appointee would have to wait while another tuna price-fixing case went through an appeals court.

Will the settlement affect UFC’s business practices?

No. Anyone hoping for hard and fast changes to the UFC’s single-entity contract and business model will have to wait for an outcome in the Johnson case, which is still early in the discovery phase and still years away from a solution.

A preliminary injunction – the court’s discretion to limit or require certain remedies to prohibit the type of restrictive conduct of which the fighters alleged the UFC was guilty – went out the window in Le due to delays and the addition of the Johnson case. When Boulware denied the earlier settlement, he made a point of saying that the two classes had different interests and should be separated from each other. A new class counsel has been added to the case to address the judge’s concerns.

Is all this legally significant?

The The initial settlement included minor changes to the contracts, but that “prospective relief” left much to be desired. These issues are on the table with Johnson, although many fighters in that class became parties to class action waivers when they signed contracts with the UFC.

Following a 2018 U.S. Supreme Court ruling that found such waivers constitutional, more than half of fighters in that class have included these clauses in their contracts.

Boulware seemed eager to have these clauses challenged by the plaintiffs, and Johnson’s action could take the issue to an appeals court.

Professor Eric Posner of the University of Chicago Law School wrote in support of the fighters, noting that Le “is the first [labor-side claim under Section 2 of the Sherman Act] to ever survive summary judgment, achieve class certification, or even survive a motion to dismiss,” therefore the “plaintiffs have secured important legal opinions that will assist litigants and future courts in assessing Section 2 [Sherman Act] antitrust employment law cases.”

Counsel for the fighters said the case and settlement are “remarkable, groundbreaking achievements” compared to other cases. While the monetary awards in the Le settlement should prove meaningful, the potential for structural changes in the UFC business as a result of the Johnson action could go a long way in determining whether that’s true or not.