One of the biggest potential threats to the UFC’s dominance in mixed martial arts hasn’t been from an actual competitor, but from a couple of recently-combined antitrust lawsuits over fighter pay. That’s now gone away, but at a hefty cost. Kevin Draper of The New York Times reported Wednesday that UFC parent TKO Holdings indicated in a SEC filing they’ve settled those lawsuits (which included more than 1,200 fighters) for $335 million:
https://twitter.com/kevinmdraper/status/1770479808897483101
Here’s more on the settlement and the trials it avoids from Winston Cho of The Hollywood Reporter:
“We are pleased to have reached an agreement to settle all claims asserted in both the Le and Johnson class action lawsuits, bringing litigation to a close and benefiting all parties,” said a UFC spokesperson in a statement. “The final terms of the settlement will be submitted to the court for approval.”
A trial expected to last four weeks was scheduled to start on April 15, with damages pegged at roughly $1.6 billion. At the center of the case was allegations that UFC used longterm, exclusive contracts to substantially delay, or in some cases, totally prevent free-agency; coerced fighters into re-signing deals; and acquired or closed down multiple competing MMA promoters in violation of antitrust laws.
As a result of the alleged scheme, the class action argued UFC wields “monopsony power” — a dynamic in which a single buyer owns a monopoly, allowing it to purchase labor under market value. A pivotal ruling in favor of fighters came down last year when the court certified a class of 1,214 fighters who competed in bouts from 2010 to 2017, though a separate class of plaintiffs whose identities were allegedly exploited by the Dana White-led outfit weren’t allowed to proceed.
As Cho notes too, this comes after WWE (also owned by TKO) settled an antitrust lawsuit from Major League Wrestling in December. However, that settlement was for just $20 million.
Pricey settlements shortly before trial are not uncommon in class-action litigation. In sports alone, one of the most notable cases came from the NFL’s settlement of concussion litigation from former players (finalized in 2015, although questions about its implementation remain), but there have been many other examples. For leagues and organizations, settlements have the appeal of at least some level of cost certainty (whether absolute, as in this case, or at a certain level per claimant, as in the NFL case), and they avoid the risk of being found liable at a much higher price tag. Meanwhile, for plaintiffs, settlements get them at least something, and avoid the risk of a trial loss or a Pyrrhic victory like the original USFL’s $3.76 in damages from the NFL.
It’s interesting to see this approach taken from TKO and the UFC, though. UFC founder/CEO/president Dana White in particular has long insisted the organization has done nothing wrong with fighter pay, and has vowed to fight this lawsuit at every step. Of course, settlements are often billed as not including an admission of liability, and it is sometimes cheaper and more beneficial to pay to settle even a claim you feel confident against. But that’s not necessarily a move to expect from the UFC, and it’s significant to see them do that.
