The Plot Thickens with the UFC, the Culinary Union, and the Federal Trade Commission

One of the UFC's biggest fights is not between its fighters, but in New York where Zuffa continues to push for the legalization of MMA. For fans, it's an easy sell. The idea of two UFC fighters squaring off at the iconic Madison Square Garden feels like the cultural footprint the sport needs to find respect. A way to establish its own history in a historical setting.

But more than just selling the idea to fans, the UFC is selling the idea to the state of New York. With new jobs, state benefits, and ticket sales, the UFC expects to bring in 23 million annually for the state of New York with five million alone expected from a single event at the Garden (Bob Reilly has attacked these numbers, explaining that the money going into the state is not "long term"). In addition, legalization would pave the way for the additional economic impact of MMA not under the Zuffa umbrella: beyond simply the events, we're talking the addition of quality gyms as well (numbers taken here). But despite all this, New York hasn't budged. 

A lot of factors are at play. The most easily recognizable is Bob Reilly. But Bob Reilly is the strawman of the debate: with his provocative, and frankly idiotic perception of MMA (which he's compared to prostitution), he's an easy target for fans to point at, quote, and mock. Although not to downplay his significance, as the 2008 rumors were that Reilly killed the bill almost by his lonesome. But this misses the broader picture. Other factors include New York's budget, which is on a deficit (the state spends nearly 40% of its budget on health care, and with health care costs rising, it's not an issue that can be easily cast aside), but the most prominent factor has been the Culinary Union: a subset of UNITE HERE, bound by hotel and restaurant workers, and who have had a long standing battle with Station Casinos (owned by the Ferttitas). 

The Culinary Union has sought to unionize Station Casinos for awhile, and the Fertittas haven't been kind to the idea. The story of the Culinary Union is an old one, but one that saw little attention given to it when Robert Joyner first broke the story in 2008. Dana White has been vocal in selling people the idea that "its all the union's fault" when it comes to what has kept MMA out of New York.

But as Stephen Koepfer (founder for the Coalition to Legalize MMA in New York, and was cool enough to respond to nottheface's fanpost at Bloody Elbow) points out, unions are not the issue in the way Dana argues they are: "I am not a fan of Reilly, but on the union issue he is spot on. It is not an issue here in NY. To those who think it is the unions I ask: where were they in all the other states in which MMA has been legalized during the last 10 years? If you look at all the states that have legalized MMA since 2006 for example (the last year Unite Here donated to Reilly), all have Unite Here locals, in those states there was no resistance from the Unions. Why NY all of a suffen? Because it is Zuffa spin designed to attack their foes on another front."

The war has mostly been waged between the union and the casinos, but now that blood is being shed on the UFC battlefield. Early last month, the Union sent a formal request to have the UFC investigated by the Federal Trade Commission on the grounds of violating antitrust law.

The lack of anything like the Muhammad Ali Act is a concern. For example, much has been made on the issue of fighter pay when it comes to the discrepancy between MMA fighters, and boxers. While it remains an issue, the UFC has since made progress with the introduction of fighter insurance. Not to mention, the UFC does not enjoy boxing's luxuries: in boxing expenses are split between producer and promoter. So not only does Zuffa have to play the roles of HBO and Golden Boy Promotions (for example), but venues don't compete against one another to sponsor fights.

Their respective economic models are drastically different, but that's not to say the Union's criticisms are without merit. Dana White can wear the white hat as well as he can wear the black hat. And if ever there was an indictment of his flaws as sincere liability, look no further than the AKA situation, where several of the world's top welterweights, and a future HW Champion stood on the brink of termination because of likeness rights over a video game of all things.

As the original letter to the FTC explains, "Merchandise and ancillary rights agreements that require athletes to forfeit their image and likeness rights "in perpetuity," or forever. These far-reaching agreements deprive athletes of the freedom to make money from their own success and further bind them to Zuffa indefinitely."

A letter is one thing (especially in this situation where the Union's motives are clearly political, as the UFC is not the transgressor), a formal investigation is another. But is that already happening? Is the UFC already under investigation by the FTC? It's possible.

On October 7th, the Economist would elaborate on this possibiltiy , "Although the commission does not acknowledge its investigations until they have been completed, rival fight promoters say they have answered requests from the FTC for information about UFC. The $40m Strikeforce deal fell below the $66m threshold for an FTC investigation. But the commission could have launched one retroactively if it found evidence of abuse of monopoly power.

Mr White has ducked questions about antitrust concerns, saying only that "there are a lot of people coming after us and taking shots at us." (If he were to admit publicly that UFC was being investigated, the FTC would then be able to discuss the case as well). The FTC will issue a statement, usually after about six months, if it has investigated a company and not found grounds to proceed. If UFC’s many rivals fail to weaken it through the executive branch, they can always turn to the legislature. It would take just a slight tweaking of the Muhammad Ali act to expand it to MMA as well, which would give fighters like Mr Fitch more leverage in dealing with the company. John McCain, the senator who sponsored the Muhammad Ali act, remains in office. He should probably expect a call from anti-UFC lobbyists sometime soon." Full article is here.

While it'll be interesting to see what happens with the investigation, it's even more interesting to see how Zuffa would respond to a potential tweaking of the Muhammed Ali act: the kind of tweaking they couldn't buy their way out of.