A Face-Punching Legal Battle
SYLVIE DOUGLIS, BYLINE: NPR.
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CARDIFF GARCIA, HOST:
Hey, everyone. Stacey and Cardiff here. This is THE INDICATOR FROM PLANET MONEY.
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GARCIA: And if you are a frequent listener...
STACEY VANEK SMITH, HOST:
GARCIA: You might know that I am a fan of the sport of mixed martial arts, MMA - and also that Stacey judges me for it a little bit.
VANEK SMITH: I don't judge you for it. Like, they're amazing athletes. But it's so violent, Cardiff. Like, I - it's, like, hard to watch. I can't even watch the fighting. So for the unindoctrinated, mixed martial arts is the sport that combines elements of boxing and kickboxing plus, like, wrestling things like takedowns and grappling. It is undeniably exciting to watch, as Cardiff will tell you. It's also undeniably super-violent, and it takes a huge toll on the fighters.
GARCIA: Yeah, fighters like Kyle Kingsbury. From 2008 to 2014, Kyle fought in the UFC, which is the biggest promotional organization that runs mixed martial arts fights.
KYLE KINGSBURY: I've had two orbital blowout fractures in my left eye. My left eye is actually five millimeters depressed compared to my right. My nose has been broken. I've had a separated rib, torn right labrum, which required surgery, you know, arthritis in my knees, hips, very limited ankle mobility on my right side.
VANEK SMITH: What injuries do we have from podcasting, Cardiff? Like, I don't know.
GARCIA: Neck strain.
VANEK SMITH: I think I might need reading glasses.
VANEK SMITH: By the way, Kyle is only 38 years old, so fighting has taken a big toll on him physically. But it is the financial toll of his time as a fighter that has been on his mind lately.
KINGSBURY: I had to have multiple jobs the entire time I fought as a professional athlete. For a large portion of my career, I lived in my mother's detached garage, and I worked as a bouncer and a bartender at a local bar. And I would stay up till 3:30 in the morning. And I'd come home, sleep for as long as I could and try to make it to morning practice on time and still get two training sessions in in a day and then head back to work. And in between those training sessions, I was doing personal training out of my own home garage.
VANEK SMITH: So whether or not UFC fighters are underpaid is the subject of a legal battle that Kyle and several other former fighters have been waging against the UFC for years. And their lawsuit is one of the most intriguing labor market stories in the country.
GARCIA: Yeah. These former fighters are alleging that the UFC has violated U.S. antitrust laws and that the UFC has engaged in monopsonistic tactics. What that means is that according to the fighters, the UFC has become so big and dominant within the sport that it can impose unfair contracts on the fighters, including restricting where else they can fight, and leaving them with so few options that they have to accept those unfair terms.
VANEK SMITH: And monopsonistic behavior is a concept that economists are increasingly paying attention to in the rest of the economy, like a few years ago, when hospitals in Detroit colluded to hold down the wages of nurses. The nurses didn't have other options of where to work in the city, so they couldn't fight back. That's a monopsony. They sued.
GARCIA: And today on the show, kind of the opposite of nurses suing. These are people who hurt each other for a living suing.
VANEK SMITH: (Laughter) They give nurses business.
GARCIA: A lawsuit in the face-punching game and what it might reveal about the dynamics of the labor market.
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GARCIA: The UFC has an overwhelmingly dominant position as the biggest promotional organization that runs fights in mixed martial arts. It likely made close to a billion dollars in revenues last year, and that's estimated to be as much as 90% of all the revenues in mixed martial arts. And it achieved that dominant position both by successfully managing and promoting the sport but also by buying out all of its biggest rivals and getting all of those top fighters from its rivals to fight for it.
VANEK SMITH: So the UFC's numbers are not public, but these estimates come from John Nash, who analyzes the business and finances of mixed martial arts for the website the Bloody Elbow. He's our guide to this world. And John says the lawsuit filed by the former fighters against the UFC has unveiled all these documents that show what the fighters get paid.
JOHN NASH: We had an inkling. We had an idea. But now we have, like, concrete numbers.
GARCIA: OK, so here are some of the points made by the fighters, and here are some of the UFC's counterarguments. First, the fighters argue that they simply get paid a much smaller share of the UFC's revenues than athletes in other major sports leagues.
VANEK SMITH: And this is true. Those new documents from the court hearing revealed that fighters get paid roughly 20% or less of UFC revenues in a given year. For the major basketball, baseball, hockey and football leagues, athletes get paid close to half of what their leagues make.
GARCIA: And in boxing, the other major combat sport, it's even higher. Close to 60% of boxing revenues goes to boxers. And one of the reasons, John says, is that there are several major boxing promoters trying to sign fighters. It's just a more competitive market.
NASH: So for the UFC, the fighter has to pitch to the UFC to hire him to give him a fight because he needs to be in the UFC to make money, where in boxing, the promoter has to find a fighter and convince him to let him promote them because he's the person drawing the money.
VANEK SMITH: In response to the fighters, the UFC is arguing that even though its fighters get a smaller share of its revenues, those fighters are still getting paid more money over time because the UFC is making more in revenues over time. So the overall level of the fighters' pay is still going up.
GARCIA: And John says if the UFC were some other kind of company, that response might be enough to win the case. If the fighters are just like other workers and their pay is going up, why would it matter if the fighters are getting a smaller share of the sport's revenues than the athletes in other sports?
NASH: What makes this case different - and this is what the plaintiffs argue - is that the fighters aren't workers like a typical worker on a factory line. The fighters are the product. And as the product that's being sold, they deserve a share of the sales.
GARCIA: The UFC has also argued that mixed martial arts is still a young and growing sport, so it should not be compared against established sports leagues. Plus, the UFC makes the case that a big reason it makes so much money is not because of how great its fighters are but because of how good the UFC is at putting on big, lucrative fight nights - that, effectively, the UFC has a kind of special ingredient that it adds to its fight cards. John Nash is a little skeptical of this one.
NASH: But what is the special sauce is a little confusing. I mean, the UFC would claim it's their production. It's the way they do things. But then can you be more specific? - because, you know, boxing does the same thing. They promote fighters. They put on events. They make packages. They - you know, all that stuff that seems to be part of the special sauce is done by, you know, other promotions.
VANEK SMITH: Plus, John says if the UFC does have a special sauce and the specific fighters don't matter too much, then why did the UFC go to such lengths to buy out its rivals and get their fighters? And why does the UFC put restrictions in the fighters' contracts that prevent them from fighting for other promotional companies?
GARCIA: Look; there's lots of other complexities in this lawsuit. For example, the UFC also makes its fighters accept a sponsorship deal with Reebok and keeps a lot of the money from that deal. The fighters say if they could get their own sponsors, which they used to be able to, they would get paid more. But, really, we're just scratching the surface here on this lawsuit, and it probably has a long way to go anyways.
But what is clear is that the lawsuit is a fight about worker power. The former fighters say they lost power to negotiate their pay because the UFC made the market for their talent less competitive. The UFC disagrees and has argued that it should not be punished for being a successful company. By the way, we emailed a spokesperson for the UFC about the lawsuit. They have not yet responded.
VANEK SMITH: What's also clear right now is that the financial life of a lot of UFC fighters is really hard. Fighters who are not highly ranked will sometimes get as little as $10,000 for a fight, and fighters will have, at most, a few fights a year. And they pay a big share of their earnings to their fight camps, the places that run their training and provide coaching - things like that.
GARCIA: And so these former fighters are basically suing the UFC for what they believe they're owed - what they argue they would have made if the UFC had allowed a competitive market for their services. Nate Quarry, one of these ex-fighters, says they're also hoping that the UFC has to change its approach to paying fighters going forward.
NATE QUARRY: We deserve our seat at the table, whether it's talking about sponsorships, whether it's in negotiating our purses, whether it's being able to fight for someone else. Free agency - that's what we truly need in this sport - where the fighters will have the ability to really test out the free market and see what our value is.
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GARCIA: This episode of THE INDICATOR was produced by Jamila Huxtable and fact-checked by Sean Saldana. THE INDICATOR is edited by Paddy Hirsch and is a production of NPR.
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