$335 million
For weeks, that number was seen as the price UFC had to pay to settle two separate antitrust class action lawsuits brought on by former fighters. The figure represented a monumental potential conclusion to a saga that started more than a decade ago when a group of former UFC talents got together and looked at challenging the promotion’s business model. But, the number also presented more questions than answers.
How much of that money would fighters actually see? How would the length of some fighter’s careers be weighed in comparison to others? And importantly, would there be any other non-financial terms that UFC would have to abide by alongside any payout made?
These details weren’t answered in the brief SEC filing earlier this year which presented the $335 million figure. However, more recent details emerging from the case have provided some potential answers that paint a better picture of what the legal proceedings mean for everyone involved.
To help unpack the details and digest the weight of some information, we reached out to Hey Not The Face writer and podcaster John S. Nash. For years, Nash has closely covered the business of MMA, including the anti-trust case, mainly writing for Bloody Elbow before switching to his own blog in recent months.
Let’s talk money
The new filing gave an in-depth breakdown of how payments could be made to fighters involved in the class action suit, pending judge approval.
Between the two cases that UFC settled—the Cung Le et al. case representing talent from 2010 to 2017 and the Kajan Johnson et al. lawsuit for fighters from 2017 to 2023—it’s the older of the two groups that will receive three-quarters of the settlement money.
Nash pointed out that the split might be confusing to some, especially since UFC’s more modern years have proven to be their most profitable. But there’s a fair reason for the split being that way, he explained.
Along with having less leverage because of their case not being as far along as the Le lawsuit, a clause placed in more recent UFC contracts forced the Johnson class to represent fewer fighters than expected. Contracts implemented in recent years by the UFC include class action waivers, preventing fighters who sign onto a deal from being represented in an antitrust case like what is in the process of being settled.
“Large numbers of fighters—over half the fighters in that [Johnson] class, and basically every fighter going forward in the UFC—cannot take part in antitrust lawsuits,” Nash explained. “They’re technically not part of the class. That [Johnson] class had much less leverage because they could not sue the UFC on behalf of those fighters.”
A two-step process will allow fighters from the Le group to divide up the 75 percent that they are receiving from the settlement. Firstly, a pool representing 80 percent of the class’ settlement money will be given out to fighters based on the percentage of fighter compensation they received during the 2010 to 2017 time period. In simple terms: If someone’s pay represented one percent of the total fighter compensation from that period, they’ll get one percent of the share of money.
Fighters from the Le class will also receive money based on how many bouts they had during that time. For each fight, a talent will receive roughly $5,000. Fight four times? You’ll get $20,000 from that share, for example. In any instance, a fighter is guaranteed a payout of $8,000 at minimum.
The Johnson side of the class uses a similar, yet different system. Fighters who didn’t sign a class action waiver will go through the same two-part calculations as Le fighters, receiving money through both their percentage of fighter compensation and number of bouts. However, unlike the Le case, there is a ceiling placed on how much they can earn, with 10 percent of their personal fight compensation or $7,000 being the maximum. For fighters who are held back by a class action waiver, they’ll earn a singular payment of $5,000 from the settlement.
The fighter payouts will take place after lawyers take one-third of the settlement money off the board, per the planned settlement. However, as already mentioned, it’s worth noting that the details are not set in stone and require the important judge’s approval before proceeding.
Injunctive relief, or ‘cosmetic’ relief?
To the surprise of some, there are non-financial terms that UFC agreed to within the settlement. After weeks of just the $335 million figure being publicly mentioned, it seemed unclear if there would be other rules that UFC had to follow. In the end, they do – sort of.
As part of the settlement, UFC is held to a five-year agreement which forces them to cap exclusive negotiating periods with a fighter for 30 days and limits a matching period to four months max. A retiring fighter will also get their agreement frozen for four years, then deemed expired once that time concludes.
These agreements do place limitations on UFC’s contracts that must be met for five years. However, according to a note by economist Hal Singer in the filing, these terms were already part of what UFC had implemented years ago when the pressure of an antitrust suit was already starting to pick up.
Nash pointed out that, while the agreement is small, it does hold the promotion to an agreement for some time.
“If you go pre-2017, these changes are beneficial to the fighters … The UFC introduced these changes to fight the antitrust lawsuit. There’s nothing really preventing the UFC from reintroducing those provisions back in, except for the fact they’ve agreed to keep them for five years,” he said. “It’s not a major change, it’s almost cosmetic because the UFC’s market dominance might even be greater now than it was back then, but it does keep some of the minor benefits from those contractual changes.”
Nash mentioned that no terms being included surrounding a sunset clause were “terrible for fighters.” The clause, which was implemented in 2017, forces the UFC to put a maximum length on contracts. A notable case of a sunset clause at play was when former heavyweight champ Francis Ngannou waited out the expiration of his deal until early 2023.
“It’s sad that there’s nothing to enforce the UFC to continue that,” he said.
In a comment that arguably underscored how the UFC views the terms, it was mentioned during last month’s TKO Group Holdings quarterly earnings call that the settlement was reached “without any further changes to the UFC’s business operations.”
Did the public get their hopes too high?
Many supporters of the Le antitrust case were licking their lips at the potential trial, which was quickly approaching its expected start date earlier this year. However, hope likely turned to frustration once the public learned that it would end in a settlement instead.
Nash explained that, while labor issues in trials often see a jury favor the worker, there was still a risk involved for the fighters that they were able to afford with a settlement. The years of work on the case could have potentially been lost if the jury didn’t see things their way.
“Look [at] how many fans on Twitter and stuff always think, ‘Oh, the fighter signed the contract. That’s their problem right?’” Nash explained. “There’s always a sizable percentage that hold that view, that if you don’t like the contract you shouldn’t sign it. The idea of monopoly [or] monopsony power doesn’t mean much to them.”
When news of the settlement came out, a wide range of opinions were expressed online. Many were frustrated or even confused about the result, with the expectation being that UFC could have been on the hook for $1 billion or more and would have to implement major changes to its business.
The sky-high hopes of the Le antitrust potentially made expectations too lofty. As Nash explained, the feeling of grappling with wanting more out of the settlement while also recognizing that a nine-figure payout will be given to fighters might be hard for some to fully understand.
“As sad as it is, this is the single biggest victory fighters have ever seen in MMA,” he said. “We can laugh about it, but 335 million is more than every non-UFC promotion put together probably paid in the last 10-20 years … Unfortunately, it’s gonna be short-lived because this is a one-time event now, even though it was originally planned to be potentially multiple events or permanently changing the structure of the sport.”
UFC escaped the settlement with a payment of $335 million and some already-implemented contractual terms that they only have to honor for five years. What’s more, class action waivers mean that they will likely not have to face an issue like this in the future. At the end of the day, when considering all of the details, it’s hard to not see this as a big win for the UFC.
“I think they have to be fairly satisfied,” Nash said when putting himself in UFC’s shoes. “This threat has basically been permanently removed from the UFC.”
