In the lawsuit, a group of about 1,200 fighters who operated between 2010 and 2017 sued for lost wages, accusing the company of using a variety of illegal tactics to reduce their wages. At issue is whether the UFC took advantage of its supposed dominance in attracting top-level MMA fighters to give MMA competitors little access to enough elite athletes to compete.
This is a landmark case for a sport that has gone from niche entertainment with a brutal reputation (the late US Senator John McCain called it “human cockfighting”) to one of the fastest-growing viewership Sport in the world.
In the immediate future, the trial threatens the business operation of the TKO Group, born out of a recent merger between the UFC and WWE (World Wrestling Eentertainment), the professional wrestling organization.
But in the long run, the case could have wide-ranging implications for a variety of sporting arrangements in the future.
“There’s no question that the rise of sports as entertainment has fueled antitrust scrutiny,” he says Mark McCareins, clinical professor of business law at the Kellogg School. From the debates over the treatment of college athletes to the pay equity debates in women’s soccer and the WNBA, “there has been a renewed emphasis on wages, salaries and playing conditions for all athletes.”
Here’s what’s at stake—and what McCareins will be looking for as the case unfolds.
Fighters looking for an increased share of the pie
The plaintiffs in the UFC case argue that the UFC is a monopoly that uses its size and influence to lock up a critical mass of top-level MMA fighters through unfavorable contracts. Particularly objectionable to plaintiffs are non-poaching and non-compete clauses in fighter contracts.
“They come to you before the fourth game and say, ‘Here’s a new contract. Sign it or you’ll have a terrible fight for your fourth fight,” a lawyer for the plaintiffs he said Bloomberg’s Law.
“This is no different to how a major airline would treat its ‘rookie’ commercial pilots,” McCareins says. “They say, ‘You have to fly a certain number of hours in the cockpit of a regional carrier before we’ll let you take the controls of a 747, and we’ll compensate you less until you’re credentialed.’
The plaintiffs claimed that these types of contractual restrictions allowed the UFC to pay athletes at market value. In most major sports leagues such as the NBA and NFL, about half of the league’s total revenue goes to player salaries, although players in these leagues are unionized and their wages and benefits are negotiated under collective bargaining agreements . With the UFC, the fighters’ share is about twenty percent of the gross revenue from events. But UFC fights are event-based promotions, not team sports like the NBA and NFL, so the UFC absorbs all the costs of producing and creating events, making revenue sharing comparisons between apples and oranges.
In that case, the UFC will argue that it has expanded opportunities for all MMA fighters by making significant investments — including lobbying states to legalize fights and insuring fighters — to “professionalize” the sport. Additionally, while the plaintiffs allege a U.S.-only geographic market, the UFC claims its fighters come from around the world and that it competes with MMA promoters far beyond U.S. borders.
“Just like in the Google antitrust case, they’re going to say, ‘We’re not a monopoly,'” McCareins says. “They will argue that it got to that position through pro-competitive means—by innovating and developing a superior product.”
The UFC will also argue that it provides value-based compensation to its fighters in addition to the significant endorsement money fighters earn using the UFC platform to promote their brand. Furthermore, contrary to any stagnant monopsony comparisons, the UFC’s fighter salaries have increased as the number of events it stages—and its revenue—has soared.
“Monopolists are allowed to compete aggressively,” McCareins says. “If it is determined that the UFC has used ‘superior skill or business acumen’ to build a successful company, the Sherman Act will not necessarily condemn their contractual restrictions with their fighters. Under the Sherman Act, even monopolies are not required to “cooperate” with—or create a level playing field for—their rivals.
Even the allegedly anti-competitive non-compete clauses the UFC has with its fighters have withstood legal challenges and are generally legal if they are reasonable in scope and duration.
Increasing global competition
But even as the case moves through the court system, conditions on the ground change quickly.
First, the UFC competes with global entities to recruit top MMA talent and that global competition is increasing, with Saudi Arabia investing up to $100 million in the Professional Fighters League (PFL), one of the UFC’s rivals.
Critics have argued the deal is part of the kingdom’s “sportswashing” strategy, which hopes to hide its human rights record through heavy investment in global sports such as football, Formula 1, boxing and golf. . Whatever it is, it seems to be working. LIV Golf, the Saudi-sponsored championship, lured top golfers away from the PGA Tour with huge contracts. The PGA initially responded by banning LIV-affiliated players from its tour, but eventually relented and agreed to a possibly ill-fated merger.
“LIV has been more successful than most people thought,” says McCareins. “So what’s to stop the Saudis from doing to UFC fighters what LIV did to golfers?”
The state of golf at LIV is strong evidence that the barriers to entry in the professional MMA industry negate the view that the UFC is a classic antitrust monopoly.
The odds of this strategy working are particularly favorable for sports like the UFC, where athletes compete as individuals (as opposed to teams) and the audience is international.
“American football doesn’t have global appeal,” says McCareins, “so you’re not going to see a Saudi-backed NFL clone anytime soon. But the product that the UFC offers offers an opportunity for foreign companies to come in.”
The Impact of Sports Betting on the Future of Sports Pay
The class-action lawsuit against the UFC comes amid another big change: sports gambling.
In the last six years, 38 states have legalized some form of sports gambling, with more than half of states now allowing fans to bet online. In response, major U.S. sports leagues such as the NBA, NFL and MLB, which had long discouraged fans from betting on games out of fears that players or officials might manipulate results in bettors’ favor, reversed the their course and instead began working on sponsorship deals with gaming companies.
“Once states like Illinois started legalizing it, league owners started cutting deals with the FanDuels of the world, giving access to their intellectual property—their logos and names,” says McCareins. “In return, they got a percentage of the revenue from betting sites.”
According to the American Gaming Association, revenue from sports betting in the U.S arrived $7.5 billion in 2022—and the UFC is in a position to capitalize on that growth. As a UFC executive points outthe league features more than 500 matches per year, during events that span multiple zones and have no off-season, all features that appeal to players.
While the issue of gambling revenue has not come up in the UFC’s litigation, it is another source of income that the league — and many others — will have to consider as athletes try to ensure they are properly compensated for their work.
Going forward
The most obvious consequences of a victory for the UFC athletes would be a shift in bargaining power away from the promotional companies in favor of the athletes.
“The UFC plaintiffs are seeking to achieve an outcome through litigation that would otherwise be sought through the unionization and collective bargaining process,” McCareins says. “However, since fighters are independent contractors, the traditional union approach is not available to them.”
“If the UFC ultimately loses this injunction, it will significantly change the way it operates in terms of exclusive contracts,” says McCareins. “Other sports that have non-unionized independent contractors, including the golf and tennis tours, may be very concerned about the outcome here.”
The win could lead to additional lawsuits against other sports leagues. For example, NASCAR he is currently facing some of the same charges. It could also push athletes, particularly independent contractors, to demand more control over when and how they compete, and how their image and career is promoted.
But regardless of the outcome, McCareins doesn’t see the recent emphasis on fair labor practices in the entertainment industry going away anytime soon. In this sense, the UFC’s antitrust litigation mirrors compensation debates in the worlds of film, television and live music.
“I think there will continue to be pressure on successful companies to share more of the pie with actors, entertainers, fighters and athletes of all stripes.”
