Archive for the ‘Contract Law’ Category

Apparently, Dave has been reporting since the early 80s. Or so I hope. That haircut better not have seen the 90s.

Dave Meltzer has been discussing a contract between Showtime and Zuffa, LLC, owner of the Ultimate Fighting Championship (“UFC”) and Strikeforce. The latest word from Meltzer on the contract is that there is a list of fighters on the Strikeforce roster that may not fight on a UFC card without Showtime approval until the Zuffa-Showtime contract ends (2013 or 2014, depending on whom you ask). It’s important to note that neither Meltzer, you, or me have a copy of the contract (as far as I know). By Meltzer’s own admission, his information comes from someone who knows someone, and Meltzer has already changed his story once. Moreover, for what it’s worth, Dana White is telling us Meltzer is making up the whole story, which wouldn’t surprise me. This is all factual speculation, and I’m going to make it worse by adding some legal speculation.

Much Ado About Nothing

This isn’t that big of a deal. If the UFC wanted to do cross-promotional fights, they can still do it. Let’s say they offer Showtime two of six fights, with the UFC doing the other four. The fights will be, for example, Condit v. Marquardt, Dos Santos v. Cormier, or even non-title holders like Kennedy v. Diaz. Showtime would be so happy with having Dos Santos on their network, they’d gladly approve of such a deal even though it’s technically in the UFC’s favor. The only thing really stopping Melendez from fighting the Edgar/Henderson winner is Zuffa. If they want it to happen, it will.

It’s a Contract, but Is It Legal?

Several people have raised this question, and answering it without seeing the contract itself would be irresponsible. Being a nerd and a lawyer, though, I love throwing around hypothetical, nerdy, legal propositions, especially ones that might break new legal ground.

In an employment contract, you can have a covenant-not-to-compete, which prevents the employee from working for a competitor for a limited period of time in a limited geographical area after leaving the company. You’ve probably heard of this, so it’s not news. If the terms are too restrictive (e.g., it lasts too long, it covers too large a geographical area), the term will be deemed void. Virginia takes a strict approach to this. If the terms are deemed too restrictive, it’s completely thrown out rather than modified. For example, if a Virginia contract restricts you from being employed for five years in a 50-mile radius, and the court determines that to be unreasonable, the court won’t change it to “1 year in a 10-mile radius” to make it reasonable. Instead, the court will throw out the term altogether, saying there’s no covenant not to complete. Different states might try to reform the contract instead, changing its terms to something reasonable.

Enough of that. Let’s get back to the Zuffa-Showtime contract.

This isn’t an employment contract, of course, but if you think this doesn’t directly affect the fighters’ employments, you’re naive. Because it’s clearly having such a huge impact, I could see a court drawing an analogy to the covenant-not-to-compete and voiding it. After all, the geographical scope is international (events are held all over the world), and the term might be 2 years (assuming it expires in mid to late-2014). Moreover, pro athletes are more sensitive to these kinds of restrictions. Their shelf-life is limited, and keeping them out of the action or limiting their growth for even a short period of time can end or permanently damage their career.

Still, the analogy probably doesn’t hold up, at least not if the contract lives up to how Meltzer is reporting it. This isn’t analogous to restricting employment but rather like restricting in-house promotions for an existing job. Would Gilbert Melendez’s career really be so terribly harmed by being forced to fight Strikeforce-caliber fighters for the next year or two? I’m guessing not.

Career Suicide

On the other hand, Melendez’s career could be harmed by suing.

Keep in mind that in order for a fighter to sue, he’ll have to prove they were the ones facing harm. The only fighters that could possibly claim that harm are the marquee fighters appearing on the list. If one of those fighters sued Zuffa (suing Strikeforce wouldn’t yield results), the UFC would fire them, forcing them into the minor leagues for all time. The cash reward the fighter received from the case (assuming they could win) probably wouldn’t be nearly as valuable as staying Zuffa’s good graces. If Saturday’s Strikeforce card is a sign of things to come, being in Strikeforce isn’t such a bad thing anyway. That card was awesome.

There might be enough here that some fighters could sue over this contract (without receiving sanctions for a frivolous suit), but I doubt they’re foolish enough to do so. They’d be biting the hand that feeds them, and no one will feed them as well as Zuffa.

The Future

As mixed martial arts grows, contracts like this might generate more lawsuits, as the threat of going to “the minor leagues” might not be so intimidating a prospect. It’s impossible to guess whether those lawsuits would win on the grounds I’ve outlined here. Other than these grounds, I don’t see much of an argument based on what little I know of the contract, and I’m really reaching with this idea. A litigator might have better insight.

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