Culinary Union Requests FTC Investigation of Zuffa LLC
The Culinary Workers Union filed a request with the Federal Trade
Commission on Monday, asking the FTC to investigate the business
practices of Zuffa LLC, parent company of the Ultimate Fighting
Championship.
Affiliated with the Unite Here North American labor union, the Las Vegas-based organization known as Local 226 has asked the FTC to formally probe into whether Zuffa is operating in compliance with federal anti-trust laws.
The request comes following Zuffa's June setback in the New York
State Assembly, where once again the bill to legalize mixed martial
arts failed to make it to the floor for a vote. According to UFC
president Dana White, the Culinary Workers Union spent significant
funds to help keep mixed martial arts out of New York due to the
organization's issue with Fertitta-owned Station Casinos.
“It has to do with the Culinary Union,” White said following UFC 129 on April 30. “The Culinary Union is spending millions of dollars of all these people who pay dues to keep us out of there because my partners, the Fertitta brothers, are the largest non-union gaming company in the country. So these union idiots, all these people work in the Culinary Union, pay their money towards dues, this is what all their money's being spent towards. Fighting the UFC from coming there and bringing money into the state of New York.”
The alleged contractual restraints listed in the letter are as follows:
“a) ‘Automatic renewal’ contract provisions such as the ‘champion's clause,’ which extends the contract of an athlete who becomes a champion. Such clauses effectively prevent some athletes who sign contracts with Zuffa from becoming free agents and negotiating for higher pay.
“b) Exclusive negotiation and ‘right to match’ clauses that lock athletes into negotiating with Zuffa for a period after their contracts have expired. These clauses diminish the ability and incentive of smaller promotions to bid for top mixed martial arts athletes.
“c) 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.”
The letter goes on to assert that these restrictions have been considered anti-competitive in past court rulings, such as in the case of the NFL's “Rozelle Rule,” which was deemed an unfair restraint on free agents.
Although the union admits that in some cases professional sports leagues must employ such restraints in order to maintain a competitive balance, the letter asserts that Zuffa “does not operate as a professional league,” but instead operates as “a private limited liability partnership that promotes and produces mixed martial arts events for the benefit of its owners.” According to the union, Zuffa’s alleged contractual restraints “serve no legitimate business justification beyond stifling competition and increasing Zuffa’s already dominant position in the market.”
Chartered in 1938, the Culinary Workers Union is composed of 60,000 members working in Nevada casinos, hotels, restaurants and laundries. Local 226 is the largest affiliate of the Unite Now labor union. Local 226’s website displays numerous web links to local news reports detailing the organization's protests against Station Casinos.
Sherdog.com attempted to contact the organization for comment, but a representative could not be reached at the time of publication.
Affiliated with the Unite Here North American labor union, the Las Vegas-based organization known as Local 226 has asked the FTC to formally probe into whether Zuffa is operating in compliance with federal anti-trust laws.
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“It has to do with the Culinary Union,” White said following UFC 129 on April 30. “The Culinary Union is spending millions of dollars of all these people who pay dues to keep us out of there because my partners, the Fertitta brothers, are the largest non-union gaming company in the country. So these union idiots, all these people work in the Culinary Union, pay their money towards dues, this is what all their money's being spent towards. Fighting the UFC from coming there and bringing money into the state of New York.”
Sherdog.com acquired a copy of the union's letter to the FTC from a
source close to the situation on Thursday. Signed by the union’s
research director, Ken Liu, the letter lists several of the union’s
complaints, which include Zuffa's longstanding stance against
co-promotion, as well as the terms of fighter contracts. The letter
claims that several alleged contractual restraints within Zuffa's
fighter contracts may limit a fighter’s “freedom of movement.”
The alleged contractual restraints listed in the letter are as follows:
“a) ‘Automatic renewal’ contract provisions such as the ‘champion's clause,’ which extends the contract of an athlete who becomes a champion. Such clauses effectively prevent some athletes who sign contracts with Zuffa from becoming free agents and negotiating for higher pay.
“b) Exclusive negotiation and ‘right to match’ clauses that lock athletes into negotiating with Zuffa for a period after their contracts have expired. These clauses diminish the ability and incentive of smaller promotions to bid for top mixed martial arts athletes.
“c) 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.”
The letter goes on to assert that these restrictions have been considered anti-competitive in past court rulings, such as in the case of the NFL's “Rozelle Rule,” which was deemed an unfair restraint on free agents.
Although the union admits that in some cases professional sports leagues must employ such restraints in order to maintain a competitive balance, the letter asserts that Zuffa “does not operate as a professional league,” but instead operates as “a private limited liability partnership that promotes and produces mixed martial arts events for the benefit of its owners.” According to the union, Zuffa’s alleged contractual restraints “serve no legitimate business justification beyond stifling competition and increasing Zuffa’s already dominant position in the market.”
Chartered in 1938, the Culinary Workers Union is composed of 60,000 members working in Nevada casinos, hotels, restaurants and laundries. Local 226 is the largest affiliate of the Unite Now labor union. Local 226’s website displays numerous web links to local news reports detailing the organization's protests against Station Casinos.
Sherdog.com attempted to contact the organization for comment, but a representative could not be reached at the time of publication.
