Caged Law: The UFC vs. The Federal Government, Round 2 The MMA Corner Staff February 8, 2012 News Last week, the FTC closed its investigation into whether the purchase of Strikeforce by the UFC violated any antitrust laws. The components of antitrust law that were being tested surrounded the question of whether a monopoly practice or illegal merger exists. Although the FTC did not find any violations, they left a foot in the door shall they decide to revisit the situation once again. Furthermore, it was prognosticated that if the UFC maintains its current path of business conduct, it will continue to be in the purview of the federal government’s lens, which begs the question: how would the Federal government have standing over the UFC to implement regulations similar to the Ali Act? Well, the Federal government could act through the Commerce Clause. The Commerce Clause allows Congress to regulate the instrumentalities, channels or activity that substantially affects interstate commerce. Here, the business of MMA easily meets at least one, if not all three, methods that allow Congress to regulate commerce. A deeper analysis is beyond the scope of this article, but nonetheless, for the sake of thoroughness, a rudimentary qualifying analysis can be offered. MMA events cause states to interact with individuals from other states. Individuals such as fighters, trainers, cornermen, referees, fans, etc., often travel between states to compete in an MMA event. This satisfies the interstate “channels” element. Moreover, such individuals utilize the instrumentalities, such as roads, or interact with public bodies for fighter licensing. Finally, given the sheer size and popularity of MMA events, it is unquestionable that MMA activities “substantially effect” interstate commerce, as the sport has grown to a billion-dollar industry present in nearly all 50 jurisdictions. Therefore, the Commerce Clause gives Congress the power to act. Since Congress would have the power to act over the UFC, they could in effect use existing regulations such as the Ali Act or create new regulations in order to exhibit control over the UFC’s business practices. However, putting the interstate commerce clause aside, the UFC’s rendezvous with antitrust law goes beyond the aspects analyzed in the recent investigation. Additionally, due to the expansive body of law that is antitrust, other aspects of UFC’s business operations and MMA in general fall under the antitrust umbrella. For nearly 100 years, the federal government has tested the boundaries of antitrust law in relation to professional sports. Currently, only the sport of baseball enjoys a complete exemption to antitrust laws. Why baseball, as opposed to other sport leagues operating with incredibly similar business models? The answer rests within our country’s romanticism with the American pastime and court cases dating back to the early 1900’s until the present. Nonetheless, the other three major sport leagues enjoy some form of antitrust exemption as well. Namely, sports leagues enjoy antitrust exemption with respect to the terms of labor between teams and the players. In principle, the concept of a labor union would violate antitrust laws because they act as organizations that collectively limit competition among workers for jobs and wages. However, player unions that developed decades ago within sports leagues, with the goal to advance the best interests of the athlete have received antitrust exemptions. Therefore, in each of the four major sports leagues, the players have unionized and entered into a collective bargaining agreement with the owners, who in effect band together and act as a whole, along with the presence of the league bureaucrats, and enter into negotiations with respect to athlete compensation, negotiation terms, the trading and signing of players, medical coverage, pension funds, revenue sharing and many more key financial aspects. In the seminal case, American League of Prof’l Baseball Clubs v. Ass’n of National Baseball League Umpires, the National Labor Relations Board (NLRB) established jurisdiction over professional sports leagues. In doing so, the NLRB applied the National Labor Relations Act (NRLA) to professional sports. The NRLA provides for the collective bargaining process that allows league owners and players to unionize and negotiate terms of employment and other related issues, such as pension funds and medical coverage. In boxing and MMA, no such union exists. Due to the innate structural characteristics of boxing and MMA, the NRLA does not seemingly apply, because there is no league per se. Rather, boxers and fighters are independent contractors that sign a contract with a specific promoter, for a specific contest; they do not belong to a league like athletes of other major sports. On the other hand, athletes of major sports are employees of a team that is a part of a league. The entities involved in the league then follow the collective bargaining process as set forth by the NRLA to create a Collective Bargaining Agreement (CBA) that governs the conduct of all individuals involved. Because of boxing and MMA’s innate characteristics and business model, simply applying the NRLA and all of the benefits and protections it provides is not feasible. For some time, there have been rumblings of an union to be formed among UFC fighters. How this union would take shape and subsequently be applied to MMA is perplexing. The same rumors pervaded boxing for years, but due to the innate business structure of the two sports, unionizing presents difficult challenges. In either case, boxing and MMA are similar in that they are unlike every other major professional sport in the United States because they do not have a strong, centralized association or league to establish and enforce uniform rules and practices. The absence of a centralized organizing and oversight body is the cause of boxing’s problems. Because the same model is used in MMA, it is reasonable to state that MMA will inevitably experience the same problems. The presence of a strong centralized body is key to MMA’s success. Although the NLRA does not explicitly apply to MMA vis-à-vis American League of Prof’l baseball Clubs v. Ass’n of National Baseball League Umpires, does not mean that MMA cannot seek to mobilize fighters in a movement to unionize and acquire more bargaining power. However, given UFC’s conduct, it is unlikely that fighters would seek such recourse. Remember the UFC’s conduct towards fighters? The fighters fear the possible retaliation of the UFC in the same way boxers feared industry insiders. Congress should step forward and put in place regulations that do not interfere with the business of MMA, but rather create an arena so that all players involved in MMA have an equal footing, which would facilitate growth. The oversight would mandate individual states follow particular minimum standards in regulating MMA, and the standards could be drafted in a way that the subsequent policies would incentivize fighter, promoter and state commission participation in the business of MMA. Moreover, the new system could be structured in a way that the NLRA would apply to those seeking a career in MMA. Photo: The Federal Trade Commission Building in Washington, D.C. (Paul J. Richards/AFP Photo) This piece was authored by Chase Buzzell. You can find Chase via his LinkedIn Profile.