Contracts are involved in almost every business. Whether it is employment contracts, independent contractor contracts, promotional contracts, the list goes on and on. Furthermore, navigating the complexities of contract law can be particularly overwhelming. This is why so many businesses rely on the services of contract law experts such as LegalVision. However, contracts in the MMA world can be very “shady”, “sticky”, “fake”, and down right “criminal”.
In 2007, UFC heavyweight champion Randy Couture was involved in a very public contract dispute with the UFC. Randy accused the UFC of underpaying him and making millions of dollars of his fights without paying him “what he deserved”. This dispute gained a lot of media attention and was the first time the UFC brass opened their financial records to the media in order to dispute claims made by Randy Couture about being underpaid and undervalued.
“When he signed and executed the promotional agreement he was awarded a signing bonus of $500,000 of which half was to be paid upon signing and half upon the completion of his first fight which was UFC 68,” stated UFC Chief Financial Officer John Mulkey. The UFC did produce a cashed checked signed by Couture dated Jan. 30 for $250,000 and an additional check for $250,000 dated March 3, 2007 and referenced as “UFC 68 Bonus” was issued to Couture, which would seem to corroborate the $500,000 amount referenced both by the UFC and Couture. In September 2008, over 12 months of contract disputed, Couture struck a deal to return to the UFC and defend his heavyweight title against Brock Lesnar at UFC 91. The contract disputes between the UFC and its athletes did not end with Randy Couture.
More recently we have seen fighters such as women’s bantamweight champion Ronda Rousey go through a contract dispute with the UFC, number one contender Gilbert Melendez and the infamous Diaz brothers. Ronda Rousey almost lost her coaching spot on the reality show “The Ultimate Fighter”. Gilbert Melendez was involved in one of the bigger contract disputes in recent memory that eventually saw him sign with Bellator only to have the UFC match Bellator’s offer, which included a coaching spot on “The Ultimate Fighter” opposite UFC lightweight champion Anthony Pettis as well as a guaranteed title shot opposite Pettis. It should be pointed out that most MMA promotional agreements include a matching clause that allows a promotion like the UFC to match other promotions offer’s within a certain time frame.
No other contract dispute has been bigger then Eddie Alvarez’s battle with Bellator and Viacom. In late 2012, Eddie Alvarez was a free agent and was testing the MMA market. Alvarez has long been one of the top lightweights in the world and was presented with an offer by the UFC which would have not only compensated him very well but offered the opportunity to fight on PPV and collect a percentage of the PPV buys. Under the terms of a clause in his Bellator contract, that promotion had a right to match the UFC offer, and that’s where things got interesting.
This was a huge deal because while Bellator retained matching rights it was believed that they could not match the UFC’s offer because Bellator was not on PPV. Well that was not the case and sadly for Eddie Alvarez this ordeal cost him over a year of courtroom battles and sitting on the sidelines watching his prime fighting years pass him by.
The main points of the UFC offer to Alvarez was a $250,000 signing bonus and a $70,000 fight purse with a $70,000 win bonus for his first fight, with salaries escalating over the life of the deal. The contract was to cover a span of 40 months or eight fights, whichever occurred earlier. While these concrete figures are easy for Bellator to match, the issue lied in Alvarez’s ability to earn projected income from PPV buys.
Bellator CEO Bjorn Rebney had this to say about the PPV bonus offer, “There is no guaranteed pay-per-view in the UFC offer to Eddie Alvarez… We as Bellator don’t have to match projections. We don’t have to match what could conceptually happen. We have to match guaranteed dollars and what the UFC contractually guaranteed would occur. That is what we are held to.” After the two sides went to court, they reached an out of court settlement that brought Alvarez back to the Bellator cage and saw him fight on Spike TV against Michael Chandler. Key point is that the fight was not on PPV, which may have cost Alvarez big money.
The major issue with the way Bellator exercised their matching rights in this situation was Bellator had never been on PPV and because PPV bonuses are hypothetical they argued in court that they can not be held to match hypothetical projected dollar figures and that by law they had to match concrete dollar figures. Well clearly the UFC has multiple shows that air on PPV and with Eddie Alvarez’s contract offer offering him a piece of those PPV shares, Bellator used a loophole to trap Alvarez and prevent him from possibly cashing in on one of the biggest fight purses in MMA history. But the trouble with Bellator’s contracts does not end here.
Recently news has come out about the terms in Bellator promotional contracts and it is not good. According to a recent article by John S. Nash, “Bellator has informed the fighters and managers that this extension can be enacted each time a fighter is declared “the champion of his weight class, a Tournament winner, or a Tournament runner-up” and that the extensions accumulate. What this means is that a tournament winner who then fought and won a Bellator title would have two extensions added to his contract, one for being declared a Tournament winner and one for being declared a champion of his weight class. There also does not seem to be a limit to the number of extensions that can accumulate, so that a fighter who wins or reaches the finals of multiple tournaments or who wins the championship on separate occasions or in different weight classes could have 3, 4, or even more extensions added to his deal.”
This clause in the Bellator promotional contracts is very discouraging and leads to lots of questions and speculation. Whether other managers decide to sign their clients to these contracts remains to be seen, but I will not have any of my clients sign this type of contract.
Another organization that has contract troubles is a regional promotion named “King of the Cage.” I have first hand experience with this promotion as I have had several fighters fight for them and I have seen first hand some of the shady wording they put in their contracts. One fighter who brought a lot of media attention to this origination is Lowen Tynanes. Lowen is a former client of mine and informed the media and myself that his King of the Cage contract was forged. Lowen had entered into this deal before we began to work together. What makes matters worse is that his forged contract was a 4-year contract. YES A 4 YEAR CONRACT. There was not a specific amount of fights, the pay was god-awful and the length of the contract was four years. That is unheard of in the MMA business and very shady. And this contract was forged. When king of the cage was questioned about it they said they knew it was forged but they were going to hold Lowen to it under the legal terminology of “acceptance by performance”. Because Lowen fought for them once he accepted the terms of the contract without even knowing it. I did not represent Lowen when he began to fight this contract and brought it to the media. But I plan on helping Lowen because he is a great young man and this type of behavior is unacceptable. This can ruin Lowen’s career and this organization needs to be held accountable.
Hopefully these contracts can be fixed/tweaked in the future and we can attempt to make this industry a more honest and fair one for the fighters. Bellator and King of the Cage need to be held accountable for these misconceptions and fraudulent contracts they produce.