Zuffa

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Zuffa, LLC
Limited liability company
Industry Sports promotion
Founded 2001 (2001)
Founders Frank Fertitta III
Lorenzo Fertitta
Headquarters Las Vegas, Nevada, United States
Key people
 Lorenzo Fertitta
(Chairman & CEO)
Dana White
(President)[1]
Owner Frank Fertitta III (40.5%)
Lorenzo Fertitta (40.5%)
Flash Entertainment (10%)
Dana White (9%)[2]
Subsidiaries Ultimate Fighting Championship
Defunct:
World Fighting Alliance (2006)
Pride Fighting Championships (2007)
World Extreme Cagefighting (2010)
Strikeforce (2013)

Zuffa, LLC /ˈzuːfə/ is an American sports promotion company specializing in mixed martial arts. It was founded in January 2001 in Las Vegas, Nevada, by Station Casinos executives Frank Fertitta III and Lorenzo Fertitta to be the parent entity of the Ultimate Fighting Championship (UFC) after they purchased it from the Semaphore Entertainment Group. Lorenzo Fertitta is the company’s CEO and chairman while Dana White runs the day-to-day operations.[2] Zuffa is co-owned by Fertitta brothers (40.5% each), Dana White (9%) and Flash Entertainment (10%).[3]

The word "Zuffa" is an Italian word (pronounced [ˈtsuffa]), meaning "fight".[4]

Relationship with MMA organizations

International Fight League

Throughout the existence of the International Fight League (IFL) between 2006 to 2008, both Zuffa and the IFL had competed in a hostile relationship. Zuffa accused the IFL of and sued them for illegally using proprietary information obtained by hiring executives from the UFC organization. The IFL responded with their own suit claiming that Zuffa was threatening potential partners not to work with the IFL, including Fox Sports Net (a deal with Fox Sports was later signed before resolution of the suit[5]). The tension between the IFL and the UFC worsened with accusations that the IFL had attempted to buy out several top UFC fighters.

In July 2008, there were reports of the IFL's possible purchase by the UFC.[6] That same month, Joe Favorito, former IFL senior vice president, cited financial troubles for the closing of the company on July 31, 2008. Anonymous sources stated that Zuffa had bought the IFL.[7] Other reports cited the UFC's airing of IFL footage on its programming, and the signing of previous IFL fighters, as an indirect confirmation of the purchase.[8]

WFA

On December 11, 2006, Zuffa acquired the assets of the World Fighting Alliance, and formed WFA Enterprises, LLC. as a subsidiary to handle these assets, including select fighter contracts.[9] On the same day, it was reported that Zuffa was formalizing plans to buy World Extreme Cagefighting, to be run as a separate promotion from the UFC.

WEC

Following the purchase of the WEC, Zuffa made several changes to the promotion. This included modifying the WEC's cage, transferring to a focus on lighter weight classes, giving it the ability to host events in Las Vegas and having the championships of fighters who were contracted UFC fighters vacated.

From 2007 to the end of 2010, the WEC was run as a separate promotion under the Zuffa banner, airing events 28 to 53 on Versus in the US and on The Score in Canada.

On October 28, 2010, Dana White announced that the WEC would be absorbed into the UFC in early 2011.[10]

Pride Fighting Championships

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Main article: Pride Fighting Championships § Pride Worldwide era

On March 27, 2007, it was announced that Frank Fertitta III and Lorenzo Fertitta were acquiring the assets of Pride Fighting Championships, the UFC's largest rival, from Dream Stage Entertainment. To handle the take over, the Fertitta brothers created a new corporate entity to handle the assets, Pride FC Worldwide Holdings LLC. With common ownership in place, Zuffa and Pride Worldwide would be working closely together.[11][12] Although goals of reviving Pride were not realized, many of Pride's assets, including contracts with fighters and intellectual property, are now regularly utilized by the UFC.

Strikeforce

Early relationship (2008–2010)

Starting around 2008, UFC president Dana White began a long media battle with their main competitor Strikeforce and their main media partner, Showtime.

Dana White had expressed that he had "no beef with Strikeforce", instead indicating a greater dislike for Showtime, and Ken Hershman in particular.

However, White did express in an interview that he had a mutual relationship with Strikeforce founder and CEO, Scott Coker, explaining that Coker was caught up in his battle with Showtime.

2011 acquisition and beyond (2011–2013)

On March 1, 2011, Scott Coker was noted for dismissing rumors of a pending sale to Zuffa as "crazy." Coker went onto explain that Strikeforce was searching for "strategic partners" and that there were at least two (some reports say three) potential investors, but that "the UFC is not one of them."[13][14] One of the potential investors has been documented to have been ProElite.[13][15]

However, on March 12, 2011, it was announced in an interview of Dana White by journalist Ariel Helwani that Zuffa had purchased Strikeforce.[15][16][17][18][19] The deal was made between Zuffa and partial Strikeforce owner Silicon Valley Sports and Entertainment.[15][20] The amount of money involved has not been officially disclosed, however it has been reported that the deal was worth $40 million.[21]

Sources have confirmed that Scott Coker attempted to not sell Strikeforce to Zuffa. However, Coker ultimately failed and agreed to sell Strikeforce's licensing rights, fighter contracts, and video library to Zuffa on March 10 or 11.[13][15]

On March 14, 2011, Zuffa held a conference call to officially announce the acquisition of Strikeforce.[22][23]

On March 28, 2011, Scott Coker stated that he felt that the acquisition would be good for the sport of mixed martial arts. This was in contradiction of his original resistance of selling Strikeforce to Zuffa.[24]

Ultimately Strikeforce was operated as a separate company, similar to that of the WEC, until January 12, 2013, when the final Strikeforce show was held in Oklahoma City. After which the promotion was dissolved and all fighter contracts were either ended or absorbed into the UFC.

United Glory

When United Glory was originally formed in 2006, it was known as Ultimate Glory before a lawsuit with Zuffa forced a name change.[25]

Invicta Fighting Championships

In June 2014 the UFC announced that they had signed a multi-year, multi-event broadcast deal to show and archive all Invicta FC events on UFC Fight Pass.[26][27] This has allowed the UFC to further expand its women's divisions by adding a strawweight division in July 2014, and signing Invicta fighters such as Carla Esparza and Felice Herrig.

Shooto

In June 2014 the UFC announced that they had signed a development deal with the recently revived, Vale Tudo Japan. A brand that was brought back in 2012 by the long running, Shooto promotion.[28][29] The UFC plans on promoting and operating a new tournament series that will focus on 135 and 145 pound divisions. There were plans of a The Ultimate Fighter-like TV show to help promote these tournaments but it is unclear on what the status remains on it.[30][31]

Relationship With non-MMA organizations

Flash Entertainment

On January 12, 2010, Zuffa sold a minority interest in the company to Flash Entertainment. The company announced the completion of a deal in which a 10-percent interest in the company to the Abu Dhabi government-owned Flash Entertainment. With the sale, company ownership would be 40.5 percent held by Lorenzo Fertitta, the company’s CEO and chairman, 40.5 percent held by his older brother, Frank Fertitta III, 10 percent by Flash Entertainment and nine percent by Dana White.[2] Flash Entertainment was formed in 2008 by the Abu Dhabi government’s Executive Affairs Authority.

Ubisoft

In December 2010, Zuffa filed a lawsuit against video game publisher Ubisoft, for what they claimed was a violation of trademark on the game, Fighters Uncaged, packaging.[32] On the packaging of the game the trademarked term, "Ultimate Fighting" is shown in all capital letters. Zuffa claimed that the use of the term is identical or confusingly similar to the use of the UFC's trademarks. While Ubisoft failed to provide any comments on the lawsuit,[33] by August 2011, the two companies announced the dissolution of the lawsuit.[34]

Lone Survivor Foundation

In May 2011, it was announced that Zuffa would be holding a charity auction featuring more than 100 items to benefit the Lone Survivor Foundation during the last week of May 2011.[35]

All products were autographed by UFC fighters and included, baseball caps, T-shirts, MMA gloves, and DVDs. Products generally ranged in price from $50 to a few thousand dollars.

Cleveland Clinic brain trauma study

In February 2014, Zuffa was one of a number of major combat sport promotions to support a major brain trauma study that was being conducted by the Cleveland Clinic.[36][37][38][39][40][41][42][43][44][45][46]

MMA regulations

The current rules used in the UFC were first established by the New Jersey Athletic Control Board in 2000, in consultation with the UFC and other MMA promotions in the United States.[47] The first UFC event under the new rules was UFC 28, held before Zuffa's takeover. New Jersey's Unified Rules of Mixed Martial Arts has since been established throughout the country by other state athletic commissions, including Nevada and California.[47] The UFC has however kept close ties with state commissions, especially the Nevada State Athletic Commission, of which Lorenzo Fertitta was a former board member.[48]

Drug Policy Efforts

While during the early years of the sport of mixed martial arts, when Pride Fighting Championships along with the Ultimate Fighting Championship were early premierships of the sport. It has been documented that there was a noteworthy lack of rules and regulations regarding drug testing for PED's.[49][50][51] This led to a widespread debate and discussion regarding how prevalent the use of steroids were in the sport. As well as to a long list of competitors in the UFC and other major organizations facing failed drug tests.[52] This was further highlighted by continued problems with UFC champions including Jon Jones and Anderson Silva.[53][54] So in February 2015, Zuffa announced a more aggressive year round, random-testing approach for its competitors to begin in July 2015.[55][56][57]

Anti-piracy efforts

Zuffa has been one of the largest and most aggressive spenders among anti-piracy political lobbyists in the United States since the end of the 2000s.[58] One thing in particular that sets them apart from other sports leagues is that, in addition to supporting efforts of stricter piracy laws, they have also on numerous occasions gone after selected individuals in addition to pirate hosting websites.[59][60] Some of the most notable cases have included, a well publicized lawsuit with Justin.tv in 2011[61][62][63] and a $32 million settlement involving a New York man in 2014.[64][65]

Zuffa has always maintained the stance that the large amounts of illegal streams of their events causes massive financial losses.[66] In response to having such a stringent stance it has been extremely controversial and has caused a number of debates within the mixed martial arts community on its effectiveness.[67][68] As a result, the UFC began experimenting on an online subscription model known as UFC Fight Pass in 2014. It is unclear how beneficial the service has been since its emphasis has been largely minimal next to UFC's partnership with Fox and noticeable decline in average PPV buyrates, highlighted by the S&P downgrading Zuffa's credit rating in late 2014.[69]

Insurance policy

On May 9, 2011 it was announced that Zuffa would be providing year-round customized insurance coverage for any injury suffered by a UFC or Strikeforce athlete.[70][71][72] [73] [74][75][76] The policy covers any injuries that occur during competition, training, and non-training related accidents.

The policy was underwritten by Houston-based specialty insurance group HCC Insurance Holdings and went into effect on June 1, 2011.[76]

The details of the policy include:

  • Coverage for all athletes signed by the UFC or Strikeforce.
  • Coverage for athletes residing both within and outside of the United States.[70]
  • Zuffa paying for all premiums for the policy, with athletes not required to pay anything.
  • Allowing athletes to use up to $50,000 in annual coverage for any injuries that occur while under contract to Zuffa. This includes services such as, doctor services, laboratory tests, emergency medical evacuation, and physical therapy.
  • Coverage for athletes regardless of if they are scheduled to compete.
  • Life and dental insurance at no cost to the athletes.[70]
  • No coverage for minor illnesses, but training-related illnesses like staph infections are covered.[73]

An insurance policy is not a first for mixed martial arts or combat sports as a whole. Former promotions such as the International Fight League, offered insurance to its athletes. However Zuffa's policy is the first to cover a large group of combat sport athletes.[74]

According UFC president Dana White, the policy was a goal of the company since Zuffa first purchased the UFC in 2001. In addition UFC chairman and CEO, Lorenzo Fertitta stated that the policy took three years to establish while trying to find possible insurers.[70]

Prior to the introduction of this policy, Zuffa provided up to $100,000 for an athlete on each event to cover injuries sustained during competition. However, if an athlete was injured outside of competition they would have to pay for their own medical expenses.[76]

Notable incidents where UFC athletes were injured outside of competition include,

  • Frank Mir, who was struck by a car while riding his motorcycle in 2004, and forced out of competition for over 20 months.
  • Brock Lesnar, who was forced out of action for several months while struggling with diverticulitis.

Monopoly accusations

The Ultimate Fighting Championship has been accused of monopolistic business practices both in casual criticism[77][78][79][80] and in formal lawsuits for a number of years. There are numerous fighters who have accused the company of various wrongdoing's regarding issues including, unequal pay, predatory actions towards rival promotions, lack of a pension or union safety net, and other perceived unethical business practices.

These perceptions have been most highlighted by a Federal Trade Commission investigation that took place between 2011 and 2012. As well as in a series of class action lawsuits filed against the company in late 2014 and early 2015.

Federal Trade Commission investigation

In the months following the March 2011 acquisition of rival promotion, Strikeforce by Zuffa, rumors began to circulate that a possible investigation by the FTC would take place.[81] These rumors later came to be true when it was officially announced around the end of January 2012 that the FTC had in fact conducted an investigation, and found no wrongdoings regarding the UFC being a monopoly.[82][83][84]

Class action lawsuits

2014

On December 16, 2014 a class action lawsuit was filed against Zuffa by fighters Cung Le, Jon Fitch and Nate Quarry.[85][86] Within a few days, Javier Vazquez and Dennis Hallman filed a second class action.[87] And on December 24, Brandon Vera and Pablo Garza filed a third lawsuit.[88] Shortly after the initial news spreading, Zuffa quickly responded following the first class action with the statement that, "The UFC will vigorously defend itself and its business practices."[89]

This soon lead other promoters such as Scott Coker, President of Bellator MMA, expressing an interest in the outcome of the lawsuit while rejecting his organization as being label a, "minor league" as it was done several times in the initial filing. [90]

By the end of December 2014 the UFC made a formal statement stating, "We are proud of the company we have built, confident in our legal position, and intend to prevail in this lawsuit." [91]

2015

On February 7, 2015 a fourth lawsuit was filed against the UFC this one by Mac Danzig And Gabe Ruediger.[92][93]

It was around this time Zuffa motioned to move the hearing date from May 7 to March 26. As well as move the venue from Northern California to Las Vegas, where they are headquartered. [94]

A few weeks later Zuffa motioned to have the lawsuits dismissed, in four separate documents they claim, "The Complaints' vague and conclusory allegations fall far short of the Supreme Court's requirements in Bell Atlantic Corp. v. Twombly, for pleading specific facts showing a plausible antitrust claim."[95]

Shortly thereafter a fifth lawsuit was added by Kyle Kingsbury and Darren Uyenoyama on March 20, 2015.[96]

On April 12th, the plaintiff athletes filed an opposition to February's motion to dismiss and transfer.[97]

Following the May 7th hearing regarding the motion to change venue a Californian federal judge granted Zuffa the motion to change venue to Las Vegas after citing contract agreements from the former employees.[98]

In the latest update, following the change of venue to Nevada Zuffa was denied its motion to remain a discovery for 15 years of its financial records. [99][100]

References

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