MMA Universe

Earlier today, Josh Gross from ESPN.com broke the news that the Federal Trade Commission has closed a non-public investigation into the UFC’s purchase of Strikeforce as of last week.

ESPN reports:

Documents published on the FTC website dated January 25, confirm the FTC’s Bureau of Competition conducted an investigation to determine whether the $34 million acquisition of Explosion Entertainment, LLC, by UFC’s parent company, Zuffa LLC, violated Section 7 of the Clayton Act or Section 5 of the Federal Trade Commission Act.
…
In closing letters issued to counsel for Zuffa and Explosion Entertainment, FTC secretary Donald S. Clark stated, “Upon further review of this matter, it now appears that no further action is warranted by the Commission at this time. Accordingly, the investigation has been closed.”

The full letter from the FTC is below (H/T: FightOpinion.com):

UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580
Office of the Secretary

January 25, 2012

Stephen Axinn, Esq.
Axinn Veltrop, and Harkrider LLP
1330 Connecticut Ave., NW
Washington, DC 20036

Re: Acquisition of Explosion Entertainment, LLC (Strikeforce) by Zuffa, LLC (UFC)
FTC File No. 111 0136

Dear Mr. Axinn:

The Federal Trade Commission’s Bureau of Competition has been conducting a nonpublic investigation to determine whether Zuffa, LLC’s acquisition of Explosion Entertainment, LLC may violate Section 7 of the Clayton Act or Section 5 of the Federal Trade Commission Act.

Upon further review of this matter, it now appears that no further action is warranted by the Commission at this time. Accordingly, the investigation has been closed. This action is not to be construed as a determination that a violation may not have occurred, just as the pendency of an investigation should not be construed as a determination that a violation has occurred. The Commission reserves the right to take such further action as the public interest may require.

By direction of the Commission.

Donald S. Clark
Secretary

The New York District Attorney and Attorney General filed separate motions to dismiss two claims in Zuffa’s lawsuit in New York City. While the lawsuits seek to dismiss only a portion of the UFC complaint, it appears that the defendants are leaving open a motion to dismiss the entire complaint in total at a later date.

Courtesy of the Fight Lawyer, the two motions are below:

Attorney General’s Motion to Dismiss(function() { var scribd = document.createElement("script"); scribd.type = "text/javascript"; scribd.async = true; scribd.src = "http://www.scribd.com/javascripts/embed_code/inject.js"; var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(scribd, s); })();

District Attorney’s Motion to Dismiss(function() { var scribd = document.createElement("script"); scribd.type = "text/javascript"; scribd.async = true; scribd.src = "http://www.scribd.com/javascripts/embed_code/inject.js"; var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(scribd, s); })();

Payout Perspective:

The crux of both arguments appear to be that despite Zuffa’s claims, the fact remains that New York had a rational basis for enacting the ban at the time it was drafted. And based on this, the statute was not vague and overbroad as it relates to the due process and equal protection claims. They cite to case law which supports the theory that despite changes over the years that may, arguably, antiquate a statute’s purpose, under a rational basis review of a law, so long as there was a rational purpose for it at the time of its introduction it is valid.

Both motions argue that the proper forum for Zuffa’s claims is with the legislature and that if Zuffa wanted to enact change, it should direct its efforts to the legislature.

Via the District Attorney’s motion to dismiss:

…as a proper exercise of judicial restraint, federal courts must uphold a statute that was rational when enacted, even when post-enactment developments cast doubt on the wisdom, logic, or providence of prior legislative decisions

It also argues that legislatures are given “substantial latitude” when it comes to enacting laws under a rational basis review of the law as “imperfections and even inequality must be tolerated.”

The defendants’ motions are persuasive and could set the dominoes in line if the court grants the motion to dismiss Zuffa’s claims. As indicated in its motions, both parties contemplate a further motion to dismiss the rest of Zuffa’s claims if it is successful with this motion.

OnMilwaukee.com reports that an “Anti-MMA” bill in Wisconsin is still alive but is fading quickly. If passed, the bill could ban mixed martial arts in over 1,200 towns in the state.

Duke Roufus of Roufus Sport has lobbied against the measure. You may recall Roufus is the trainer for MMA fighters including Anthony Pettis and his gym is located in Milwaukee

The actual bill authorizes towns to pass ordinances banning MMA. The state’s Department of Safety and Professional Services governs the regulation of MMA in the state. The proposed bill would grant local government the authority to ban MMA in its town.

Via OnMilwaukee.com:

Referred to as “Wisconsin’s Anti-MMA Bill”, AB-308 was authored by Representative Patricia Strachota and co-sponsored by Senator Glenn Grothman in October of 2011, just a year removed from Wisconsin’s adoption of mixed martial arts regulations designed to create statewide safety and regulatory standards.

The bill’s sponsors actually supported the original legislation adopting MMA regulations. The change in course is puzzling to Roufus and supporters of MMA of that state.

Payout Perspective:

If passed, it would be a definite blow to MMA in the state. The story suggests that MMA cards are just being organized and to repeal the MMA regulations would be a disappointment for MMA fans. The bill is not as definite as New York’s ban as the pertinent language gives a town the authority to ban MMA. So, it would really be up to the local governing body whether it would enact a ban. The bill appears to be losing support but we will continue to monitor.

MMA Fighting and TSN report that Vancouver is likely out of the UFC’s rotation of events for 2012. It announced 2012 events in Montreal and Toronto and another “surprise” Canadian city according to UFC’s director of operations Tom Wright.

Wright indicated that the lack of regulatory movement, not financial success was the reason that it would not return in 2012.

Via MMA Fighting:

The shows certainly weren’t financial failures. 2010′s UFC 115 did a $4.2 million gate, while UFC 131, held this past June, drew a $2.8 million gate. Instead, the problem is regulatory stalling. Both of the UFC’s events were held during a two-year test period held by the city after overturning a previous ban on MMA. That test period will end in the coming months and apparently, the prospects of sanctioned MMA will go with it.

Via TSN:

“And the disappointing thing for our sport is that after a two-year test period, they’ve had two tests — ours,” Wright said Wednesday. “Because no other promotion could afford the indemnification or the insurance costs or the other things — or actually have the perseverance to get an event to be held there.

Payout Perspective:

A disappointment to MMA fans in the Pacific Northwest. Last June’s event was set to be the return of Brock Lesnar. Unfortunately, due to Lesnar’s health issues, Lesnar’s late scratch likely affected the attendance for the show (yet, it still did pretty well). Taking Vancouver off of the schedule is a sign for the need of uniform regulation in Canada. This is something the UFC has lobbied for in Ottawa. Bloody Elbow was critical of Vancouver for granting the UFC the opportunity to hold events in its city but not doing anything to ensure a lasting relationship with the sport of MMA. BE argues that Vancouver officials made unreasonable monetary requests of the UFC to cover for insurance, extra police security, etc. while not creating laws which would regulate the sport in the province. Certainly, this would be the UFC’s point of view as well.

Notwithstanding Vancouver’s loss, there are other Canadian cities more than willing to hold a UFC event and work with the UFC regarding regulating MMA.

For Pacific Northwest MMA fans, perhaps Seattle will be a new destination for a UFC PPV. It had the highest attendance for a UFC Fight Night and the Seattle media embraced the sport. With the Key Arena dormant except the random concert and the WNBA’s Storm in the summer, Seattle has a great venue to house the sport.

As predicted (and as in past years), the MMA bill has again stalled in the New York State Assembly after passing the New York Senate and overwhelmingly passing the two committees where it was debated in the Assembly–Tourism, Parks, Arts and Sports Development and Codes.

Unfortunately, the next committee in the process, Ways & Means, has issued its Agenda on this last day of the legislative session and it does not include the bill that would legalize MMA in New York.

While the legislative session could go a few days longer — until Wednesday or Thursday perhaps — the bill would still need to pass through W&M and Rules before going to the floor for a vote.  This is not going to happen as Herman Farrell, Chair of Ways & Means, has voiced his distaste for MMA:

The Ways and Means chairman said that he’s “looking at” the bill, but said he’s far from a mixed-martial arts fan.  “I don’t think very much of the sport,” Farrell said. “Next we’ll give them clubs with spikes on the end; that will be good.”

Moreover, Sheldon Silver, Chair of Rules and Speaker of the Assembly, has stated that he is not “enamored” with the sport.

Despite the setback, there is some room for optimism this year.  Indeed, there was more mainstream media attention to the issue, which I believe and have previously written will be critical if we are going to get this done.  Moreover, the votes (when votes occurred) were more favorable to MMA than past years.

The fight resumes in 2012.

Fight Lawyer

Justin Klein is an attorney at Satterlee Stephens Burke & Burke LLP in New York City where he concentrates his practice in commercial litigation and represents clients in the fight industry. He regularly addresses current legal issues that pertain to combat sports, including efforts to legalize MMA in New York, at his Fight Lawyer website. He is a licensed boxing manager with the New York State Athletic Commission as well as the founder and Chairman of the Board of the New York Mixed Martial Arts Initiative, a non-profit organization that gives inner city youth the opportunity to experience the emotional and physical benefits of martial arts training. Justin lives in New York City where he trains in jiu jitsu and boxing.

DISCLAIMER

The information in this post and on my site consists of my opinion only, i.e., it is not the opinion of my employer or anybody else. In addition, and because this is my opinion, it is not intended to be (and is not) legal advice or an advertisement for legal services. This post provides general information only. Although I encourage interested parties to contact me on the subjects discussed in the articles, the reader should not consider information on this site to be an invitation for an attorney-client relationship. I disclaim all liability in respect to actions taken or not taken based on any contents of this post. Any e-mail sent to me will not create an attorney-client relationship, and you should not use this site or my site to send me e-mail containing confidential or sensitive information.

As predicted (and as in past years), the MMA bill has again stalled in the New York State Assembly after passing the New York Senate and overwhelmingly passing the two committees where it was debated in the Assembly–Tourism, Parks, Arts and Sports Development and Codes.

Unfortunately, the next committee in the process, Ways & Means, has issued its Agenda on this last day of the legislative session and it does not include the bill that would legalize MMA in New York.

While the legislative session could go a few days longer — until Wednesday or Thursday perhaps — the bill would still need to pass through W&M and Rules before going to the floor for a vote.  This is not going to happen as Herman Farrell, Chair of Ways & Means, has voiced his distaste for MMA:

The Ways and Means chairman said that he’s “looking at” the bill, but said he’s far from a mixed-martial arts fan.  “I don’t think very much of the sport,” Farrell said. “Next we’ll give them clubs with spikes on the end; that will be good.”

Moreover, Sheldon Silver, Chair of Rules and Speaker of the Assembly, has stated that he is not “enamored” with the sport.

Despite the setback, there is some room for optimism this year.  Indeed, there was more mainstream media attention to the issue, which I believe and have previously written will be critical if we are going to get this done.  Moreover, the votes (when votes occurred) were more favorable to MMA than past years.

The fight resumes in 2012.

Fight Lawyer

Justin Klein is an attorney at Satterlee Stephens Burke & Burke LLP in New York City where he concentrates his practice in commercial litigation and represents clients in the fight industry. He regularly addresses current legal issues that pertain to combat sports, including efforts to legalize MMA in New York, at his Fight Lawyer website. He is a licensed boxing manager with the New York State Athletic Commission as well as the founder and Chairman of the Board of the New York Mixed Martial Arts Initiative, a non-profit organization that gives inner city youth the opportunity to experience the emotional and physical benefits of martial arts training. Justin lives in New York City where he trains in jiu jitsu and boxing.

DISCLAIMER

The information in this post and on my site consists of my opinion only, i.e., it is not the opinion of my employer or anybody else. In addition, and because this is my opinion, it is not intended to be (and is not) legal advice or an advertisement for legal services. This post provides general information only. Although I encourage interested parties to contact me on the subjects discussed in the articles, the reader should not consider information on this site to be an invitation for an attorney-client relationship. I disclaim all liability in respect to actions taken or not taken based on any contents of this post. Any e-mail sent to me will not create an attorney-client relationship, and you should not use this site or my site to send me e-mail containing confidential or sensitive information.

Dana White made one last plea for the legalization of MMA in New York with an op-ed piece in today’s New York Daily News. While White hopes for a full NY Assembly vote, the current bill to legalize MMA is not expected to be passed.

White argued to overturn the ban in the New York Daily News:

It’s long past time to overturn that prohibition. It’s a safe and respectable sport that’s every bit as legitimate as boxing or professional football.

White stressed how different the sport has become since it was banned in the 1990s. He also addressed the issue of concussions – a topic that is becoming increasingly important when discussing safety in other sports such as football. In addition, he stressed the economic benefit the sport would have on New York.

One thing that the op-ed did not touch on that the Fight Lawyer picked up on was that there are unsanctioned, underground fights occurring in New York and legalizing MMA could curb these type of bouts. ESPN had a piece on this not too long ago.

Payout Perspective:

White’s op-ed piece is a nice bit of public relations for the UFC. It was plainspoken and laid out the arguments for the legalization of the sport. It did not point fingers or badmouth any person or group for blocking the legalization of MMA. Other commissioners of sports leagues (e.g., Roger Goodell) have used op-eds to get their points across about issues in their respective sports. This shows that the UFC is strategizing like a mainstream sports league. While the MMA bill may not go through this legislative session in New York, it is laying groundwork for its eventual passage.

I just read an article, The fate of mixed martial arts bill uncertain, and was troubled by Assemblyman Englebright’s (the bill’s sponsor and Chair of the Tourism, Parks, Arts and Sports Development Committee where the bill originates in the Assembly) comments because they are telling and signify the bigger issue with legalization here in New York.

Specifically, he says:

There is a healthy controversy. There are very concerned members of the majority who can’t support it this year, as they could not support it in years past, . . . I imagine we’ll have similar blockage or stoppage, . . . But, you never know. There are quite a few new faces in the chamber this year. I haven’t seen a sea change, but I have seen subtle changes.

As I have posted before, the majority — the democratic leadership in the Assembly — is allowing the bill to stall out in Committee before reaching a floor vote, where it in Englebright’s opinion should have enough support to pass. This is the “blockage” and “stoppage” that Englebright is referring to.

If you follow my blog, you will recall that last year Assemblyman Englebright said essentially the same thing:

“If we were able to get it to the floor, we’d probably pass it with Republican votes,” Englebright said. “But there is a desire, I think, on the part of many of the members of our Democratic majority to resolve this matter satisfactorily within our own [party] before submitting it to the uncertainties of a debate.”

Hopefully, Englebright, as the bill’s sponsor and a member of the senior leadership of his party, can convince the other members of his majority to let the bill go to the floor for an up or down vote (i.e. let the so-called democratic process play out).

Otherwise, we may be having this same conversation one-year from now….

One last note, I am told that the bill will be taken up in the Tourism Committee next week and that there are a significant number of assembly members pushing the Assembly Speaker to let the bill go straight to the floor for an up or down vote after passage out of the Tourism Committee.

Fight Lawyer

Justin Klein is an attorney at Satterlee Stephens Burke & Burke LLP in New York City where he concentrates his practice in commercial litigation and represents clients in the fight industry.  He regularly addresses current legal issues that pertain to combat sports, including efforts to legalize MMA in New York, at his Fight Lawyer website.  He is a licensed boxing manager with the New York State Athletic Commission as well as the founder and Chairman of the Board of the New York Mixed Martial Arts Initiative, a non-profit organization that gives inner city youth the opportunity to experience the emotional and physical benefits of martial arts training.  Justin lives in New York City where he trains in jiu jitsu and boxing.

DISCLAIMER

The information in this post and on my site consists of my opinion only, i.e., it is not the opinion of my employer or anybody else. In addition, and because this is my opinion, it is not intended to be (and is not) legal advice or an advertisement for legal services. This post provides general information only. Although I encourage interested parties to contact me on the subjects discussed in the articles, the reader should not consider information on this site to be an invitation for an attorney-client relationship.  I disclaim all liability in respect to actions taken or not taken based on any contents of this post. Any e-mail sent to me will not create an attorney-client relationship, and you should not use this site or my site to send me e-mail containing confidential or sensitive information.

On Monday, legislators in the New York state senate passed a bill (42-18) which would legalize MMA in New York. The bill must get through a final Assembly floor vote for the proposed legislation to become law according to a UFC press release.

The release provided by the UFC’s public affairs firm stressed the economic impact the passage would have on the state:

A recent study estimated that holding two Ultimate Fighting Championship (UFC) events in the state (one at Madison Square Garden and one in Buffalo) will create roughly $16 million in new spending. Additionally, the study found smaller MMA operators will likely hold around 70 events that would bring an additional $4 million. In total, $23 million of annual new spending and hundreds of new jobs will be created in the local economy by regulating MMA. The full economic impact study is available at www.ufc.com/nyceconstudy.

Currently 45 other U.S. states regulate MMA, and Alaska and Wyoming lack athletic commissions, which regulate the sport. New Jersey, Pennsylvania, Massachusetts and neighboring states consistently attract fans and bring economic benefits through multiple MMA events in front of sold out arenas.

MMA Fighting sobers NY fans with the fact that there is one hurdle left:

It will now move on to the State Assembly, considered a much tougher audience for MMA. In 2010, the same bill passed the Senate but never made it to the floor for an Assembly vote after the state’s legislators were bogged down in budget problems and other issues.

Payout Perspective:

If the legislation passes, it would mean that the UFC, and other MMA organizations, would finally be able to promote in New York. It would also mean a dramatic, positive economic impact for the state according the the UFC study. According to MMA Fighting, MSG has reserved dates for the UFC if (and when) the legislation is signed into law. There is still opposition to the bill and the vote will be close so the UFC may have to sweat it out until the vote occurs.

MMAJunkie broke the news that FullTiltPoker.com, PokerStars.com, and AbsolutePoker.com were seized today by the FBI and indicted for bank fraud, illegal gambling, and money laundering.

The implication of these charges could have a great impact on MMA, as FullTiltPoker.com (among other poker sites) invest a great deal of money into sponsoring MMA promotions  such as the UFC and Strikeforce,  as well as individual fighters.

Sam Spira, owner of Xtreme Couture management said the following:

“This is a disturbing development,” Spira told MMAjunkie.com (www.mmajunkie.com). “Full Tilt was one of the remaining pro-fighter sponsors that has strongly supported MMA over the past few years. The importance of the ongoing interplay between supporters and fans of poker and supporters and fans of MMA cannot be underestimated.”

Ken Pavia of MMA Agents gave some input as to what the poker companies are going through right now:

“The online poker companies don’t have a complete handle on it at this time, but they’re doing their due diligence to find out what the full impact is,” Pavia said. “In the short-term, it will severely impact fighters’ sponsor revenue, which traditionally matched their show pay for our televised clients. I would venture to say the poker industry is equal to apparel industry as the No. 1 sponsor of fighters outside the UFC.”

Jene Gene of Magnetic MMA points out that the “.net” versions of the poker sites are the ones sponsoring the promotions and fighters, and that they are compliant since they are for educational and entertainment purposes, not for gambling (FullTiltPoker.net is still functional).  As for Zuffa’s newly acquired MMA promotion Strikeforce, which FullTiltPoker is a major sponsor, they told MMAJunkie that  they are “looking into the situation specifically how it relates to our deal”, and would not comment any further.

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Payout Perspective:

ESPN goes into more details regarding the charges on the poker companies:

The Manhattan U.S. Attorney announced the indictments of those involved with the online poker sites as well as those who were responsible for the financial transactions. The 11 defendants are Isai Scheinberg and Paul Tate (PokerStars), Raymond Bitar and Nelson Burtnick (Full Tilt Poker), Scott Tom and Brent Beckley (Absolute Poker) and Ryan Lang, Ira Rubin, Bradley Franzen, Chad Elie and John Campos (involved with payment processors).
…
Manhattan U.S. Attorney Preet Bharara said in the indictment: “As charged, these defendants concocted an elaborate criminal fraud scheme, alternately tricking some U.S. banks and effectively bribing others to assure the continued flow of billions in illegal gambling profits.
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The companies are all based overseas. The indictment sought $3 billion in money laundering penalties and forfeiture from the defendants.

As for the penalties the companies are facing:

The charges are conspiracy to violate Unlawful Internet Gambling Enforcement Act (UIGEA), violation of UIGEA, operation of illegal gambling business, conspiracy to commit bank fraud and wire fraud, and money laundering conspiracy . Maximum penalties from these charges range from five years in prison and a $250,000 fine to 30 years in prison and a $1,000,000 fine (or twice the gross gain or loss).
…
“These defendants, knowing full well that their business with U.S. customers and U.S. banks was illegal, tried to stack the deck,” said Janice Fedarcyk, FBI assistant director-in-charge. “They lied to banks about the true nature of their business. Then, some of the defendants found banks willing to flout the law for a fee. The defendants bet the house that they could continue their scheme, and they lost.”

Zach Arnold of FightOpinion.com points out the potential severity for the MMA landscape:

This is enormous news. Full Tilt is a Strikeforce sponsor and they also recently made a deal with the Fertittas to try to work on getting legalized gambling in the states. (Harry Reid and others in Congress were on the same wavelength.) The huge irony — this same prosecutor is one that Dana White thanked in fighting piracy of UFC footage.

…

When discussing this story, you simply can’t avoid the politics of it. The political climate was growing in the US Congress to work out legislation for online gambling in the States. Harry Reid, who Zuffa management helped out politically in his 2010 re-election campaign, was receptive to the idea of legalization. Several other key players, like Barney Frank, were also keen on the idea. After all, legalize-and-tax made perfect sense. The political climate became so positive that the Las Vegas casino power players like Steve Wynn and the Fertittas got involved in deals with companies like Full Tilt Poker.

Arnold points out the irony involving the prosecutor in this case, which is the same who Dana White publicly thanked in being aggressive in anti-piracy efforts relating to copyright issues with Zuffa property.

Another interesting point to note is that due to the charges, Forbes reports that Steve Wynn has cut ties with PokerStars, one of the poker sites indicted, after announing to team up with the company only a few weeks ago.  The UFC and the Fertittas are in the same boat, as  Full Tilt Poker and  Fertitta Interactive just announced an online poker deal just weeks ago and the UFC was working on promotional deals with FullTiltPoker for upcoming events and would further it’s involvement if the online gambling bill was ever passed.  Strikeforce has expanded their promotional dealings with FullTiltPoker since they were acquired by Zuffa as well. The Las Vegas Review-Journal has the story behind Fertitta Interactive and FullTilt:

Online gaming giant FullTilt Poker and Fertitta Interactive, which is co-owned by the family that founded Station Casinos, have struck a partnership to operate an Internet poker website if the activity gains federal approval.
…

The agreement covers only potential federal legislation for Internet poker, said Tom Breitling, who co-owns Fertitta Interactive with brothers Frank Fertitta III and Lorenzo Fertitta and his longtime business partner Tim Poster.
…

“We believe that a federal law for online poker is the way to go,” Breitling said. “We do believe that a federal online poker bill would be good for Nevada. Nevada is a leader in gaming regulation, and we need the thousands of high-paying high tech jobs and the millions in tax revenues associated with online poker.”

The political and gambling ties don’t stop there for the Fertittas, who own Station Casinos and backed up and openly campaigned for Nevada Senator Harry Reid, who is now trying to legalize online poker, a move that could make UFC and Station Casino owners a good amount of money. ESPN also ran with a story titled “UFC Pikcing Political Sides”, stating that UFC’s Chuck Liddell, Randy Couture, and Dana White were openly campaigning and swaying the UFC fanbse to become supporters of Reid.

The Wall Street Journal reports on Reid and the gambling bill:

Mr. Reid, who has opposed online gambling in the past, is holding his cards close to his vest regarding plans to move forward with the legislation. Passing such a measure is highly uncertain as the heated session winds down, given the sensitive nature of the subject.
…
Previous attempts at online-gambling legislation haven’t moved forward, but casino interests believe that given Mr. Reid’s powerful position atop the Senate, he might be able to push the poker measure into another bill, according to people familiar with the discussions.
…
The legislation would overturn a bill passed in 2006 that bans financial institutions from processing online-gambling transactions. That led publicly traded companies to pull out from operating online sites in the U.S. In their place, offshore sites have gathered an estimated 10 million U.S. poker players, according to the Poker Players Alliance.
…
According to the draft of the bill reviewed by The Wall Street Journal, Mr. Reid’s office is considering language that would allow only existing casinos, horse tracks and slot-machine makers to operate online poker websites for the first two years after the bill passes, which could limit the ability of other companies to enter the market.

Back in October of 2010, BloodyElbow’s Luke Thomas wrote a piece titled “UFC Tries to Help Nevada Senator Harry Reid, Deepens Political Involvement”, which delves deeper into UFC’s political involvement regarding the legalization of MMA, legalizing online poker, fighting internet piracy, and their ability to make and use political allies to accomplish future goals and further expand their bottom line.

UFC Light Heavyweight Thiago Silva waived his right to an attorney yesterday and decided to accept his fate after admitting to altering his post-UFC 125 drug test. The NSAC revoked his license for 12 months, took a percentage of his purse and rendered his fight with Brandon Vera a no contest.

MMA Junkie reports that the NSAC reduced its original punishment due to Silva’s “candor and honesty”. Silva admitted to using a “urine adulterant” when giving a sample to the NSAC officials. Apparently, owning up to his wrongdoing has granted him some leniency with the NSAC.

Via MMA Weekly:

Silva issued a statement through his camp at American Top Team explaining the situation, and apologizing for his misdeeds.

“We make decisions every day of our lives. Some are good and some are bad. When you make a bad decision, you can either make the situation worse by trying to cover it up or lie about it or just stick your head in the sand and refuse to acknowledge it even happened or you can own up to it with an honest explanation, accept the consequences of your actions, apologize to the people affected by it, learn from it and move on. I’m choosing the second option,” Silva wrote.

Via MMA Junkie:

NSAC commissioners originally recommended a fine of one-third of Silva’s “show” purse, as well as his entire win bonus, but citing the Brazilian’s “candor and honesty” eventually settled on 25-percent of his purse ($13,750) and $20,000 of the win bonus for a total fine of $33,750.

Silva dodged a bit of a bullet with his suspension, as NSAC executive director Keith Kizer recommended the 12-month suspension begin with Thursday’s hearing rather than the more traditional procedure of backdating the first day of the suspension to the date of the fight in question.

Kizer cited Silva’s reluctance to fess up to the charges until his “B” sample returned with the same findings as the first test. However, the commissioners instead elected to reward Silva for his belated admissions and chose to stick with the traditional routine. Silva is eligible to reapply for a license on Jan. 2, 2012, and he will have to provide a drug-free (and authentic) urine sample.

Despite a lackluster performance, the UFC reinstated Brandon Vera due to the questions concerning Silva’s drug test.

Payout Perspective:

Does it makes sense that he was docked only a percentage of his win bonus although the bout was changed to a no contest? Shouldn’t Silva have been stripped of the full win bonus?

Its interesting that the NSAC granted Silva some leniency even though he attempted to cheat the system and then did not admit to wrongdoing until it was apparent that he would be caught. Still, a year out of work and $33K plus in fines is a stiff penalty and serve as some sort of deterrent to those that would follow the same path as Silva. Obviously, this does not help with any of his sponsors. Will they be there when he comes back in 2012? Silva is a good fighter that did not need to cheat to win.

What this means for further drug tests is that the NSAC will have to be more intrusive in watching athletes as they submit the urine sample.

Saturday’s New York Times features an op-ed calling for the legalization of MMA in New York State. Entitled, “It Only Looks Dangerous,” and written by the editor of Men’s Health, David Zinczenko, he states that he has changed course on his position on MMA and is now a firm supporter of the sport.

Coincidentally, this month’s Men’s Health features GSP on the cover.  Zinczenko states that he had opposed MMA and prohibited MMA from its front cover in the past.

Via NY Times:

But I’ve come to believe that, in fact, the New York Legislature is wrong. Mr. Reilly is wrong. And more to the point, I was wrong (an admission my brother will hold over my head as long as I live). Mixed martial arts may be a violent sport, but it is much safer than other, supposedly more civilized competitions, and New York and its fellow holdouts should finally sanction it.

With West Virginia regulating MMA recently, New York, Connecticut and Vermont are the only states with athletic commissions that have not legalized MMA. Connecticut has legislation pending.

Zinczenko subtely calls out the traditional sports of football and boxing as more dangerous than MMA. He cites the appearance of safety in helmets and padded gloves as not safe at all.

These (helmets and boxing gloves) are, in fact, more like the equivalent of poorly designed sunscreen — “protection” that allows athletes to submit to even greater levels of punishment.

(H/t Fight Lawyer)

Payout Perspective:

This is another editorial attempting to educate the public (and more specifically New Yorkers) that MMA is not as dangerous as other popular sports. The op-ed seemingly is an admission of wrong by the author as he has changed course after discovering that MMA is not as dangerous as boxing or the NFL. Hence, New York should rethink its position on banning it in the state. This is a sound argument and good for proponents of MMA. But, the fact that GSP is on its cover prior to one of the UFC’s biggest events of the year colors the opinion. Is the author changing position because it sees the success of the UFC and is jumping on the bandwagon to sell magazines? Secondly, what of the subtle diss of the NFL and boxing in essentially calling the sports unsafe. This position probably would not sit well with Roger Goodell. Despite the fact that the NFL is in labor strife, calling out the sport now may not be a wise decision.

A recent op-ed on CBSNews.com believes that the UFC will be able to gain mainstream acceptance as the NFL muddles in labor uncertainty. It also takes aim at lawmakers that don’t see the sport as a source of revenue for a stumbling economy.

Via CBSNews.com:

The UFC may appear like an upstart against the NFL powerhouse in terms of fan base, revenue and reputation, but securing absolute ownership of the elite athletes of the sport signals that Dana White and company are an entertainment force to be reckoned with. Bringing together the sport under one brand allows greater fan loyalty, more marketing opportunities and exponential revenue growth. It’s a game-changer within an industry historically dominated by the NFL, NBA, MLB and NHL.

But now the UFC has been elevated to the elite club of sports entertainment organizations. And like most grassroots movements, the mainstream media and politicians are the last to realize it.

…The UFC has risen from its humble beginnings in 1993 to surpass the one billion dollar mark; and it’s now broadcasting in more than 130 countries. Fighters Randy Couture and Quinton Jackson are crossover successes and starred in two Hollywood blockbusters last year – The Expendables and The A-Team, respectively. When Charlie Sheen’s fight with Chuck Lorre and CBS erupted, he name dropped the octagon – the UFC’s standard fight structure – as the place to bring his tiger blood and fire-breathing fists. And the UFC is one of the premiere case studies of how social media can deliver when done right. White’s embrace of Twitter showcases his strong personality and fan-appeal and he has personally won over legions of paying followers with his unparalleled direct dialogue. With a rabid and growing fan base, the UFC’s ceiling is nowhere in sight.

As the NFL’s labor situation spirals out of control and with the NBA only a few months from a similar fate, UFC’s owner Zuffa LLC and White are surely brushing up on their history. The redneck, uncouth reputation that’s unfairly been attached to the UFC like a scarlet letter is starting to fade. Don’t let the tattoos, dark music and gallons of blood spilled on the mat fool you, this is a multi-billion dollar industry.

The article goes on to ask why lawmakers have neglected the sport as a revenue stream:

The political elites in Washington, financial whizs on Wall Street and studio heads in Hollywood ignore the sport at their own peril. An economic impact report last year determined the sport could generate $25 million a year in benefits to New York alone if the state allows fights to be held and regulated. That’s based on holding only two events. In the midst of the financial crisis, legislators in Albany and Washington, DC have foolishly failed to ignore the sport. And taxpayers should be outraged.

You don’t have to be a football or mixed martial arts fan to appreciate the spectacle of an American sports entertainment industry rising to world-wide prominence. It’s a uniquely American story that should be celebrated by even government tax collectors.

Payout Perspective:

This is a good piece from a mainstream outlet that understands that MMA is a profitable sport and should be given its due. Its rare to see articles that are willing to accept MMA and realize the economic impact it can have.  It does a good job of calling out Albany in pressuring lawmakers to legalize MMA in NY.

Following up on my post, Bill to Legalize MMA in New York Out of the Gate Early in the Senate, I am happy to report that  New York Senate Bill 1707A, i.e. the bill to authorize mixed martial arts in New York, overwhelmingly passed the Senate Standing Committee on Cultural Affairs, Tourism, Parks and Recreation, by a vote of 13-1 this morning.

If last year is any indication, the bill will now go straight to the full Senate for a vote.

The overwhelming support for the bill is a good sign and so is the fact that the bill is through the Tourism Committee this early in the legislative session, i.e. approximately three (3) months before the bill was referred out of the Tourism Committee last year.

As I said in my earlier post:

While I hesitate to read too much into anything when it comes to New York politics, in my view, the early action on the bill in the Senate (in particular, before the budget process has been resolved) is a step in the right direction.

By the time the bill passed the Senate last year it was near the end of the legislative session, which did not give proponents of legalizing MMA in the Assembly too much time to use that leverage and publicity to work on pushing the bill in the Assembly.

Now, however, if the Senate can pass the bill in April or even early-May, there will be more time to force the issue in the Assembly.

If this happens, I think the New York grassroots movement can be a critical force by getting the issue on the radar of representatives (who are not otherwise sponsors of the bill or aware of the issue) up in Albany.

I will continue to monitor.

Fight Lawyer

Justin Klein is a partner of the law firm Satterlee Stephens Burke & Burke LLP in New York City where he concentrates his practice in commercial litigation and represents clients in the fight industry.  He regularly addresses current legal issues that pertain to combat sports, including efforts to legalize MMA in New York, at his Fight Lawyer website.  He is a licensed boxing manager with the New York State Athletic Commission as well as the founder and Chairman of the Board of the New York Mixed Martial Arts Initiative, a non-profit organization that gives inner city youth the opportunity to experience the emotional and physical benefits of martial arts training.  Justin lives in New York City where he trains in jiu jitsu and boxing.

DISCLAIMER

The information in this post and on my site consists of my opinion only, i.e., it is not the opinion of my employer or anybody else. In addition, and because this is my opinion, it is not intended to be (and is not) legal advice or an advertisement for legal services. This post provides general information only. Although I encourage interested parties to contact me on the subjects discussed in the articles, the reader should not consider information on this site to be an invitation for an attorney-client relationship.  I disclaim all liability in respect to actions taken or not taken based on any contents of this post. Any e-mail sent to me will not create an attorney-client relationship, and you should not use this site or my site to send me e-mail containing confidential or sensitive information.

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The West Virginia legislature passed legislation on Saturday which would allow the state to host mixed martial arts events. West Virginia is one of the last states that did not regulate MMA in its state. New York is the most notable holdout of MMA in its state.

Via WSAZ.com:

West Virginia could host mixed martial arts events under legislation passed by the state Legislature.

The Senate voted 23-10 in favor of the measure Saturday.The House then sent the bill to acting Gov. Earl Ray Tomblin on a 71-26 vote.

Opponents criticized the sport’s violence and argued it would hurt boxing. Supporters pushed the sport in part because it could bring in national sporting events.

Mixed martial arts combines elements of karate, judo, jujitsu and kickboxing. Of the 48 states with athletic commissions, all sanction the sport except West Virginia, Connecticut, New York and Vermont.

H/t John Luther via twitter.

Payout Perspective:

This news tops off a monumental day for the state of MMA. This is good news for supporters of MMA since Connecticut recently contemplated similar legislation. New York is still the big holdout here although new legislation has been introduced in its senate.

I am happy to report that New York Senate Bill 1707A, i.e. the bill to authorize mixed martial arts in New York, is off to an early start in the Senate Standing Committee on Cultural Affairs, Tourism, Parks and Recreation.

Specifically, the bill is on the Tourism Committee Agenda for next week.

As you may recall from earlier posts, the bill is sponsored by District 47 Senator, Joseph A. Griffo, of Utica New York and originates in the Tourism Committee.

Last year, although the bill passed the full Senate in mid-June, it was not debated and referred, i.e. passed, out of the Tourism Committee until June–near the end of the legislative session.

For a discussion on what happens after the bill passes the Senate, see this post.  Essentially, because there is a virtually identical bill that has been introduced in the Assembly, that bill must follow its committee progression (similar to the Senate bill) and ultimately pass the full Assembly before the joint bill would go to the Governor for signature.

The Assembly, of course, was the sticking point last year.  The bill was referred out of the Tourism Committee (of which Assemblyman Reilly is a member), the Codes Committee, and ultimately hit a wall in the Ways and Means Committee where no action was taken.

While I hesitate to read too much into anything when it comes to New York politics, in my view, the early action on the bill in the Senate (in particular, before the budget process has been resolved) is a step in the right direction.

By the time the bill passed the Senate last year it was near the end of the legislative session, which did not give proponents of legalizing MMA in the Assembly too much time to use that leverage and publicity to work on pushing the bill in the Assembly.

Now, however, if the Senate can pass the bill in April or even early-May, there will be more time to force the issue in the Assembly.

If this happens, I think the New York grassroots movement can be a critical force by getting the issue on the radar of representatives (who are not otherwise sponsors of the bill or aware of the issue) up in Albany.

I will continue to monitor.

***

Justin Klein is an attorney at Satterlee Stephens Burke & Burke LLP in New York City where he concentrates his practice in commercial litigation and represents clients in the fight industry.  He regularly addresses current legal issues that pertain to combat sports, including efforts to legalize MMA in New York, at his Fight Lawyer website.  He is a licensed boxing manager with the New York State Athletic Commission as well as the founder and Chairman of the Board of the New York Mixed Martial Arts Initiative, a non-profit organization that gives inner city youth the opportunity to experience the emotional and physical benefits of martial arts training.  Justin lives in New York City where he trains in jiu jitsu and boxing.

DISCLAIMER

The information in this post and on my site consists of my opinion only, i.e., it is not the opinion of my employer or anybody else. In addition, and because this is my opinion, it is not intended to be (and is not) legal advice or an advertisement for legal services. This post provides general information only. Although I encourage interested parties to contact me on the subjects discussed in the articles, the reader should not consider information on this site to be an invitation for an attorney-client relationship.  I disclaim all liability in respect to actions taken or not taken based on any contents of this post. Any e-mail sent to me will not create an attorney-client relationship, and you should not use this site or my site to send me e-mail containing confidential or sensitive information.

MMA Junkie reports that due to budget cuts, the Nevada State Athletic Commission has eliminated out of competition drug testing. This type of drug testing is thought to be a strong deterrent to performance enhancing drugs in pro competition.

Via MMA Junkie:

With state governments around the country tightening their belts amid a widening recession, the NSAC’s budget for out-of-competition testing was reduced to $12,000 (from $18,000) in fiscal year 2009-2010. Regulators then asked the commission to give back all of the money before the year’s end, (NSAC Executive Director Keith) Kizer said.

In fiscal year 2010-2011, there is no money in the NSAC’s budget for out-of-competition drug testing, though athletes are still tested either the day prior to an event or immediately following it, and sometimes both.

The enforcement gap has nevertheless prompted the commission to get creative in coming up with the money to reinstate the program. One solution expected to be addressed at a meeting early next month is to draw a portion of funds from the amateur combative sports program, which pays for some of the safety and administrative costs associated with amateur boxing, kickboxing and MMA. The program is funded by a “ticket fee” assessed by the NSAC at professional events that is separate from the commission’s live gate fee, which takes a percentage of the money generated by ticket sales. The ticket fee amounts to .50 per ticket with live gates totaling less than $1 million, and $1 per ticket above that figure.

Commissioners will decide during the March meeting whether to lobby legislators on changing the NSAC’s funding statutes for the next state budget, which runs from July 1, 2011 to June 30, 2013. Nevada legislators are working to close a $2.2 billion dollar shortfall in the state’s general fund, which has prompted governor Pete Sandoval to recommend harsh cutbacks in education and government spending in his budget proposal.

Payout Perspective:

The out of competition testing was a way that the commission would keep fighters honest even when not training for an upcoming fight. The elimination of this does not mean that fighters will immediately use PEDs, but it takes away a deterrent. Although I think that the out of competition drug tests are valuable, I do not think the NSAC should shortchange amateur programs to fund this testing. In a time when states are crunching budgets, a lot of tough choices will need to be made.

The Hartford Courant reports that lawmakers are considering the introduction of a bill that would sanction mixed martial arts.

Via the Hartford Courant:

State Sen. Joan Hartley, a Democrat from Waterbury who co-chairs the public safety committee, asked at a hearing Tuesday how MMA differed from the professional wrestling shows staged by the Connecticut-based World Wrestling Entertainment. “We’re not scripted entertainment,” responded Marc Ratner, vice president of government and regulatory affairs for Ultimate Fighting Championship, the Las Vegas-based company that promotes most of the top-ranked MMA matches. “These are real fights.”

Hartley said she is open to the idea of sanctioning MMA matches, provided the regulatory requirements don’t burden the state’s budget.

“This bill will put mixed martial arts on an equal footing with boxing, allowing the thousands of MMA fans in Connecticut the opportunity to watch their pastime without leaving the state,” state Rep. Matthew Lesser told the legislature’s public safety committee Tuesday afternoon. “In addition, it would generate economic activity and should be revenue positive.”

A 5 percent tax on MMA gate receipts would bolster the state’s bottom line, Lesser said.

Forty-six states currently sanction MMA competitions. Massachusetts joined the list last year. Vermont and New York are two of four states that have not. And that, say proponents, provides an opportunity for Connecticut, given its proximity to a large base of fans in the Empire State.

Payout Perspective:

A very positive article about the possibility of legalizing MMA in Connecticut. The article did not provide an opposing view on the legalization of MMA with the exception of the usual “human cockfighting” quote. The backers of this bill see this as a way to stimulate the state’s economy. While they are realistic about how much it can assist, they also realize that the state can take advantage of New York’s ban on MMA and solicit the UFC, Strikeforce or other organizations to sponsor events instead of New York.

H/T: Robert Joyner via twitter

The Hartford Courant reports that lawmakers are considering the introduction of a bill that would sanction mixed martial arts.

Via the Hartford Courant:

State Sen. Joan Hartley, a Democrat from Waterbury who co-chairs the public safety committee, asked at a hearing Tuesday how MMA differed from the professional wrestling shows staged by the Connecticut-based World Wrestling Entertainment. “We’re not scripted entertainment,” responded Marc Ratner, vice president of government and regulatory affairs for Ultimate Fighting Championship, the Las Vegas-based company that promotes most of the top-ranked MMA matches. “These are real fights.”

Hartley said she is open to the idea of sanctioning MMA matches, provided the regulatory requirements don’t burden the state’s budget.

“This bill will put mixed martial arts on an equal footing with boxing, allowing the thousands of MMA fans in Connecticut the opportunity to watch their pastime without leaving the state,” state Rep. Matthew Lesser told the legislature’s public safety committee Tuesday afternoon. “In addition, it would generate economic activity and should be revenue positive.”

A 5 percent tax on MMA gate receipts would bolster the state’s bottom line, Lesser said.

Forty-six states currently sanction MMA competitions. Massachusetts joined the list last year. Vermont and New York are two of four states that have not. And that, say proponents, provides an opportunity for Connecticut, given its proximity to a large base of fans in the Empire State.

Payout Perspective:

A very positive article about the possibility of legalizing MMA in Connecticut. The article did not provide an opposing view on the legalization of MMA with the exception of the usual “human cockfighting” quote. The backers of this bill see this as a way to stimulate the state’s economy. While they are realistic about how much it can assist, they also realize that the state can take advantage of New York’s ban on MMA and solicit the UFC, Strikeforce or other organizations to sponsor events instead of New York.

H/T: Robert Joyner via twitter

Getting anything done in Albany is difficult and leads to frustration and efforts to legalize MMA are no exception.  As I stated recently during an interview with TapouT Radio, I believed the odds of MMA being legalized in New York State this year would go up dramatically if Governor Cuomo, like Governor Patterson last year, included a provision in his Executive Budget lifting the ban on MMA.

Unfortunately, today we learned that Cuomo would take no such step.  Indeed, there is no provision in the 2011-2012 Executive Budget permitting MMA in New York.  Moreover, and perhaps more troubling, the Governor’s Executive Budget proposes “[e]liminat[ing] the salary for the Chair of the State Athletic Commission.”

I am not really sure what to make of this proposal, but it seems like a bad sign for all combative sports, not just MMA, and may shed some light on the Governor’s view of the “economics” of these sports in New York in general.  I have previously written about why I believe “economics” cannot be the focus of the debate to legalize in New York.  As Governor Cuomo’s Executive Budget makes clear, he is tackling a $10 Billion dollar budget deficit and MMA with an estimated $23 million in “economic impact” is simply not compelling.

As you may recall from my earlier post, “Zuffa’s Support of Cuomo — Does It Really Mean Anything?,” the New York Post reported (in fact, Zach Arnold at Fight Opinion first reported) that “Las Vegas firm Zuffa Entertainmen [sic] has pumped $74,600 into Cuomo’s campaign coffers — and hopes the Democrat will use his political muscle to bend the Legislature into approving the controversial cage fights in New York.”

As I reported back then (and as recently as a few weeks ago when the UFC conducted its press conference at Madison Square Garden), Governor Cuomo has never taken a position on the issue of legalization and so I did not read too much into the campaign contribution by Zuffa.

Bottom line, we still do not really know where Governor Cuomo stands on the issue but his failure to include a provision permitting MMA is not a good sign in my view.  That said, I do not read the absence of the provision from the budget as an indication that Governor Cuomo would necessarily vote against the bill if it passed through the normal legislative channels, i.e. the Senate and the Assembly.  Keep in mind, Governor Cuomo is currently facing a $10 billion deficit and is planning on cutting nearly 10,000 state workers in an effort to cut costs.  MMA with an estimated $1.3 million in direct revenue to New York and $23 million in “economic impact” is clearly not going to be a budget priority.

Accordingly, there is still hope this legislative session and we should continue to fight to educate the legislators about MMA as a sport as I have previously written.

Justin Klein is an attorney at Satterlee Stephens Burke & Burke LLP in New York City where he concentrates his practice in commercial litigation and represents clients in the fight industry.  He regularly addresses current legal issues that pertain to combat sports, including efforts to legalize MMA in New York, at his Fight Lawyer website.  He is a licensed boxing manager with the New York State Athletic Commission as well as the founder and Chairman of the Board of the New York Mixed Martial Arts Initiative, a non-profit organization that gives inner city youth the opportunity to experience the emotional and physical benefits of martial arts training.  Justin lives in New York City where he trains in jiu jitsu and boxing.

DISCLAIMER

The information in this post and on my site consists of my opinion only, i.e., it is not the opinion of my employer or anybody else. In addition, and because this is my opinion, it is not intended to be (and is not) legal advice or an advertisement for legal services. This post provides general information only. Although I encourage interested parties to contact me on the subjects discussed in the articles, the reader should not consider information on this site to be an invitation for an attorney-client relationship.  I disclaim all liability in respect to actions taken or not taken based on any contents of this post. Any e-mail sent to me will not create an attorney-client relationship, and you should not use this site or my site to send me e-mail containing confidential or sensitive information.