Three unlikely suspects just dropped a bomb on the UFC, which could potentially have far-reaching consequences throughout the sport. In San Jose, on a conference call to the media, it was announced that current and former fighters, Cung Le, Jon Fitch, and Nate Quarry had filed a class action, antitrust lawsuit against the Zuffa LLC, the parent company of the UFC. 

In addition to the conference call, a nearly 60-page document has been released online by the plaintiffs and participating law firms outlining all of their allegations. In a nutshell, the lawsuit alleges that the UFC used illegal and malicious, anti-competitive schemes to attain a monopoly within the MMA industry, thus restricting athletes’ abilities to be paid a fair market value. Other accusations include exploitation of athletes through stifling contract clauses, and unfair exclusivity. 

Major sports leagues are certainly no strangers to antitrust issues. In fact, it was an antitrust suit against Major League Baseball that helped to create free agency. More currently, the NCAA has also been embroiled in litigation over name, image, and likeness rights. The UFC, however, operates in a vastly different way than other sports leagues, and it will be difficult to use previous precedent because they exist in such a unique market space. Cases like this typically last between 3-5 years, so don’t expect much to happen quickly, but down the road, this could prove to be a watershed moment for the sport of MMA.

In the meantime, let's take a look at the major players and issues, of this case and where it could potentially lead.

The three fighters initially named as plaintiffs in this suit are Cung Le, Jon Fitch, and Nate Quarry. Joining the fighters on the conference call was former UFC welterweight champion, Carlos Newton, who is credited for being one of the driving forces behind the lawsuit, but is not specifically named within it. Cung Le is still currently signed to the UFC, although it remains to be seen for how much longer. Fitch, a former UFC welterweight title challenger was released by the UFC in 2013 and is still fighting in other organizations. Nate Quarry fought in the UFC from 2005 to 2010 and challenged for the middleweight title, but is now retired. All three fighters have had past issues with the company in some way or another, most notably Fitch and Le.

In 2008, during the height of his prominence, Jon Fitch was released from the company when he refused to sign away his likeness rights, in perpetuity, for the UFC video game. His teammate and current UFC heavyweight champion, Cain Velasquez, was also temporarily released in the same fashion. Both fighters were brought back into the fold when they finally agreed to the UFC’s terms. After Cung Le’s last fight, he was alleged by the UFC to have tested positive for illegal performance enhancing drugs, and suspended. Le appealed these charges and won, on the grounds of improper testing practices. They certainly aren't the only fighters out who have a bone to pick with the UFC. Expect other fighters and notable names in the sport to come forward and sign on with this lawsuit as it begins to gain traction.

In addition to several big name fighters, the suit is backed by some real heavy hitters in antitrust litigation. The three leading firms in this case are the Joseph Saveri Law Firm, Cohen Milstein Sellers, PLLC, and Berger & Montague P.C. Now these names alone, probably mean nothing to most people, however, they have all had recent success in huge antitrust cases against corporate giants, all who dwarf the UFC.

Specifically, the Saveri Law Firm just won a $300 million dollar antitrust suit against tech giants Apple, Google, and Adobe. These companies had an agreement to not solicit each other’s employees and the workers sued, claiming a restriction to a fair, competitive job market. In 2013, Cohen Milstein Sellers won a $1.2 billion suit against Dow Chemical in a price-fixing case and again in 2013 won a $500 million settlement in a massive mortgage-backed securities fraud.

At the end of the day, law firms don’t take cases like these out of the kindness of their hearts. They see an opportunity to cash in and have decided that it is financially feasible to pursue this even though it is estimated to cost upwards of $5 million and will last a minimum of three years. The UFC is a big company with a strong legal department, but they just might be outweighed and outgunned this time.

Contained within the documents submitted to the courts and media are numerous allegations of illicit anti-competitive schemes and tactics that  ultimately end up limiting a fighter’s ability to earn an income commensurate to other athletes in high profile sports. The first specific allegation is that the UFC illegally gained and maintained a monopoly on the market of elite MMA promotion.  The means to accomplish this is outlined a number of ways, including the buying out and foreclosing of potential competition. Specifically, the purchase and  consequent dissolution of Strikeforce is listed as an example of this. Also mentioned are the UFC’s use of strong arm tactics, forcing sponsors and venues to close their doors to other MMA promotions, effectively cornering the market.

The plaintiffs also complain of oppressive contracts that prevent optimal market capitalization. An example listed is the “champion’s clause” wherein a UFC fighter’s contract is automatically extended when they become champion. This prevents fighters from shopping themselves around to buyers when they have the most value. Not only does this damage the athletes’ abilities to earn, but it also prevents rival promotions from being able to sign top-tier fighters, a necessity for growth in this industry.

Interestingly enough, the document also uses numerous quotes from UFC president Dana White to back up their claims that the UFC knowingly and purposefully eliminated and stifled competition. A photo of White holding a mock tombstone adorned with the logos of now defunct MMA promotions, IFL, Elite XC, and Affliction appears alongside numerous boastful quotes from White such as, “There is no competition. We’re the NFL. You don’t see people looking at the NFL and going, ‘Yeah, but he’s not the best player in the world because there’s a guy playing for the Canadian Football League or the Arena League over here.’ We’re the NFL. There is no other guy.” An interesting comparison to make, considering in a 2010 case, the United States Supreme Court ruled that the NFL and its franchises are subject to antitrust laws. Unlike the UFC however, the NFL has an internal market of 32 teams to bid on players and determine their fair value, a key distinction which will certainly be stressed during the legal proceedings.

The UFC will defend themselves a number of ways. Primarily, they will attempt to show that their market dominance was acquired not through illegal means, but through superior business tactics and research. In addition to this, after they acquired Strikeforce and other promotions, the Federal Trade Commission launched an investigation to see if there were any antitrust violations committed by the UFC, but found none and closed the investigation. Expect these arguments to be front and centre in the UFC’s defense.

Like I said before, antitrust litigation is a very slow-moving process that will take years before we start to see any truly meaningful information. However, that won’t stop us from wildly speculating on how this can turn out. It may go nowhere. Zuffa has filed a motion to dismiss and there is certainly a chance the judge may rule in their favor and toss the case. On the other end of the spectrum, the ruling could fall in favour of the fighters. If this is the case, whatever dollar amount awarded is automatically tripled under U.S. antitrust laws. This could mean a potential payout of hundreds of millions of dollars. The Muhammad Ali Boxing Act would be introduced to help protect fighters and promoters from anti-competitive practices. Realistically, judgement will probably fall somewhere in the middle, maybe awarding a cash settlement, maybe creating new regulations.Whatever the judgement, it will be a long time before any of us is able to announce a winner in this fight.