Culinary asks FTC to investigate Ultimate Fighting Championship
Culinary Local 226 wants the Federal Trade Commission to investigate the business practices of Las Vegas-based Ultimate Fighting Championship, claiming the world’s largest promoter of mixed martial arts events is violating U.S. antitrust laws.
Zuffa LLC, which operates the UFC, is majority-owned by Frank Fertitta III and Lorenzo Fertitta, the principals in Fertitta Gaming and operators of Station Casinos. The Culinary is locked in a bitter, long-standing feud with Station Casinos over attempts to organize many of the company’s 13,000 employees.
"The Culinary obviously knows nothing about the fight business and this is aimed solely at the Fertittas," UFC President Dana White said.
The Fertitta brothers paid $2 million for majority ownership in UFC in 2001. In 2008, Forbes magazine valued UFC at more than $1 billion.
In a letter Wednesday to the FTC, Culinary research director Ken Liu said Zuffa bought out four rivals to dominate professional mixed martial arts. The union cited a 2008 independent equities research firm estimate that UFC controls 80 to 90 percent of its market.
"Zuffa has preserved and strengthened this dominant market position through exclusionary conduct by refusing to co-promote events, as well as anti-competitive contractual restraints that severely limit a professional athlete’s freedom of movement," Liu wrote.
White said FTC approval would be needed only if the deals were each valued at more than $65 million.
In the letter, Liu said Zuffa’s contracts with fighters have an "automatic renewal" extension if an athlete becomes a champion, and require the fighters to negotiate with Zuffa after their contracts expire. That prevents them from becoming free agents and negotiating for higher pay.
The Culinary also said fighters forfeit their image and likeness rights "in perpetuity" for merchandise and ancillary agreements, and that Zuffa won’t promote events with rival companies.
"Zuffa does not operate as a professional league, and thus cannot justify its restrictive behavior as being necessary to preserve a competitive balance in mixed martial arts," Liu wrote.
In Las Vegas, UFC cards are typically held at the MGM Grand’s Garden Arena or at the Mandalay Bay Events Center, where UFC 137 is scheduled for Oct. 29. Employees of both venues are represented by the Culinary.
"Every time we host one of our UFC events in Las Vegas, it brings $100 million of economic impact … ," White said. "That benefits Culinary members. The Culinary is hurting their own members. They are taking their union dues and taking them to attack our company."
The Fertittas’ ownership of Station Casinos is not mentioned in the letter.
Yvanna Cancela, political director for the Culinary, said the union is not interested in organizing UFC fighters. She said the reasons for the action, "are spelled out in the letter."
The complaint to the commission is not the first time the Culinary has climbed into the octagon with Zuffa. Last spring the union’s affiliated New York Hotel and Motel Trades Council lobbied against legalizing mixed martial arts events in the state. The issue is pending.
At the time, White called the union’s action "extortion," and said "these union idiots" were trying to keep the UFC out of New York because of the Fertittas.
The Culinary has lodged several unfair labor practice complaints against Station Casinos and tried to interject itself in the company’s recently completed bankruptcy. The Fertittas own 45 percent of Station Casinos, which operates 18 casinos in the Las Vegas Valley.
Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871. Follow @howardstutz on Twitter.
