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The Ali Act (2000) and its Possible Application to MMA

In the latest piece for The Legal Pitch, LLB Law student Arron Kotecha and founder, Adam Smith analyse the development of legislation protecting athletes in combat sports. Starting with the keynote ‘Ali Act’ in Boxing, the piece will assess a potential Expansion Bill into MMA. Further, we speculate on; how The Ali Act can protect fighters, lobbying against the expansion bill, and what could be expected going forward into the Biden Administration.


This article includes an exclusive interview with former Cage-Warriors’ Featherweight champion, and European top prospect, professional MMA fighter, Paddy ‘The Baddy’ Pimblett, discussing his thoughts on the implementation of The Ali Act. You can find the full transcript of our discussion with Paddy at the foot of the article.



1) The Ali Act’s findings, aims and reforms in Boxing


a. Findings


The Muhammad Ali Boxing Reform Act 1999 (The Ali Act) came into force on May 24th 2000 in the US. Its findings were that boxing has no ‘league’ or centralized industry to set ethical standards and uniform business practices. Time and time again, there has been corrupt and amoral business practice to the detriment of boxers.


This malpractice saw Mike Tyson entering an exploitative contract with his former promoter, Don King. Tyson gave King ‘de-facto control’ over his entire career, money and post-fight purses. Although giving the impression that Tyson had independent advisors, he had no impartial advice, further highlighting how commonplace corruption and exploitation was between high profile athletes and their promoters.

Boxing promoters commonly engaged in anti-competitive behaviour depriving their athletes of fair opportunities for career advancement, and hosted bouts in states with light regulation and oversight. This was at the expense of public viewership and fighters, who both found that this undermined confidence in the sport.


N.B. The Ali Act is US federal law, but an expansion bill would apply unequivocally to fighters in any jurisdiction signed to a US promotion.

b. Aims of The Ali Act

(1) protect the rights and welfare of boxers; and to largely prevent unfair and coercive contracts where the promoters stood likely to gain. Much like in the context of Tyson and Don King’s relationship.


(2) increase sportsmanship and integrity within the boxing industry. Formerly, we saw a common culture of ‘fixed fights happening like in old film noir movies’, as per Bert Sugar, with the FBI even investigating Ali-Liston for match-fixing. Furthermore, there was a common culture of promoters choosing match-ups for their fighters to shield them for an undefeated record.


(3) assist state boxing commissions in overseeing boxing events, and equip commissions with adequate regulatory powers in the event of unfairness or coercion. This has largely been accomplished with the implementation of ‘The Association of Boxing Commissions’ (ABC) who act as a ‘quasi-regulator’ enforcing The Ali Act and it’s reforms.


c. Reforms


The Ali Act was introduced (as above) to:


  1. eliminate coercive and unethical contracts;

  2. eradicate rankings manipulation through the imposition of published and objective criteria; and

  3. circumvent the “forum shopping” where promoters were able to take advantage of a lack of equitable business standards in the sport by holding boxing events in States with weaker regulatory oversight.


Coercive or unethical contracts


Section 10 (The Ali Act) introduces the general rule that any coercive contract provision shall be considered to be in restraint of trade, contrary to public policy, and most importantly unenforceable against any boxer. The general rule is aimed at contracts between boxer and promoter where a “coercive provision” is included as a condition precedent to the boxer’s participation in a professional boxing match against another boxer who is under contract to the same promoter. It was implemented to combat the common practice of a promoter who has more than one successful boxer under contract and had subjected those boxers to a condition precedent that any challenger who sought to fight against them is to sign a long-term agreement with the promoter (hence a restraint on trade). For example, in 1996 Evander Holyfield was forced to sign a long-term promotional contract with promoter Don King before being granted the “option” to challenge heavyweight champion Mike Tyson (who was already under contract with said promoter).


Further to the general rule, The Ali Act mandates that a promoter discloses to the relevant state boxing commission, any applicable contracts with any boxers involved in the match, as well as making a disclosure to the boxer his/herself “the amounts of any compensation or consideration that a promoter has contracted to receive from [the] match” (section 13). Pursuant to section 5, a “firewall between promoters and managers” is established and following it became “unlawful for a promoter to have a direct or indirect financial interest in the management of a boxer or . . . a manager . . . to be employed by or receive compensation or other benefits from a promoter”. This was a particularly important reform as promoters do not owe a fiduciary duty to their boxers and therefore should not have an active role in the management of a boxer (e.g., determining who they fight next by virtue of a condition precedent in an option agreement).


Rankings Manipulation


A further reform implemented by Section 9 of the legislation, is to utilise the ABC to develop and approve guidelines for objective and consistent rankings of boxers. This is thus to prevent any manipulation of rankings due to corruption of promoters under the WBO and WBA.


It should also be noted that Section 9 holds little weight; despite being a piece of federal legislation (USA), there is no mandatory requirement to follow it. Therefore, as a non-compulsory act, states can choose to adhere to minimum contractual provisions.


These guidelines include: a sole basis on win/loss records; and if two ranked boxers compete against each other, and the lower rated boxer wins:


a) The lower rated boxer shall be elevated in the ratings and;

b) The higher rated boxer shall be lowered in the ratings.


Under no circumstance can a boxer's ranking be influenced or swayed by a boxer’s promoter, manager or affiliate.


Whilst the legislation does bring a modicum of certainty, the act has its pitfalls. Firstly, the legislation does not make adoption of the ranking guidance mandatory. It is non-compulsory and only suggested that states should follow it. Furthermore, the guidance does not detail how fighter’s rankings compare to one another, for instance whether an undefeated boxer with less wins, should be ranked higher with a boxer with a 50-2 record. It is also unclear as to whether how the win occurs, (either by knockout, TKO or split decision) bears any gravity.

Forum shopping


Another issue that Section 9 sought to remedy was the concept of ‘forum shopping’. This is where both promoters and boxers would ‘shop’ between a multitude of state athletic commissions with the intention of gaining licenses for fighters and to host an event with minimum interference or input from that state’s athletic commission. This ability to host a bout without tight regulation frequently led to fixed bouts, bribed referees, and inadequate medical services on hand for the fighters.


The act endeavours to create better oversight of the sport through empowering state commissions to gain information which can determine if boxers fighting under a state sanctioned event are subjected to unethical or inequitable business practices which violate regulations. The principal issue of Section 9, is again, the fact that it is non-mandatory, and an opt in provision. Therefore, any unethical or improper conduct that is found, might not be acted upon.



2) How The Ali Act could apply to Mixed Martial Arts (MMA)

In May 2016, Markwayne Mullin, a former professional fighter & congressman, drafted a bill to extend The Ali Act to MMA. Mullin had bipartisan support from both Republicans and Democrats, but the expansion bill was quashed by the Trump Administration.

An Expansion of The Ali Act would likely result in numerous reforms to how the UFC (and other promoters) operate. For example, promoters may lose the capacity to regulate rankings and issue championships. This would become the responsibility of independent bodies, and thus prevent the UFC from skewing rankings to lean in favour of an athlete’s star power or marketability. The act may even mandate champions to fight the top-ranked contender, ensuring fights make sense in terms of ability, not star power.

It may be interesting to observe how The Ali Act’s prohibition on coercive contracts would operate in relation to MMA. Currently the UFC insert various clauses into their contracts in a very one-sided fashion, favouring the company rather than the athlete. This can be illustrated by the UFC operating championship ‘lock-in clauses’ allowing them to extend a fighter’s contract upon winning a belt. This is exacerbated by an exclusivity clause which obligates an athlete to fight for the UFC, unless the company permits or waives the right to compete under another organisation [this includes a fighter’s participation in grappling matches].


The one-sided nature of UFC-contracts is intensified by the promotion being the most esteemed company in MMA, and holding a reputation of being the best on the market. Therefore, most fighters aspire to fight for the UFC, regardless of their contract. Therefore, an expansion of The Ali Act would potentially secure fighters to fairer, longer term contracts. Some ideas for reform may be establishing a minimum number of fights, [as was proposed in Mullins’ 2015 Bill], fettering the UFC’s broad ability to terminate a contract or removing the ability to tether a fighter to a contract, which may allow a fighter to pursue a different organisation’s belt — much like a free agent. We may even see fighters seeking to ‘unify different belts’ — as in boxing, which may even create ‘super-fights’ between promotions.


The Ali Act may propose to reform areas relating to fighter pay. Sanctioning authorities require a disclosure of earnings and transparency of a fighter's contract. This degree of transparency will allow for greater bargaining power; fighters could thus point to similarly ranked athletes and their salaries when negotiating their specific contractual agreement.


Although this addresses many problematic aspects of the UFC, World Titles would need to be issued by the sanctioning bodies as opposed to the UFC itself; so whilst we may see cross-promotional super fights, multiple sanctioning and approving bodies may clash over which fights to organise, and therefore less champions moving between weight classes [like Georges St.-Pierre, Conor McGregor, TJ Dillashaw and Henry Cejudo].


***


We spoke to Paddy ‘The Baddy’ Pimblett in an exclusive interview, discussing how The Ali Act may affect MMA fighters.


In Paddy’s opinion it was a ‘tricky set of issues to balance’. He compared the potentially reformed model to that of boxing, as opposed to the current ‘WWE-esque’ model the UFC currently operates under. He then noted that this raises a common problem in boxing:

'We don’t see the best fighting the best, they use different belts to avoid each other, so four belts [in boxing] half ruins it. A prime example is Mayweather v Pacquiao; they fought each other 10 years too late… if they were MMA fighters signed to the UFC, we’d have probably seen the trilogy… whereas with MMA, the UFC belt is really ‘the one belt’. That belt is really the be all and end all. The owner is the best fighter.’ Paddy then commented on how there’s two sides to the UFC system. From a fan’s perspective, the UFC’s current model is preferential, however, this is strongly at the expense of the athlete.

‘From the fans perspective the UFC system works well… but from the fighter’s perspective, we as athletes can get exploited by the UFC, financially. But for the fans, it’s better, as they get to witness the dream fights’.

‘If I’m looking at it from an athlete’s perspective, as I’m looking to sign with the UFC soon, it will be better if the system operated like boxing. Because the boxers get more of a percentage out of the show itself and the event’.


Paddy’s full interview can be read at the foot of the article.


***


3) McGregor v Mayweather


An example of how The Ali Act may remotely apply in the context of MMA falls to the biggest example in sports history; McGregor v Mayweather.


  • Around late 2016, speculation surrounding a mega-fight in boxing between Conor McGregor & Floyd Mayweather was highlighted in the public eye.


  • Many within the profession pointed to McGregor’s contract as requiring exclusivity with the UFC, [unless the promotion said otherwise].

  • Fighters must seek permission from the UFC before partaking on other shows [be it boxing or grappling and so forth].


  • To apply pressure on McGregor, and prevent him participating in the boxing bout, the UFC [on November 27th] stripped him of his featherweight title and therefore his ‘double-champion’ status.


  • However, McGregor had [by Dec 1st 2016] acquired a boxing license from the Nevada State Athletic Commission. Many believed this to be theatrics to create hype and anticipation around the fight.

  • This was, in fact, a pivotal moment for the bout, as a boxing license is [1] necessary to host the boxing match and [2], protected under The Ali Act from coercive contracts through section 10.

(Image courtesy of Variety.com)


Section 10 of the Ali Act states how a contract will be deemed coercive:


“A contract provision that grants any rights between a boxer and a promoter, or between promoters with respect to a boxer, if the boxer is required to grant such rights, or a boxer’s promoter is required to grant such rights with respect to a boxer to another promoter, as a condition precedent to the boxer’s participation in a professional boxing match against another boxer who is under contract to the promoter.”

Despite the provision being lengthy, it can be summarised as followed:


If a fighter is limited by the rights of their promoter, which prevents said fighter’s participation in another competition, s10 of The Ali Act will deem the provision coercive, subject to requirements. Here, McGregor’s contractual obligation of exclusivity to the UFC would prevent his bout with Mayweather, but the intervention of s10 of The Ali Act would prove different.


McGregor required the UFC to waive his exclusivity clause as a condition ‘preceding to his participation’ with a bout against Mayweather. Therefore, the exclusivity clause directly falls within the definition of a coercive provision, and would be interpreted as such in a court. This can be proven as the UFC is a promoter, and McGregor, (having gained a boxing license), is considered a boxer under US federal law. As a result, the exclusivity clause directly falls foul of s10, and McGregor’s decision to box (despite being contrary to his UFC contract), would not be deemed as a breach of contract.


It is important to note the timing of said case, in that McGregor obtained a boxing license prior to the dispute, and thus the exclusivity clause seems more severe / coercive in this scenario, and if not waived by the UFC, McGregor would have strong grounds for a court appeal.


Ultimately McGregor was able to work with [in partnership] with the UFC to co-promote and hold the boxing bout, without a need to litigate against or challenge the UFC from a legal perspective.


We even saw McGregor launch his own promotion ‘McGregor Sports & Entertainment’ in recognition of this ‘co-promotor’ status. Nonetheless, this shows both the legitimacy and how athletes would be brought onto an equal playing-field with promoters, if the expansion bill was passed.



4) Lobbying


As previously discussed, the passing of The Ali Act’s expansion bill into MMA would cause the UFC and other organisations to open their books, and divulge their exact earnings and payouts each event. Therefore, fighters would have an indication of what similarly ranked colleagues are being paid, which provides them with better bargaining power. However, this would raise the UFC’s costs for paying salaries and may be an unlikely implementation.


The UFC reportedly hired Farragut Partners to politically lobby against the implementation of The Ali Act, spending $210,000 to ‘fight’ its enactment. These lobbyists have argued successfully that the UFC currently runs ‘a league-like format’. Therefore, state regulation and oversight through the expansion bill would be redundant and interfere with expert knowledge from promoters such as Dana White. These arguments have been successful under Trump’s administration.


The UFC states they hire and view fighters as ‘subcontractors’. It could, however, be suggested that contractors can work for various entities, yet the UFC’s exclusivity clauses will tie fighters into remaining with the organisation. Furthermore, many athletes are reluctant to pursue ‘free-agency’ as a tenable route, due to the UFC’s prestige and market share. Arguably The Ali Act’s removal of exclusivity and issuing of rankings/belts will give fighters greater autonomy in contractual agreements.


The UFC’s market power has also been challenged judicially, from 2014, by former fighters such as Jon Fitch, claiming the UFC had monopsony market power [being the main employer and acquiring competitors like strike force]. Judge Boulware has granted this as a class action lawsuit, and is set to unseal documents including around fighter pay. Although it is unrelated to what The Ali Act may bring, it is a challenge to the UFC’s monopoly power. This comes in conjunction with the political pressure to implement the expansion act of the UFC, that President Biden’s administration will likely apply.



5) The Biden Administration: Another opportunity for the Bill to be passed in MMA?


Andrew Yang, a former presidential candidate who has been tipped to serve in President Biden’s administration, is looking to bring the fight to the UFC by extending The Ali Act to MMA. He has received bipartisan support from both Republicans and Democrats.


A keynote problem Yang details, is that fighters are paid around 10-18% of company revenue. The UFC’s revenue is estimated at $900 million, and when compared to other sports such as the NBA/NFL/MLB/WBA who all pay around 50% of their revenue, this appears inequitable. This figure is intensified in light of the extremity in training, cutting weight, and the physical injury that underpins the sport of MMA. Considering the UFC’s value, [last being sold at $4.2billion -- the largest deal in sports history] and currently approximated at $9-10 million; Yang argues the UFC is out of step with other major sports promotions.


Some may argue that the UFC covers flights, accommodation and expenses, as well as providing a financial contract. Yang’s contention, however, is that circumstances may change as a fighter’s record, win-streak and and reputation improves; therefore, as a fighter's win-record and reception improve, so should their pay, and contractual capacity.


It is also worth noting, Yang criticises the labour practices of the UFC, and their ability to terminate contracts. An extension of The Ali Act would undoubtedly create a fairer labour-market, including greater capacity to renegotiate contracts, transparency of what other fighters are being paid, and extension and protection from termination. There have also been suggestions that Yang has considered allowing fighters to unionise, extending outside of the UFC and into MMA as a whole, providing better collective bargaining power to negotiate higher wages for immensely skilled athletes.



6) Conclusion


It appears The Ali Act would present a very welcome change to MMA from an athlete’s perspective, as noted in our interview with Paddy below. Although the sport isn’t riddled with corruption in the same way that boxing historically has been, a clear imbalance in power can be observed between the UFC and their athletes. This is largely reflected in the UFC’s capacity to draft contracts and create stipulations as to a fighter’s exclusivity, pay and termination, wholly in their favour. Furthermore, the UFC’s market share and prestige as the top promotor, creates little choice or bargaining power for fighters. Therefore, providing The Ali Act can overcome the lobbying hurdles in the transition period of American politics, we may see the UFC lose total power in negotiation of contracts with fighters.


To fans that consider themselves MMA purists, this does however raise the concern of potentially unwelcome changes to the UFC’s model as a promotion. The fact the UFC might no longer control their rankings, and belts [rather the belts would be issued through impartial bodies], creates a concern regarding a shift towards a typical boxing model and format. UFC fans may consider it unwelcome, as it would cause lag in forming the highly touted bouts that ‘everyone wants to see’.



Full Interview with Paddy Pimblett:


Paddy is a former Cage-Warriors’ Featherweight champion and a European top prospect, looking to sign for the UFC. He has previously received two contract offers from the UFC. He gives his thoughts on the implementation of The Ali Act in his sport.

Q: Do you think there is a potential for reform with regards to belts and fights handed out to athletes and how would The Ali Act affect this?


Paddy: At the moment it’s all about star power and marketability, but the act could make rankings and belts based off of a fighter’s performance. They [the UFC] also decide themselves and bump someone up the rankings, so it looks like a top-ranked guy is fighting a top-ranked guy when in reality it's just that one of them has a big mouth [and can talk his way to the top].


Remember when Aldo fought McGregor, they bumped Aldo up to no.1, even though Aldo hadn’t fought in ages. So, to combat that, it could be the organisations handing the belts out rather than the UFC [like in boxing it is the WBO].


But if we compare this [idea] to boxing, then there are mandatory fights, like Canelo’s, that can easily be avoided; his fight the other night was ‘a load of sh*te’; everyone knew he was going to win, and it was pointless. But he had to do it to keep his belt.’


***


Q: What do you think the main changes are that The Ali Act will bring to finances? One thing the act could do is make a transparent marketplace, giving fighters, like yourself more bargaining power, sort of like boxing.


Paddy: Yeah, there are a lot of backroom bonuses given out in the UFC. And there is a lot of good and bad in that and pay in sport at the moment. On the one-hand the fighters can get away with not paying tax on that money [earnt through bonuses], and that's a big thing for athletes fighting overseas. But on the other hand it's only some fighters that get that specific money.

When you compare it all to boxing, we [as MMA fighters], know boxers are getting a lot more money. There are boxers that are nowhere near world champions making more money than those headlining the UFC main cards.


When we compare the quality of boxing, when Callum Smith fought Canelo, the co-main event was a debut, a highly touted amateur. Then look at the UFC cards over the weekend; they’re stacked from top to bottom with ranked fighters. The entire main card is full. So yes, the market would become more transparent with the act.


You’d be asking the question what is going on and why am I not getting more. [in response to fighter ranked #10 earning more than fighter ranked #9 under The Ali Act].


*** Q: Essentially what it comes down to, is the UFC as the top organisation having the ability to price set, and very few athletes [yourself being one of them] are willing to put their foot down and say no to this pressure.


Paddy: They [the UFC] monopolise the sport, the same way the WWE have with wrestling, and fighters that chose to go to another organisation, are never really seen as a top athlete because the UFC appears to be the be all and end all.


***


Q: Have you any more thoughts on the financial side of MMA, and how The Ali Act could help you profitability wise?


Paddy: I think it would work in a big way in that sense… but I would say in MMA, it's not just your fighting style and the way you fight that gets you paid, it's your personality as well.


In boxing it's a lot more on the fight alone. For example, Canelo doesn't even have a personality, let's be honest, but because he’s that good; he gets paid that amount of money. But if he was an MMA fighter, he’d be getting paid like Usman, who isn’t highly touted because of his personality and his fight style.


The UFC only pays around 14% of their revenue to athletes [in comparison to around 50% paid to NFL athletes]. When you look at all those other sports, they’re also not taking head injuries, brain damages, or hits in the head or elbowed in the face.


[But unfortunately], they monopolise the sport, the same way the WWE has with wrestling, and if you go to another organisation, you’re never really seen as a top athlete because the UFC appears to be the be all and end all.


You have to be a top 5% fighter to feel an actual benefit from it [the UFC payouts]. And this is why I always say it's important to have an actual personality. Without that in the UFC, if you just turn up, fight and go home, you won't go very far.


You have to earn your money. You can't just like in boxing, turn up, fight and get off. You have to promote yourself and let everyone know who the boss is. Some fighters are too respectful and don't do as well because they’re too respectful.


***


Q: Are there any things you believe The Ali Act has missed out/could improve on?


Paddy: I think sponsorship. When it comes to sponsorship the UFC have messed a lot of people around. The Reebok deal is disgusting.


That was how some fighters were making a living, off of the sponsors. That's how the UFC could get away with giving the fighters such a little amount, because they could get sponsors and prints on their shorts, and earn their money that way.


Once they took that away, they [the UFC] said if you’ve had 1-5 fights you can get around $5000 off of Reebok, which is cheeky! Brendan Schaub came out and stated there would be no point in him fighting anymore, as he previously earned 500k in sponsorship fees, and now earns around 15k. I'm not taking any more head damage for that.


Anderson and Jones were the same, both with Nike sponsorships. Now it's only reebok and some of them have a monster can at the end. They already sponsor the UFC. Only the higher echelon of fighters can get access to that so that's another element where it isn't fair… [It's better] for smaller businesses too, Scramble and Yokkao. They’ve been sponsoring me since day one. If I was able to wear a scramble rashguard, or a pair of Yokkao shorts in the cage, the publicity they get from that becomes worth sponsoring. Now it's all social media… it's important for us fighters to have a big social media presence. If you’re not you're not going to be successful.


But the way you’re asking, ‘will The Ali Act come into MMA?’ I’ll be honest I don't see it happening. It will take another 5-10 years. It will take at least Dana to walk away from the UFC for that to happen. I compare the UFC and its lawyers to Man City’s lawyers when they were banned from the Champions League. They just paid a sh*t load of money to the best people and they get you off.


***


This article was co-written by LLB Law student, Arron Kotecha and founder of The Legal Pitch, Adam Smith.


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