April 16, 2024

TKO Group Holdings, the parent company of the Ultimate Fighting Championship, has agreed to pay $335 million to settle two class-action lawsuits brought by former UFC fighters, who alleged that the promotion firm engaged in anticompetitive behavior and underpaid its athletes.

The lawsuits alleged that UFC bought out or undermined rival promoters, forced UFC fighters to sign restrictive contracts that prevented them from working with potential competitors and forged exclusive deals with venues.

In doing so, UFC maintained and increased its monopoly power, meaning mixed martial arts fighters who wanted to have a career in the sport could only work for the company, diluting their earning potential, according to the lawsuits.

One of the class-action lawsuits alleged that fighters were paid only 10% to 17% of the total UFC revenue generated from live bouts, as opposed to U.S. athletes in football, basketball, baseball and hockey, who earned more than 50% of league revenue.

The proposed settlement ends a 10-year-long litigation involving multiple class-action suits.

Five related class-action complaints filed between 2014 and 2015 were eventually consolidated into a single lawsuit focused on fighters who participated in the UFC from 2010 to 2017. An additional lawsuit was filed in 2021 and covered fighters starting in 2017.

“We are pleased to have reached an agreement to settle all claims asserted in both … class action lawsuits, bringing litigation to a close and benefiting all parties,” a UFC spokesperson said in a statement.

The final terms of the settlement will be submitted to the court for approval, the spokesperson said.

Eric Cramer, chairman of Berger Montague and lead counsel for the plaintiffs, said the plaintiffs were “pleased with the result and look forward to presenting the full settlement and all of its terms to the court for approval in the coming weeks.”

The settlement comes about six months after the creation of the publicly traded TKO, which merged UFC with World Wrestling Entertainment in a $21.4-billion deal. Beverly Hills-based Endeavor, which also owns Hollywood talent agency WME, holds a majority stake in the company, and Endeavor’s chief executive, Ari Emanuel, leads TKO.

Endeavor in 2016 bought a majority stake in UFC, the popular mixed martial arts league that gained a loyal audience and attracted controversy because of its violence. Endeavor took full ownership of UFC in 2021.

Shares of TKO rose 8% to $87.47 on Wednesday. The shares are down 13% from their September stock market debut.

Two months ago, TKO was rocked by the departure of its executive chairman, Vince McMahon. McMahon resigned one day after a former WWE employee sued him, WWE and the company’s former head of talent relations, alleging sexual assault, trafficking and emotional abuse. McMahon denied the allegations but resigned his position “out of respect for the WWE Universe.”

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