1/3/2012

Will Insurance bring the UFC to NYC?

UFC owners are trying to use better insurance coverage as a way to make the case for the former blood sport’s metamorphosis into mainstream entertainment.

By Christopher Fusco

In 2001, the Ultimate Fighting Championship (UFC), which features mixed martial arts (MMA), was on the brink of bankruptcy. In the decade that followed, the UFC became a sporting empire boasting revenues in excess of $1 billion. Today, the UFC has legions of loyal fans and myriad websites supporting MMA competitions. Some observers have opined that the UFC has filled the void left by the decline of heavy-weight boxing and a drop in the popularity of professional wrestling.

Recently, the UFC obtained the gold standard for professional sports: a national television contract. In August 2011, the UFC and Fox announced a major seven-year broadcasting deal. The television contract, rumored to be worth $100 million a year, will ensure that at least 32 fights a year are broadcast on Fox and its family of networks, including prime-time events. Broadcasts will come complete with pre and post-fight analysis. Fox likely was driven to obtain the UFC broadcast rights for MMA fights due to strong ratings with the lucrative 18-34 male demographic.

The UFC boasts that in its first ever event, held in Toronto, Canada, it generated $40 million for local businesses. It claims the event sold out in a matter of minutes and had a capacity crowd of 55,000 at the MMA event.

Given these developments, there could be no more natural showcase for this growing league than a primetime televised event at the “world’s most famous arena,” Madison Square Garden (MSG) in midtown Manhattan. The only problem is that in 1997 the New York State legislature passed a ban on live professional mixed martial arts fighting, so an MSG extravaganza is not only out of the question, it is illegal.

The history of New York State’s ban on MMA has been somewhat infamous and is now the subject of a major civil rights lawsuit. In November 2011, the UFC and Zuffa, LLC, its parent company, filed a civil rights action in the United States District Court for the Southern District of New York against New York Attorney General Eric Schneiderman and New York County District Attorney (Manhattan) Cyrus Vance. Vance is being sued because he is charged with enforcing any criminal penalties for violating the MMA ban in New York County where MSG is located.

For constitutional law purposes, the plaintiffs in the UFC lawsuit include individual fighters. The fighters allege that the New York State ban infringes on their constitutional right to express themselves under the First Amendment. As part of the suit brought under 42 U.S.C. 1983, the UFC claims that individual fighters cannot express their skills and MMA prowess in a live event where they would have the opportunity to show their self-discipline, training, courage and strategic thinking.

The crux of the lawsuit is the need for a clearer understanding of how the league and MMA has evolved and changed the mainstream audience’s sports apatite. The UFC acknowledged that in the 1990s it marketed MMA as a “blood sport” and “no holds barred” fighting. Fights were advertised as having a winner determined by “a knock-out, surrender, doctor’s intervention or death.” It further acknowledged that the strategy it designed to draw blood-thirsty crowds into small, nondescript venues was a poor backdrop and not suited for an event held at a marquee arena like MSG. The UFC claims that it is has gone mainstream, complete with rules, referees and safety procedures designed to ensure the purity of a high-level MMA contest.

The challenge for the UFC has been to apply MMA-style strategic thinking to its old reputation and blunt the sports’ former brand of violent imagery and winners by death.  In May 2011, the UFC announced the enactment of an unprecedented insurance program for its fighters. Previously, athletes, who are independent contractors, received customized insurance coverage for injuries sustained during fights. Its new program goes much further than octagon time. Before instituting its civil rights lawsuit, the UFC trumpeted the extension of its insurance coverage to all injuries sustained in training exercises as well as non-training losses such as automobile accidents. Moreover, insurance premiums for the expanded coverage will be entirely paid for by Zuffa.

 “Our athletes are some of the very best in the world, and we’ve committed significant financial resources to provide them with insurance that complements the gold standard we have set for event-related coverage,” said UFC Chairman Lorenzo Fertitta.

For the UFC, the term “insurance” may have a double meaning. Yes, the UFC has extended coverage for its combatants but this insurance (even for car accidents) was purchased to send another message: The blood sport days are over. It is telling the public and New York State legislators that its fighters are no longer disposable assets but elite competitors. After all, how can MMA athletes express their skills and prowess if the winner can be decided only by “death?” More importantly, with a valuable TV contract and full arenas, the last thing the UFC needs, or wants, is an atrocity during a match or any association with a message of senseless violence.

In obtaining expanded insurance coverage before filing the lawsuit challenging the ban, the UFC used an insurance program to show the world it had changed its message and joined the mainstream to stay.


Christopher Fusco is the managing partner of Callahan & Fusco, LLC. His blog, Sports in the Courts, can be found at www.sportsinthecourtsblog.com. He may also be reached at cfusco@callahanfusco.com.



Christopher Fusco is the managing partner of CLM Member Firm Callahan & Fusco LLC. His blog, Sports in the Courts, can be found at www.sportsinthecourtsblog.com. He may also be reached at cfusco@callahanfusco.com.

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