BILL ANALYSIS Ó
AB 2100
Page 1
Date of Hearing: April 25, 2012
ASSEMBLY COMMITTEE ON ARTS, ENTERTAINMENT, SPORTS, TOURISM, AND
INTERNET MEDIA
Nora Campos, Chair
AB 2100 (Alejo) - As Amended: April 9, 2012
AS PROPOSED TO BE AMENDED IN COMMITTEE
SUBJECT : Athletes: Mixed Martial Arts Fighters
SUMMARY : This bill would require that the California State
Athletic Commission, (CSAC) in consultation with the Association
of Boxing Commissioners, to establish and enforce a professional
code of conduct, as specified, and that persons seeking payment
as promoters must make specified disclosures to the CSAC prior
to being compensated. Specifically, this bill :
1)States that in order to ensure that individuals and entities
licensed under the CSAC observe common standards of decency,
the commission shall, in consultation with the Association of
Boxing Commissioners, establish a professional code of ethical
conduct.
2)Provides that violations of this code shall include, but not
be limited to, the following:
a) Engaging in actions or activities such as felony
convictions, failing to respond to a subpoena, sanctions by
a judge or court of law, crimes involving moral turpitude,
sexual assault, ethnic or religious slurs, hate speech and
obscene language.
b) Entering into a promotional contract with a mixed
martial arts fighter licensed in the state of California if
the contract contains one or more coercive provisions. For
purposes of this Section, a coercive contract provision
includes, but is not limited to, the following:
i) Assigns any exclusive future merchandising rights to
a promoter for an unreasonable period beyond the term of
the promotional contract.
ii) Automatically renews a promotional contract or
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extends the term without good faith negotiation, or
extends the term of any promotional contract of a fighter
who participates in a championship contest for a period
greater than 12 months beyond the existing contract
termination period.
iii) Unreasonably restricts a mixed martial arts fighter
from obtaining outside sponsorship from a firm, product
or individual.
iv) Requires a mixed martial arts fighter to relinquish
all legal claims that the fighter has, or may acquire in
the future, against the promoter beyond assumption of the
risks inherent in the sport of mixed martial arts and the
Fighter's participation in Pre and Post Bout events and
activities.
v) Requires a fighter to grant or waive any additional
rights not contained in the promotional contract as a
condition precedent to the fighter's participation in any
contest.
3)Provides that the CSAC may enforce the code of ethical conduct
by suspension, revocation of refusal to issue a license to any
mixed martial arts promoter or fighter.
4)States that no promoter shall be entitled to receive any
compensation directly or indirectly in connection with a
contest until the promoter provides to CSAC the following:
a) A copy of any agreement in writing to which the promoter
is a party with any professional athlete or contestant
licensed under this act.
b) A statement made under penalty of perjury that there are
no other agreements, written or oral, between the promoter
and the athlete with respect to that contest.
c) All fees, charges, and expenses that will be assessed by
or through the promoter on the athlete participating in the
event, including any portion of the athlete's purse that
the promoter will receive.
d) Any reduction in the athlete's purse contrary to a
previous agreement between the promoter and the athlete.
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5)Prohibits CSAC, and any person acting on its behalf, from
disclosing to the public any agreement furnished by a promoter
under the above section, except to the extent required to
comply with an order in a legal, administrative or judicial
proceeding.
6)Declares that it is the intention of the Legislature in
enacting these provisions to protect mixed martial arts
fighters from being subjected to exploitative, oppressive, or
coercive contractual practices that violate the athletes'
freedom to work and their ability to support themselves and
their families as professional athletes. Therefore it is
necessary and appropriate to establish standards to protect
the rights and welfare of mixed martial arts fighters licensed
under this chapter.
EXISTING LAW :
1)Establishes the CSAC, and declares that the CSAC has the sole
direction, management, control of, and jurisdiction over all
professional and amateur boxing, professional and amateur
kickboxing, all forms and combinations of forms of full
contact martial arts contests, including mixed martial arts,
and matches or exhibitions conducted, held, or given within
this state.
2)Further provides that no person shall engage in the promotion
of, or participate in, a boxing or martial arts contest,
match, or exhibition without a license.
3)Declares that the CSAC shall prescribe standards as necessary,
for the licensure of any persons required to be licensed by
this chapter or by CSAC's regulations.
4)Provides by Regulation that any licensee who violates the laws
of the State of California, with the exception of minor
traffic violations, or the rules of the Athletic Commission,
or who fails or refuses to comply with a valid order of a CSAC
representative, or who conducts himself or herself at any time
or place in a manner which is deemed by CSAC to reflect
discredit to boxing, may have his or her license revoked, or
may be fined, suspended or otherwise disciplined in such
manner as the CSAC may direct.
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5)Defines "Martial Arts" to mean any form of karate, kung fu,
tae kwon-do, kickboxing or any combination of full contact
martial arts, including mixed martial arts, or self-defense
conducted on a full contact basis where a weapon is not used.
FISCAL EFFECT : Unknown
COMMENTS :
1)Author's Statement :
According to the author, "The purpose of the bill is to
prevent the mistreatment of MMA fighters in California by
banning certain exploitative contracting practices that
violate athletes' freedom to work and their ability to
support their families. Many California MMA fighters
have retired after suffering multiple concussions, bone
fractures, muscle tears, nerve damage and spine injuries,
which threaten their ability to earn a living and support
their families as they grow older."
In support of the bill, the author shared what he stated to be
testimony with the committee from three current or former MMA
fighters, which illustrate some of the contractual issues this
bill will address.
Frank Shamrock : Mr. Shamrock is a retired mixed martial arts
fighter who held championship titles with four separate MMA
promotions, including the Ultimate Fighting Championship
(UFC), Strikeforce, World Extreme Cagefighting, and King of
Pancrase. Mr. Shamrock said he disagreed with the UFC over
their proposed merchandising agreement that allowed Zuffa, LLC
to use his name and likeness "in perpetuity" or forever, on
UFC merchandise (and therefore refused to sign their contract
containing this term.) This prevented Shamrock from competing
in the UFC, despite being a four time defending UFC world
champion.
Christian Wellisch : Mr. Wellisch is an attorney and former
mixed martial arts fighter who retired in 2009, and now runs
his own law practice. "It happens all the time where
different promoters sign fighters to one-sided contracts that
only the promoters can renew at their option, while giving
them as many opportunities to release the fighter as possible.
Because of this, fighters are prevented from shopping around
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their services to the highest bidder. By monopolizing the top
talent, the most successful promoters are also able to further
depress fighter pay, and offer one-sided, 'take it or leave
it' contracts that fighters really have no option but to sign
if they want to continue to make a living."
Antonio McKee : Mr. McKee has competed in more than 50
professional mixed martial arts events since 1999. However,
Mr. McKee claims he has never earned enough to insure even a
modicum of financial security. Mr. McKee maintains that the
absence of real money-making potential in the sport of MMA
forces fighters to latch on to unscrupulous business promoters
who dictate exploitative contract terms.
2)Arguments in Support :
The California Teamsters Public Affairs Council , writes in
support to say, "Mixed martial arts, also known as MMA, is one
of the fastest growing sports in the world. Many of the most
talented and well-known professional fighters in the sport
live in California and are licensed to compete in events held
in this state. Since 2006, California has hosted more than 60
professional mixed-martial arts events, making California a
center of the mixed-martial arts world.
"Fighters licensed in California who compete in these contests
often undergo years of punishing training, and risk serious
injury by competing in professional bouts for other's
entertainment. Despite these physical risks, mixed-martial
arts fighters who compete professionally in California have no
pension benefits and limited protection against exploitation.
Promoters often require that mixed-martial arts fighters in
California agree to coercive and oppressive contract terms."
A private citizen , host of No Holds Barred, states, "The
exploitation of boxers by generations of cigar-chomping fight
promoters was so pervasive and well-documented that Congress
passed the Muhammad Ali Boxing Reform Act in 2000. With the
rise in recent years of mixed martial arts, the cigar-chomping
may have become outdated for this new generation of fight
promoters, but the exploitation has not. In fact, in the
U.S., mixed martial arts fighters today share none of the
legal protections boxers have under the Ali Act, and face
practices which would have made the old-time boxing promoters
swallow their stogies.
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"Among these practices which need changing are: Exclusive and
non-public contracts; a perpetually-renewing 'championship
clause'; assigning of certain merchandising rights to
promoters in perpetuity with no compensation or remuneration;
a system of arbitrary and secret bonuses used as a means of
controlling fighters; encouraging fighters to promote racism,
sexism, homophobia, and other anti-social values such as
disrespect for their opponents as a means of publicizing their
fights and manufacturing rivalries; and compensating mixed
martial arts fighters with a smaller percentage of gross
pay-per-view revenues than boxers receive."
3)Arguments in Opposition :
Zuffa, LLC , which operates the Ultimate Fighting Championship
and Strikeforce, states in their opposition letter to the
committee, "Zuffa first became a licensed promoter in the
State of California in February 2006. ? As a licensed
promoter, Zuffa has paid well over a million dollars in direct
taxes to the California State Athletic Commission (CSAC). In
addition to the direct taxes, UFC events have generated
millions of more dollars for the State of California in
indirect revenue through tourism, retail shopping,
restaurants, hotels, car rentals, etc. Zuffa is proud that
our professional sporting events create work and jobs for so
many Californians, and that we generate an enormous economic
impact for cities like Los Angeles, Anaheim, San Diego,
Oakland and San Jose.
"Zuffa has enjoyed bringing world class events to California
because the state's regulatory system has provided certainty
in how events are regulated, overseen and taxed. ? It is
therefore troubling that AB 2100 would specifically impede
bringing business to California and would intentionally drive
the business to states with a more reasonable tax and
regulatory framework.
"In a similar vein, the proposal offered to prevent alleged
'coercive' contracts will not benefit athletes, but rather
will simply interject the government into private contract
matters. Zuffa is only one of approximately 30 MMA promoters
licensed by the CSAC. However, Zuffa has paid more to MMA
athletes, and has generated more opportunities for MMA
athletes, than any other promoter in history. Moreover, Zuffa
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routinely and voluntarily pays bonuses and other compensation
that is above and beyond the written agreements with its
athletes. Since Zuffa purchased the UFC in 2001, compensation
for UFC athletes has increased over 35-fold, and more than 50
UFC athletes have received compensation over $1,000,000
directly from Zuffa. Beyond pure monetary compensation, Zuffa
was also the first and, to our knowledge, the only promoter to
provide accident insurance for its roster of athletes; a
costly benefit that was believed to be impossible for combat
sports. Furthermore, it bears noting that most of the
professional athletes at the UFC level have skilled management
an legal counsel that assist with contract review and
negotiations, and alleged 'coercive' contracts are not based
on reality.
"Finally, the CSAC is a well-respected regulatory body that
has done a fine job of overseeing more unarmed combat events
than probably any other athletic commission in the country.
As a result, promotional companies like the UFC voluntarily
choose to bring MMA events to California, which has helped
grow MMA into a worldwide sport, a sport that literally did
not exist 15-20 years ago. It is through thoughtful oversight
and regulation by state athletic commissions that the sport of
MMA will continue to grow. AB 2100 will stifle that growth
and will drive events, tax revenue and economic impact outside
of the State of California."
The Honda Center writes the committee in opposition, based
upon their concerns that, "Large boxing and MMA events are
transient by nature and can be held in any big arena in any
state or any Country. We fear that the new contract
restrictions and un-capped taxes included in your bill will
make California an unattractive place to host live events. As
a consequence, promoters could very easily choose not to hold
their event in California. Rather, promoters may opt to hold
events in more economically-friendly environments."
The HP Pavilion at San Jose also writes in opposition to share
their concerns about the potential costs of such events
leaving the state, saying, "HP Pavilion at San Jose has hosted
17 MMA events since 2006 and is scheduled to host another
event on May 19. In our experience, these events have been a
tremendous success and bring a significant economic boost to
the South Bay Area and to the California State Athletic
Association (CSAC) budget? For example, in our most recent
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event, UFC 11/19/11, we sold 10,000 tickets for a total live
gate of $1.3 million. The thousands of fans that attend MMA
events directly invest in San Hose's restaurants, bars, and
hotels. In addition, because HP Pavilion at San Jose is
municipally-owned, a successful MMA event has a direct
positive economic impact of at least $6 million for the city
of San Jose. Further, our UFC event last November contributed
$63,000 in revenue to the CSAC budget.
"Importantly, HP Pavilion at San Jose is also a union
operation. Our employees are represented by IATSE, SEIU, IUOE
and HERE. When large fights come to HP Pavilion at San Jose,
it requires us to employ 300-400 union members for the event."
4)Background: California State Athletic Commission (CSAC) :
The CSAC was created by initiative of the people of California
in 1924. It is charged with protecting the health and safety
of boxers, kickboxers, martial arts fighters, and wrestlers.
It also must comply with the federal Professional Boxing
Safety Act and Muhammad Ali Boxing Reform Act. Functionally,
the CSAC consists of four components: licensing, enforcement,
event regulation, and administration of the Funds. Its
responsibilities include establishing requirements for
licensure, issuing and renewing licenses, approving and
regulating events, assigning ringside officials, investigating
complaints received, and enforcing applicable laws by issuing
fines and suspending/revoking licenses.
The following is taken from the Background Paper for the
California Athletic Commission, prepared for the March 14,
2011, Oversight Hearing of the Senate Committee on Business,
Professions and Economic Development.
The current CSAC mission statement, as stated in its 2010
Strategic Plan, is as follows: The California State Athletic
Commission is dedicated to the health, safety and welfare of
participants in regulated competitive sporting events, through
ethical and professional service.
The CSAC is responsible for implementation and enforcement of
the Boxing Act also known as the State Athletic Commission
Act. The Commission establishes requirements for licensure,
issues and renews licenses, approves and regulates events,
assigns ringside officials, investigates complaints received,
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and enforces applicable laws by issuing fines and suspending
or revoking licenses.
The CSAC does not require any formal education or examination
requirements. Licensees must possess at least a certain level
of skill to enable them to safely compete against one another
and demonstrate his or her ability to perform. Licensees who
do not fall into the combatant category such as referees,
judges, timekeepers and ringside physicians must have adequate
knowledge of laws and rules so as not to jeopardize the health
and safety of athletes. The CSAC indicates that there were
11,538 licensees for the 2009-10 Fiscal Year.
The CSAC is funded through regulatory fees and license fees.
In the 2009-10 Fiscal Year, the CSAC's operating budget was
approximately $2.3 million, and there were 14.5 authorized
staff positions. In 2010, the CSAC supervised 184 events,
including 82 boxing, 72 MMA, 16 kickboxing and 14 muay thai.
The CSAC has two Committees in statute and has established
sport specific Sub-Committees at its discretion. The Martial
Arts Advisory Committee, established in statute and appointed
at the discretion of the CSAC, is comprised of California
residents who have previously served as promoters, fighters,
trainers, managers or officials in kickboxing or full-contact
martial arts events.
5)This Bill, as Proposed to be Amended in Committee, Recasts
Language & Deletes Provisions for Inclusion of MMA Fighters
Into the Boxer's Retirement Fund :
This bill has been substantially amended two times in the past
month. The third version, analyzed and presented as proposed
to be amended before the committee today, contains
substantially the same provisions as the last version in print
dated April 9, 2012. The key differences are that the stand
alone provisions regarding requirements for licensed
promoters, and the proposal to restrict coercive contracts
have now been included in the section of the bill creating the
professional code of ethical conduct.
In addition, in response to concerns that public disclosure of
promotional contracts and merchandising agreements could
expose "trade secrets", the author has provided an amendment
to expressly prohibit the CSAC, and any person acting on its
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behalf, from disclosing to the public any agreement furnished
by a promoter under the bill's terms, except to the extent
required to comply with an order in a legal, administrative or
judicial proceeding.
Finally, the author has removed the provision in the bill
which would have included MMA fighters in the Boxer's Pension
Fund. This amendment was taken in response to existing law,
Business and Professions Code Section 18618, which provides
that "The commission shall furnish to the Governor and the
Legislature a report, on or before July 30, 2012, on the
following? (b) The condition of the Boxers' Pension Fund.
This report shall include a recommendation on whether the fund
should be continued and, if so, whether it should be expanded
to include all athletes licensed under this chapter and
appropriate fees paid into the fund."
It is the author's intention to allow the CSAC's report
process to proceed, and will hold any decision regarding the
pension fund until after the report required under this
provision is published and its recommendations can be
assessed.
REGISTERED SUPPORT / OPPOSITION : (Unconfirmed, based on prior
versions of the bill)
Support :
American Rights at Work
Arete Agency
California Conference Board of the Amalgamated Transit Union
California Conference of Machinists
California Labor Federation, AFL-CIO
California Police Activities League
California Teamsters Public Affairs Council
Engineers & Scientists of California, IFPTE Local 20
Fighters Online
International Longshore and Warehouse Union
Jockey's Guild
Mixed Martial Arts Fighters Association
Patient Networks
Professional & Technical Engineers, IFPTE Local 21
United Food & Commercial Workers Western States Council
UNITE-HERE, AFL-CIO
Utility Workers Union of America, Local 132
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2 private citizens
Opposition :
Goossen Tutor Promotions
Honda Center
Howard Jarvis Taxpayers Association
HP Pavilion at San Jose
Ultimate Fighting Championship
Analysis Prepared by : Dana Mitchell / A.,E.,S.,T. & I.M. /
(916) 319-3450