UFC and Anti-Trust

So the black-balling is true. To recap: EA Sports is making a videogame called "MMA" which seeks to license the likenesses of real MMA fighters. The rumor had been that UFC head Dana White had threatened to black-ball any fighter who sold their private rights to EA. And on Saturday night, White confirmed that the rumor is true. The other important fact in the case is that the UFC currently has a license with another game producer, THQ, for their own game.

White is particularly savvy about the values of intellectual property. He built the UFC by purchasing the video rights for the nascent company and then using that leverage to buy the rest of the UFC outright. You could make an argument that any enterprise organized around a pay-per-view model needs to smartly manage its IP, striking the right balance between giving away enough product to stoke demand and keeping enough product walled-off to generate revenue. I suspect that White sees the EA-UFC fight as another instance where his company needs to aggressively control what they see as their intellectual property (even if the IP they're trying to lay claim to isn't actually theirs).

This brings up two questions: The first is whether or not White's stance violates anti-trust (or employment discrimination) laws. I doubt that Acme Widgets could, as a matter of company policy, refuse to hire people who made side-income selling comic books on eBay. (Acme Widgets might be able to demand that employees not sell other widgets in their spare time, which is the nature of non-compete clauses. But I'm not sure that licensing your likeness to another videogame is direct competition to the UFC. Direct competition to THQ, maybe, but not to the UFC itself.)

The second question is whether or not White is smart to create a point of labor friction with this fight, even if he is within his legal rights. The UFC is the dominant organization in its space (at least in the U.S.). But it's still a relatively small operation. I don't think UFC's dominance is so total as to be able to ward off any potential competitor. Creating dissatisfaction in the labor market is practically begging for the creation of a rival brand and the barrier to entry seems pretty low. A rival could duplicate most of the UFC's distribution (save the Spike reality series) relatively easily. UFC's competitive advantage lies with its fighters. Unless the company's position is more dominant than I understand (a very real possibility!), White should be trying to protect that advantage while creating other areas of strength.

He's a long way from having Vince McMahon levels of monopoly power.