In 2008, when Eddie Alvarez was an untested commodity as a mixed martial arts fighter, he signed a contract with the Bellator Fighting Championships that gave the promotion an exclusive 90-day negotiating window with him when the four-year deal ended.
Alvarez also agreed, at the conclusion of the 90-day period, to give Bellator the right to match any contract offer for one year. So, in essence, he would be bound to Bellator for 15 months beyond the end of his original deal, unless the sides came to agreement on an extension or Bellator signed off on it earlier.
As 2013 opens, Alvarez is one of the elite lightweight fighters in the world and very much in demand. He's been sued by Bellator in an attempt to prevent him from completing a deal with the UFC, a dispute that could literally cost him millions of dollars.
Alvarez has filed a counter claim in U.S. District Court in New Jersey, seeking to be freed from Bellator and allowed to sign with the UFC.
Alvarez is seeking an injunction to allow him to fight in the co-main event of UFC 159 on April 27, a card that will be headlined by a light heavyweight title match between Jon Jones and challenger Chael Sonnen. That would be the first of an eight-fight deal the UFC offered Alvarez.
Originally, the UFC offered him a spot in the co-main event of UFC 158, which will have a welterweight title fight between champion Georges St-Pierre and arch rival Nick Diaz as its main event.
Through spokesman Anthony Mazzuca, Bellator CEO Bjorn Rebney declined comment. Mazzuca noted that Rebney and other key company officials were preparing Thursday for the promotion's first fight card on Spike TV and weren't in a position to address Alvarez's counterclaim.
However, Rebney told MMA Junkie earlier this month that Bellator matched the offer the UFC gave Alvarez.
"As a matter of fact, we didn't just match it, we took the UFC contract, took it out of the PDF format, changed the UFC name to the Bellator name, and put a signature to it," Rebney said.
At issue, though, are several key points:
• Is Bellator, a company which has never done a pay-per-view show, effectively able to match a contract that would have put Alvarez on a card that is projected to sell more than 700,000 pay-per-view units?
• Is changing the television network from Fox to Spike TV, as Rebney did when he presented the match to Alvarez, actually the same thing, given the switch from broadcast to cable?
• Did the fact that Rebney added so-called "sweeteners" to the matched offer in essence change the word-for-word match the original contract called for?
Alvarez will stand before federal Judge Jose L. Linares on Jan. 25 seeking an injunction allowing him to fight on the UFC 159 card. In its offer to Alvarez, the UFC asked for an answer by Jan. 27 in order to effectively promote Alvarez.
The UFC essentially put a poison pill into its contract offer to Alvarez that it hoped would make it impossible to match. By putting him as the co-main event on a card headlined by St-Pierre and promising him a cut of the pay-per-view revenues, the UFC attempted to position its offer as out-of-reach for Bellator.
It offered to give Alvarez $1 per buy between 200,000 and 400,000 buys. That would go up to $2 per buy between 400,000 and 600,000 and $2.50 for each buy over 600,000.
The UFC is a privately held company and does not publicly release its pay-per-view sales. However, according to Alvarez manager Glenn Robinson, who manages numerous UFC fighters, St-Pierre did approximately 700,000 sales at UFC 154 for his bout in Montreal against Carlos Condit.
Robinson said that St-Pierre's history of success as a pay-per-view draw makes it likely that he'd get a similar or higher number for the fight against Diaz. That would generate additional revenue that would then trickle down to Alvarez.
"The reason [Bellator] threw in the sweeteners from our point of view is that they were trying to get closer to the reality of the numbers by adding other stuff in because they knew they couldn't meet the numbers," Robinson told Yahoo! Sports. "So Eddie turns around and says, 'Well, I don't want any of the sweeteners. I just want what I'd get in the UFC offer.' That's a chance to fight for the title. They offered him a chance to be the co-main event of a GSP card. That card has a value.
"You can look at that card when you're discussing a match and when someone says, 'I'm going to put you on this particular card,' you can see and figure out what the value is based on the history. You could say, 'OK, GSP has never done below 690,000 pay-per-views,' over the last seven pay-per-views. He averaged 854,000 pay-per-views and he did 700,000 pay-per-views against Condit. Let's say he does 700,000 again now and does at the low end of his range. ... That's worth $1.2 million [for Alvarez] for the first fight."
At a buy rate of 700,000, Alvarez would have gotten a pay-per-view bonus worth $850,000. Had it gone to what Robinson said was the average over seven fights of 854,000, that would have meant Alvarez would have earned a $985,000 pay-per-view bonus.
UFC CEO Lorenzo Fertitta wouldn't confirm the sales figures Robinson used, but he said "they are in the right zip code." Fertitta said the St-Pierre-Condit fight was the year's second-best performing show, behind UFC 148 that was topped by Anderson Silva in a rematch against Sonnen.
No MMA promotion other than the UFC has ever sold more than 100,000 pay-per-view buys, which makes it unlikely that Bellator, a newcomer to the PPV field and without high-profile name fighters, could do that well.
"All pay-per-views are not created equal," Robinson said. "It took the UFC years to create a formula to build them up to the average of 400,000 pay-per-views [per event] over the course of the year. You just can't do that in one quick, thrown-together pay-per-view."
Linares will have a wide range of options available following the hearing on Jan. 25. He could grant the injunction and allow Alvarez to fight in the UFC while ordering a trial. He could rule in favor of either Bellator or Alvarez or he could simply deny the injunction and set a trial date.
Robinson said that the 29-year-old Alvarez is desperate not to get caught in a lengthy court case and said he wants to be able to maximize his value in order to be able to best provide for his wife and three kids.
"Shouldn't he have a right to earn what he can?" Robinson said. "If he has five years left of really strong fighting [and high-earning potential], then one year with Bellator equals 20 percent of his [remaining] fighting career. And they can't demonstrate they'll even do a single pay-per-view."
Robinson said that sponsors also pay more for fighters competing in the UFC because it has a higher profile, and that would be another way Alvarez would make more money than he would in Bellator. That, however, is not part of the terms that are under dispute.
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