Time now for a reality check about how the New York State Legislature does business. Legalization does for Mixed Martial Arts (MMA) what the carried interest tax loophole does for income inequality. It institutionalizes economies of scale through mandates that push breakeven into budget busting territory for all but the biggest operators. This bill was sold on the promise that it would make the state a lot of money. The bill has now come due.
Quid pro quo is a suite of best practices from someone savvy enough to know that kick boxing is a different species altogether from single discipline martial arts. Look no further than literary critic James Wood’s observation that “grounded journalistic comprehension of a foreign [culture] is rare”, because we tend “to proceed on the not obviously misguided premise that, since American reality is preoccupyingly interesting, [pronouncements on these subjects] should function as a kind of brilliant cultural selfie.” (“Floating Island” by James Wood in The New Yorker on March 21, 2016) From S05949, Article 41, §1001: “Authorized combative sports include, amateur and professional boxing, wrestling, sparring, kick boxing, single discipline martial arts and mixed martial arts, pursuant to the provisions of this article.”
Keyword character and competence for everyone has to get licensed. From §1007: “with respect to all authorized professional combative sports in this state, all corporations, entities, persons, referees, judges, match-makers, timekeepers, professionals, and their managers, trainers, and seconds shall be licensed by the commission.” §1004 makes it clear that “The commission shall have and is hereby vested with the sole direction, management, control and jurisdiction over: (4) all gyms, clubs, training camps and other organizations that maintain training facilities to prepare persons for participation in authorized professional combative sports.” Checking the equal protection box of the Interstate Commerce Clause, temporary work permits under §1011 pro-rate best practices for non-residents.
The penalties for going rogue now are Draconian. At the very least, non-compliance will result in a rap sheet. Civil penalties under §1019 range from “ten thousand dollars or twice the amount of gain derived therefrom whichever is greater, or for a subsequent violation twenty-five thousand dollars or twice the amount of gain derived therefrom whichever is greater. The attorney general is hereby empowered to commence judicial proceedings to recover such penalties and to obtain injunctive relief to enforce the provisions of this section.”
“A Moon for the Misbegotten” also casts its shadow over authorized sanctioning entities. We all know who that is. (“What Shall It Profit a Man If He Gains the Whole World but Forfeits His Soul?” by Miguel Rivera in Muay Thaimes®, Volume IV, No. 3, Winter of 2010) It is now in the crossfire of policing the fleecing in all of those conflict of interest purse parsing practices that work their way up the chain of command to an 8½% gross receipts tax. Remember what happened to Al Capone, when he didn’t pay his taxes?
Well truth or dare means business with new commission subpoena powers riding shotgun where §1016 requires “the organization that promotes, sanctions or otherwise participates in the proposition, selection, or arrangement of one or more professionals for a contest must file with the commission a written statement executed under penalty of perjury” to basically give up the encryption on its iPhone.
Then there are these §1018 specific prohibitions:
“Any person, including any corporation and the officers thereof, any physician, referee, judge, timekeeper, professional, manager, trainer or second, who shall promote, conduct, give or participate in any sham or collusive authorized professional combative sports, shall be deprived of his or her license by the commission and any other appropriate legal remedies.”
“No licensed promoter or matchmaker shall knowingly engage in a course of conduct in which fights are arranged where one professional has skills or experience significantly in excess of the other professional so that a mismatch results with the potential of physical harm to the professional.”
To give you some idea how much costs matter in this business, I’ve been told that Glory 12 in NYC lost somewhere in the neighborhood of a million dollars, despite filling the house without comps. While Glory World Series isn’t the UFC, neither is anyone else. Economies of scale have a way of crushing irrational exuberance. How much opportunity actually knocks, there’s no such thing as a free lunch nor any commercial amnesty from costing out such best practice benefits as:
§1010(2) “Any professional applying for a license or renewal of a license to participate in combative sports under this article shall undergo a comprehensive physical examination…If, at the time of such examination, there is any indication of brain injury,…the professional shall be required to undergo further neurological examinations by a neurologist including magnetic resonance imaging or other medically equivalent procedures…The costs of all such examinations for professional boxers shall be assumed by the state…the costs of all such examinations for professional mixed martial arts participants shall be assumed by the applicant or promoter with which the professional mixed martial arts participant is affiliated, regardless of provider.” Gottcha!
§1015(11) “All persons, parties or corporations having licenses as promoters…shall continuously provide accident insurance for: medical, surgical and hospital care, with a minimum limit of fifty thousand dollars for injuries…and for a payment of fifty thousand dollars to the estate of any deceased athlete…and, medical, surgical and hospital care with a minimum limit of one million dollars for the treatment of a life-threatening brain injury sustained in a program operated under the control of such licensed promoter, where an identifiable, causal link exists between the professional licensee’s participation in such program and the life-threatening brain injury.”
§1015(9) “Before a license shall be granted to a person or corporation to conduct an authorized professional combative sport, the applicant shall execute and file with the secretary of state a bond…conditioned for the faithful performance by said corporation of the provisions of this article and the rules and regulations of the commission…In case of default in such performance, the commission may impose upon the delinquent a penalty in the sum of not more than one thousand dollars for each offense, which may be recovered by the attorney-general in the name of the people of the state of New York in the same manner as other penalties are recovered by law; any amount so recovered shall be paid into the treasury.
§1015(10) In addition to the bond required by subdivision nine of this section, each applicant for a license to conduct an authorized professional combative sport shall execute and file with the secretary of state a bond…conditioned for and guaranteeing the payment of professionals’ and professional wrestlers’ purses, salaries of club employees licensed by the commission, and the legitimate expenses of printing tickets and all advertising material.
New York differs from the rest of the country only in the institutional power of Wall Street and an epidemic of homelessness, both of which are flip sides of the same income inequality coin. In a business with economies of scale, those with low end margins are the ones most likely to be squeezed by a near tripling of the gross receipts tax. In the words of a U.S. Supreme Court Chief Justice, who wasn’t so out of touch with reality as some now on the bench, “the power to tax is the power to destroy”. (Chief Justice John Marshall in McCulloch v. Maryland, 1819)
Since boutique shows are the portals for entry level jobs, be careful what you wish for. The bill takes effect 120 days after it becomes law. Except for putting ammies on the regulatory radar, they’re not going to get any of the best practice benefits that are newly mandated in this bill. Who’s exempt from brain damage, because they’re not getting paid?
For a slightly abridged text of the bill and other premium content, download the Club Muay Thaimes