This Saturday, May 2nd, hundreds of millions of viewers are expected to tune in to what is being titled the “Fight of the Century.” Floyd “Money” Mayweather brings his 47-0 professional record to the MGM Grand in Las Vegas for the long-awaited fight against eight-division world champion Manny Pacquiao.
Fans have been calling for this bout since 2009. With six years of hype and several failed negotiations preceding it, the match is expected to pulverize previous pay-per-view records and become the highest grossing fight in boxing history. With so much hype and excitement surrounding the fight, restaurateurs and bar owners across the country will surely take advantage by showing the bout to pull in customers.
Sporting event exhibitions are an excellent and valuable way of advertising a business and increasing a customer base. It offers the casual fan a venue for viewing when they would otherwise not want to spend the high cost of purchasing the fight on their own, and it can bring in those diehard fans searching for a more social atmosphere to enjoy it in. But if the business managers do not carefully comply with the necessary preconditions, it can invite the unwanted attention of litigation.
Sporting event licensees have been cracking down on businesses trying to capitalize on major events. Joe Hand Promotions, a premier UFC pay-per-view distributor, and J & J Productions, a leading boxing match distributor, are common plaintiffs against businesses who show sporting events to the public without the proper licensing, each bringing several hundred lawsuits in a given year. They have both collected some substantial monetary awards. For example, in 2012, Plaza Mexico Bar & Grill in Laredo, TX was forced to pay $32,500 to a UFC sales agent for an unlicensed exhibition of the 2010 UFC fight between Koscheck and Daley.
The Communications Act of 1934, 47 U.S.C. § 553, expressly prohibits intercepting or receiving unauthorized communications via cable and exhibiting them for commercial gain. For similar violations via satellite, § 605 governs. Violations of the Communications Act carry with them a penalty of not less than $1,000 and not more than $10,000. In a finding of a willful violation, which requires a simple disregard for obtaining the license to show, a court will multiply the amount of damages, but not exceed $100,000. When doing so, courts look to compensate for the complainant’s lost business revenues, as well as penalize the violator to prevent future violations. To make matters worse, the statute mandates violators pay the opposition’s attorney fees and costs.
The horror stories from businesses caught violating the Communications Act, and other copyright laws, range from nominal amounts to over $100,000 penalties. In 2009, Rio De La Plata Bakery Shop, in Queens, NY was forced to pay over $110,000 for violating the statute. In many circumstances, plaintiffs have been able to hold managers and owners vicariously liable in their individual capacity if they can show the defendant had a right and ability to supervise the exhibition and had a strong financial interest in it. Thus, a bar owner could find himself or herself personally liable for the amount awarded for a violation. In 2014, a principal director of Eddie’s Back Bar in Dallas, Texas was held personally liable for an unauthorized exhibition of UFC 114: Rampage v. Evans. In Joe Hand Promotions, Inc. v. Leija, No. 3:13-CV-1462-L, 2014 WL 1095034 (N.D. Tex. Mar. 20, 2014), the defendant failed to respond to the lawsuit and the court entered a $60,000 award against him for a willful violation of the Communications Act.
To prove a violation of the statute, the distributor need only show that the defendant business showed the event and that the business did not have the required license to do so. Production companies have gotten very good and crafty in catching violators. Often they will hire private or amateur investigators to attend public viewings and take a few quick videos of the exhibitions with their smart phones. Joe Hand Promotions even has a link on its website for whistleblowers to report alleged violators. The UFC has caught hundreds of violators in this manner, and has obtained $4.7 million in settlements between 2006 and 2012.
Many violators think they can get away with purchasing a residential license for $80 to $100 instead of the commercial license that would range from $1,500 to $3,000. Such violators then broadcast their residential license in their business to avoid the inflated premium. But with the law and technology stacked against them, these violators are in serious risk of expensive financial liability. So, if you’re a business owner seeking to turn a profit off Mayweather v. Pacquiao, the best bet would be to give the promoters their cut, pony up for the commercial license, and just try to enjoy the bout. Otherwise, you will be suspiciously eyeing every patron in your bar with a cell phone, wondering whether they are a private investigator looking to turn a profit off of you.