The California state athletic commission is one of the largest combat sports sanctioning bodies in the nation, overseeing 190 events during its 2011 fiscal year, but it is also in chaos, a fact highlighted by a Tuesday meeting in which it was revealed that the agency is insolvent, with expenditures far outpacing revenue.
CSAC is already in the red, and according to numbers released in a memorandum from Department of Consumer Affairs budget officer Taylor Schick, if the commission continues its current projections, it would face a deficit of nearly $700,000 by the end of fiscal year 2013, a shortfall that could have a catastrophic effect on MMA and boxing in the state, because it could cause the commission to halt its programs, thereby denying regulation for combat sports.
"Without the ability to pay for even basic services, the Commission will have no choice but to cease operation immediately and cancel or postpone indefinitely all Commission regulated events," Department of Consumer Affairs (DCA) director Denise Brown wrote in a recent letter to CSAC's executive director George Dodd.
Dodd -- who has been the commission's executive officer since February 2010 -- came under fire in Tuesday's meeting, during which his continued employment was a subject of debate behind closed doors. He ultimately emerged with his job, although he was censured for "not adequately informing the commission about the insolvency of the athletic commission fund," according to The Los Angeles Times.
That was not enough for one commissioner, Linda Forster, who on Thursday resigned, saying she was "shocked" to learn of the financial crisis.
Under this duress, California is still tasked with regulating the upcoming July 11 UFC on FUEL 4 show, which emanates from HP Pavilion in San Jose, as well as August 4's UFC on FOX 4 event, which will be held at Los Angeles'' Staples Center. The UFC also ran two events in the state in 2012 and three in 2011.
During the open portion of the meeting held in South El Monte, Dodd said that revenue has decreased because the state has failed to attract as many major events as in years past.
In fiscal 2011, he said, the commission regulated 12 shows which generated over $25,000 of revenue apiece. In 2012, that number dipped to seven, partly he said, due to taxing issues that deterred promoters from going there, and partly due to the loss of Strikeforce as a standalone promotion.
Schick's numbers show that CSAC began the 2011-'12 fiscal year with $467,000, and is projected to collect $1,284,000 in revenue while spending $1,786,000. That means the fiscal year, which ends on June 30, is likely to leave the fund with a deficit of $35,000.
Dodd, who was famously Chael Sonnen's foil at a hearing related to Sonnen's UFC 117 drug test that came back with an elevated T/E ratio, said that he had attempted to slash costs, including those related to inspectors' fees, but had been told nothing more could be done. While he maintained his position, he has been asked to provide a plan to address the budget shortfall and be subjected to another job evaluation within 90 days, according to the Times.
As of now, no scheduled fights have been affected, but given the economic difficulties faced by state governments and regulatory agencies across the country, this is a situation that bears watching as a possible harbinger of trouble elsewhere.