MMA Universe

TMZ first reported that UFC heavyweight Alistair Overeem has sued his ex-management group, Golden Glory. According to TMZ, the lawsuit requests that the court break his contract with Golden Glory. Since the filing, Golden Glory has fired back at Overeem.

First the lawsuit.

Via the Fight Lawyer:

Overeem is suing “Knockout Investments, B.V., Golden Glory, Golden Glory California, Bas Boon” and a bunch of “Does.”  According to the complaint, KOI is the legal entity that manages Overeem and allegedly KOI performs its management function through its affiliate, Golden Glory.

According to the allegations in the complaint, Overeem’s contract with KOI and GG was signed in July 2007 and is for a 5-year term.  The agreement has an automatic renewal provision (for another five-years) unless either party does not want to renew and then any such notice must be served six months before renewal.

The agreement provides that KOI and GG were to provide a number of services–Overeem alleges that some of these terms are ambiguous and unenforceable (e.g., “acting as a ‘confidential agent,’” ”looking for personal sponsors,” and ”making publicity”) in a personal services contract.

Under the agreement, Overeem alleges that KOI and GG are entitled to 35% of Overeem’s pre-tax income.  Overeem alleges that under the contract the same 35% is due “for any deals ‘within one year after this contract has expired and/or were prepared during the duration of this agreement.’”  Overeem claims the management agreement also includes a provision that fines Overeem $10,000 for any breach of the agreement and a $5,000 per-day penalty for each day the violation continues.

Overeem asserts two claims–one for breach of contract seeking “an amount in excess of $151,000″ and a judicial declaration concerning the parties’ respective rights under the management contract.  Essentially, he wants the court to declare that KOI and GG are not entitled to his UFC money.  Overeem also seeks an accounting.

A few thoughts — and I am doing this quickly.  The liquidated damages clause — i.e., the 10k penalty and 5k a day add on as the violation continues– is not, in my view, by any stretch of the imagination enforceable. That said, there is no allegation that I saw that KOI or GG are seeking to enforce that provision.  So it may be a moot point.

Turning to the crux of the complaint.  Overeem lists a bunch of “failures” on the part of KOI and GG — chiefly, failures to pay, including money from FEG, Dream/K-1s parent, but he really alleges nothing specific, e.g., an amount.  He also claims he was not “properly informed” and alleges that KOI and GG failed to “protect [his] interests.”  Overeem also alleges that he believes KOI and GG received some undisclosed bonus arising from Overeem’s signing with the UFC–nothing more.

While certainly some of the provisions in the agreement could have been written more eloquently, whatever services Golden Glory provided, it seems pretty clear based on my read of the complaint (which is biased for Overeem) it is entitled to 35% of his pre-tax income and it also seems pretty clear that they have a trailing commission for a year even after the contract has expired.  Some of the allegations arguably make KOI and GG look bad, e.g., allegedly managing him in jurisdictions where KOI and GG were not licensed and allegedly pushing him to fight when injured.  But not sure that gets him around the 35% or somehow renders the management contract a nullity.

In any event, I read this quickly but sounds like Golden Glory has a nice little claim for the UFC 141 income, which would presumably include sponsorship money as well.

All of this said, let’s see how the story unfolds as there may be more out there.

Now the response by Golden Glory.

Via MMA Weekly:

“We are currently in receipt of a copy of Mr. Overeem’s lawsuit and our clients are assessing all available defenses and counterclaims,” read the statement from Golden Glory’s legal counsel at The Law Offices of Roderick J. Lindblom, APC.

“This lawsuit is a preemptive action on the part of Mr. Overeem and his counsel in response to KOI’s recent notification to Mr. Overeem of numerous violations by him of his management agreement with KOI, including but not limited to his failure to pay commissions for past fights and endorsement deals secured by KOI and Golden Glory.”

Payout Perspective:

The lawsuit makes one think about Dana White’s previous statements about Golden Glory business practices when Zuffa unloaded the Golden Glory stable. The lawsuit is in its infancy stages and we will have more as time goes on.

Justin Klein is an attorney at Satterlee Stephens Burke & Burke LLP in New York City where he concentrates his practice in commercial litigation and represents clients in the fight industry.  He regularly addresses current legal issues that pertain to combat sports, including efforts to legalize MMA in New York, at his Fight Lawyer website.  He is a licensed boxing manager with the New York State Athletic Commission as well as the founder and Chairman of the Board of the New York Mixed Martial Arts Initiative, a non-profit organization that gives inner city youth the opportunity to experience the emotional and physical benefits of martial arts training.  Justin lives in New York City where he trains in jiu jitsu and boxing.

DISCLAIMER

The information in this post and on my site consists of my opinion only, i.e., it is not the opinion of my employer or anybody else. In addition, and because this is my opinion, it is not intended to be (and is not) legal advice or an advertisement for legal services. This post provides general information only. Although I encourage interested parties to contact me on the subjects discussed in the articles, the reader should not consider information on this site to be an invitation for an attorney-client relationship.  I disclaim all liability in respect to actions taken or not taken based on any contents of this post. Any e-mail sent to me will not create an attorney-client relationship, and you should not use this site or my site to send me e-mail containing confidential or sensitive information.

TMZ first reported that UFC heavyweight Alistair Overeem has sued his ex-management group, Golden Glory. According to TMZ, the lawsuit requests that the court break his contract with Golden Glory. Since the filing, Golden Glory has fired back at Overeem.

First the lawsuit.

Via the Fight Lawyer:

Overeem is suing “Knockout Investments, B.V., Golden Glory, Golden Glory California, Bas Boon” and a bunch of “Does.”  According to the complaint, KOI is the legal entity that manages Overeem and allegedly KOI performs its management function through its affiliate, Golden Glory.

According to the allegations in the complaint, Overeem’s contract with KOI and GG was signed in July 2007 and is for a 5-year term.  The agreement has an automatic renewal provision (for another five-years) unless either party does not want to renew and then any such notice must be served six months before renewal.

The agreement provides that KOI and GG were to provide a number of services–Overeem alleges that some of these terms are ambiguous and unenforceable (e.g., “acting as a ‘confidential agent,’” ”looking for personal sponsors,” and ”making publicity”) in a personal services contract.

Under the agreement, Overeem alleges that KOI and GG are entitled to 35% of Overeem’s pre-tax income.  Overeem alleges that under the contract the same 35% is due “for any deals ‘within one year after this contract has expired and/or were prepared during the duration of this agreement.’”  Overeem claims the management agreement also includes a provision that fines Overeem $10,000 for any breach of the agreement and a $5,000 per-day penalty for each day the violation continues.

Overeem asserts two claims–one for breach of contract seeking “an amount in excess of $151,000″ and a judicial declaration concerning the parties’ respective rights under the management contract.  Essentially, he wants the court to declare that KOI and GG are not entitled to his UFC money.  Overeem also seeks an accounting.

A few thoughts — and I am doing this quickly.  The liquidated damages clause — i.e., the 10k penalty and 5k a day add on as the violation continues– is not, in my view, by any stretch of the imagination enforceable. That said, there is no allegation that I saw that KOI or GG are seeking to enforce that provision.  So it may be a moot point.

Turning to the crux of the complaint.  Overeem lists a bunch of “failures” on the part of KOI and GG — chiefly, failures to pay, including money from FEG, Dream/K-1s parent, but he really alleges nothing specific, e.g., an amount.  He also claims he was not “properly informed” and alleges that KOI and GG failed to “protect [his] interests.”  Overeem also alleges that he believes KOI and GG received some undisclosed bonus arising from Overeem’s signing with the UFC–nothing more.

While certainly some of the provisions in the agreement could have been written more eloquently, whatever services Golden Glory provided, it seems pretty clear based on my read of the complaint (which is biased for Overeem) it is entitled to 35% of his pre-tax income and it also seems pretty clear that they have a trailing commission for a year even after the contract has expired.  Some of the allegations arguably make KOI and GG look bad, e.g., allegedly managing him in jurisdictions where KOI and GG were not licensed and allegedly pushing him to fight when injured.  But not sure that gets him around the 35% or somehow renders the management contract a nullity.

In any event, I read this quickly but sounds like Golden Glory has a nice little claim for the UFC 141 income, which would presumably include sponsorship money as well.

All of this said, let’s see how the story unfolds as there may be more out there.

Now the response by Golden Glory.

Via MMA Weekly:

“We are currently in receipt of a copy of Mr. Overeem’s lawsuit and our clients are assessing all available defenses and counterclaims,” read the statement from Golden Glory’s legal counsel at The Law Offices of Roderick J. Lindblom, APC.

“This lawsuit is a preemptive action on the part of Mr. Overeem and his counsel in response to KOI’s recent notification to Mr. Overeem of numerous violations by him of his management agreement with KOI, including but not limited to his failure to pay commissions for past fights and endorsement deals secured by KOI and Golden Glory.”

Payout Perspective:

The lawsuit makes one think about Dana White’s previous statements about Golden Glory business practices when Zuffa unloaded the Golden Glory stable. The lawsuit is in its infancy stages and we will have more as time goes on.

Justin Klein is an attorney at Satterlee Stephens Burke & Burke LLP in New York City where he concentrates his practice in commercial litigation and represents clients in the fight industry.  He regularly addresses current legal issues that pertain to combat sports, including efforts to legalize MMA in New York, at his Fight Lawyer website.  He is a licensed boxing manager with the New York State Athletic Commission as well as the founder and Chairman of the Board of the New York Mixed Martial Arts Initiative, a non-profit organization that gives inner city youth the opportunity to experience the emotional and physical benefits of martial arts training.  Justin lives in New York City where he trains in jiu jitsu and boxing.

DISCLAIMER

The information in this post and on my site consists of my opinion only, i.e., it is not the opinion of my employer or anybody else. In addition, and because this is my opinion, it is not intended to be (and is not) legal advice or an advertisement for legal services. This post provides general information only. Although I encourage interested parties to contact me on the subjects discussed in the articles, the reader should not consider information on this site to be an invitation for an attorney-client relationship.  I disclaim all liability in respect to actions taken or not taken based on any contents of this post. Any e-mail sent to me will not create an attorney-client relationship, and you should not use this site or my site to send me e-mail containing confidential or sensitive information.

MMA Fighting reports that Alistair Overeem has left the managing stable of Golden Glory. Overeem’s decision to leave was due to “a breach of trust.”

Via MMA Fighting:

With Overeem only stating that “a breach of trust” was the reason for his departure, details behind the split are up for speculation and many people may be quick to point the finger at the recent issues between Golden Glory and Zuffa.

Overeem’s former manager, Bas Boon, indicated that Overeem’s departure was not related to the recent Zuffa-Golden Glory squabble which saw Zuffa cut Overeem, his brother, Valentijn, and Marloes Coenen. In a press release, Boon cited the current state of the fight business (outside of Zuffa we presume) as the culprit as he cited the fact that Golden Glory fighters are owed money from FEG and K-1. Boon cited the fact that Overeem is fighting in the UFC this December as a sign that the Zuffa-Golden Glory relationship is not fractured. But it appears that the money owed Overeem from other fight organizations may be the reason for the split.

Payout Perspective:

Overeem’s departure is interesting considering it occurred after Golden Glory negotiated his contract for the Lesnar fight. This is another example of the tenuous business of fight management. We will see if Overeem decides to sign with another agent and, if so, whether the agent will make an effort to collect the past debt from the organizations.

MMA Weekly reports that MMA agent Ken Pavia has sold his agency, MMA Agents, to Paradigm Sports Management. The transaction includes Pavia’s company and his stable of fighters. Pavia is moving on to become Vice President of Business Development at sports agency Takedown Entertainment.

Via MMA Weekly:

Speaking to MMAWeekly.com on Friday, Pavia confirmed that he has sold his company and fight roster to Paradigm Sports Management, but will remain on in a consultant’s role to help the transition for his fighters.

Takedown Entertainment is a publicly traded company that produces and packages MMA shows for broadcast as well as digital release.

Mike Whitman of Sherdog spoke to Pavia about the offer from Paradigm:

“The timing and the opportunity were both right. Takedown represented an opportunity that, in the long run, not only benefits me, but also benefits my clients and the industry,” Pavia said. “The funny thing is that over the last four or five [years], because of my roster and connections, I’ve been offered two or three things a week — whether it’s helping out with a promotion or consulting or advising in some capacity, but it was never the right time or opportunity. With Takedown’s business model, it was an offer I couldn’t refuse.”

Pavia indicated that all employees of his company were going to Paradigm or staying with him in his move to Takedown so the transition would not leave anyone without a job.

Payout Perspective:

Its an interesting move within the industry and we will see if any of Pavia’s fighters will seek other representation. The report indicates that Pavia will stay on with MMA Agents for a period of time to ensure a smooth transition so maybe there will be no switching of agents. Based upon the recent MMA Fighting article on the state of MMA sponsorships, the role of the MMA agent can be a difficult task. It appears as difficult as an NFL or NBA agent without the market of sponsors or big financial payoff as the two sports. This could change, ever so slightly, with the UFC-Fox deal. We are not saying that Pavia left for any specific reason, merely pointing out the tough and competitive job it is to be an MMA agent.

MMA Fighting had a piece on the state of sponsorships in MMA. It was a revealing look behind sponsoring of fighters in MMA.

Overall the piece depicts the sponsorship game as a huge investment for companies with a tenuous rate of return. For fighters, its a necessity to supplement their fight income as well as keep them financially afloat waiting for their next fight. For agents, its the likely primary goal in helping their clients.

Via MMA Fighting:

If you’re a company looking to sponsor a UFC fighter, the hit to your pocketbook varies depending on everything from the fame and popularity of the fighter you’re doing business with to the location of your logo. Walk-out T-shirts can be among the most expensive items, sometimes edging into the six-figure range, while a small decal on the thigh of his shorts might only run you a couple thousand dollars.

There is also the dreaded sponsorship “fee” or “tax” which the UFC has imposed on sponsors:

…most (sponsors and/or agents reached) put the cost of the tax at about $50,000 per year for the majority of apparel and supplement companies in the UFC, though the fee has been knonw to vary according to the sponsor and the situation…

Then, there is the issue of the return on investment. If a company pays to play, will viewers buy what your selling, let alone know who or what you are. Hayabusa’s Ken Clement told MMA Fighting:

“It’s trackable, but it’s very hard to be objective,” Hayabysa’s Clement said. “It’s the simple question of how many fans watching the UFC saw your logo and recognized it, and of those, who cares? …It can be looked at quantitatively, but there’s a lot of guesswork involved.”

Agent Dean Albrecht breaks down a company’s goals to sponsor a fighter in three categories: advertisement, sponsorship and endorsement. As defined by Albrecht, advertisement is the lowest tier of sponsorship as the relationship between fighter and sponsor is short-lived. The agreement is usually meant strictly for eyes to be on the sponsor’s logo.  These are usually one-time sponsorship deals or done on a flat fee. Sponsorship is more of a commitment between the fighter and sponsor where the sponsor has the fighter wear its logo over a period of time. The idea is to become brand ambassadors for the company. Endorsements are an elite level of sponsorship as the relationship between fighter and sponsor is more exclusive. Its where the fighter will do more than just wear the sponsor’s patch or shirt during fight night. The fighter will exclusively wear the sponsor’s gear in and out of the cage.  They will also make appearances for the sponsor.

Payout Perspective:

An interesting tidbit of the article was the fact that less sponsors are interested in Strikeforce and focus more on the UFC. The fact that Zuffa imposed its tax on Strikeforce seemingly is driving sponsors from the organization. We reported this summer on sponsor Ranger Up as it no longer found it economically feasible to sponsor its Strikeforce fighters. Could this have been a harbinger for the impending demise of the organization?

The article reflects on the work of the agent as they broker the deals with sponsors for their fighters. This is something that is very important for fighters as we all recall the lack of sponsors was the reason Matt Mitrione famously relieved Malki Kawa of his duties.

With the Fox deal, we shall see if the sponsorship industry heats up. While we may see the downturn of certain companies, we could see major mainstream sponsors dipping its toes in sponsorship of fighters, perhaps in the “advertisement” stage of sponsorship. Hopefully, for all involved there could be a time where we see bigger commitments from sponsors.

Junior dos Santos announced via twitter that he has left Ed Soares and has hired new representation. The change came as a surprise to Soares as dos Santos has been on a roll this year.

Soares talked about the separation via Tatame (h/t 5th Round):

“He wants to go a different way. If that’s how he feels, God bless him on his journey.”

“To tell you the truth, he hasn’t said why. I asked him, but he wasn’t much specific,” Soares added.” The only thing he told me was that the decision has been made. What am I supposed to say? If the guy wants to go another direction, who am I to tell him otherwise? I was his manager, not his father.”

Soares also represents many of the fighters under Team Black House including Lyoto Machida and Anderson Silva.

Payout Perspective:

An interesting move by dos Santos who is on a roll in the UFC. Not only is he scheduled to challenge for the UFC Heavyweight title this fall, but he was the featured coach on  The Ultimate Fighter. With this much momentum, a change in management seems unusual. It seems unlikely that he was neglected by Soares or that he was not receiving enough sponsorship opportunities. While Soares continues to have a venerable stable, losing dos Santos is a blow. It will be interesting to see how this management change affects his relationship with Team Blackhouse.

We have seen GSP and Frankie Edgar terminate their agent after much success. Here, dos Santos is doing the same. While nothing particular was mentioned for the reason for the change, it will be interesting to see what new management means for dos Santos.

Only 3 months into the partnership, Malki Kawa, agent for Jon Jones and other UFC stars is leaving Florida-based Authentic Sports Management (ASM). From the press release, it appears that this will be an amicable breakup.

Via Authentic Sports Management:

This move was a mutual decision that both parties amicably agree is in the best interests of the athletes they represent.

“We agree that this decision allows us to provide more focus, deeper resources and only the absolute best management services for the athletes we represent,” said (Glenn) Robinson. “This agreement is mutual and on good terms with the best intentions for everyone.”

“As managers we both agree this is the right move,” said Kawa. “We understand and respect each other and at this point I will go in a different direction. Starting today, I will resume operation of First Round Management through which I will continue my representation of UFC Light Heavyweight Champion Jon Jones, Thiago Alves, Carlos Condit, Ben Henderson and other talent.”

Robinson will assume the role of president of Authentic Sports Management, which represents UFC athletes Rashad Evans, Kenny Florian, Anthony Johnson, Jorge Santiago as well as Cosmo Alexandre, Gesias “JZ” Calvacante and the superstar brothers Danillo and Yuri Villefort, and others.

Jen Wenk will maintain public relations representation of Authentic Sports Management and its entire roster of athletes including Rashad Evans through StarPR Las Vegas LLC, and effective today with a new agreement directly with Jon Jones, will continue as the public relations representative for the UFC light heavyweight champion of the world.

As you recall Wenk left the UFC PR department to start her own agency and conduct press for ASM athletes including Jon Jones.

Payout Perspective:

A very short marriage between Kawa and ASM. One would think that with the addition of Wenk, ASM would turn into a super agency for MMA fighters. It would be interesting to see how much planning the two parties did prior to entering into the partnership. Regardless, it seems clear that the parties wanted to make sure that everyone knew that the parting was mutual and amicable. Obviously, the cautious wording of the press release was to ensure their clients that everything was fine and that other agents would not poach them.

Inside MMA has the scoop with Diaz manager Cesar Gracie who indicates that a fight with Fernando Vargas is signed. Does this mean that the Strikeforce welterweight champ is retiring from MMA?

In his post-fight interviews from Saturday, Diaz talked about not getting paid enough, overworked, over-trained and possibly being suspended. The release of Strikeforce salaries shows Diaz earned $175,000 (not including sponsors) for his fight with Paul Daley.

Nick Diaz last four payouts in Strikeforce:

vs. Paul Daley – $175,000

vs. “Cyborg” Santos – $150,000

vs. KJ Noons – $50,000

vs. Marius Zaromskis – $100,000

Diaz is earning respectable money for the Strikeforce WW champ. Speaking of underpaid, the latest Strikeforce salary report has Paul Song receiving only $750 for his prelim bout.

The full interview will be on Inside MMA on HD Net this Friday.

Payout Perspective:

This is an unusual career move if the information is true. Only Fernando Vargas benefits from this news as he is the only one that will receive a career boost from the fight. In a post-fight interview, Dana White talked about how Diaz could be a star and that the money will come. It should especially with the new marriage with Zuffa. Still, Diaz seems only happy when he’s miserable.

Shouldn’t Diaz question his management about the direction of his finances? If he is claiming that he’s not seeing the money then maybe he should ask his manager instead of demonizing a straw person (or people) holding him back. It should be the role of the manager or agent to come up with opportunities both inside and out of the ring. Sure, an agent can only go so far to lobby for matches. But, they definitely can help a client with outside opportunities.  Sponsorships, business investments and general finances are well within the realm of a manager. This is what White meant when he stated Diaz “won’t play the game”. If Diaz would be more media savvy, he might be able to get more opportunities. Diaz has the “Stone Cold” persona which could play well with sponsors and advertisers. A lot of people are fans of this Nick Diaz.  He just needs to know when to turn it on and off.

A fight with Vargas diminishes the Diaz brand at a time when its received the most publicity.

UPDATE 4/14/11, 11pm: The Vargas fight fell threw according to MMA Junkie. Diaz has restructured his Strikeforce contract (presumably to allow boxing) and will look to fight Jeff Lacy. Lacy lost to Roy Jones, Jr. in 2009 via TKO. Jones was 40 years old at the time of the fight, not the dominant fighter of the late 1990s.

Could this all be a ploy so that Diaz will get a fight (and more importantly) a payday he wants? Fighting tomato cans doesn’t seem like the proper career path if the end goal is a big payday.

Inside MMA has the scoop with Diaz manager Cesar Gracie who indicates that a fight with Fernando Vargas is signed. Does this mean that the Strikeforce welterweight champ is retiring from MMA?

In his post-fight interviews from Saturday, Diaz talked about not getting paid enough, overworked, over-trained and possibly being suspended. The release of Strikeforce salaries shows Diaz earned $175,000 (not including sponsors) for his fight with Paul Daley.

Nick Diaz last four payouts in Strikeforce:

vs. Paul Daley – $175,000

vs. “Cyborg” Santos – $150,000

vs. KJ Noons – $50,000

vs. Marius Zaromskis – $100,000

Diaz is earning respectable money for the Strikeforce WW champ. Speaking of underpaid, the latest Strikeforce salary report has Paul Song receiving only $750 for his prelim bout.

The full interview will be on Inside MMA on HD Net this Friday.

Payout Perspective:

This is an unusual career move if the information is true. Only Fernando Vargas benefits from this news as he is the only one that will receive a career boost from the fight. In a post-fight interview, Dana White talked about how Diaz could be a star and that the money will come. It should especially with the new marriage with Zuffa. Still, Diaz seems only happy when he’s miserable.

Shouldn’t Diaz question his management about the direction of his finances? If he is claiming that he’s not seeing the money then maybe he should ask his manager instead of demonizing a straw person (or people) holding him back. It should be the role of the manager or agent to come up with opportunities both inside and out of the ring. Sure, an agent can only go so far to lobby for matches. But, they definitely can help a client with outside opportunities.  Sponsorships, business investments and general finances are well within the realm of a manager. This is what White meant when he stated Diaz “won’t play the game”. If Diaz would be more media savvy, he might be able to get more opportunities. Diaz has the “Stone Cold” persona which could play well with sponsors and advertisers. A lot of people are fans of this Nick Diaz.  He just needs to know when to turn it on and off.

A fight with Vargas diminishes the Diaz brand at a time when its received the most publicity.

MMA Weekly reports that UFC Lightweight champ Frankie Edgar has signed on with Dominance MMA headed by Ali Abdel-Aziz. Abdel-Aziz and Edgar’s wife will handle The Answer’s management going forward.

In February, Edgar split ways with agent Shari Spencer. Spencer had managed Edgar and Georges St. Pierre. But, GSP split with Spencer in January and Edgar followed suit.

Via MMA Weekly:

Abdel-Aziz manages several other prominent fighters including Renzo Gracie, Ricardo Almeida, Rafael “Sapo” Natal, as well as several Gracie fighters including Igor, Gregor and Rolles Gracie.

Edgar is a mainstay at the main Renzo Gracie academy in New York City, while also training at Ricardo Almeida’s gym in New Jersey.

Payout Perspective:

Obviously, Abdel-Aziz’s relationship with the Renzo Gracie Academy helped him with signing Edgar. Also, having Edgar’s wife included in the management team could have been a factor.  This is similar to GSP’s hiring of new manager Rodolphe Beaulieu, who is a longtime friend of the welterweight champ. It is interesting to see the trend of having family/close friends assist in the business side of managing their career. There are obvious pluses and minuses in having family/friends involved business. We will see how this will play out.

Jon Jones’ agent, Malki Kawa, has joined forces with a sports management agency to form Authentic Sports Management. The agency will have offices in New York, Los Angeles and South Florida.

Via Authentic Sports Management press release:

Entrepreneur and business owner Glenn Robinson and entertainment manager Jon Rubinstein announce the establishment of Authentic Sports Management (ASM) company and the merger of ASM with longtime Mixed Martial Arts (MMA) manager Malki Kawa’s First Round Management. The merger forges a team with vast experience in MMA and sports and entertainment management, endorsements and sponsorships, brand building, marketing and public relations to create a unique full service firm. ASM offers unparalleled representation that will set a new standard in the MMA sport.

Payout Perspective:

The press release indicates that Robinson began a sports agency in late 2010 but it does not indicate whether he had experience in representing mixed martial artists.  Rubinstein owns an entertainment agency with offices in New York and Los Angeles. As we know, Kawahas a stable of MMA stars including Jones. The alliance combines Robinson’s marketing experience, Rubinstein’s mainstream entertainment knowledge and Kawa’s MMA clientele. One might see this as an acquisition of Kawa’s stable so ASM can get its foot in the door of MMA.

With the recent ousting of manager Shari Spencer by GSP and Frankie Edgar, this new merger of fighter services will be interesting. It appears that the move is an attempt to bolster the visibility of MMA fighters with the goal of getting fighters (namely, Jon Jones), mainstream sponsorships. We will see how Rubinstein can leverage his entertainment business knowledge into opportunities for mixed martial artists. Also, how receptive will mainstream sponsors be of fighters. After GSP, maybe Jon Jones (provided he wins in March) can crossover. But, will there be enough appeal for others?

First GSP, now UFC Lightweight Champ Frankie Edgar has split with his agent Shari Spencer. Spencer had represented GSP and Edgar at the beginning of the year, now both have left her agency.

Edgar sent out a press release which stated the following: “Shari did a fantastic job with handling my business affairs however at this juncture in time, we decided to go our separate ways.”

Payout Perspective:

Interesting that GSP and Edgar decided to leave Spencer within a month’s time of each other. Bloody Elbow speculates that money may be the reason for GSP’s departure. It would be easy to believe that money was a reason for Edgar leaving as well.  It was believed that Spencer was charging 20% of the deals that she brought to her clients. This charge seems very high considering agents in pro leagues (NBA, NFL) take on average 3 to 4% of the deals they broker for their clients.

The BE story states that Hollywood talent agency CAA helped facilitate GSP’s mainstream deals with Gatorade and Under Armour. Thus suggesting that Spencer did not get him these deals. Could we see Edgar following GSP’s example and sign on with CAA or another big talent agency and hire a confidant as his manager?

According to MMA Fighting, Spencer is evaluating her options in representing mixed martial artists. The news certainly says something about the state of agent representation in MMA.

Georges St. Pierre has split with his agent since 2007, Shari Spencer. A press release Thursday provided the news of the change in management and described the split as amicable.

According to the press release, “They (GSP-Spencer) felt they had a different vision for the future of Georges’ career and it was best to remain close personally but dissolve their business relationship.” (via MMA Fighting)

St. Pierre will remain at Hollywood talent agency, Creative Arts Agency. But, he will choose a new manager. It is rumored that he will hire a close friend to take over for Spencer.

Spencer, who runs her own company, continues to manage UFC Lightweight Champion Frankie Edgar.

Payout Perspective:

In September we commented on GSP’s feature in the NY Times’ Fashion and Style section (definitely the work of Spencer) and wondered if he would become the face for the UFC. The article chronicled GSP’s foray into NY fashion week. An underlying theme in the piece was that GSP seemed uncomfortable with the mainstream New York scene…and perhaps his role as the spokesperson for the UFC. Spencer’s work had helped GSP obtain mainstream sponsors (Gatorade and Under Armour) as well as appearances on ESPN and non-MMA magazines.

Despite the publicity, the speculation is that the mainstream glitz was not his scene. GSP did not like selling himself to Madison Avenue and did not like the time that went into dealing with sponsors. GSP would rather dedicate himself to time in the gym rather than build his brand or become the face for the UFC. Will GSP continue to be a mainstream pitchman? If he does not want to spend time in building his brand through sponsors, his opportunities may be limited and relegated to what CAA can bring him.  (h/t Robert Joyner via twitter)

GSP may be an introvert, or insecure about his place in celebrity, and retreating from being a pitchman may be his wish. Rereading the NY Times article and looking at some of the attempts at comedy GSP has done (see ESPN commercials), he tries, but seems grossly uncomfortable. From an athletic standpoint, concentrating on fighting is probably a good thing. But, from a business perspective, GSP is leaving a lot of opportunities on the table. This may be something that GSP may regret in 10 years.

Sherdog’s Tracey Lesetar and J.R. Riddell report that Zuffa received a boost in its lawsuit against Bellator Fighting Championships and Ken Pavia of MMA Agents as the United States District Court of Nevada denied Bellator’s protective order to stay discovery until the court decides Bellator’s motion to dismiss for lack of jurisdiction.

The background of the lawsuit was summed up by MMA Fighting last summer:

The suit alleges Bellator and Pavia were conspiring to essentially steal trade secrets from Zuffa through the exchange of confidential documents in e-mails. Pavia, head of the MMA Agents representation firm, handles dozens of MMA fighters, including many under the Zuffa umbrella.

In its motion to stay discovery, Bellator requested the court hold off on the parties from having to conduct written discovery and depositions before the court decides on whether to dismiss Zuffa’s case. Prior to the motion for protective order staying discovery, Bellator took issue with Zuffa filing the lawsuit in Nevada. Bellator claimed that it had no ties with Nevada and, by law, Zuffa could not file a lawsuit in Nevada. Instead, if the lawsuit were to continue, Bellator would want it moved to New Jersey.

Payout Perspective:

The issue being fought over is a basic Civil Procedure question involving jurisdiction. The papers even include a reference to International Shoe (a famous case for those that have attended law school). The court ruling means that Zuffa will agressively pursue Bellator and Pavia with discovery. This will range from written requests to depositions. It is likely that there will be many skirmishes between the parties about the production of documents and other information. The discovery deadline for the parties is set for the end of June.

As Sherdog points out. this case may serve as a model on how non-Nevada promotions and MMA companies will be treated in the future. Basically, can the UFC and other Nevada companies sue promotions in Nevada if those promotions have minimal contacts with the state.

(h/t: MMA Supremacy)

Loretta Hunt over at Sherdog is reporting that Gegard Mousasi has split with his management team, M-1 Global, and has already secured new representation.

“After careful consideration, I have decided that it is in my best interest to part ways with M-1 Global,” Mousasi wrote in the e-mail. “During the time I spent under their wing, M-1 Global, as a promoter and management company, allowed me to achieve many great things. I appreciate all they have done for me.”

 

M-1 Global, based out of Holland and Russia, had guided the Armenian-Dutch fighter’s career to two championship titles in the last few years.

 

The company also represents Fedor Emelianenko, the world’s No. 1-ranked heavyweight, who has publicly stated that he has an ownership stake in the organization, as well.

 

“The business relationship with M-1 Global is over,” said company representative Apy Echteld. “It was a business decision, but not a personal one and there are no hard feelings.”

 

Echteld said he would continue to work with Mousasi apart from M-1, although Echteld will be staying with the organization. Echteld added that Emelianenko had expressed his hopes to train with Mousasi again in the future.

Payout Perspective:

The rumor flying around for the better part of the last 9 months is that the UFC offered Gegard a contract, but M-1 turned it down in favor of a Strikeforce contract of lesser value (ostensibly as a favor to Strikeforce). However, Joe Silva of the UFC denied even offering Mousasi a contract last summer following the collapse of Affliction’s promotional unit. Mousasi’s split from M-1 is bound to re-ignite those rumors.

The Armenian claims to already have found representation, but refuses to disclose whom it might be. Fans hoping to see him in the UFC may have to wait as he’s got fights remaining on his Strikeforce contract, in addition to plans with the Japanese promotion Dream and its light heavyweight grand prix this year.

FIGHTER OF THE YEAR – GEORGES ST-PIERRE

St-Pierre had an incredible 2009 both in and outside of the Octagon. The UFC’s welterweight champion improved his record to 19-2 and established himself as a top sporting attraction with convincing victories over BJ Penn and Thiago Alves at UFC 94 and UFC 100, respectively. He also broke barriers for the sport of mixed martial arts by signing ground-breaking endorsement deals with the likes of Gatorade and Under Armour.

The native of Saint-Isidore, Quebec was again voted Rogers Sportsnet’s Canadian Athlete of the Year, in addition to placing second behind Sidney Crosby in the Canadian Press version of the poll.

PROMOTER OF THE YEAR – ZUFFA

Another year, another record broken. Zuffa’s Ultimate Fighting Championship smashed its previous mark for PPV sales in 2009 with nearly 8 million units sold. The organization also broke its record for live gate revenue with over $42 million generated from 20 events.

It was a year in which the company encountered immense success with its first champion vs. champion bout at UFC 94 between Georges St-Pierre and BJ Penn. Zuffa then continued to build momentum with the release of its UFC Undisputed video game in May and UFC magazine in July. However, the key to the year was the success of the UFC 100 weekend: a potent combination of unprecedented media coverage, a fan expo held parallel to the fight, and, of course, the title defenses of the UFC’s two most prominent fighters in Brock Lesnar and Georges St-Pierre.

The year may not have been without its challenges, but in the face of adversity Zuffa emerged from the year in a great position to repeat its success with not just the UFC but also the WEC. Indeed, with the UFC staring at a star-studded line-up of fights and a WEC PPV featuring Urijah Faber and Jose Aldo in Spring 2010, Zuffa will likely find itself right back here next year.

MANAGER OF THE YEAR – Shari Spencer

Last year Spencer made headlines with her less-is-more philosophy to MMA that saw her build the St-Pierre brand image with careful sponsorship selection that painted St-Pierre as a clean, strong, and reliable entity to which sponsors could associate their own brands. In 2009, her approach paid off as St-Pierre has become a top draw and marketable commodity for the UFC - evidenced by the major endorsement deals he inked with Gatorade and Under Armour.

Spencer will now look to do the same for Frankie Edgar in 2010 as the young lightweight from New Jersey is set to challenge for BJ Penn’s title in April.

INDUSTRY PROFESSIONAL OF THE YEAR – MARC RATNER

Marc Ratner serves as the UFC’s VP of Government and Regulatory Affairs, and is the driving force behind the UFC’s effort to get MMA regulated in all 50 states. In 2009 alone he helped to open up Massachusetts, Tennessee, Michigan, and the City of Vancouver for MMA.

Ratner is easily one of the most well-respected individuals in the sport because of the way he chooses to do business on a daily basis. With a gentle disposition and calm demeanor, Ratner is engaging to all. However, he has also become one of the sport’s greatest proponents and defenders.

In 2010, you can expect New York and Ontario to be his two major priorities, but with a well of experience under his belt it’s only a matter of time before he locks down MSG and the ACC as viable venues for the UFC and the rest of MMA. 

HONORABLE MENTIONS

BJ Penn:

Penn rebounded extremely well following his loss to Georges St-Pierre in their blockbuster fight that began the year. The UFC lightweight champion defended his belt twice – both in convincing fashion – against Kenny Florian and Diego Sanchez at UFC 101 and UFC 107, respectively.

The Prodigy earned every bit of his nickname not just with his performances, but also in the way he has slowly developed into the draw that everyone in MMA hoped he’d become. He currently leads the MMAPayout.com Power Rankings with money generated for his three outstanding headline performances in 2009.

Strikeforce:

Scott Coker’s vision is quickly becoming a reality as the veteran promoter landed his organization a network television deal, signed the best heavyweight fighter on the planet, agreed to a fighter-sharing alliance with Japanese promotion Dream, and formed a collaborative agreement with Electronic Arts that will showcase Strikeforce fighters in EA’s up-coming MMA game. Not bad.

Expect more from Strikeforce in 2010 as the promotion is planning to hold some 20 events and a very important return to CBS in April. Coker has also signed sports marketing guru Matt Levine to help develop a marketing strategy that will elevate the brand in the New Year.

Ed Soares:

The manager’s stable of fighters includes Anderson Silva, Lyoto Machida, Jose Aldo, Antonio Rodrigo, Antonio Rogerio, and Junior dos Santos – it’s quite possible that by the end of the year Soares fighters will own 50% of Zuffa’s divisional hardware. Impressive.

Soares isn’t on the honorable mention list just because of the success of his fighters – he also happens to be one of the hardest working professionals in the sport. He signed his clients to numerous sponsorship deals in 2009 including a slew of agreements with breakout clothing company Silver Star. Soares also runs his own clothing company, Sinister.

Charles “Mask” Lewis:

The co-founder of clothing company TapouT regrettably passed away earlier this year, only having seen half of his life-long dream realized: MMA’s ascension as a legitimate and popular sport. While his brand has risen to the top of the MMA clothing ladder – generating an estimated $180-200 million in 2009 – Lewis’ spirit and determination will remain with the entire MMA industry as it pursues worldwide acceptance and popularity.

Tripp Mickle of the Sports Business Journal reports on Madison Avenue Sports & Entertainment’s latest acquisition of MMA agency, Maxum Royalty:

Madison Avenue Sports & Entertainment, the agency started by former NHL executive Ed Horne and defense attorney Joe Tacopina, made its first acquisition two weeks ago, buying a mixed martial arts agency that represents six fighters.

 

The acquisition of New York-based agency Maxum Royalty was a mix of cash and equity. Under terms of the deal, Maxum founder Jim Barry becomes a partner in Madison Avenue Sports and will work with agency partner Stuart Kudman, a transactional attorney, on the agency’s mixed martial arts business.

 

“The growth of that sport is nothing short of phenomenal,” Horne said. “This is a sport we see real opportunity in.”

 

Tacopina added, “It’s the wild west. It’s chaos, and chaos breeds opportunity for guys who are organized and can be trailblazers. This (acquisition) gave us entree into the business.”

 

Maxum represents six fighters headlined by lightweight Vitor “Shaolin” Ribeiro. Ribeiro signed a multifight contract with Strikeforce and will be on a card with former football star Herschel Walker at the BankAtlantic Center on Jan. 30.

 

Barry said that he chose to sell the business to Madison Avenue Sports because of the “brand credibility,” resources and support the agency offered. He will work out of the agency’s New York office on Madison Avenue.

Payout Perspective:

The opportunity that Tacopina speaks of is the combination of the growth in the industry and the fact that most fighters are still only represented by their trainers, or other former fighters, that have very little business experience. At some point there may be a need for individuals with the ability to bridge the gap between the MMA world and the business world.

MMAPayout.com had the pleasure of sitting down with Shari Spencer, President of GSP Enterprises, earlier today to talk about George St-Pierre’s latest endorsement with apparel maker Under Armour.

KP: Looking at this deal between UA and GSP – there are so many sides to it: the GSP side, the Under Armour side, and the sport side – but I’d like to start with Georges. What does this deal mean for Georges in terms of his commitment, responsibilities, and the affect it will have on his lifestyle?

SS: Georges will be featured in Under Armour’s upcoming marketing campaigns representing their underwear and other specific products.  His responsibilities are typical for this type of endorsement, i.e. service days for photo shoots, personal appearances, etc.  As far as the effect on his lifestyle, I think you’ll see him sporting the UA logo a lot more during training.

KP: The Under Armour image fits perfectly with MMA in terms of being that aggressive, “we must protect this house” type of apparel maker, and for the longest time there has been this under-served, clean-cut and professional clothing market within the MMA industry. How might that affect the rest of the MMA clothing business?

SS: I personally think there’s room for both. We still have a deal with Affliction, and that is our fashion apparel brand. Under Armour is our performance or athletic apparel brand. To some degree, UA is already in the space through its athletic apparel for wrestlers – fighters are wearing their apparel as rash guards – even if UA is not calling them rash guards.  Initially, they will be using Georges as the face of their underwear brand – I’m crossing my fingers that he’ll sell more underwear for them than David Beckham did for Emporio Armani.  

KP: Are you managing any other fighters right now, and what sort of impact might this deal have on their future?

SS: I just signed a second fighter, Frankie Edgar. He’s been flying under the radar, so to speak, but people started to take notice of him when he beat Sean Sherk.  He’s an exciting fighter who shows a lot of heart when he fights, but more importantly, he’s just a great kid.  I went out and met with him and his father-in-law, who has been advising him business-wise, and getting to know him as a person was what convinced me to respond to his request for help. 

Under Armour has a roster of athletes that it endorses, and it’s my understanding that they are starting with Georges in MMA and then going to evaluate from there where they sign other fighters.

KP: GSP is a pretty unique entity in terms of being French-Canadian, a P4P type fighter, and he’s got that GQ look. How does Frankie compare, and how will you go about marketing him?

SS:  I’ve always recognized Georges’ potential to reach an audience outside the sport or those that might not be huge fans.  Georges’ fanbase tends to skew a bit more female (not surprisingly), and he’s the fighter that many guys say they can get their wives or girlfriends to watch alongside them.  As a result, there’s been a very deliberate strategy not to associate too heavily with fight-related brands, so that the public would see him as an athlete first and a fighter second.

I think that for Frankie he will reach a different demographic. I think that he’s more of a “guy’s guy” and he will resonate with a different group. Frankie’s already a family man with one child and another on the way, and so he can’t (well, at least he shouldn’t) be a ladies’ man. Frankie doesn’t have a French accent; he’s got a New Jersey accent. So, I’ll market him much differently.

Frankie is going to resonate with the guy next door.  He’s everybody’s neighbour, and he’s got a very altruistic side to him that I don’t think has really been exposed. He’s done a lot of community work, a lot of giving back, and so my approach with him will be more “the lightweight fighter with a heavyweight heart”, with the obvious double-meaning on the word ‘heart’ – the heart he shows when he leaves it all in the Octagon, and the heart he shows by giving back to society. 

Frankie’s a professional athlete with a champion’s heart and he’s a true gentleman – like Georges, I think he can also make great strides in representing this sport and hopefully changing the opinion of some of the lawmakers in the state of New York.

KP: When I first heard about the agreement, I thought: a.) it was a major, mainstream endorsement of the sport, but b.) it also suggested that UA believes in the viability and profitability of MMA in the long-term – that they can make money in this industry. That’s a pretty big notch on MMA’s belt.

What’s your take?

SS: I agree on both counts.  I believe that the explosive growth that the sport has experienced has caused most brands to sit up and take notice – MMA is growing too fast and resonating too well with that target demo of males 18-35 that they can’t ignore it.  Yet I’ve frankly been a bit surprised at the continued reluctance to pull the trigger.  So when a brand such as Under Armour, known for their high-quality products and cutting-edge approach steps up, I think it can only be a positive endorsement for the whole sport of MMA, not just Georges.  I also think it exposes the sport to a broader audience and hopefully paves the way for endorsement opportunities for other fighters with more mainstream brands.

KP: Even CAA, I suppose, jumping in to help represent Georges.

SS: That’s right, he was their first MMA fighter.  But even with CAA, there was an education process, frankly on both sides, of what the relationship would look like. CAA didn’t have experience representing fighters, so they had to get comfortable with representing an athlete in this sport, then get comfortable with Georges, and finally get comfortable with me.  Over time a trust level and partnership has been established, and in a nutshell, they’ve given us accelerated access to mainstream opportunities while we’ve been educating them on the nuances of this sport.  It’s been a great relationship so far, and while the endorsement deals still do not rival those of the major sports and challenges still lie ahead, I can’t think of anyone I’d rather be making this journey with.

KP: You mention the sort of learning curve that CAA experienced, and I feel there’s still a lot more work to be done. I’ve had the opportunity to speak with a few high-level people from ESPN over the last few weeks, and the feeling that I get is their concern is not primarily based on the viability of the sport in the long-term, but rather, will they alienate some of their current audience just to bring in a new audience? They’re just not sure whether there’s a brand fit.

SS: Together (CAA/myself) we’re still approaching brands directly, as well as ad buyers and the agencies that represent brands and decide that this guy should be your brand ambassador, and introducing them to Georges and try to help them understand MMA.  Marketing Georges is the easy part – he has a great look, he backs it up with his performance, he’s got character, he’s charming -he’s got all those things.  Our biggest challenge has been selling the sport and that continues to be an education process.

So while the UFC is progressing in their efforts to obtain sanctioning in all the Provinces of Canada and all the States here in the U.S., we’re having similar conversations with brand managers and ad agencies – it’s just a constant job of educating.  And, if you were to look at me, I’m about as corporate as they come – I’m a former CFO (and still dress like one) and I speak more of the same language.  I also pull from my experience as president of the Intermountain Section of the US Tennis Association and the governance of that sport in this country.  Add to that my obvious gender, and I’m probably the last person you’d expect to be representing a guy who makes his living fighting in a cage.  That anomaly, combined with the CAA partnership and arguably the most marketable athlete in the sport, and yet it’s still a challenge to present MMA in a way that they’ll understand the sport and want to affiliate with it.

KP: Right. Yeah, and so when I saw that UA was coming on board, I thought, “man, if there had to be an apparel maker to jump into MMA, they would be my first choice.” There is no conflict of brand image with UA, because the sort of aggression that MMA represents is right in line with their target market.

SS: I do tend to think that UA tends to appeal to a younger target demo, and that perhaps the other athletic apparel brands are a bit more established and conservative. UA seems to be more progressive and cutting edge in their branding. So, I do think it’s a good fit and it’s a logical choice.

This is pure speculation on my part, but it wouldn’t surprise me if this deal weren’t some sort of pre-emptive strike.   I can just imagine UA executives sitting around the board room contemplating, something like, “OK, we’re all [UA, Nike, Adidas] looking at it [MMA], and we’re all probably going to get involved eventually, so let’s just be the first one and let’s throw the first punch. And, if we’re going to do it, who are we going to do it with?”

In my opinion, the “safest” way for a brand to enter an admittedly rebellious sport is with the most traditional guy – the guy that wears the gi, the guy that wears the suit to press conference, and the guy that doesn’t do the trash talking.  So from that perspective, endorsing Georges is probably the safest way to dip your toes in the MMA water, so to speak, because he’s got one of the cleanest images of any of the fighters.

KP: Absolutely.

Well, thank-you for your time. I’ll let you get back to work.

SS: No problem. You’re very welcome! 

So MMAJunkie reported that Dana White claimed negotiations with Dan Henderson had reached a standstill due to Henderson’s wanting to be the highest paid fighter in the UFC:

“We’re at a stalemate right now,” White said. “The money that [Henderson] is asking for would make him by far the highest-paid guy in the UFC.”

White initially told Yahoo! Sports less than a week ago that his negotiations with Henderson had failed and that “Hollywood” was close to signing with Strikeforce. Henderson then refuted those claims with several media outlets, insisting his contact with Strikeforce had simply been introductory in nature.

Loretta Hunt of Sherdog.com then reported that Henderson’s camp denied that Henderson was demanding that kind of money during negotiations:

Aaron Crecy, Henderson’s business partner and manager who has been privy to all offers circulated between the two parties, reiterated similar sentiments regarding White’s contract claims.

“Contracts are confidential, so that statement’s impossible to prove or disprove,” said Crecy. “However, we have done our due diligence. We certainly don’t believe that to be the case. Dan understands and we have a certain belief on where he stands in the hierarchy. Certainly there are champions and former UFC champions that deserve to be paid more than Dan.”

Payout Perspective:

MMAPayout has discussed why Dan Henderson’s negotiating tactics were unlikely to lead to a lucrative new contract with UFC, despite his being at least temporarily the hottest free agent in Mixed Martial Arts.

Now we’re receiving seemingly contradictory reports relating to the contract negotiations themselves: Dana White makes the claim that Henderson wants to be “by far” the highest paid fighter in UFC, and Henderson’s camp dismisses it as the absurdity it would seem to be.

I’m not certain that the claims are entirely inconsistent.  What we’re hearing is that the sticking point in the negotiations is Henderson’s demand for a seven figure signing bonus, as Henderson seems to believe (reasonably) that this is his last chance to make big money in the business.

I believe it’s possible that Henderson is requesting the largest signing bonus in UFC, which, in combination with his base pay, could from one perspective make him the highest paid fighter in UFC.  This point of view, however, discounts the millions of dollars made by fighters whose contracts are structured to provide them shares of ppv revenue (providing the ppv reaches a certain number of buys).

Even if Henderson were to be given a share of ppv revenue, he’s never proven to be a huge draw, and I’d say it’s impossible that, if granted, his demands would make him UFC’s highest paid fighter.  I’m not even going to research this one, I’ll tell you who it is in 2009 (and probably going forward into the future): Brock Lesnar.

Unfortunately by stating early in negotiations that he had no desire to work for Strikeforce, Henderson gave away all leverage in his negotiations with UFC, and Dana White seems to believe Henderson will eventually come around and will agree to what the UFC is offering him, with maybe a small concession from the promotional juggernaut to let Dan save face.

And I’d bet more money than I’d be willing to place — with even odds – on Lyoto Machida at UFC 104 that Dana White is 100% correct.