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« | Home | »

Getting the PRIDE story straight

By Zach Arnold | June 28, 2007

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By Zach Arnold

Dana White made some rather interesting comments today about PRIDE in the UFC 73 conference call.

…explain the situation pertaining to the PRIDE contracts and whether they can be transferred to the UFC. He said the old PRIDE contracts are valid with PRIDE Worldwide, the new company that owns PRIDE. However, the contracts can’t be transferred to the UFC and that with PRIDE’s status being uncertain, a lot of the guys need to fight so they are also signing them to UFC deals.

This is, in my opinion, Mr. White completely talking out of both sides of his mouth. The ‘test’ to determine the validity of the PRIDE contracts is very simple – were they personal service contracts? If they were, they are not transferrable to third parties in asset sales. If they were iron-clad deals, then they are transferrable.

Simply put, it doesn’t make any sense to ask PRIDE fighters to sign UFC contracts if you think the PRIDE contracts are iron clad in the first place. The PRIDE fighters know this and are calling Zuffa’s bluff here.

If Mr. White would like the public to know the details about the PRIDE contracts and the assets purchased from DSE, perhaps Zuffa management should cooperate in the witness deposition process in the Ed Fishman lawsuit against DSE. Instead, members of Zuffa management are not cooperating with witness depositions by claiming that they have nondisclosure agreements that prevent them from discussing the asset sale details. (The information about members of management not wanting to give depositions is publicly listed in court records pertaining to the Fishman vs. DSE Inc. lawsuit.)

Said it was their intention when they bought Pride to actually run it but that there’s just a lot to sort out right now. He scoffed several times when reports about Pride running shows soon were brought up.

This is exactly the kind of attitude that will not fly with the Japanese when it comes to doing business. There’s a reason why the inmates who used to run the asylum are making noise again in Japan — they want to see some action. The perception amongst many people in the Japanese fight community is that UFC is a dead-end proposition for them. UFC better be prepared for a major turf war in Japan, a situation which presents Zuffa with having zero leverage in that marketplace.

Topics: Japan, MMA, Media, PRIDE, UFC, Zach Arnold | 19 Comments » | Permalink | Trackback |

19 Responses to “Getting the PRIDE story straight”

  1. chairibofjustice says:

    A little off topic but today is the 10th anniversary of the Tyson incident where he bit part of Hollyfield’s ear off.

    And people say MMA is barbaric.

  2. Luke says:

    Zach, what exactly does “iron clad” mean?

  3. Tomer Chen says:

    Zach, what exactly does “iron clad” mean?

    That they are enforceable by Zuffa even after the asset transfer.

  4. Jeremy (not that Jeremy) says:

    Contracts can be funny things, and the fact that Zuffa bought Pride’s assets instead of buying the company makes it all quite complicated.

    It sounds like maybe Pride was never a company in the first place, just kind of a DBA of DSE (for instance, if you go the Pride FC website, it says Dreamstage Entertainment at the bottom, not PrideCo or something).

    If they had been a company, and Zuffa had bought the COMPANY, then there would most likely be no problem with the contracts. The two contracting entities (the fighters and PrideCo) would both continue to exist.

    If Pride was a company, then the company’s demise (liquidation, by way of the sale of all of it’s assets) might cause all those contracts to become void or voidable by either party. Typically in the US, the process by which those contracts would be acknowledged is called novation. The fighter and the new company agree that they will abide by the terms of the original contract, as if the new company was originally a party to the contract.

    It’s also possible that a contract would in some cases allow one party to assign their contractual rights and responsibilities to another party (permitting the contract to be sold).

    It sounds like either these contracts can only be fulfilled by DSE, or only by PrideCo, and cannot remain enforceable without novation by NewPrideCo. If not, then NewPrideCo is pretty much shit out of luck, since they should have determined through their due diligence whether they were getting transferable contracts or not. Their recourse would only be to go to DSE and attempt to prove that DSE defrauded them by providing them with false representations that were not otherwise verifiable that the contracts were valid.

  5. jeff says:

    isnt this getting in the way of the fake fighting murder story every other zillion news outlets are covering better than you?

  6. Just another MMA "mark" says:

    “isnt this getting in the way of the fake fighting murder story every other zillion news outlets are covering better than you?”

    Uncalled for and shows lack of class.

    Shame on you.

  7. Zack says:

    There have been some great articles recently on this site. Great work Zach.

  8. Dave says:

    Dana white and Zuffa make me sick. However, my addiction to MMA precludes any intentions I have of protesting the UFC.

  9. jgass says:

    Didn’t Zuffa supposedly pay 65 million for Pride? Why would they do that? It makes absolutely no sense to spend that kind of money for contracts that are not enforceable and entry into a hostile business climate (of Japan). This whole thing stinks. Either they got TOOK big time by DSE, or we don’t know the whole truth here. Something is fishy here.

    Zach, I really have not heard your opinion on this yet. Did Zuffa get taken for a ride in this deal or is it too early to say?

  10. Lynchman says:

    jgass,

    The Fertitas paid a LOT LESS than 65 million for the company.

    The way it was put to me, by somebody I trust, was that upon looking at the books, it was clear there was more debt than perviously thought.

    As a result, the Fertitas came back with a much lower offer since they determined the value to be less than was previous thought.

    As far as contracts go, DSE signed fighters to a ton of different contracts. Josh Barnett has a personal contract with DSE and is waiting until it expires so he can get away from the former Pride owners.

    But the bottom line is that the Pride assests were purchased for a relatively small amount of money.

  11. MMA Fan says:

    its been rumored the price was closer to 23 million.

    and a few have joked the lions share will go to ed fishman,

  12. jgass says:

    23 million still seems to high. They could have gotten most of the fighters anyway after Pride failed. It looks like they will never run shows in Japan, so what did they pay for? The DVD rights? That can’t be worth it.

  13. JThue says:

    Regardless of whether contracts were assignable or not, Dana demands exclusive deals, and the PRIDE-contracts weren’t, so obviously new deals would have to be reached, no? UFC can’t just force a contract to change from non-exclusive to exclusive can they?

  14. Fred says:

    I’m not saying Dana is being completely straight-forward, but what he said *could* make sense. PRIDE was a mess under DSE, and no one can deny that. Even if the PRIDE contracts are iron-clad and transferable, it would make sense for many fighters to sign new UFC contracts if they wanted to fight sooner rather than later. Why would fighters want to wait around until a PRIDE show is finally put together? Even with the best intentions, it could take the Fertittas a year or longer to straighten out PRIDE’s affairs. What fighter really wants to wait that long to fight?

    Any blame for PRIDE fighters being in limbo should go to DSE. They made a mess out of the PRIDE brand, and that’s why they had to sell PRIDE in the first place. The Fertittas probably want to scavenge the best PRIDE talent and let PRIDE die. They probably don’t want to re-establish that brand. But either way, that org. was a complete fiasco at the end (in terms of its finances and mgmt.) and it will take a long time to sort it out. Can’t blame the Fertittas/Dana for that.

  15. Captain says:

    I don’t know what is meant by “personal service contract” or “iron-clad” but it seems to me that there could be a very plausible explanation for Dana’s comments.

    As someone else said, fighters most likely had contracts between themselves and DSE, as Pride never seemed to be it’s own separate company. In those contracts, there was likely a provision regarding assignment that said either DSE may freely assign the contract or DSE may only assign the contract with the fighter’s consent. Assuming that the assignment provision required the fighter’s consent, that fighter would have had to consent to the assignment of the contract from DSE to Pride Worldwide. Pride Worldwide did not inherit any contracts by matter of law because they did not actually buy DSE; only certain of its assets.

    Now, as for Dana’s comment, I could see it very likely that many fighters (whose contracts included a consent right with respect to assignment) consented to the assignment of their contracts to Pride Worldwide, comforted by the idea that they would still be fighting for the Pride brand once it was up and running again. In order for the contracts to require fighters to fight in the UFC, however, they would either need to be freely assignable without any consent right or fighter X would have to consent to a second assignment of the contract from Pride Worldwide to Zuffa. Here’s the rub; how many fighters would have consented to the assignment of their contracts from DSE to Pride Worldwide (believing they would still be fighting for “Pride”) but are now reluctant to consent to a second assignment of their contracts from Pride Worldwide to Zuffa (forcing them to fight in the UFC)? I think many.

  16. MMA Fan says:

    Fred, it wasn’t ard for Pride to find a buyer. Ed Fishman was willing to pay $65 million for the brand and its assets in Feb. His group would have included a more powerful casino company then Stations. Fertittas were scared. PRIDE didn’t sell to him because Ed wanted to do real due dillagance and run it like a business. No just use it to corner the MMA market and bury it…. there HAS to be more then meets the eye. Fishmas was willing to write the check and PRIDE would have had a Show scheduled in Vegas this June. There is more to this story then any one knows.

    Dana’s comments as proven by Ken and Tito and Sherdog shouldn’t hold much water. He is just talking. No one holds him accountable for what he says and much of the BS MMA Media takes what he says at face value.

  17. MMA Fan says:

    Fred, it wasn’t hard for Pride to find a buyer. Ed Fishman was willing to pay $65 million for the brand and its assets in Feb. His group would have included a more powerful casino company then Stations. Fertittas were scared. PRIDE didn’t sell to him because Ed wanted to do real due dillagance and run it like a business. No just use it to corner the MMA market and bury it…. there HAS to be more then meets the eye. Fishman was willing to write the check and PRIDE would have had a show scheduled in Vegas this June. There is more to this story then any one knows.

    Dana’s comments as proven by Ken and Tito and Sherdog shouldn’t hold much water. He is just talking to hear him self talk. No one holds him accountable for what he says. Its comical that much of the BS MMA Media takes what he says at face value.

  18. JThue says:

    And again, this whole “getting things straight” title appears to be completely misleadig. As if it isn’t apparent enough to the casual eye and as mentioned earlier here, Meltzer is now also reporting(in this week’s newsletter) that most of the deals are indeed valid under new PRIDE ownership, but the hang up is renegotiating from non-exclusive to exclusive deals.

  19. Zach Arnold says:

    And again, this whole “getting things straight” title appears to be completely misleadig. As if it isn’t apparent enough to the casual eye and as mentioned earlier here, Meltzer is now also reporting(in this week’s newsletter) that most of the deals are indeed valid under new PRIDE ownership, but the hang up is renegotiating from non-exclusive to exclusive deals.

    Personal service contracts tend to be non-exclusive, or at least if you try to enforce one in court.

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