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Report: Xyience files for Chapter 11 protection

By Zach Arnold | January 22, 2008

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UFC’s largest corporate sponsor in 2007, Xyience, has filed for bankruptcy (according to The Las Vegas Review-Journal).

The meat of this story comes on allegations that Xyience founder Russell Pike supposedly threatened Xyience management. Given the close nature between UFC and Xyience, it is important that Zuffa makes a public statement about this matter. It was UFC that gave Xyience the most public exposure, pushed the company the hardest, and also reportedly got financing for the operation.

A question that I want to see answered: If Xyience paid UFC $15 million USD/year for being the company’s largest corporate sponsor, why was UFC so intimately involved in helping the company get financing and having fighters featured in prominent sponsorship deals? Let me phrase this differently… why would UFC, the largest company in their respective sport, take money from a sponsor, then prop up that ailing sponsor financially, and then have their top fighters sign sponsorship deals with that company? There are many legitimate questions that should be asked here and need to be asked. Will others ask the tough questions?

Whether UFC likes it or not, the fact is that their company is associated with Xyience in the eyes of many media writers. Just look at the LVRJ headline in the first place. UFC has to be candid and open (read: talk to other media writers besides Kevin Iole) to any and all questions relating to Xyience. They opened up pandora’s box by helping Xyience get financing.

The LVRJ article is must-read material and certainly puts the company’s $25 million USD lawsuit against writer Rich Bergeron into a whole new perspective. Keep a close eye out for future articles on this story at MMA Payout.

Topics: Media, MMA, UFC, Zach Arnold | 15 Comments » | Permalink | Trackback |

15 Responses to “Report: Xyience files for Chapter 11 protection”

  1. Ivan Trembow says:

    The only reason that Xyience didn’t have to shut down a couple of months ago, according to the Wrestling Observer, was because of a $12 million infusion of funds from Lorenzo & Frank Feritta, as well as a $30+ million renewal of Xyience’s sponsorship deal with the UFC.

  2. IceMuncher says:

    “A question that I want to see answered: If Xyience paid UFC $15 million USD/year for being the company’s largest corporate sponsor, why was UFC so intimately involved in helping the company get financing and having fighters featured in prominent sponsorship deals? Let me phrase this differently… why would UFC, the largest company in their respective sport, take money from a sponsor, then prop up that ailing sponsor financially, and then have their top fighters sign sponsorship deals with that company?”

    It kind of makes sense to me. Their biggest sponsor, a significant source of income for the UFC, comes into financial problems. If your company made 10% of it’s cash from a single, long-time buyer, you’d probably see if there was anything you could do to help out as well.

    Business is inherently risky. If it worked out, the Fertittas look like geniuses. They maintain a major source of income that is extremely loyal to the UFC. If it doesn’t, well, it can look odd in hindsight.

  3. Tomer Chen says:

    It kind of makes sense to me. Their biggest sponsor, a significant source of income for the UFC, comes into financial problems. If your company made 10% of it’s cash from a single, long-time buyer, you’d probably see if there was anything you could do to help out as well.

    I think the question hints at the possibility of money laundering (which traditionally involves shifting money between several parties back and forth in order to ‘remove the stench’ of bad money) being a factor. Whether or not that is true, it certainly does raise red flags (since traditionally a company does not reinvest into the sponsor which is supposed to be investing into them in return for advertising space on the program).

  4. The Gaijin says:

    Looks like it’s really good news they’ve locked up Harley-Davidson and potentially Budweiser as upper tier sponsors.

  5. Ivan Trembow says:

    IceMuncher— One also has to take into consideration the fact that Russell Pike is another one of Lorenzo Fertitta’s high school friends.

  6. IceMuncher says:

    “I think the question hints at the possibility of money laundering (which traditionally involves shifting money between several parties back and forth in order to ‘remove the stench’ of bad money) being a factor. Whether or not that is true, it certainly does raise red flags (since traditionally a company does not reinvest into the sponsor which is supposed to be investing into them in return for advertising space on the program).”

    #1 – They left a paper trail using their own names and not an associate or company of theirs. If they were laundering money they were irrationally stupid.

    #2 – They own gaming casinos. That’s the easiest business in the world to launder money with, and a hell of a lot easier than investing in an outside company in financial woes.

  7. IceMuncher says:

    “IceMuncher— One also has to take into consideration the fact that Russell Pike is another one of Lorenzo Fertitta’s high school friends.”

    You’ll have to tell me who that is and what he does. I don’t keep up to date with conspiracy theories.

  8. The Gaijin says:

    “You’ll have to tell me who that is and what he does. I don’t keep up to date with conspiracy theories.”

    Uhhh, that would be the FOUNDER of Xyience. Maybe you should read up on things before just making comments off the cuff?

  9. The Gaijin says:

    If I picked up a book would I learn such academic pursuits as how to point out to them “You’re eating your own shit, how does it taste?”?

    Wow, you use big words from the thesaurus – apparently where you’re from that makes you smart in spite of the fact that what you write is complete drivel not to mention it makes absolutely ZERO sense.

    If not following your completely irrational babbling makes me an ‘illiterate rube’, I’m perfectly content with that.

  10. I hate the word amid. You’ll never hear a human being say it speaking extemporaneously.

  11. Jeremy (not that Jeremy) says:

    There are some extremely unpleasant commenters around here lately.

  12. JP says:

    This site blows Sherdog out of the water.

    FO>Sherdog

  13. I have been trying to tell everyone all along. I reported over a month ago these guys would go bankrupt. Read all about it on my site:

    http://www.unlimitedfightnews.com/xyiencewow.htm

    oh, and Russell Pike’s wife went to high school with the Fertittas, not Pike himself.

  14. dice says:

    Icemuncher says:
    “It kind of makes sense to me. Their biggest sponsor, a significant source of income for the UFC, comes into financial problems. If your company made 10% of it’s cash from a single, long-time buyer, you’d probably see if there was anything you could do to help out as well.”

    It makes sense to invest in a company that is losing money like crazy because it pays out money in sponserships of which is cannot afford, that are going to you, the investor? I guess we have two different meanings of “making sense”.

    Typically companies that receive revenue from advertisers don’t reinvest in those advertisers if the advertisers are suffering financial hardships; especially if the money is just getting recycled back to them. It defeats the whole purpose of being in business, which is to maximize profits (and market share).

    Icemuncher says:
    “You’ll have to tell me who that is and what he does. I don’t keep up to date with conspiracy theories.”

    Apparently you don’t keep up with legitimate stories either. If you don’t know who Russell Pike is then I would refrain from even talking about this story anymore. Read bergeron’s story first and then talk.(and there are numerous other journalists who are now jumping on this bandwagon, just mentioning that in case you think Bergeron is one of those crazy conspiracy theorist).

  15. shannon says:

    Russell Pike & a few others who are in management at Xyience are complete sleeze balls. I cannot tell you how crooked these men are. I am glad all of their poor business decisions caught up with them. It just shows what goes around comes around.

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