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Adam Swift on Xyience/UFC relationship

By Zach Arnold | January 30, 2008

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He won’t be on UFC’s Christmas card list, that’s for sure:

In fact, documents reveal that Xyience’s third largest shareholder is closely tied to Zuffa and the UFC.

Also named on the shareholder list are Zuffa Chief Financial Officer John Mulkey, who holds 50,000 shares of Xyience, and resident agent John Hertig, who holds 25,000.

Xyience has $42,342,831 in liabilities, including $27,319,517 in secured claims, compared to just $5,285,722 in assets, bankruptcy filings show. Accordingly, the Fertitta brothers could stand to become majority owners of the reorganized company.

A shareholder, who wished to remain anonymous, told Sherdog.com that Xyience’s original owners (Pike and his associates) approached him and other investors to join a lawsuit against the Fertittas.

I’m going to ask a question now that I’ve asked in the past…

UFC pushed Xyience extremely hard. They had fighters sign sponsorship deals with the company. They reportedly had Xyience inked to a $15 million USD/year sponsorship deal while Xyience was supposedly bleeding cash. Why was UFC’s biggest corporate sponsor a company with a troubled past, that couldn’t pay fighters on their sponsorship deals, and needed financing from the very same people that they signed a sponsorship deal with?

Name me a sports entity where this kind of situation currently exists.

Topics: Media, MMA, UFC, Zach Arnold | 9 Comments » | Permalink | Trackback |

9 Responses to “Adam Swift on Xyience/UFC relationship”

  1. Jeremy (not that Jeremy) says:

    Similar relationships exist in soccer actually.

    The obvious one would be the US Soccer Foundation, which is funded in large part by league operations etc, and sponsors teams and the league itself.

    ===

    I suspect that this was more a case of trying to take the company over than anything though. Take them over, clean house, have plenty of capital in place, then you can clean up.

    The people I’ve talked to in the supplements business have indicated (in the past) that Xyience’s problem is that they don’t have enough SKUs to saturate store shelves, don’t have adequate distribution agreements, and basically don’t have the money to improve the situation.

    Without a takeover intent, it would be unlikely that the Fertittas would pump that kind of cash into the company.

  2. Pontus says:

    Juventus (enormous italian football club) is owned by the Agnelli family.
    They own Juventus and they own Fiat who sponsors Juventus.

    They don´t try to hide it though..

  3. david says:

    molto amo italianos!

  4. tannerfan says:

    Parma FC/Parmalat also

  5. Ivan Trembow says:

    Excellent journalism by Adam Swift, as usual. The implications of this could be huge. Swift also recently reported that a criminal investigation into Xyience may be forthcoming in Nevada.

  6. KennyP says:

    Jeremy,

    The US Soccer Foundation example isn’t a good match. Partly because the foundation isn’t a corporation, but a nonprofit. But moreso, because the Soccer Foundation is much more closely linked to the US Soccer Federation (the national governing body) than to MLS.

    While that whole US soccer relationship is rather convoluted and incestuous, it isn’t as much a shell game, as it is an attempt to “donate” unsold sponsorship to a nonprofit in return for tax considerations. (This often happens in autoracing too: Cure Autism Now, Paralyzed Veterans of America, Hole in the Wall Gang have all been on cars in the past few years)

    If you want to see shady examples of sports sponsorship, research ChampCar owner Paul Gentilozzi’s Rocketsports teams relationship to Lexington Energy Services. That one really stinks…

  7. Howard Lincoln, was the chairman of both Nintendo and Seattle Mariners. Nintendo featured Ken Griffey Jr (then with the Mariners) prominantly on several of their baseball games.

  8. Ivan Trembow says:

    That is a good point by GameCritics about Howard Lincoln, who later left Nintendo to have a bigger role in running the Mariners. One difference between the two cases, though, would be that Nintendo and the Mariners were both very transparent about Lincoln’s involvement in both ventures.

    PS to GameCritics: I love your web site. I remember when we were both starting out with fairly small video game web sites, and now years later to look at your site, it’s just amazing what you’ve accomplished.

  9. That is a good point by GameCritics about Howard Lincoln, who later left Nintendo to have a bigger role in running the Mariners. One difference between the two cases, though, would be that Nintendo and the Mariners were both very transparent about Lincoln’s involvement in both ventures.

    And Nintendo has enough money from Wii and DS sales that they could start using yen instead of toilet paper to wipe their behinds. 😉

    PS to GameCritics: I love your web site. I remember when we were both starting out with fairly small video game web sites, and now years later to look at your site, it’s just amazing what you’ve accomplished.

    Thanks bud. It was always nice to see a familar face on MMA media scene and the respect you get for your work among readers is well deserved and envious.

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