By Zach Arnold | May 25, 2016
The Nevada State Athletic Commission officially suspended California promoter Roy Englebrecht for 18 months after he provided false & misleading information to the commission regarding information put on boxer Zab Judah’s fighter application form regarding child support he owed to the state of New York. Additionally, Englebrecht will be put on one year’s probation when he re-applies for a Nevada license, be obligated to pay attorney fees for his disciplinary hearing, and make restitution to fighters who lost money due to a Las Vegas show getting canceled by the Athletic Commission a few months ago.
The big question, unresolved, is whether or not California will recognize Nevada’s suspension. Unlike fighters, there is no reciprocity provision mandating state athletic commissions honor promoter suspensions. Given that Englebrecht’s base is California and the majority of his business is done in California, the Nevada suspension is more or less toothless if California decides to ignore Englebrecht’s suspension over acts of moral turpitude.
The war to settle the score
Rarely do you see “liar, liar, pants on fire” anger on display from an Executive Director towards a promoter but Nevada boss Bob Bennett and state AG Caroline Bateman held nothing back in Wednesday’s disciplinary hearing against Roy Englebrecht. They didn’t call him a liar but used as many words as possible to insinuate he was one.
- Zab Judah was scheduled to fight in Las Vegas
- On the fighter application form, it stated that he did not owe back child support
- New York authorities claimed Judah owed $274,000 in back child support but reached an agreement with him in February which would allow him to fight and his purse money to be forwarded to NY authorities
- When Bob Bennett found out about the back child support, he pulled Judah from the Vegas card promoted by Roy Englebrecht
- Englebrecht told Bennett that he had filled out Judah’s fighter application form
- Bennett immediately contacted Nevada’s commission chairman regarding the admission of perjury and forgery
What Wednesday’s disciplinary hearing revealed was an incredible tale of multiple parties involved in an event collapse built on numerous promises not honored.
By Zach Arnold | May 17, 2016
The Nevada State Athletic Commission’s next meeting is on Wednesday, May 25th, and the hammer is coming down on promoter Roy Englebrecht. The Attorney General’s office has filed their official administrative legal complaint against Englebrecht. Amongst the charges outlined in the administrative complaint:
- On February 13th, 2016, the commission received a license application for Zab Judah and that Englebrecht, under penalty of perjury, forged Judah’s signature on the Application.
- Unknowingly, Englebrecht signed Judah’s application not realizing that he owed back child support.
- Englebrecht used Judah’s date of birth and social security number on the forged application, violating Nevada’s identify theft law (NRS 205.463).
The AG’s office had the option of pursuing criminal charges but opted for the administrative route instead.
During a March 23rd meeting regarding an extension of a temporary Nevada suspension, Englebrecht admitted under oath that he was guilty of the charges being presented against him. The 3/23 meeting was not a disciplinary meeting but he decided to fall on the sword without legal representation present.
The administrative complaint was filed against Englebrecht on May 3rd, giving him 20 days to respond before the meeting on May 25th. Nevada wants action taken against Englebrecht’s promoter license along with investigative costs & attorney’s fees.
The major question after May 25th is whether or not the California State Athletic Commission, which is Roy’s home turf, will enforce Nevada’s license suspension. There’s a lot of money at stake and California is legally not obligated to follow the suspension of a boxing promoter in another state. If California chooses to ignore Nevada’s suspension, it will spark political tension between the two states.
By Zach Arnold | May 15, 2016
When we last checked in with a boxing doping scandal, VADA produced a positive test result of clenbuterol for Francisco Vargas. The California State Athletic Commission did not suspend Vargas since they weren’t the ones who administered the drug test.
The NFL Players Association came out and warned their athletes not to each too much Mexican or Chinese meat because clenbuterol could show up in their drug test results.
VADA has been trying to get their foot in the door in regards to worldwide drug testing in boxing. They managed to take a page out of the UFC/USADA playbook but on a much, much larger scale with the WBC sanctioning body. The end result is the Clean Boxing Program project, where all fighters ranked 1 through 15 for WBC titles are required to register for VADA drug testing.
The latest fighter to get busted by VADA is Alexander Povetkin, who was scheduled to fight Deontay Wilder in Moscow. Povetkin tested positive for… meldonium. This Bloody Elbow article on meldonium is a good starting point if you don’t recognize the name of the drug.
Povetkin’s camp reportedly claims that the fighter stopped taking meldonium last September. According to ESPN’s Dan Rafael, that story doesn’t hold up because Povetkin took multiple VADA drug tests in April and tested negative until April 27th when he supposedly got busted.
The WBC initially “postponed” the fight. Wilder’s camp abruptly ended and he went back home. Now it appears the fight is “off” and will not happen.
We have a lost fight. We have lost purse money for both guys, which means litigation is likely. But the fight was scheduled to take place in Russia. How will money get recovered in the Russian legal system?
The major legal ramifications of the WBC & VADA tag team
It’s highly unlikely that standard American state athletic commission drug testing would have caught what VADA caught with Alexander Povetkin. VADA has an established track record of catching certain fighters (think: Lamont Peterson) microdosing but not getting any sort of results in suspension or canceled fights. The Nevada State Athletic Commission did not want to cancel Peterson’s fight.
UFC changed the landscape by partnering with USADA and unilaterally enforcing drug suspensions. It just happened this past weekend with their mega Brazilian event. The end result has been largely positive. The UFC acts as their own sanctioning body for titles in MMA. Boxing already has sanctioning bodies. The WBC is the most famous sanctioning body of all. VADA attaching itself to the WBC for drug testing has proven to be a genius move… for now.
There are serious legal and business questions that must be asked.
First, we know that the text of the Ali Act specifies transparency for sanctioning body rankings. OK. I couldn’t answer to you how rankings are currently formulated. It’s arbitrary and at the whims of the powers-that-be. Fighters have no say in how they are ranked by the sanctioning bodies.
So the WBC decides to name 15 ranked fighters for each of their title belts. Let’s say a fighter doesn’t want to cooperate with the WBC on the VADA testing and wants nothing to do with the WBC. What statutory authority does the WBC have to punish a fighter other than publicly shaming a fighter in the press and preventing that fighter from fighting in WBC-sanctioned fights? Will the WBC rely on TV networks and business partners to pressure fighters into cooperating with the WBC or else get iced out?
Scenario two: Let’s say Fighter A is scheduled to face Fighter B and both fighters agree to VADA testing but the fight has two title belts from two different sanctioning bodies on the line, e.g. WBC & IBF titles. What happens if Fighter A tests positive? Does the WBC have the power to cancel the fight? What about the purse money involved given IBF involvement?
Second, if Fighter A tests positive for a WBC title fight in a state like Nevada, would Nevada’s athletic commission accept the result of the VADA drug test? They currently don’t. Why would state athletic commissions change drug testing enforcement policy now?
Third, when the money is large and the stakes are high, how solid will WBC’s backbone be? The Wilder/Povetkin fight was on the rocks until Wilder went back home and then the fight was “postponed.” What if Wilder had said that he wanted the fight to continue so that he could earn the purse money?
What will the TV networks backing cable & PPV fights do if they lose multiple fights? Slash boxing budgets further?
Fourth, given the new legal liability at stake with the WBC/VADA drug testing tag team, will there be momentum amongst promoters to avoid booking WBC fights due to fears of getting sued for breach of contract or other economic tort claims when their fighters test positive?
In the name of advancing an agenda for a clean sport, it appears the biggest winners will be the attorneys.
By Zach Arnold | May 10, 2016
The rumors of Zuffa selling UFC have been hot and heavy, thanks to reporting from Front Row Brian. Private Equity firm Blackstone has long been thought to be the primary buyer in play.
So it comes as no surprise that Darren Rovell’s ESPN report about Zuffa getting ready to sell UFC has stirred up passionate responses from all corners. Dana White has issued a blanket denial about UFC being for sale but the Fertitta family has stayed silent.
According to Rovell’s report:
- God of Wall Street, Goldman Sachs, is representing UFC in sales talks
- The asking price is believed to be in the $3.5 to $4 billion USD range
- Goldman Sachs is reportedly telling buyers that UFC made $200 to $250M USD EBITDA in 2015
- The four finalists in contention to buy UFC are: William Morris/IMG, China Media Capital, Blackstone Group, and Wang Jianlin’s Dalian Wanda Group
It is believed that Jianlin is the leader in the clubhouse. He’s the richest man in Asia at nearly $29 billion dollars. Given his power in China, you could see why buying UFC would be a seductive investment. He would have the political and business clout to clear hurdles in communist China that others do not possess. No Ali Act to worry about outside of America. A favorable legal situation where fighters simply would not have the cash to fight in international courts.
I'm told that Dana White's status actually a negotiating point in at least one of the offers for #UFC. Not everyone keen on him staying on.
— Jonathan Snowden (@JESnowden) May 11, 2016
While Dana White has denied UFC being for sale, he did not deny that Goldman Sachs is representing UFC and he did not deny the $200-250M EBITDA figure.
Why would Zuffa want to sell UFC now?
There are lots of reasons for Zuffa wanting to flip UFC soon.
First, the MMA economy is extremely volatile. One year you have a golden goose and the next year you have a goat.
Second, lawfare. The anti-trust lawsuit is producing illuminating discovery. Depositions are coming soon. UFC is vulnerable. The company is also vulnerable to the kinds of concussion-style lawsuits that plagued the NFL. The difference is that the NFL has already settled their pending cases for a relatively small amount of cash.
Third, the business isn’t as fun of a joy ride as it used to be. The Fertittas put up over $40 million dollars before recovering their investment thanks to The Ultimate Fighter. Ownership has put up with thousands of talent-related headaches that they would have never had to put up with in another kind of sporting venture. UFC was a great way for the Fertittas to meet politicians, celebrities, and rich business leaders. They’ve maxed out on that front. They relied on rich people and entities to do their heavy lifting. There are limits to where they stand internationally.
The fourth and most intriguing reason deals with the Fertitta family wanting to shift into other business ventures. A fascinating connect-the-dots scenario:
If Fertittas sell UFC, wouldn't be surprised to see them try to buy piece of Raiders if team is headed to Las Vegas.
— Darren Rovell (@darrenrovell) May 10, 2016
The Fertittas just did their Red Rock IPO and cashed out big. Now they’re buying out the Palms in Vegas for $312.5 million dollars. But the real main event coming to Las Vegas involves the Oakland Raiders. Sheldon Adelson wants to build a major sports complex. Mark Davis, the son of Al Davis and current Raiders majority owner, is the poorest of the current NFL owners. He’s going to need cash to pull off the move to Las Vegas. Davis has promised to contribute $500 million dollars to the cause.
What’s a better way to get into the elite business inner circle of the NFL than attaching to the Raiders in Las Vegas? Selling off UFC in order to get a piece of the Raiders is a no-brainer business transaction. It would immediately elevate the political and business clout of the Fertitta family and do so in a sport that produces significantly more revenue with fewer headaches than MMA. From the proverbial outhouse to the penthouse.
It is no coincidence that UFC tried to clean up their testosterone scandals with the USADA drug testing program. It is no coincidence that Dana White has taken a back seat publicly. It is no coincidence that fighters have been strapped into the one-size-fits-all Reebok sponsorship model. Cleaning up the loose ends to sell UFC to a private equity firm is the end game. It will be a great Return on Investment for the Fertittas but it does not guarantee an automatically great result for MMA fans:
In most instances, you’re looking at a 5-7 year period where the PE firm wants to grow revenue, reduce costs and get out w/ the FUCK MONEY.
— FrontRowBrian (@FrontRowBrian) May 11, 2016
It won’t be just the folks in Las Vegas popping the champagne corks. The executives at Spike TV will be throwing their own party.
Dana White: The Fertitta's are not looking to buy a football team (Note: They would have to get out of casino business to own NFL team)
— Jason Floyd (@Jason_Floyd) May 11, 2016
There will be an exit strategy. Only a matter of how it is structured.
By Zach Arnold | May 2, 2016
Al Haymon envisioned a UFC-like scenario for boxing. As the Zuffa Myth goes, the Fertittas lost $44 million dollars before hitting it big with The Ultimate Fighter. Little did the Fertittas know how much Al Haymon would make their $44 million dollar “investment” in UFC look like chump change. Forget $44 million dollars. Forget the amount of cash organized crime spent in Japanese pro-wrestling, boxing, and MMA. Al Haymon trumped all of them with a $925 million dollar cash infusion into PBC.
Who on Earth would think that pouring $925 million dollars into combat sports would be a good idea? This is the basis of the latest prong in the nationwide legal attack against Al Haymon and the two investment trusts that have gone all-in with him.
First came the plea from the Association of Boxing Commissions to the Department of Justice to go after Al Haymon. Addendum: New ABC president Mike Mazzulli refuted the allegations made in the letter sent by ABC last year.
Then came the unfair competition & anti-trust lawsuits in California by both Golden Boy & Top Rank in Los Angeles Federal court. Haymon’s legal team couldn’t stop the plaintiffs from discovery & depositions, which will surely provide evidence to allow GB & TR to amend their initial legal complaint to add more defendants and more causes of actions.
Now comes the lawsuit against the two trust vehicles financing Al Haymon’s PBC. It’s a shareholder derivative lawsuit, meaning shareholders are suing the trust vehicles they invested money in and they’re doing so based on allegations that the corporation won’t fulfill their responsibility to the shareholders in getting their money back on an investment that supposedly violated the promises made in the investment prospectus.
Read Paul Gift’s article at Bloody Elbow titled $925 million lawsuit filed over investments with PBC’s ‘shady entrepreneur’ Al Haymon. Here’s the zinger from the article:
“According to Waddell’s website, as of Mar. 31, 2016 these six funds now have a total market value of only $357,747,414, which implies that the funds allegedly used to finance the PBC have collectively lost over $567 million in a little less than three years.”
The legal teeth for trying to choke out Al Haymon’s funding
Now I will point out some very interesting items you might want to focus on from this latest legal attack.
If the schmuck throwing tacos at Victor Ortiz used a bottle instead, California would be lawyering up
By Zach Arnold | May 1, 2016
StubHub Center and the California State Athletic Commission avoided a catastrophic confrontation on Saturday night and should be counting their blessings.
Victor Ortiz was knocked down twice in his loss to Andre Berto on the Al Haymon Fox show. After getting knocked out, Ortiz was attacked by a spectator after the fight. The attacker hit Ortiz in the face with tacos and started a brawl.
You can watch the video of the attack for yourself and spot all the problems:
- Attacker hits Victor Ortiz in the face with tacos at point blank range
- The video clearly demonstrates premeditation on the part of the attacker
- No one in the crowd stops the premeditated attack on Victor Ortiz
- After battering Ortiz, attacker touches an athletic inspector trying to halt the confrontation
- A ring second, in defense of Ortiz, throws something at the attacker and the attacker punches him
- Attacker has second altercation with another cornerman and squares up to punch
- Attacker throws a punch at cornerman and touches two more athletic inspectors
- Attacker continues to instigate others after Ortiz is escorted away
You don’t have to be a genius to see how dangerous this situation could have gotten. Here is a close-up image of the attacker:
We are offering a cash award to anyone who can provide identification of the attacker
By Zach Arnold | April 29, 2016
The last two days have been a real test of Executive Officer Andy Foster:
- Boxer Francisco Vargas, booked to fight Orlando Salido on June 4th at StubHub Center, tested positive for clenbuterol
- The drug test was administered by the Voluntary Anti-Doping Agency
- The two boxers paid for VADA drug testing, not California’s athletic commission or Golden Boy
- Golden Boy quickly went into damage-control mode for Vargas, using the “home cooking” defense
- 24-hours after news of the VADA test failure went public, California granted Francisco Vargas a temporary license dependent on a modified drug testing program
The differences between enforcement of UFC & USADA drug testing versus independent VADA testing are substantial. Athletic commissions do not have to honor third-party drug testing results. California will honor only their drug testing results. UFC made a choice to honor USADA results since they are paying the bill for it. If UFC wanted to stop honoring USADA results at any time, that’s their prerogative. To their credit, they have hung tough and enforced drug testing failures. VADA, on the other hand, is paid for by fighters. In addition to state athletic commissions, promoters also can ignore such drug testing results and not lift a finger. Golden Boy clearly fell into this camp with Francisco Vargas.
I don’t like this situation but I can’t say anything negative about what California is up to right now. The failed VADA test makes Francisco Vargas look like a schmuck.
Francisco Vargas is currently working with trainer Rodrigo Mosquera. Mosquera was suspended in late 2013 for manipulated boxing gloves but managed to work a December 2013 event. Mosquera then went to work a New York fight in January of 2014 while on temporary California suspension. Mosquera was scolded by a California athletic inspector for trying to give a boxer advice from the crowd of a show in Montebello. Mosquera was granted a new license shortly thereafter. Mosquera will be working with Vargas for his June 4th fight against Orlando Salido.
By Zach Arnold | April 26, 2016
UFC is now stuck on a sports network building around Colin Cowherd, Jason Whitlock, and Skip Bayless. Really in tune with MMA's audience.
— FightOpinion (@FightOpinion) April 26, 2016
The murder-suicide pact between Fox Sports 1 and ESPN is going to financially reward those who deserve it the least. It’s going to torture sports fans and sports executives alike. ESPN created the fertile conditions for the ugliness ahead and the Fox empire is going to inflame an already polarized playing field.
With fees for sporting events escalating to an unmanageable monstrosity, sports networks are slashing & burning budgets for production staffs while shifting their cash into opinion talkers. Spend less on hard news, more on blather. Go for emotion, tribal identity, and analogies over reason & logic on the persuasion scale. We’ve reached a point in television consumption where Skip Bayless is considered as iconic, if not more so, than Mike Tirico.
UFC is likely going to stay with Fox Sports, although ESPN certainly would have interest under any normal circumstance. We’re not living in normal times. ESPN is bleeding talent. They’re slashing & burning production employees. Disney, which is making money hand over fist, is scared to death of what is going to happen to ESPN in the future. UFC should be a sure-fire target for ESPN acquisition. The acceleration of losing personalities could play either way here for Bristol.
By Zach Arnold | April 20, 2016
God knows what is really going on behind-the-scenes between Conor McGregor and UFC. It didn’t take a genius, however, to see that McGregor would soon attempt a leverage play for more money and, ultimately, his goal of co-promoting future events. This goes against the entire credo of UFC’s business model.
With no real ammunition left, Conor McGregor had one card to play — retirement.
Nobody is taking the threat seriously. McGregor needs money and exposure. Despite the beliefs of some in MMA media circles, Conor McGregor is not bigger than the UFC. Using the retirement card plays right into UFC’s hands. It ices McGregor out of the sport of MMA. Unless he wants to take his chances and fight in Europe or Japan, UFC will gladly watch him sit on the sidelines like Randy Couture and waste his time. If McGregor does promote his own fight, UFC will easily obtain a judgment against him in the United States and transfer that judgment over to Ireland for enforcement.
You can already see the legal wheels spinning in the minds of UFC executives.
By Zach Arnold | April 19, 2016
Price: $10.96 USD
Personal rating: 7.5 out of 10 stars
Recommendation: Buy the book
FTC disclosure: I received an advanced book copy last week in the mail for review.
Josh Gross tackled one of the most controversial events in the history of combat sports with vigor and research. His final work product is a 282-page book that is incredible in its scope of information compilation. It took me three days to read the book, go through my notes, and re-read certain sections to absorb all of the details but it was well-worth it.
The book is an easy read but requires some patience and diligence to comprehend the massive amount of history surrounding the Ali/Inoki fight and why celebrating or remembering its 40th anniversary this Summer is so important to the current fight business climate.
By Zach Arnold | April 19, 2016
The Nevada State Athletic Commission just got a rude financial awakening. The public agency is being shifted from the state’s general funds to self-funding. As a result of this budgetary transition, Nevada’s commission will now have to pay legal fees to the Attorney General’s office just like California’s commission has to.
At Tuesday’s meeting in Las Vegas, the commission revealed that they have been given a six-figure legal bill for past work from the Attorney General’s office to pay. Additionally, there is grave concern that many of the fighters who get busted for doping are not paying legal fines assessed in disciplinary hearings. Deadbeats. As a result of this problem, it is expected that Nevada will now start asking promoters and fighters for bond money to cover legal fees in prosecuting disciplinary hearings. Also, the commission made it clear on Tuesday that they may end up being more selective in who they prosecute going forward and how they handle legal affairs.
This news cuts both ways. It means Nevada won’t be as inclined to take on speculative disciplinary hearings. Conversely, it leaves Nevada’s commission more vulnerable to lawfare from promoters and fighters who will use the prospect of draining the athletic commission’s budget as a weapon. It happens often in California, especially with sensitive claims such as gender and racial discrimination at play.
By Zach Arnold | April 17, 2016
I often use the word Pyrrhic when discussing combat sports. It means winning a battle but losing the war. Short-term thinking. There’s a lot of reckless behavior in combat sports. You get numb to it.
The perfect definition of Pyrrhic is booking Kimbo Slice in London after he got busted by the Texas Athletic Commission for steroids while nearly killing his opponent in the process. Addendum: Yes, of course, an awful weight cut and bad fight shape contributed mightily to Dada 5000’s health scares.
The perfect definition of Pyrrhic is a promoter and a television network continuing a relationship with a Japanese promoter who was tainted by a negative media campaign as a front man for questionable business dealings and scrubbing such history from your own TV network’s archives.
In a regular sports journalistic setting, a sports promoter pushing a drug-busted carnival act while freely associating with a business partner that your rival’s investigators labeled as “not a suitable character” would be poisonous. In combat sports, media writers will glorify such behavior. It does not mean that such behavior getting a free-pass is good. It’s self-destructive.
By booking Kimbo Slice and promoting him for a London fight in July, Bellator is daring the Texas Athletic Commission to suspend Kimbo before his July fight. If Texas does nothing, Bellator will promote the fight as planned. If Texas suspends him, Bellator has the option to either keep the fight going or yank it if the political heat becomes too great. On paper, this looks like a no-lose situation. Logically, it looks incredibly stupid and a no-win situation. We’re talking about promoting Kimbo Slice vs. James Thompson in 2016 while fighters like Will Brooks are on the sidelines.
Scott Coker & Spike TV just handed public relations gifts to both the Texas Athletic Commission and to UFC. They made Texas – Texas! – look like responsible adults. Or maybe not…
90 day suspension for anabolic steroid and elevated level of testosterone is a complete joke https://t.co/bDTF7PsTel
— Jason Floyd (@Jason_Floyd) April 18, 2016
And pushing drug-busted Kimbo Slice makes UFC’s recent fighter suspensions of individuals such as Yoel Romero & Lyoto Machida more legitimate. UFC took the financial hit and suspended fighters who failed drug tests. Spike TV & Scott Coker went in the opposite direction. Bellator chose a Pyrrhic victory. They’ll be promoting the useless carnival fight while sending the subliminal message to fighters that they’re the place to be if you want to not get punished for doping. Fighters First, right?
The message from Spike TV is clear to MMA fighters who are using performance drugs: we’re open for your business.
There won’t be much media pressure right now on the parties involved because most combat sports writers care more about access rather than any other life principle. Tell a story, sell a fight, live the dream. That could very well change once Bellator and Spike TV start doing business in New York and have to answer questions from legitimate media outlets as to why they are booking the drug-suspended Kimbo Slice and doing business with a person like Nobuyuki Sakakibara.
If Scott Coker & Spike TV were the NHL & NBC, NBA & ABC/Turner, or NFL & Fox/CBS/NBC, there would be a five-alarm media fire right now about what’s going on with Kimbo Slice. If the media pressure ratchets up, we’ll find out very quickly if Bellator is willing to die on a hill to defend a business relationship with a person like Nobuyuki Sakakibara. At this point, the only thing Sakakibara offers is an occasional event for booking Bellator fighters in Japan. That’s about it.
As for booking drug-suspended Kimbo Slice in London, it’s awful timing given what recently happened in Ireland with fighter Joao Carvalho. The British tabloids will not be as charitable & forgiving as their American counterparts to Bellator. Hope it’s worth it to the suits at Spike TV.
By Zach Arnold | April 15, 2016
There has always been one critical question about UFC’s purchase of PRIDE’s assets: why did the Nevada Gaming Commission allow the deal to happen?
The Nevada Gaming Commission is extremely tough on business dealings involving questionable individuals and walking acts of moral turpitude. We knew the Fertitta family had extraordinary power but even they aren’t the biggest fish in Nevada.
One of the nagging sub-questions about that asset purchase was this: UFC hired Spectrum Gaming to cover their ass on the issue of “due diligence” with PRIDE. In other words, legal cover for dealing with Nobuyuki Sakakibara and company. When Spectrum Gaming gave cover to UFC for the PRIDE asset purchase, I couldn’t believe it. Why would these entities risk their reputation for that guy even at UFC’s benefit?
Paul Gift’s report at Bloody Elbow details some extremely interesting findings if you followed the timeline of PRIDE’s implosion:
- According to court filings, Sakakibara was looking to unload PRIDE in February of 2006. This is significant because it shows that Sakakibara, knew the end was coming with Fuji TV after Shukan Gendai’s negative campaign. The cat was out of the bag. They were looking for an exit strategy.
- The final purchase price to buy off Sakakibara alone was $3.7 million USD + $9 million (non-compete) + $1.5 million. A $14.2 million USD pay-off to prevent Sakakibara from being their Japanese rival.
- UFC allegedly used the Spectrum Gaming due diligence report to stop the flow of cash. In other words, UFC knew exactly what caused PRIDE to implode, got Sakakibara out of the business, and then turned around and told him to get lost.
- Spectrum Gaming knew all about Shukan Gendai’s negative campaign and couldn’t supposedly produce evidence to their liking from Sakakibara himself to clear his name that had been tarnished in the tabloids, including the allegations regarding “vendor” companies.
The 38-page Spectrum Gaming report on Sakakibara & Dream Stage Entertainment is an amusing read. Some bullet points:
- Spectrum got nowhere when contacting DSE vendors. “Although Spectrum investigators managed to speak to some staff at various Vendors to advise them of our role in the Due Diligence process, none was willing to cooperate. In fact, most Vendors contacted were non-cooperative to the point to refusing to take Spectrum’s calls, or in one case, even threatening legal action.
- UFC agreed to “lower” their due diligence standards with Spectrum by having Spectrum only do online media & Internet research. I’m glad they read Fight Opinion.
- DSE’s accountant allegedly “resigned” after Spectrum started investigating, only for that accountant to show up with Sakakibara during investigative hearings.
- In April 2006, Sakakibara obtained a 10-year loan with an individual named Nobuo Kawagami at an annual interest rate of 10%. Spectrum claimed that Sakakibara did not want to reveal details about the loan or the person issuing the loan. Mr. Kawagami has a cell phone company called Dowango.
- One of the major financial backers when Dream Stage Entertainment was formed was a printing company called Nishikawa Communications, based in Nagoya. Just like Nobuyuki Sakakibara was based in Nagoya for Tokai TV. The first PRIDE event under the DSE umbrella was PRIDE 5, Nobuhiko Takada vs. Mark Coleman at Nagoya Rainbow Hall. Sakakibara bought out shares in DSE from Naoto Morishita’s widow, Nishikawa Communications, and a company called Planet.
- Spectrum claimed that Sakakibara’s right-hand men, including Sotaro Shinoda and public relations flack Keiichi Sasahara (who later went to be a face of DREAM) were non-cooperative.
- Spectrum wrote this bombshell: “Reports have been provided on the five Tier 3 Vendors, and four of the five companies have been found to have links to organized crime entities, and this is not suitable to do business with the new DSE company.”
- Spectrum found out that the Nevada State Athletic Commission sued Dream Stage Entertainment for allegedly being deadbeats on paying the TV tax for a Las Vegas event.
- Spectrum summary on Nobuyuki Sakakibara: “While Spectrum cannot speculate about their precise motives in not wishing to cooperate with the investigation, it is clear that a number of the Directors, especially Sakakibara and Kato, had much to hide, including major conflicts of interest through their personal interests in various DSE vendor companies, opaque financing and possible links to organized crime. Although none of the Directors was known to Japanese law enforcement to be a Yakuza member, media information alleges possible organized crime connections regarding DSE operations and Sakakibara. It should be pointed out that the use of “front companies” or companies that are “one step removed”, such as the Vendor companies, is a traditional method used by Yakuza Organized Crime Families in Japan to hide their association or involvement in high profile companies such as DSE.”
- Spectrum confirmed the long-standing open rumor that Sakakibara was living the high-life at Roppongi Hills in Tokyo, an 18-story condo building. “The utlities for room were subsequently found to be contracted under the name [redacted], whereas the registered owner is Hiroo Kurokawa.”
- Spectrum discovered that Ed Fishman, who tried to buy the PRIDE assets from Nobuyuki Sakakibara, filed a lawsuit against DSE for breach of contract in helping Sakakibara with the PRIDE Las Vegas events.
- Spectrum’s interview with Sakakibara revealed that his claims of filing criminal and civil actions against Shukan Gendai for their negative campaign was all a bluff.
- DSE was under investigation by the Japanese tax authorities for several years.
- Sakakibara told Spectrum that he knew the mysterious Mr. I (Takashi Ishizaka), claiming he knew Ishizaka from the 90s and that Ishizaka is both a manager of celebrities and tied to a real estate company named Aoyama Mainland. However, Sakakibara denied doing business with Ishizaka.
Bottom line? Everyone knew “the truth” going into the business deal. They were all trying to fight each other *after* the deal.
Which raises the primary question we asked a decade ago: Why did the Nevada Gaming Commission allow this transaction to happen and allow a due diligence background check happen *after* the transaction?
Sakakibara sued Spectrum Gaming and UFC. They reached a settlement. He got paid. Everybody got what they wanted. Everybody knew what they were getting into. The regulators didn’t stop the transaction from happening. None of this is earth-shattering information but it does confirm the majority of suspicions you had about what exactly went down and why.