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Fight Opinion Weekly: The end game for PRIDE

By Zach Arnold | March 5, 2007

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By Zach Arnold

On Saturday, news broke that PRIDE’s next American show on April 28th at the Thomas & Mack Center in Las Vegas, Nevada had been cancelled. It capped off a tumultuous week after the PRIDE 33 event on February 24th.

Within three days after the PRIDE 33 event (heralded in the media as an all-time great MMA show), the foundation of PRIDE’s American business plan cracked.

A few days after the PRIDE 33 event, PRIDE boss Nobuyuki Sakakibara made negative comments to PRIDE-friendly Kami no Puroresu about PRIDE USA President Ed Fishman. In a very strange comment, Sakakibara stated that if Ed Fishman bought, ‘nobody would support him.’ This statement, on many levels, has potentially different meanings. On Friday, Sherdog.com writer Josh Gross reported that PRIDE USA President Ed Fishman was considering a lawsuit against Dream Stage Entertainment (the parent company of PRIDE) if they defaulted on their contract with Fishman to promote shows in the United States. Later that afternoon, I was able to confirm that Fishman was indeed considering legal action against Nobuyuki Sakakibara & DSE for an alleged ‘pending’ breach of contract. What the legal claim is going to be, we do not know at this time.

What we do know is that PRIDE doing business in the United States has come to a screeching halt.

Chronicling PRIDE’s entry in the American market in 2006 is a very unique story.

Starting in late 2005 and plateauing in the first half of 2006, PRIDE was rocked by a major yakuza scandal that had several fronts. Admitted yakuza fixer Seiya Kawamata filed a police complaint with the Kanagawa Police, claiming that he was threatened by people he alleged were yakuza in the PRIDE organization. (Use this link for more general information). This was a result of fallout from the 2003 MMA wars in Japan when three big events (K-1’s Dynamite event, PRIDE’s Man Festival at Saitama Super Arena, and Inoki Bom-Ba-Ye at Kobe Wing Stadium) ran head-to-head on the same night, all on national free-to-air television in Japan. In 2006, Shukan Gendai ran a multi-month negative campaign against Dream Stage Entertainment and PRIDE, alleging many criminal acts performed by people associated in the Japanese fight industry aligned with PRIDE. (PRIDE later fired back by publicly stating that would they file a criminal complaint against Shukan Gendai. Nothing publicly surfaced in regards to that complaint.) The negative campaign sold a lot of magazine copies for Shukan Gendai and put heavy pressure on Fuji TV, the television network backing PRIDE events. Supposedly, Fuji TV ended up doing its own internal investigation about Shukan Gendai’s negative campaign, which also alleged that the Kanagawa Police were questioning several Fuji TV employees (including producer Kunio Kiyohara, who was never directly named in Gendai articles) in regards to their supposed connections to the yakuza.

Gendai’s negative campaign damaged the image of PRIDE management in the Japanese public. It attempted to make PRIDE management out to be illegitimate businessmen.

Facing mounting pressure from Shukan Gendai’s negative media campaign, PRIDE President Nobuyuki Sakakibara launched a counter-attack in the media — questioning the credibility of Gendai’s claims. The heat was on. A lot of activity was taking place before PRIDE’s big Osaka Dome event on May 5th, 2006, which was the launch for the promotion’s Open-Weight GP tournament. Two days before this event, K-1 had a big event in Yoyogi (Tokyo) during Golden Week. At K-1’s May 3rd, 2006 event, PRIDE icon Kazushi Sakuraba made an appearance under the Tiger Mask gimmick. All the fans in attendance at the K-1 event immediately knew that it was Sakuraba. His appearance sent shockwaves throughout Japan. For PRIDE to lose one of their top two strongest Japanese drawing cards (the other is Hidehiko Yoshida) damaged the company in terms of short-term matchmaking. Image-wise, it was a body blow. Two days later, PRIDE drew a big house at the Osaka Dome for their Open-Weight GP tournament event. However, all the media focus was on Sakuraba leaving PRIDE and Gendai’s negative campaign. Sakakibara found his back against the wall with the Japanese media asking him lots of questions. A week after Sakuraba’s appearance in the K-1 ring, Shukan Gendai published an article claiming that PRIDE sent a car to try to block Sakuraba’s driveway so that he couldn’t leave to go to the K-1 event in Tokyo.

In early June, a Fuji TV lawyer approached Sakakibara and DSE management with a shocking letter. It was a letter of termination. The letter claimed that PRIDE violated the terms of their agreement with Fuji TV and that the network was cutting all ties. Japan’s largest pure MMA league lost its TV deal. A few days later, PRIDE held a press conference with over 50 fighters and 200+ fans appearing in front of a voluminous crowd of media reporters. The theme was ‘never say die’ and the company vowed to continue running shows. Claims were made that the money from Fuji TV only represented 15% of the organization’s income.

At that same press conference, PRIDE promoted a match between Mirko Cro Cop and Hidehiko Yoshida for their July 1st, 2006 Saitama Super Arena event. Cro Cop chopped Yoshida down with many low kicks and easily won the main event match. However, the production values of the PPV broadcast was down in quality (due to PRIDE and SkyPerfecTV having to produce the telecast as opposed to Fuji TV’s state-of-the-art production team).

Facing a financial and image crisis in Japan after the July 1st event, PRIDE announced plans to run their first ever American show on October 21, 2006 at the Thomas & Mack Center in Las Vegas, Nevada. A couple of months later, it was revealed in Kami no Puroresu through an interview in Japanese that the American promoter for PRIDE would be Las Vegas casino mogul Ed Fishman, who made his fortune through ventures such as Players Club International. For PRIDE’s Japanese management, connecting with Fishman was a big coup on paper. Fishman, the ultimate legitimate businessman, working with Japan’s largest pure MMA play. Image-wise, it was clear that PRIDE wanted to change their image from Shukan Gendai’s negative campaign that attempted to make PRIDE management out to be crooks and illegitimate businessmen.

The business tie-up with Ed Fishman was a historical move in many ways for PRIDE. After losing their Fuji TV deal, PRIDE decided to do something that never had really been tried or successfully accomplished in the history of the fight game. After losing their bread-and-butter television deal, they were going to try to survive and thrive by literally expanding their operations. Not only were they going to expand, they were going to attempt to do it in a foreign market. If it meant literally changing the face of their company for survival, that was what PRIDE was going to attempt. It was bold. It was ambitious. It was an all-or-nothing strategy fitting of doing business in Las Vegas.

Prior to PRIDE’s contract with Ed Fishman, the extent of their expansion into America consisted of guest spots on Fox Sport Net’s Best Damn Sports Show Period and old taped footage airing on FSN. While the shows drew anywhere from a 0.3-0.4, the overall impact on PPV buys was very little. In short, PRIDE had no real firepower in America until Ed Fishman started working with them.

After a debut show that drew a little over 8,000 paid and nearly 12,000 total fans on October 21, 2006 in Las Vegas, PRIDE scheduled a second event for February 24, 2007 at the same venue (Thomas & Mack Center). After PRIDE’s first US event, there was immediate interest and discussion as to whether or not UFC would purchase the promotion. This theme would actually engulf much of the hype and promotion leading into the PRIDE 33 (2/24) event.

PRIDE 33 ended up being a fight card that, on paper, was not very attractive. Drawing a similar paid attendance to their first Las Vegas event, PRIDE produced a very exciting fight card that blew away all expectations. However, the media was still focused on the promotion’s financial troubles. The week of the event, PRIDE USA promoter Ed Fishman said that if he could not buy PRIDE that he would be interested in starting his own MMA company and bringing in some of the world’s top fighters. Media writers, who gave glowing reviews for PRIDE 33, kept prefacing their remarks by pontificating on PRIDE 33 being the last US event for the promotion due to financial troubles.

They were, perhaps, prophetic in their remarks.

On the same day as UFC 68 which featured legendary MMA fighter Randy Couture winning the UFC Heavyweight Title, MMA fans on the Internet found out that PRIDE’s next Las Vegas event (scheduled for 4/28) had been cancelled.

Immediately, negative reaction towards Ed Fishman poured in. On Sherdog, the reaction was so swift and nasty that anti-Semitic remarks were written. In addition, several posters encouraged violence by the Japanese mafia (the yakuza) against Ed Fishman. Yet within all of the vitriol and classlessness displayed to the news about PRIDE’s troubles in America, one question has yet to be intelligently answered:

Why is Ed Fishman being treated as such a bad guy by fight fans who have no real knowledge of what is going on behind the scenes?

On the surface, Fishman did his job in regards to promoting the two PRIDE shows under his responsibility in Las Vegas. The PRIDE 32 and PRIDE 33 events cracked the Top 10 of all-time MMA live gates in Nevada’s history. After the first PRIDE event in Las Vegas, Ed Fishman was heralded by hardcore PRIDE fans as a savior. After PRIDE 33, he’s being called a shark.

The great irony in all of the criticism leveled upon Fishman is that when he first signed a contract with PRIDE, fans praised and celebrated the deal as giving PRIDE legitimacy in the American fight game. A true business professional in the world of gaming. With legal action pending against PRIDE, Fishman is now being called by hardcore PRIDE fans everything but a professional. Did Ed Fishman forget how to be a legitimate businessman in the time span of four months? The obvious answer, of course, is no. According to Fishman’s legal team, however, they’re claiming that PRIDE’s Japanese management are the ones who forgot to act like legitimate businessmen.

It was Shukan Gendai’s negative media campaign that claimed that PRIDE management in Japan was made up of illegitimate businessmen. Now, Ed Fishman and his legal team are likely preparing to make a similar argument in an American court over finances.

Settlement vs. judgment

With a likely lawsuit developing between PRIDE USA President Ed Fishman and DSE, the parent company of PRIDE, it is important to acknowledge that there are two legal results likely to come out of such a court battle — a settlement between the two parties or a judgment from a judge or jury. As Fight Opinion Radio co-host Jeff Thaler (attorney) recently told me, “Everyone says that they are going for the judgment, but everyone is usually happy with a settlement.”

What could a settlement entail between Ed Fishman and PRIDE? It depends on several factors. First, is the PRIDE USA contract between DSE & Fishman an exclusive deal that allows Fishman (and Fishman only) to be their American event promoter? Second, did the contract allow Fishman to have any sort of role in ownership of PRIDE in America? Third, what is the apparent breach of contract that Fishman is alleging against DSE? All three factors could heavily determine the parameters of a settlement.

The obvious issue for a legal settlement would be whether or not Fishman could purchase the assets of PRIDE or buy the company outright from the Japanese.

Another legal twist that could certainly complicate matters is if DSE decides to fight until the end for a judgment.

Even if Ed Fishman is successful in getting a judgment on DSE, he would likely have to get the judgment enforced in the courts in Japan as far as grabbing assets. An interesting scenario for an enforcement in America is if Fishman was able to get a lien on all profits made by PRIDE in the US (in this case, it would be whatever profits are made from PPV sales of Japanese telecasts). For actual enforcement of the case in Japan, it would require Fishman to hire Japanese lawyers to get a judgment enforced in the Japanese court system. It could be time-consuming and also difficult because there may be not Japanese lawyers (for various reasons) who want to take the litigation.

Where UFC fits in

By potentially tying up PRIDE in the American court system, Ed Fishman could go for a court injunction to stop PRIDE from running future American shows if the contract he has with DSE states that he is the exclusive promoter in America. If this can be enforced, then UFC gains some bargaining leverage in potentially buying out PRIDE. Why? If PRIDE cannot run shows in America while under contract to Fishman, then UFC can lower the price down substantially for purchasing the organization.

Will UFC be able to triangulate both DSE & Ed Fishman to purchase the assets of PRIDE? It becomes more possible if Fishman can tie up DSE in an American court system. It is interesting to note that names (like Mirko Cro Cop’s agent, Ken Imai) who have worked with PRIDE in the past are currently or could be working with UFC in the future (through managing fighters or other business means).

One major risk for UFC purchasing PRIDE is the issue of finding out who exactly owns the company. Through due diligence, Zuffa LLC lawyers would have to determine what kind of financial and management records PRIDE has. Could potential skeletons in the closet be revealed (similar to what happened when Yukes purchased New Japan Pro-Wrestling from Antonio Inoki)? Furthermore, could an American owner of PRIDE be able to 100% ensure the security of employees in the Japanese office? The politics of the fight game in Japan are complicated, multi-layered, and potentially volatile.

The end game

In past articles, I have stated that I believe DSE will not sell PRIDE. Other Japanese fight organizations that have encountered financial trouble (such as pro-wrestling companies FMW, All Japan Women, and UWF-International — the company where stars like Nobuhiko Takada & Kazushi Sakuraba came from and eventually helped propel PRIDE to the success it initially achieved in Japan) didn’t sell themselves off to the highest bidder to pay off debts. New Japan Pro-Wrestling being sold to video game company Yukes was the exception, not the rule to how the Japanese generally do business in the fight game.

If Ed Fishman is successful in tying up DSE in the American court system, the process could last well over a year. Without steady cash flow incoming from American events, PRIDE will likely die a corporate death if the company is not sold or liquidated.

Days after PRIDE lost its contract with Fuji TV, Nobuyuki Sakakibara stated that Fuji TV accounted for only 15% of total company revenues. Despite putting on a brave front publicly, losing a free-to-air television deal squarely presented a big challenge to PRIDE management. The real test was whether or not PRIDE’s Japanese management consisted of true businessmen or if the television network had been propping up the company’s financial model. The results so far are not promising.

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