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IFL’s got it right in some areas
By Adam Morgan | June 9, 2007
By Adam Morgan
The IFL kicks off its relationship with USA Wrestling this weekend at the World Team Trials according to an article at NBC Sports. For all the things wrong with the IFL, aligining itself with USA Wrestling is great for both parties. USA Wrestling gets TV exposure and the IFL will have a talent pool of great wrestlers to draw from. But that’s not the only thing the IFL is doing right. They have the right mindset in terms of educating people about the various facets of the sport. The event this weekend is a demonstration of how wrestling can be translated to the world of MMA.
“Our goal is to not have wrestling overshadowed,” IFL commissioner and co-founder Kurt Otto said. “We want to work with USA Wrestling as a vehicle to educate wrestlers about MMA. The more they come to clinics, they’ll see it’s not human cockfighting. It’s a pure sport.”
Not only does it allow wrestlers to see how wrestling is involved with MMA, it lets fans see how wrestling is a huge part of MMA. For those who are just now becoming fans of the sport due to increased media exposure, there are a lot of things to learn. And this is a step in the right direction to educating fans about MMA and all the various martial arts involved.
“It’s one more piece to the puzzle as far as taking MMA mainstream,” Otto said. “We feel comfortable working with them.”
Exactly. It’s all about making the sport legitimate.
Kurt Otto has the correct mindset as far as the sport goes. Educate the people about technique and the sport becomes much more exciting and accepted. This weekend, Matt Lindland and IFL fighter Bryan Vettell will hold clinics to show how wrestling techniques can be applied to MMA. If the IFL was smart, they would tape some of the clinics and air them on IFL Battleground. Educating more people about things other than striking is great for the sport.
I have a feeling it will be all for naught, though, considering that the IFL’s financial future doesn’t look so good at this point. Oh well, at least they’re trying.
Topics: Adam Morgan, IFL, Media, MMA | 11 Comments » | Permalink | Trackback |
I love the idea…but i kinda get the feeling that its too little too late for the IFL
I think there’s hope for IFL if it has a good playoffs and if the Anacondas and Pitbulls have a great Finals. They also need the 4-man individual weight championship tournaments to go well.
But the major flaw of the IFL concept has been exopsed, many of the teams are full of dogs and the matchups suck. Too many teams, too little talent in the league.
I too feel that there are just too many teams in the IFL at this point. They expanded so fast that you hardly even heard about Team A when Team ZZ popped into the fray.
Zuffa lost tons of money when they started and I think the investors behind the IFL have deeper pockets than the Fertittas at the time. It will all depend on their commitment to their investment and if their losses aren’t as big as they projected them to be.
That is a great idea. Look at Kos’s wrestling ability. I just hope whomever they recruit, doesn’t turn into a LNP expert.
I think a wrestler transitions into MMA better than a boxer. A wrestler just needs to learn to block punches to get in for the takedown. Once there, they are in their element. A boxer has to learn takedown defense and the whole ground game.
I must say I really applaud what the people running the IFL are trying to do not only for their league but the overall health of MMA. They really seem to be a positive force for the sport.
Unfortunately with the reports we have seen about their financial figures it doesn’t seem like things are going really that well for them. Hopefully things change with a strong playoff push. I really enjoy watching them get young fighters a very good experience and exposure in the sport.
Is the IFL collecting franchise fees or something from these additional teams? If they are, then that would explain their insatiable hunger for new teams, because they’re turning around and using that investment to run operations.
IFL is in trouble, but they haven’t yet taken up the option of being bought out by a media company. With CBS getting into the MMA act through Pro Elite on Showtime, the continued rumours and unrumours about Time Warner hooking up with UFC via HBO, and Viacom already in bed with UFC, NBC Universal (USA) is obviously looking to get into the act as well. The question is, once they start dealing with IFL, will they allow IFL to go under, or will they bail them out for controlling equity?
I think the investors behind the IFL have deeper pockets than the Fertittas at the time.
Who are these investors?
Body_Shots…it’s kind of complicated.
The original founders of IFL were Kurt Otto and Gareb Shamus. Otto is in the real estate game, Shamus is in publishing and conventions (he has the comic mag/price guide Wizard).
Richard J. Kurtz loaned IFL 4.9 million dollars during 2005 and 2006. To pay him off, the old IFL gave him shares that turned into 4,930,213 shares of stock after the merger discussed immediately below.
Last year the company was merged with Paligent, Inc., which had been (theoretically) a biotech company (they sold off all their IP and essentially had no business at the time they merged with IFL, they had never actually SOLD any product). Paligent’s largest shareholder (Richard J. Kurtz) ended up with a large chunk of the resulting entity (Paligent had 5% of the new IFL, then they also issued about 5% in new shares to Kurtz because he cancelled a loan that he had made to Paligent for about 2/3 million dollars).
I don’t particularly understand why IFL merged with Paligent, except that it was a way of officially bringing Kurtz into the fold and getting on the market. IFL was in no condition to successfully execute an IPO at the time (nor now). Paligent had no business, and essentially no assets (under 12 thousand dollars in assets). Their only significant liabilities were the ones owed to Kurtz.
In December, IFL gave out a lot of newly issued stock to companies and individuals to whom they owed a lot of money (about $22.5 million). In order to issue this stock, they also paid off the investment firm that made the placement with nearly 600 thousand options to purchase stock at $1.25 per share.
On May 31, 2007, these major shareholders filed their intention to sell the nearly 20 million shares in IFL that they were given to settle their debts. These were:
ALK Construction LLC Defined Benefit Pension Plan
Apollo Capital Management Group L.P
Apollo Microcap Partners, L.P.
Atlas Master Fund, Ltd
Bradley Beckerman
Michael C. Borofsky
Chapman Family Trust
Donald D. Drapkin
Matthew A. Drapkin
EagleRock Institutional Partners, LP
EagleRock Master Fund, LP
Sophrosyne Technology Fund Ltd.
HHMI Investments, L.P.
Highbridge International LLC
Adam F. Ingber
Investcorp Interlachen Multi-Strategy Master Fund Limited
Jefferson St. LLC
Michael R. McAllister.
Nader Tavakoli.
SRB Greenway Offshore Operating Fund, L.P.
SRB Greenway Capital (QP), L.P.
SRB Greenway Capital, L.P.
The Tudor BVI Global Portfolio Ltd.
Tudor Proprietary Trading, L.L.C.
Unicom Capital LLC
Walker Smith International Fund, Ltd.
Walker Smith Capital, L.P.
Walker Smith Capital (QP), L.P.
Witches Rock Portfolio Ltd
The company has consistently paid their employees at all levels, in part, with stock options. Based on the recent consistent decline in the price of the stock, it’s likely that any options that haven’t been exercised previously are now “under water,” i.e., the price to buy the share is more than the price to buy a share on the open market, so no sane person would exercise the option.
The company also has a pretty good hoard of shares set aside to give to employees, but they haven’t actually given any out yet.
In total, there are about 53.5 million shares of stock that have actually been issued and are being held by entities other than the IFL (there are 75 million total shares authorized, so the company could hand out another 21.5 million shares at some point before even having to ask permission to issue more shares from the board of directors, which is controlled by the largest shareholders anyway.
Of those 53.5 million shares, about 9 million are held by Otto, 8 million by Shamus, 700 thousand by Molnar, and 116 thousand by Bucci (former president of Paligent). 4.5 million are held by Kurtz. 4.8 million are held by Nadir Tavakoli (the owner of the EagleRock companies), 4.8 million are held by Paul Tudor Jones and James Pallotta (owners of Witches Rock and the Tudor companies). About 10 million shares are held by the other companies that received stock when IFL paid off their creditors in December.
That leaves less than 12 million shares on the open market currently.
So basically, IFL announced that the people who hold more than a third of their total shares are about to flood the market with about twice as many shares as are currently on the market. That kind of explains why their stock price dropped to about a dollar a share now.
To stay listed, IFL is probably going to have to undergo a reverse stock split of maybe 5 for 1 after those shares go on the market, I would guess, to keep their share price above the limit where they would no longer be permitted to be publicly listed.
To fund continued operations, I would assume that the company is going to issue those other 21.5 million shares to people they owe money to again, and at the end of this year, everyone is going to be left holding the bag because there will be no money to run the company, with no one willing to lend them more.
The idea that somehow Otto and Shamus have deep pockets is pretty well disproven by the way that IFL has gone about paying for things in the past (handing out stock like lollipops). Typically you’d have a cash call from your current owners at a privately held company before you go outside for money. I don’t think they have any that they are willing to put into IFL. They had to borrow from Kurtz, they had to borrow from EagleRock, they borrowed from Witches Rock and Tudor, and they keep spending on credit with the intention of converting it into shares, but their share price won’t support that now.
I’m sure that they had good intentions going into it, but IFL’s finances indicate that the company is basically a scam at this point. Enjoy the fights while they last.
Oh, an addendum.
Looks like IFL has their annual meeting scheduled for June 28th. On the docket is a decision to increase the authorized shares from 75 million to 150 million. This is essentially certain to pass.
I can’t believe that people are still willing to give money to these shysters for worthless pieces of paper.
Thanks for the run down Jeremy, that is very interesting.