Friend of our site


MMA Headlines


UFC HP


Bleacher Report


MMA Fighting


MMA Torch


MMA Weekly


Sherdog (News)


Sherdog (Articles)


Liver Kick


MMA Junkie


MMA Mania


Bloody Elbow


MMA Ratings


Rating Fights


Yahoo MMA Blog


Search this site



Latest Articles


News Corner


MMA Rising


Audio Corner


Oddscast


Sherdog Radio


Eddie Goldman


Video Corner


Fight Hub


Special thanks to...

Link Rolodex

Site Index


To access our list of posting topics and archives, click here.

Friend of our site


Buy and sell MMA photos at MMA Prints

Site feedback


Fox Sports: "Zach Arnold's Fight Opinion site is one of the best spots on the Web for thought-provoking MMA pieces."

« | Home | »

Tuesday turmoil: More war games

By Zach Arnold | October 29, 2007

Print Friendly and PDF

Mike Sawyer & Oliver Copp have a new edition of Tough Talk radio w/ guest Brad Imes.

Kevin Iole praises Frank Warren.

There’s a brand new MMA statistical site called FightMetric.com.

Good news – Windy Tomomi is coming back.

Yet another press conference about the Randy Couture/Dana White situation, this time on the UFC side. If you haven’t listened to the latest edition of Fight Opinion Radio (covering this story), go listen.

Jerome Le Banner has a new web site and the URL is www.lebannerofficial.com.

Rex Richards lost at the Art of War 4 event in Tunica, MS. this past weekend.

Looking at the thought process behind M-1. Plus, who are some of M-1’s mystery backers and when will they (if ever) be publicly named?

UFCMania.com is now MMAMania.com.

Cheick Kongo news.

Here’s the latest press release from New Era Fighting about their $500 million USD lawsuit against the California State Athletic Commission:

CSAC Under Fire & Scrambling in response to New Era Fighting lawsuit

SANTA ANA, California (October 29, 2007) – After being named in a lawsuit filed by New Era Fighting (NEF) for $500,000,000, embattled California State Athletic Commission (CSAC) Executive Director Armando Garcia responded by announcing a review of NEF’s promotional licensing renewal, incredibly, 10 months after the CSAC cashed NEF’s check for its 2007-2008 promoter’s license, and two weeks after a legal claim had been delivered to the State.

NEF President Ron Kort filed the lawsuit because of a pattern and practice by the California State Athletic Commission of intentionally, willfully and viciously interfering with a licensed and approved event, which effected and injured New Era Fighting in the same or similar fashion as other mixed martial arts promoters, managers and fighters.

The California State Athletic Commission, Frank Munoz (CSAC Staff Services Analyst), and the State’s Department of Consumer Affairs were also named in the lawsuit, which is the result of the CSAC’s cease and desist order, issued only minutes prior to and forcing the cancellation of NEF’s much publicized scheduled tryouts on July 19 in Montebello (CA). The CSAC claimed NEF President Ron Kort wasn’t a licensed promoter despite having approved his application, awarding him a promoter’s license, and cashing his renewal check for 2007 (copies available upon request).

NEF is a mixed martial arts fighting organization that combines the raw brutality of mixed martial arts with entertaining, sexy and dramatic themes. It has launched possibly the largest suit in California history against the aforementioned parties for loss of revenues (past, present and future), film production, media exposure, credibility, television show, venue deposits, fighters and opportunity costs.

“Simply amazing,” Kort said. “Ten months after my promoter’s license renewal was approved and my check cashed by the California State Athletic Commission, as well as two weeks after we filed suit, that’s the best Mr. Garcia could come up with. A letter saying they were going to review my renewal. It’s also the first time he made himself available to me, so to speak, despite numerous requests for a meeting with him. It appears that Armando Garcia is only available to promoters after he’s caught doing something wrong.

“Maybe Mr. Garcia’s treatment of New Era Fighting is just his way of exerting power over Kimo Leopoldo (“KIMO”), the face of NEF, for KIMO fighting overseas because Mr. Garcia wouldn’t give him a proper hearing for a show in June of 2006. Whether you like NEF or not, the CSAC appears to have purportedly damaged so many other fight promoters, managers and fighters that people are fed-up and coming forward to speak out against the CSAC and supporting NEF by telling their stories.”

If you have been victimized by the CSAC, feel free to confidentially share your experiences by sending emails to FightBack@NewEraFighting.com. Your names and identities will be used only with your express permission to use them.

“We have informed Mr. Garcia, due to our pending litigation against him, the CSAC and other named defendants, that any further communications must be directed to our attorneys,” Kort added.

For more information about NEF call 714.973.3053/714.448.9999 or go on line to www.NewEraFighting.com.

-NEF-

CONTACT:
Bob Trieger
Full Court Press
978.664.4482
bobtfcp@hotmail.com

Dave Meltzer says that wrestling is key in the heavyweight evolution of MMA.

An interview with Benji Radach.

Miguel Torres is building a name for himself. Plus, meet Karen Williams and Shanna Young.

Kickboxer Brian Schwartz will make his MMA debut at the 11/16 Strikeforce event in San Jose.

How Jay Glazer supposedly uses his MMA connections to gain access with stars in the NFL.

Randy Couture is the world’s ‘dudeliest dude’.

Topics: Boxing, IFL, M-1, Media, MMA, StrikeForce, UFC, Zach Arnold | 14 Comments » | Permalink | Trackback |

14 Responses to “Tuesday turmoil: More war games”

  1. Ivan Trembow says:

    lol at Zuffa CFO John Mulkey being put in the position of being “credibility man” since Dana White and Lorenzo Fertitta lost theirs in Randy Couture’s eyes when they lied to him (according to Couture)… as if Mulkey is going to say anything that contradicts anything that White and Fertitta want him to say. Zuffa is not a public company, as they frequently point out in interviews. and unlike a public company, they can openly lie about contractual matters like this in public without being liable to the degree that a public company would be.

  2. Spencer Fern says:

    New Era Fighting seems to be as credible as their figurehead (Kimo.)

    I hope Garcia earns himself some more competent enemies than them.

  3. klown says:

    At UFC 44, Tim sylvia defends his belt and knocks out Gan McGee, and Joe Rogan actually calls out PRIDE Heavyweight Champion Fedor Emilianenko, saying “bring on fedor” and “gotta give Sylvia the advantage” over Fedor.

  4. David says:

    I love Ivan. Dana White is shady.

  5. Michaelthebox says:

    That fightmetric system is awesome. I’m going to waste a lot of time reading their reports, as long as they keep at it.

  6. CapnHulk says:

    Yeah, the FightMetric site makes for an interesting read.

  7. AB says:

    Zuffa cannot lie if Randy has copies of the contracts and is showing them around. Being a publically traded company is not a guarantee of transparency. Just think Enron.

  8. Grape Knee High says:

    Being publically traded is not a guarantee of transparency, but SEC and Sarbanes-Oxley regulations are in place for financial accounting oversight. Sarbox was specfically promulgated to prevent accounting scandals of the Enron and Worldcom varieties.

    I’m sure Jeremy can speak to whether this has actually increased transparency in practice, but it definitely has been the case that the onerous nature of Sarbox compliance as it currently stands has hurt the US capital markets because some companies who would otherwise have listed their shares on the NYSE or NASDAQ are now listing overseas instead (like the LSE in London).

  9. Zach Arnold says:

    A lot of multi-national companies complain about Sarbanes-Oxley and have, justifiably or not, claimed that it has chased away business from New York to London, Singapore, and other market hot-spots.

  10. Ivan, are you still writing for MMA Weekly? It’s been a while since I’ve read any of your hardcore TUF ratings breakdowns, which were always good fun.

  11. KennyP says:

    What a great Meltzer piece that was.

    I think too many recent MMA fans forget about the things that make Dave such a great writer. He has lived and breathed this stuff for decades. (pro wrestling since the 1970s, amateur wrestling since the 1980s, mma since the early 90s, plus he used to be big into bodybuilding and boxing). He just flat-out knows the history of the sport better than anyone else. And with his pro wrestling background, he implicitly understand the business of selling and promoting fighting better than any other major writer.

    Because of that, his pieces have more history and context than the guys who have come to mma in the last few years.

    Plus, now that he is with a well-financed organization, Yahoo can afford to spring for a good copy editor and proofreader. 🙂

  12. Sorry if this is a repost, looks like it got eaten:

    I’m sure Jeremy can speak to whether this has actually increased transparency in practice, but it definitely has been the case that the onerous nature of Sarbox compliance as it currently stands has hurt the US capital markets because some companies who would otherwise have listed their shares on the NYSE or NASDAQ are now listing overseas instead (like the LSE in London).

    Anyone who claims that companies are against Sarbanes-Oxley is about 18 months behind on their accounting news. There are a lot of forces within companies that were highly in favor of the regulations, in particular because they required that companies document their internal controls and that firms report on them.

    If you believe congress, though, it’s been a massive failure.

    In reality, the first year implementation costs were high, but the cost dropped dramatically from that peak because there was a lot of house cleaning to do. After you’ve got the house cleaned, you pretty much just have to sweep up from time to time to keep it clean and orderly.

    The sign-off was just propaganda though.

    Oh, and by the way, all of that Sarbanes-Oxley style stuff is coming to a company near you. Anyone who has an audit, whose CPA firm is doing their job, is going to be subject to a new cohort of risk assessment standards that the firms are going to be implementing this year. If the companies want to keep having audits, and intend to keep the cost of audits down, they’re going to have to document their own systems of controls. In fact, in a lot of ways, the new standards that are applying to non-public companies are more rigorous than those that now apply to publicly traded companies because the PCAOB basically rescinded most of AS2 in AS5.

    Technically SAS 112 went into effect last year, and the risk assessment standards are just now going into effect, but I can tell you that most firms are only now figuring out how they are going to approach the issue of extensive internal control documentation at their clients.

    In addition, CPA firms are of course prohibited from becoming part of the client accounting systems, including their system of internal control…so you’re going to see quite a bit of belly-aching.

    IMHO, it’s good because:

    1. Companies have always been responsible for maintaining their systems of internal control.
    2. CPA firms in general, and particularly at small clients, have had a practice of ignoring internal controls (basically, if you depended on internal controls to safeguard information, then you had to document them, do walkthroughs to confirm that they were in operation, and then test them for effectiveness. In a lot of scenarios it was less work to just do more actual transaction testing).
    3. A proper internal control system starts with the tone at the top of the company (and this is something that is stressed in the RASes). The problem at Enron wasn’t the honesty of the employees at the bottom, it was the guys at the top who were pushing all sorts of boundaries, with the knowledge of their external auditors. Under the new standards, the fact that they are pushing boundaries rises to a level that it has to be reported to the board of directors of the company because it represents a risk that there will be future financial misstatements BECAUSE of that tone.

    Publicly traded companies are required to submit financials so that traders will be on a level playing field when evaluating which companies are good investments and which ones are not. The market doesn’t work when nearly all of the information is sealed away. Assuming that the disclosures that need to be made under current rules for publicly traded companies represents “transparency” is a major mistake though.

    Nothing that can be done at any level of regulation is going to prevent frauds though. By definition, frauds are difficult to detect. They frequently represent short-circuits of internal control systems, even properly designed ones. In a lot of cases, you are just trying to detect those frauds in a timely manner, and that is the responsibility of management, because THEY are in a fiduciary relationship with the shareholders.

    The sign off standards were in part designed to remind management of that fact.

    There are a lot of things that need to be cleaned up though. Part of the problem is that in the case of Enron etc, they didn’t do anything that was per-se illegal. In fact, a lot of wrangling was done to make sure that they adhered to the letter of the law and accounting standards. There were a lot of weasel words in there that they took advantage of. AA was complicit in that, to the point where they were giving them advice with the explicit purpose of avoiding regulations and avoiding consolidation of companies.

    If the company’s board of directors had been aware of this, then they probably would have found someone else to run the company (assuming that it was properly comprised of non-shareholders in non-management positions with no relationships to company management or shareholders, and with adequate financial expertise to make these decisions, which is yet another thing that’s rolled into the new RASes). The fact that they weren’t is kind of scary, because even though the auditors are paid by the company, their responsibility is to report to the board (particularly the subset of the board known as the audit committee).

    Whatever, I’m going on at length here.

    Publicly traded companies with K-1s etc are NOT providing transparent information. They just aren’t. Nothing we do can cause them to do that. However, we can improve the overall environment so that companies are more likely to provide better information.

    But you also need to remember, Zuffa is managed by their shareholders (Dana and the Fertitas). Lenders would be fucked if they went out of business, but they would immediately pierce the veil and go after the other assets of those shareholders to recoup their loans if there was evidence of a fraud, and those guys DO have assets.

    There’s a lot of strength that UFC is currently deriving from secrecy, because they’re able to contract with fighters in a way that one guy doesn’t know what another guy is making, outside of what is publicly reported, and where they make it clear that a lot of guys are making amounts that are different from what is reported. That cloud of uncertainty works in their favor right up to the point where individual guys start quitting or signing with other organizations.

    At some point, transparency to the fighters is going to be necessary if they intend to take that next step. The best way to do that, while keeping the information close to their vests (i.e. not just putting it completely out in public) is to form a fighters association and create a union shop. Negotiate with the fighters as a unit, give them some hard numbers on what they’re going to get that’s going to be reported to the CSAC or whatever, give them some minor concessions on healthcare etc (a good idea in any case, and not an overly expensive one), give them a 401k to participate in (you don’t even have to make matching contributions, guys just want to have a place to sock away some money at fair rates), and put in some incentives that will allow fighters that are loyal to the organization or who are defending champs to have greater participation in event revenues.

    What isn’t ever going to happen at Zuffa is stock options to fighters.

    Which is a good thing. The worst retirement investment that you can have is your own company’s stock. That’s the least diversified, and most risky investment you can hold.

  13. […] Three companion articles to read today about the Randy Couture… First, MMA Analyst talks about the facts in the UFC vs. Couture war of words. Second, I have a new article talking about Zuffa LLC contracts and some of the issues the MMA media should be focusing on. Third, Jeremy Goodwin has some suggestions for UFC. […]

  14. klown says:

    Jeremy,

    That was a really informative analysis, even if half of it flew over my head.

Comments

*
To prove you're a person (not a spam script), type the security word shown in the picture.
Anti-spam image