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A question about the PRIDE asset sale deal…

By Zach Arnold | February 8, 2008

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Adam Swift at Sherdog has an excellent article, talking about PRIDE FC Worldwide Holding’s lawsuit against Nobuyuki Sakakibara & DSE Inc.

Go read the article.

The complaint specifically cites a series of articles published in Shukan Gendai magazine, which linked the previous ownership of Pride with organized crime in Japan, as heightening the necessity of the parties to cooperate with the investigation. Because of their failure to cooperate, Sakakibara and Ubon were ultimately found “unsuitable to conduct the Business and perform the services as anticipated under the AP agreement and the Consulting Agreement.”

According to the filing, Sakakibara and Ubon received more than $1.5 million in consulting fees through September 2007.

If you’re like me and you’ve followed the PRIDE yakuza scandal since day one, there’s a very obvious question to be asked here.

Besides the fact as to where or how Zuffa knows about the Shukan Gendai articles and the contents of those articles, the most obvious question that Zuffa has set themselves up for is this:

If you knew about the long, negative campaign by Shukan Gendai against PRIDE that started in 2006 and lasted until 2007 after the asset sale deal happened, then why did you do the deal with a company alleged to have ties to the yakuza when you knew that the Nevada Gaming Commission bans anyone with a gaming license from doing business deals with organized crime?

I had a conversation yesterday with Mauro Ranallo on Fight Network Radio (audio here) talking about this ridiculous situation.

Update: I just got the filing of the lawsuit. Some interesting claims… Apparently, a no-compete agreement was signed in which Sakakibara and associates would be prohibited from doing business in MMA for seven years after the asset sale was finalized. The lawsuit claims that Sakakibara and his production company, Ubon Inc., violated three separate agreements — the asset deal agreement itself, a consulting agreement, and the non-compete agreement.

Item #37 is certainly interesting…

37. The Selling Parties have repeatedly and consistently refused to submit basic information to and have materially obstructed the Investigator in the conduct of its background checks and due diligence investigation of, among others, Sakakibara and Ubon.

Item #39 gets better…

39. The necessity of the Selling Parties cooperating with the Investigator was heightened further by articles published by the Shukan Gendai magazine associating, among others, Sakakibara and Ubon with individuals involved in organized crime in Japan, which association could have a detrimental effect upon the Purchasing Parties’ affiliates’ gaming licenses.

Item #42 talks about the non-compete…

Plantiffs are informed and believe and thereupon allege that Sakakibara and Ubon have breached the Non-Compete Agreement by engaging, and continuing to engage, directly or indirectly, in a business which competes directly or indirectly with the Business or by assisting other persons in doing so.

Alright then, I must ask this question. Is the company in question Hustle? If it is, then why did Dana White give permission to Mirko Cro Cop which allowed him to appear (thanks to Ken Imai) at the Hustle NYE ’07 event in Saitama?

What we did learn in this lawsuit filing is that Sakakibara was paid $1.5 million USD for the consulting agreement.

Topics: Japan, Media, MMA, PRIDE, UFC, Zach Arnold | 21 Comments » | Permalink | Trackback |

21 Responses to “A question about the PRIDE asset sale deal…”

  1. So depending on the outcome of litigation, the Fertittas could lose their gaming license.

  2. GassedOut says:

    It certainly looks like it from that…

  3. Dukes says:

    Now, Now. Pipe down people. The Fertitas are WAY too connected in LV to have their gaming license stripped over the purchase of PrideFC.

    This is about $$$, and nothing else. At the very least, the UFC was hoping to get Fedor’s contract and to be able to run some shows in Japan and get a decent return on their money. This obviously has not happened.

    Remember all of the speculation on this blog about depositions, subpoenas, testifying under oath, former PrideFC official’s suicide, etc? The prospect of salacious details finally being revealed about the dark underbelly of the Japanese fight game? Nada. Zip. Zilch.

    You can have 100 blogs speculating left and right until you’re blue in the face, but this will be a low key affair, just like Ed Fishman’s suit.

  4. Jeff says:

    Dukes is right on all counts (IMHO).

  5. Zach Arnold says:

    Remember all of the speculation on this blog about depositions, subpoenas, testifying under oath, former PrideFC official’s suicide, etc? The prospect of salacious details finally being revealed about the dark underbelly of the Japanese fight game? Nada. Zip. Zilch.

    You’re referring to Ed Fishman’s lawsuit last year, in which he eventually settled with DSE and basically got what he wanted.

    I would not be surprised if Fishman somehow resurfaces given that he tried to buy PRIDE in the first place.

    I laugh at your assertion that the NGC doesn’t care about this story.

    Zuffa’s opening up the skeletons in the closet here with their lawsuit against PRIDE. A lot of interesting questions we didn’t have answers to before may finally get answered.

  6. What this tells me is that Zuffa had some inkling of an idea that this was going to be a mess before they even got involved. Why didn’t they it let PRIDE die off and sign talent?

    My guess is that it feared someone other than Zuffa controlling the PRIDE brand name and using it to encroach on Zuffa’s territory in the U.S., and Dana and Co. convinced themselves it’d be worth the risk to prevent a McMahon or a Fishman from creating credible opposition.

  7. Grape Knee High says:

    This lawsuit won’t reveal anything nor will Station Casinos lose their gaming license. If there were even a remote possibility of that happening, Zuffa would never bring the lawsuit forth.

    Just like the Fishman lawsuit, this will never reach trial, no shadowy figures will be revealed, no yakuza ties will be confirmed. Money will change hands, and the lawsuit will be buried.

    Zach, you were always factually correct about the PRIDE situation, but sometimes I think you jump down the rabbit hole too quickly. You’re looking for salacious details that will never surface.

  8. Grape Knee High says:

    What this tells me is that Zuffa had some inkling of an idea that this was going to be a mess before they even got involved. Why didn’t they it let PRIDE die off and sign talent?

    Because contrary to popular belief, they bought PRIDE to continue running it. The did send a Zuffa contingent over there to work out the issues and try to get a TV deal. Nothing emerged, so they let PRIDE wither on the vine.

    Did they not do enough due diligence? Clearly. Did they overpay? Clearly. But that doesn’t mean their intention was to bury PRIDE all along.

  9. Samscaff says:

    I dont get why the lawsuit complains about Sakakibara, etc. refusing to cooperate with due diligence investigators.

    Doesnt/shouldnt due diligence be performed prior to an asset sale?

    Was Zuffa really so naive as to pay money up front with “assurances” that the sellingp party would provide information necessary for due diligence AFTER the sale was made?? This is laughable if true. Especially if you know the selling party is mobbed up. (This would seem to indicate Zuffa did not know).

  10. The company could have fully intended to run PRIDE. Zuffa’s intent clearly wasn’t to destroy the brand name, otherwise it wouldn’t have thrown all that money into the product. I’m arguing that it took the risk because Dana & Co. didn’t want anyone using the PRIDE name against them. That was the deciding factor.

    It was widely circulated that PRIDE was for sale before and during PRIDE 33 – Sakakibara himself said at the press conference that there were multiple suitors.

  11. Ivan Trembow says:

    Absolutely shocking that they would admit, in writing, that they were aware of the alleged Yakuza ties and still completed the deal anyway (with a clause that DSE would complete background checks AFTER the completion of the deal). What does the Nevada Gaming Commission think of that?

    So far, this lawsuit looks to have done far more damage to Zuffa’s legal standing than it could possibly ever repair.

  12. Ivan Trembow says:

    “So far, this lawsuit looks to have done far more damage to Zuffa’s legal standing than it could possibly ever repair.”

    meaning that any damage-repairing that this lawsuit might do appears to be out-weighed by the damage-causing that this lawsuit has already done with that written admission

  13. Jeremy says:

    I may be wrong, but it sounds like this lawsuit is partially to shield Zuffa. They make mention of investigations into the alligations of ties to organized crime.

    It sounds like they are trying to say “There was reports of it, despite to legal charges, and we tried to determine the legitimacy of it.”

    I don’t see any problems for Zuffa coming from this.

  14. Chuck says:

    “Alright then, I must ask this question. Is the company in question Hustle? If it is, then why did Dana White give permission to Mirko Cro Cop which allowed him to appear (thanks to Ken Imai) at the Hustle NYE ‘07 event in Saitama?”

    Zach, the company in question may be Yarenokka!. Because HUSTLE has been around for years and as you said Cro Cop was given permission to appear on a recent HUSTLE show. It has to be Yarenokka!. Did everyone forget already that this show existed?

  15. white ninja says:

    i wonder if sakakibara told ishizaka about the $1.5m “consulting” agreement?

    and since dana was happy that crocop appeared at hustle, knowing that hustle is closely connected to sakakibara, seems like he was happy cooperate with these “shady” figures

  16. Fan Futbol says:

    I do think Grape Knee High and Dukes are right. There’s no chance the Fertittas will lose their license because of this deal.

    Zach, you might want to post the complaint. It’s a public record, and I’m sure the regulars here would like to see it.

    FF

  17. David says:

    Thank you. “Now, Now. Pipe down people. The Fertitas are WAY too connected in LV to have their gaming license stripped over the purchase of PrideFC.”

    This is a real mess and it will no way take center stage like on ESPN where Couture and D-Dubya go back and forth.

  18. Dukes says:

    “I laugh at your assertion that the NGC doesn’t care about this story.”

    Zach, it’s not that they don’t care, it’s just that I think the NGC will see that the Fertitas acted in good faith and did not willfully snub their nose at the NGC in this endeavor.

    They have too much influence and too many connections to have this rise to epic proportions for them. If it’s found that they were somehow negligent in the purchase, the most they would get would be a monetary fine and some other administrative restrictions – nothing that would jeopardize their casino empire.

  19. Safari_Punch says:

    If the Fertita’s get a pass from the NSAC due to their connections or not, when will the FBI be doing an investigation of what exactly is going on with the athletic commission in Nevada?

  20. […] has always been one critical question about UFC’s purchase of PRIDE’s assets: why did the Nevada Gaming Commission allow the deal to […]

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