ProElite Filing Reveals Asset Sale Details
February 12, 2009
Details of the ProElite asset sale to Strikeforce are starting to trickle out, as ProElite has started to make the necessary filings with the SEC required for a public company. ProElite looks to have gotten a lump sum up front as well as percentages on future cards put on by Strikeforce:
Consideration paid for the assets consisted of (i) $3 million in cash paid at closing, (ii) the assumption of certain liabilities relating to the assets sold and (iii) contingent consideration in the form of rights to receive a portion of the license fee earned by Strikeforce under a distribution agreement between Strikeforce and Showtime Networks Inc. (“Showtime”). The license fee is payable to the Sellers until February 28, 2012, subject to limited extensions.
Probably the most interesting part here is the cut that ProElite will receive from the licenses fees paid by Showtime to Strikeforce. This gives ProElite a passive stream of income that can help fund their other ventures, since it seems they are staying in the MMA game in some shape or fashion. For Strikforce’s sake, they should have negotiated a manageable percentage, one that one won’t mean the difference between profitability or not on their cards. Coker has a good financial head, so this figure should be something that can be worked around when putting the various cards together.
Another interesting portion of the filing:
In connection with the closing of the transactions under the Purchase Agreement, the Sellers also entered into certain non-exclusive license agreements with Strikeforce, pursuant to which Strikeforce will license from the Sellers certain trademarks and other specified intellectual property.
This is likely in regards the usage of the ShoXC trademarks that ProElite holds. It is interesting that these items were licensed instead of sold outright. With ProElite moving forward as a going venture, they may seek to work with Showtime at some later point under the ShoXC brand. Showtime seems to be varying their ties to MMA, with the retained stake they have in ProElite, the deal with Strikeforce, and their deal to produce the Affliction PPV’s. If they look to expand the ShoXC series in the future beyond the capacity that Strikeforce can deliver, ProElite/KOTC may be an in-house option to do that with.
