Jakks Pacific & Round 5 MMA Sign Sub-Licensing Agreement with UFC

August 6, 2009

Jakks Pacific, the manufacturer of toy collectibles and master toy licensee of the UFC, has signed an agreement with Round 5 MMA to sub-license UFC talent rights.

As always, Payout Perspective follows the press release below:

JAKKS Pacific, Inc. (Nasdaq: JAKK), leading U.S. toymaker and master toy licensee for Ultimate Fighting Championship® (UFC®), announced today a sub-licensing agreement with Mixed Marital Arts (MMA) collectibles company, Round 5 Corp., to share UFC and MMA talent.  The agreement will allow both companies access to the biggest MMA fighters in order to manufacture, market and distribute action figures and related products under the UFC umbrella.

As a result, both companies now have access to a significantly larger MMA talent pool, including Randy Couture, Andrei Arlovski, Matt Hughes, Jake Shields, Chuck Liddell, Forrest Griffin, Brock Lesnar, BJ Penn and other top MMA fighters.

“This is truly a match made in heaven and we are excited to enter into this agreement with Round 5,” said Jeremy Padawer, SVP Boys Entertainment Marketing, JAKKS Pacific. “As the master toy licensee for the UFC, JAKKS can now offer MMA fans an entire world of action figures, accessories and other collectibles encompassing the most notable fighters in the fight world. The synergy between JAKKS® and Round 5® will ensure cohesive and comprehensive merchandise offering at retail that will benefit all parties involved, including JAKKS, Round 5 and the UFC, as well as the MMA fighters themselves, and most importantly, MMA fans.”

JAKKS’ new UFC line of toys and collectibles is expected to be available at retailers nationwide starting this Fall, with plans to roll out the newly acquired talent beginning as early as Spring 2010.  Along with the full line of deluxe articulated action figures, JAKKS also expects to offer Octagon playsets, accessories and role play toys based on the Ultimate Fighting Championship (UFC), PRIDE® Fighting Championship and World Extreme Cagefighting® (WEC®).

“We want to provide fans with the most complete and authentic line of UFC products,” said UFC President Dana White.  “This agreement with JAKKS Pacific and Round 5 brings the biggest players in the MMA action figure world together – now our fans will have access to the best and most diverse line of action figures.”

Damon Lau, President, Round 5, stated, “We are thrilled to partner with JAKKS and UFC, and we are confident that our teamwork will produce a more comprehensive product offering for MMA fans. In addition, JAKKS and R5 will facilitate marketing and distribution efficiencies at retail to increase exposure of our core product offerings. We are very excited to expand our line of 6″ display collectible figurines and 10″ display collectible statues with more of the biggest names in MMA.”

Payout Perspective:

The deal greatly expands the MMA talent pool for both companies and will help to boost their bottom line through improved distribution synergies. I was curious about the distribution in particular, so I contacted Damon Lau from Round 5 to get his thoughts:

“Moving forward, Round 5 and Jakks Pacific will be working together through our combined distribution channels, including mass retail, international and independent retail channels.  The key synergy lies in a more complete overall product category offering to retailers.  Whether it’s a 3.5 inch figure a 10 inch figure or any size in between,  this ‘complete’ range of product offering is now available to all consumers who are fans of the sports despite whether they want to ‘play or display.’”

This is also a huge victory for the fighters in the UFC. The new Round 5 lines to come – including figurines of Chuck Liddell, Forrest Griffin, Brock Lesnar, BJ Penn, Clay Guida, and more – will offer they typical Round 5 MMA royalties which are 4-5 times the toy industry standard. In turn, fighters like Couture that were previously exclusive to Round 5, will now also have the benefit of Jakks distribution.
In fact the only downside to this deal – from an MMA perspective – might be that it has created significant barriers to entry that might prevent new companies from entering the MMA collectible segment of the toy industry.

In the grand scheme of things, though, this seems to be a very good deal for MMA as a whole: its fans, its fighters, and some of its most prominent companies.

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