Team Takedown’s investment with Hendricks pays off

March 21, 2014

SI.com reports on Team Takedown’s unique investment in Johny Hendricks and other fighters when it agreed to manage and fund fighters in exchange for a 50-50 split in their earnings.

The brainchild of founder Ted Ehrhardt, along with his brother and business partner agreed to pay for living expenses, trainers and gym time.  According to the article, it costs the company $100,000 a year to fund just one fighter.  It has spent over $4 million in its 7 years in existence but does not break even with a fighter until those fighters’ earnings (including fight purses, sponsorship and other revenues) reach $200,000.  The good news for the fighter is that according to the article, the fighter need not pay back any of the money advanced by Team Takedown. 

The most telling, or outrageous, depending on what you believe, is the quote from Ehrhardt:

“[Former champion] Georges St-Pierre has gone public saying he makes $20 million-$30 million a year with all his sponsorships,” according to Ehrhardt.

Ehrhardt’s quote is contrary to a pre-UFC 167 Forbes article in November in which it stated that the former welterweight champion made $12 million per year.

Payout Perspective:

Team Takedown’s business plan is similar to MTX Audio’s plan back in 2009.  MTX Audio sponsored fighters such as Ben Henderson and according to MTX Audio, it provided the fighters with living expenses in order to train full time.  Team Takedown differs from MTX Audio in that its income is directly tied to its fighter’s success.

The financial managerial arrangement set up by Team Takedown is also similar to how agents, particularly in the NFL, recruit clients and advance training and living costs to them in hopes of recouping the investment when/if they get drafted.  The problems with this are evident.  Athletes can bolt for other agents, an athlete may not materialize or get injured and the agent is left without realizing on their initial investment or an athlete that hits it big may seek to break away from the company.  The company has much risk involved with the distinct possibility of no reward.

For Team Takedown, they must be good scouts to ensure that it finds the right fighters that will eventually succeed.  For the fighters, it’s an enticing tradeoff.  Most fighters are in need of funding to train and having an organization pay for you up front would make sense for the fighter at the time. Of course, if you finally make it and receive the big payday you worked hard for the fighter will realize that half will have to go to your management.

5 Responses to “Team Takedown’s investment with Hendricks pays off”

  1. saldathief on March 21st, 2014 9:43 PM

    What people dont understand and what they never mention is all the money spent on training and expenses comes out of the fighters money, Its more of an advance, or even a loan. Fighters even pay interest on expenses. Their is no free lunch

  2. pureincognito on March 22nd, 2014 5:16 AM

    This is a great situation for rookies. But unless Hendricks is just that loyal I can’t see him staying with them when his contract is up.

  3. Jason Cruz on March 22nd, 2014 7:25 AM

    @saidathief

    According to the SI article, the TT fighters do not have to pay back the training costs although in most cases, as with NFL agents, living expenses are a loan against their future earnings.

    I know of at least one instance (and I’m sure there are many) where an agent was burned because they had put up front the training costs for a (NFL to be) player and then the player went with another agent leaving the first agent out in the cold. Unless there was a clause in the initial contract about reimbursing expenses then they are out of thousands of dollars.

  4. saldathief on March 22nd, 2014 9:49 AM

    I knew a well known fighter, Boxer, who had a nice contract with MSG in the 80’s he was paid 100k a year as long as he won, and only got 10% of any purses he fought. I thought it was interesting because he got guaranteed money but when he got a few nice pay days he barley made anything after all the expenses. I hope MMA fighters can get better deals. honestly I don’t see Hendricks being a superstar. Also I wouldn’t believe most of what we read in SI or any magazines or press. Unless we actually read all the clauses in a contract its complete bullshit. And sports writers are totally full of shit for the most part. Agents get burned all the time and so do promoters. Thats why they never put out money unless they know its coming back same in the record business . A loan or an advance. And a 50 50 split is misleading.

  5. saldathief on March 22nd, 2014 10:04 AM

    Also do the simple math, training and living expenses for a champion is a huge amount, there would be nothing left over if they payed for everything.

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