Canadian MMA promotion sues WSOF for breach of Franchise Agreement

February 15, 2018

A Canadian mixed martial arts regional promotion has filed a lawsuit against MMAWC, LLC and associated entities with the World Series of Fighting promotion in Clark County Superior Court in Nevada.

The lawsuit, filed on February 1, 2018, also names Carlos Silva, Ray Sefo and Keith Redmond.  Aggression Fighting Championship (“AFC”) claims that in mid-2013 was approached by WSOF looking to expand its business into the Canadian market.  WSOF claimed it wanted to acquire AFC and rename it World Series of Fighting Canada.  According to the lawsuit, it claims that WSOF represented that it had “substantial money behind the company” and an “ironclad network deal with NBC” and had retained IMG to sell events internationally.  AFC claims that WSOF would “cover all increased costs of events to rebrand the AFC, and Plaintiff would be reimbursed all event expenses.”  WSOF claimed it would share all broadcast revenues.

AFC executed a 5-year “licensing agreement which began on August 21, 2013 and expired on August 21, 2018.  But, AFC claims WSOF never provided a Franchise Offering Circular, financial statement or any of the required disclosures for selling a Franchise.

The lawsuit states that after WSOF took over AFC, that WSOF was “forcibly evicted from their office space and there was internal fighting related to non-payment of loans, expenses and vendors.”

AFC claims that it “advanced several tens of thousands of dollars for costs and expense for these events.”  It also paid a “monthly stipend” to WSOF.  Despite requests for payment, WSOF did not “honor the terms of the Franchise Agreement.”

AFC claims that WSOF has failed to pay any Canadian broadcast or streaming revenue to AFC or merchandise revenue.

Interestingly, AFC notes that as part of the “Franchise Agreement,” AFC can use the “Professional Fighters League” name in Canada.

There are ten causes of action in the Complaint, among the claims AFC claims breach of contract of the Franchise Agreement, the implied covenant of good faith and fair dealing in contract, failing to inform AFC that they did not honor the obligations of the Franchise Agreement, intentional interference with prospective economic advantage and tortious interference with contract. It also claims that Silva, Sefo, Redmond and Bruce Deifik breached their fiduciary duty as managers, directors and/or officers of WSOF/PFL. There is also a Civil RICO claim as a result of these claims.

Payout Perspective:

Notably, next week a hearing is scheduled fora Motion to Dismiss and/or compel arbitration in the case of WSOF and Shawn Wright as trustee for a company (WSOF Global, LLC) that provided loans to WSOF.  That case also deals with the issues related to the WSOF and PFL.  Here, it appears that the Canadian company is attempting to recoup money after a broken franchise deal from WSOF.  Since the new ownership took over, AFC probably feels duped that they were not compensated from the still existing franchise agreement.  One would assume that the new investors would take over the liabilities of the previous regime.  Then again, the multitude of lawsuits reflect ongoing issues with the structure of the prior company.  One would think we see this case go to arbitration as well as the Shawn Wright situation.  MMA Payout will keep you posted.

 

Jon Jones CSAC hearing set for February 27th

February 14, 2018

The California State Athletic Commission will have a hearing in Anaheim on Tuesday, February 27th to address an appeal from Jon Jones’ doping violation and license suspension from UFC 214.  The agenda posted by the CSAC website confirmed the hearing.

Jones was suspended after winning the UFC Light Heavyweight title in Anaheim this past July.  An in-competition drug test revealed a positive test for the banned substance Turinabol.

In addition, Jones will have another USADA arbitration hearing to determine the failed drug test.

Jones’ manager, Malki Kawa indicated that a resolution should occur by the end of March.  He also told MMA Fighting’s Luke Thomas that there is a “95-percent chance Jones will fight before the conclusion of 2018.”

Perhaps being positive, Jones has posted training videos on his social media account.  So, maybe there’s some good news for the former champion.

Payout Perspective:

This case has been lingering for a while.  We note that the next CSAC meeting after February is in May so if there is no resolution in a couple weeks, barring a special meeting.  I am not sure how Kawa believes Jones can be back before the end of 2018.  As a second-time offender, the UFC Anti-Doping Policy can hand down a 4-year ban to Jones.  His team denies he knowingly took the substance but even if that’s a mitigating factor, the team seems confident Jones will just receive a 1-year suspension.  Yet, he’d have to navigate both the CSAC and USADA hearings.  Jones seemed confident last time he was suspended, we will see if he has a better case this time around.

Alliance MMA cleans house of C-Suite officers according to SEC filing

February 14, 2018

Alliance MMA announced that its Chief Executive Officer, Paul K. Danner III, resigned as an officer of the Company effectively immediately according to a February 7, 2018 SEC Filing.  In addition, it terminated the employment of the Company’s President, Robert Haydak, and its Chief Marketing Officer James Byrne.

Danner will stay on with Alliance MMA as Chairman of the Company’s Board of Directors through May 1, 2018.

Alliance MMA announced that Robert L. Mazzeo will serve as the Company’s acting CEO.  Mazzeo had been acting as the company’s corporate counsel and is a partner at Mazzeo Song, P.C.

Alliance MMA is a publicly traded company on the NASDAQ.  The stock is currently trading under $0.75 per share.  The company’s 52 week high is $3.38 as of the time of this writing.  It is down 77.46%  over the course of the past 52 weeks.  When it opened on the NASDAQ in November 2016 it started at $4.00 per share.

The company positioned itself as a “feeder” league for bigger promotions like the UFC.  It had acquired several regional promotions

MMA Payout previously interviewed Haydak and Burt Watson about their work with Alliance MMA.

UFC 221: Payout Perspective

February 13, 2018

Welcome to another edition of Payout Perspective.  This time we take a look at the UFC’s first event in Perth for UFC 221.

Romero misses weight but KO’s Rockhold

Yoel Romero missed weight which threw the main event into question.  Romero was fined 30% of his fight purse which was given to Rockhold.  The awkward stipulation was that Rockhold could win the interim title but Romero could not.  It was expected that Rockhold likely received further incentives to fight Romero.

And hopefully he did because Romero KO’d Rockhold in Round 3 to destroy his chances of winning the interim middleweight title and a showdown with Robert Whittaker.

For Rockhold, it has to be a disappointing result. One might suggest he not go through with the fight since Romero missed weight but I’m sure it was a matter of getting paid for the event.  It sounds as though he is looking to move up to light heavyweight next.

Blaydes earns decision over Mark Hunt

Curtis Blaydes earned a unanimous decision victory over Mark Hunt.  The New Zealander was the fan favorite but the now 10-1 (5-1 in the UFC) Blaydes earned the biggest win of his UFC career.  The good news for Blaydes is that he it was the penultimate fight on his UFC fight contract which means he has some leverage going into negotiations for a new deal.

On the other end, Hunt, who is still embroiled in a lawsuit against the UFC, Dana White and Brock Lesnar indicated that he would be ending his time with the UFC.

The UFC may need Blaydes.  Currently 9th in UFC rankings, the division is suffering from lack of known fighters and/or injuries.  Perhaps he is paired with another UFC 221 star, Tai Tuivasa, who defeated Cyril Asker.

Attendance, gate and bonuses

UFC 221 did well despite the Sunday morning start in Perth.  It drew 12,437 fans for a live gate of $3.6 million Australian dollars (or $2,810,520 American).

The bonuses went to Israel Adesany, Jussier Formiga, Jake Matthews and Li Jingliang.  Adesanya and Formiga earned Performance Bonuses while Matthews and Jingliang drew the “Fight of the Night.”  All received $50,000 bonuses.  There was some controversy in Jingliang’s receipt of the Fight of the Night since he eye-gouged Matthews while attempting to get out of his guillotine.  No foul was called despite calls for at least a point deduction.

Sponsorships

Air Asia, Hudson Shipping Lines, Fetch, General Tire and Monster Energy had the center of the octagon.   I do not believe Modelo was a part of the signage for this event.

Fetch is an independent internet pay television provider.

Odds and ends

The promotion in the U.S. was minimal.  The UFC Countdown Show on Sunday night did register in the Nielsen 150 with 102,000 viewers and 0.04 in the A18-49 demo.  The post-fight show on FS1 drew 188,000 viewers.

The UFC 221 Prelims on FS1 drew 697,000 viewers on FS1.  It was the lowest-rated UFC Prelims event since UFC 216 on FX drew 653,000 viewers.  UFC 216 drew about 120,000 PPV buys.

Luke Rockhold arriving to open workouts on a camel was some Ricky Jarrett from HBO’s Ballers-type stuff.

Tai Tuivasa could be a fighter to watch out for in the heavyweight division.  Drinking out of the shoe was different.

Tyson Pedro also gave a great post-fight promo and Jon Anik was able to catch his attempt at a mic-drop.

There were over 200,000 google searches for UFC 221 on Saturday.

Conclusion

One might expect that this PPV to do very poorly.  Romero not making weight may have added some intrigue to the matchup.  This card would have been an interesting FS1 card but to pay $65 for the card is very hard to reconcile if you are a casual viewer.  Moreover, the fact that there is another UFC card next weekend makes skipping a PPV like this easier.  One might expect a buy rate of around 125,000.

UFC 221 Prelims on FS1 draw 697,000 viewers

February 13, 2018

The UFC 221 on FS1 drew 697,000 viewers Saturday night per Nielsen via ShowBuzz Daily.  The telecast featured Dong Hyun Kim earned a split decision over Damien Brown.

Also on the telecast, Israel Adesanya stopped Rob Wilkinson, Alex Volkanovski stopped Jeremy Kennedy and Justin Formiga submitted Ben Nguyen.

The two-hour telecast drew 0.21 in the A18-49 demo.

Also, the post-fight show on FS1 drew 188,000 viewers.  The 52-minute wrapup show which started a little after 1:00 am on the east coast drew 0.08 in the A18-49 demo.

Payout Perspective:

Predictably, the event drew lower than UFC 220 last month.  This is likely due to the Olympics as well as the less-than-stellar hype for this PPV.  This ratings may mean that the PPV buys did not do well domestically despite the local excitement for the event in Perth.

UFC 221 attendance, gate and bonuses

February 10, 2018

The UFC made its promotional debut in Perth for UFC 221 and fans were happy to see the fighters in action.  It drew 12,437 fans for a live gate of $3.6 million Australian dollars.

The US equivalent is $2,810,520 for the gate for a Sunday afternoon in Perth.  According to UFC exec David Shaw it was the largest gross ever earned in a sporting event at Perth Arena.

The bonuses for UFC 221 went to Israel Adesanya, Jussier Formiga, Jake Matthews and Li Jingliang.  Adesanya and Formiga earned “Performance of the Night” while Matthews and Jingliang earned “Fight of the Night.”

Payout Perspective:

The gate has to be promising for the company as it tries to expand its reach in the region.  While the card may not have been PPV-worthy, there were some good matchups on the show.  Of course, Yoel Romero did not earn a bonus due to not missing weight.

UFC 221 weigh ins: Romero misses weight, Rockhold agrees to fight

February 9, 2018

Yoel Romero missed weight during the UFC 221 weigh-ins and the main event for an already thin PPV card was put in jeopardy as Luke Rockhold considered not fighting Romero tomorrow in Perth, Australia.

Romero weighed in at 188 pounds and was not able to cut down to the limit of 185 pounds within the time given him.  Rockhold was less than pleased with the outcome.  According to sources, he has agreed to fight Romero with Rockhold having the chance to win the interim middleweight belt.  Romero, if he were to win, would not be able to win the belt.

Romero was a replacement for Robert Whittaker, the interim champion that defeated Romero this past July.  Whittaker has been suffering from an illness.  Georges St Pierre, who defeated Michael Bisping to gain the middleweight championship in November, vacated the title.

Payout Perspective:

For a card that did not have a lot of mass appeal, Romero missing weight may deter even more fans from sitting out this card. The good (or bad) news is that the UFC is making its debut in Perth and the fans in a new market are generally excited to see the UFC regardless of who is fighting.  However, with prices raised to $65, the card looks, at best, like a UFC Fight Night card rather than a PPV.

UFC raises its PPV prices $5

February 8, 2018

Although most have not talked about it, you will notice that your cable and/or satellite bill might be a little more if you purchase UFC PPVs as the suggested price has been raised $5.00 to $64.99.

The last time the UFC raised its PPV prices was 2015.

UFC 220 started 2018 with two title fights.  The PPV sold for $64.95 HD and $74.95 for 4K.  There was no indication if this was just a one time price adjustment from the standard $59.95  HD price.

But, at least two carriers have priced UFC 221 this Saturday at $64.95.

Miesha Tate also unofficially confirmed the new price.

Payout Perspective:

The question is whether $5 more will detract the casual fan from purchasing PPVs like this Saturday where there is not a whole lot of big names on the card.  Similarly, UFC 222, a card which was sold for one fight, Holloway-Edgar fell through and the company scrambled to replace the main event.  It has Cyborg fighting on the card and Edgar staying on to face Brian Ortega.  Still, February and March seem like very low PPV buy rates.  One has to wonder if the new strategy is to load up on big cards and see what happens with cards without big drawing names or fights.

Hunt allowed to include removal from UFC Fight Night 121 in his lawsuit against UFC

February 8, 2018

The court in the Mark Hunt-UFC/Dana White/Brock Lesnar lawsuit has granted Hunt the opportunity to Supplement his lawsuit to include facts about his removal from UFC Fight Night 121.

   Order on Supplemental Complaint by JASONCRUZ206 on Scribd

In finding for Hunt, the court stated that Defendants’ argument in precluding the filing a supplemental complaint was that the allegations were false.  Secondly, they argue that the accusations are distinctly different from the lawsuit.  The Court denied both arguments.

Payout Perspective:

As we stated, this was the likely result as the Court would be willing to include the additional information in order to properly litigate the entire case rather than piecemeal.  The factual claims serve as to bolster Hunt’s causes of action.  It also forces Defendants to address the allegations as it tries to dismiss the lawsuit.

Top Rank Boxing on ESPN draws 741,000 viewers Saturday night

February 7, 2018

Top Rank Boxing on ESPN Saturday night drew 741,000 viewers according to Nielsen (via ShowBuzz Daily).  The event drew 0.21 viewers in the A18-49 demo.

The event featured Zurdo Ramirez as he defeated Habib Ahmed in the 6th round to successfully defend his World Boxing Organization super middleweight title.  In addition, Jerwin Ancajas, dubbed as the heir apparent to Manny Pacquiao stopped Israel Gonzalez in defense of his International Boxing Federation super flyweight title.

Payout Perspective:

The event came on ESPN slightly late due to the NCAA men’s basketball game between Michigan State and Indiana.  It did not do as well as November’s event which drew 1.487M viewers.  Still, it did well considering the card were for those well-versed in boxing as the fighters on the telecast did not carry much casual viewer cache.

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