Who is to blame in Gil-UFC contract impasse?

February 14, 2014

Dana White has expressed his discontent with the current negotiations with UFC Lightweight Gilbert Melendez and has all but told the former Strikeforce Champion to look elsewhere for work.

On Wednesday’s “UFC Tonight” on FS1, White spoke out about the contract negotiations with Melendez’s representation as the parties are at an impasse with a new deal for Melendez.

Although it was not officially reported how much he made at UFC 166, he did receive a $60K FOTN bonus for his bout with Diego Sanchez.  He did make $175K at UFC on Fox 7 in a loss to Benson Henderson.  One assumes that Melendez would like to improve on his $175K show salary.

Strikeforce Pic of Gil (Via Wikimedia Commons"

Strikeforce Pic of Gil (Via Wikimedia Commons)

The MMA Report brings up a good question: whether a fighter should look for top dollar or the best competition when it comes to deciding where to fight.  There is the example of Ben Askren who was let go by Bellator in order to presumably sign with the UFC.  However, he chose to sign with Singapore-based OneFC where he will make $50K/$50K to start.  Arguably, Askren is one of the top welterweights in the world and has a personality that would make him marketable.  The knock on Askren is that his fight style is not appealing to the casual viewer.  One would think that he would choose the UFC over an overseas company.

When I think of the Ben Askren choice it reminds me of NBA player Josh Childress.  A Stanford alum, he left the NBA after 4 productive years and with an offer to stay in the NBA but decided to make more money in Greece.  But after 2 years, Childress ended back in the NBA and cited issues with getting paid and less amenities overseas as compared to the NBA as reasons he chose to return.  Thus, this is an example of why taking the most money may not be the best for a career.  Of course, MMA differs from basketball if you were to just compare the physical rigors and average shorter career span of a fighter.

One of the underlying issues that may be hampering the negotiations is that Melendez is represented by the same agent as Georges St. Pierre.  As we know, GSP’s departure from the UFC was awkward and may have been less than amicable.  GSP spoke out about drug testing in the UFC which unsurprisingly drew the ire of White.  Is the difficulty in brokering a new contract for Melendez in part due to White’s anger at GSP via his agent?

Then there’s the use of the media in the negotiations.  First, there was White’s public comments on FS1.  Then, in a bit of a surprise, the UFC on Fox twitter account tweeted an article it posted on its Fox Sports web site in which it mocked Melendez for the stalled negotiations.  The article actually admits it has scant information on negotiations but would speculate on the reasons why Melendez has not come to an agreement.

Payout Perspective:

Melendez has a short timeframe to earn as much as he can in a sport where the premise is to inflict maximum pain on your opponent.  This takes a toll on the fighter physically and mentally.  However, the sacrifice is worth it assuming he is compensated enough to take care for himself and his family.  In MMA, it’s unlikely that a contract will make someone set for life but a fighter has the potential to do much better than he would if he or she just had a 9-5 job.  We do not know how much Melendez is asking for but one might assume he wants to make sure he is fairly compensated (in his mind) for his sacrifices.

Like many sports executives, White is negotiating through the press.  Calling out Melendez’s agents is a part of negotiations.  A new wrinkle is the use of Fox Sports to seemingly call out Melendez for not agreeing to a contract.  In other sports, the media produces pieces calling out one side or another in negotiations but the Fox Sports piece is a blatant run at Melendez.  Is it fair?  Should Melendez and his representatives respond with their side of the story?  We shall see.

Cigano signs with 9ine

September 25, 2013

MMA Fighting reports that UFC Heavyweight Junior dos Santos has signed on with 9ine.  The Brazilian sports and entertainment company is headed by former soccer star Ronaldo and is backed by worldwide marketing communications firm WPP.

You may recall that Anderson Silva signed on with 9ine in 2011.  It also represents several soccer stars as well.

Via MMA Fighting:

According to 9ine’s CEO Marcus Buaiz, the company will take care of dos Santos’ image, social media and contracts with sponsors. “Cigano” is currently sponsored by Nike, TNT and Corinthians.

“Cigano is a great champion with an image that lots of companies want to work with, and he has a good relationship with the media,” Buaiz said. “9ine’s goal is to increase what has already been done with our excellence of working athlete’s image.”

Payout Perspective:

You may recall that JDS suddenly left long time manager Ed Soares in June 2011 for the Guedes Group.  That occurred months before his KO of Cain Velasquez on the first Fox show.  The latest development is an interesting move by JDS since he has already secured top sponsors.  We will see what his new agency can do for him.

Cowboy signs with NASCAR driver’s agency for representation

June 24, 2013

MMA Junkie reports that Donald Cerrone has signed on with NASCAR driver’s Kevin Harvik’s agency – Kevin Harvik, Inc.  The signing is the company’s first MMA client.

Harvick is a big fan of MMA and has been seen at UFC/Fox events as part of the new “synergy” of cross promotion between Fox’s sports properties.

Cerrone indicated that he hoped that Harvik’s professionalism and contacts with blue chip sponsors.  Cerrone is the third Harvik client as the company switched from race operations to professional athlete management.

Cerrone explained his decision via MMA Junkie:

“That’s what I think we need in the sport,” Cerrone said. “We don’t need, ‘Hey, my brother knows a little bit about fighting. He can manage you.’ I see a lot of that in the fight game — guys that know nothing but think they can make a dime by just managing people, and it’s crazy to see. In the NFL, you don’t just have your uncle call up the NFL and say, ‘Oh, I need to do a Nike deal.’ That happens a lot in MMA.

Payout Perspective:

Although Cerrone’s intentions seem valid, the decision to sign with Harvik does not seem to agree with his statement.  Harvik’s company is new and Cerrone is the first MMA client.  Moreover, the company switched over from race operations to athlete management.  The point being is that if Cerrone is seeking experienced representation then Harvik may not be it.  Does Harvik have the contacts, know the market and the MMA sponsorship game?  If the answer is that he does have sponsorship contacts interested in sponsoring an MMA fighter then Cerrone is making the right decision.  But, if this professional relationship is based on a personal friendship its the same scenario that Cerrone describes above.

We’ve seen this recently with Jay-Z forming his own athlete representation company, Roc-Nation, and quickly signing Kevin Durant, Robinson Cano and Victor Cruz.  Obviously, Harvik’s company is much smaller but the idea of experience equaling monetary results is a theory that may be tested.

 

Is there a need for MMA managers?

February 13, 2012

MMA Junkie had a recent article on the managers’ role in representing fighters. With the recent departures of Jose Aldo and Mauricio Rua from their representation, the need for managers has come into question.

The Junkie article looks at long time manager Alex Davis as he discusses the need for a fighter to have good management. He also addresses the question of whether top notch fighters need representation anymore. This comes on the heels of Rua’s statement (which could have been taken out of context) that the UFC does not want its fighters to have managers.

Via MMA Junkie:

“Some people will say that once a fighter reaches a level where he enters the UFC, he doesn’t need management anymore, but usually a manager has worked very hard to get him to that point without ever getting properly rewarded for his efforts,” Davis said. “Only once a fighter is at the top can a manager have a chance at making something in the deal, which is only fair. Not only that, but its not like, ‘Hey, great, now I am in the UFC. My problems are over!’ Far from that. Things get way more complicated.

Davis identifies more responsibility outside of just fighting that the fighter must consider once he makes it in the UFC. There are many tasks that a manager should handle while the fighter concentrates on training.

In addition, the manager may have contacts with sponsors and promoters in helping the younger fighter achieve his goals.

Payout Perspective:

Manager and agent may be two separate jobs or one in the same. Certainly fighters can have both or one individual to handle both duties.

One need only look to Matt Mitrione, Brandon Vera and Alistair Overeem more recently as examples of what happens when you have issues with management. Mitrione publicly fired his manager, Vera lost a year due to a contractual dispute and Overeem is currently in litigation with Golden Glory.

Then there are Georges St. Pierre and Frankie Edgar who left Shari Spencer to go with closer ties to manage their career.

Still, there are many MMA management agencies that take care of their fighters in securing sponsorships and public appearances. This can go a long way in getting fighters the visibility, notoriety and opportunity to increase the value of their own personal brand.

Heavy MMA had a good two part (one and two) series last year on the role of an agent.

The Junkie article points out the reasons that a good manager is necessary in a fighters’ career. Certainly, there are many responsibilities and tasks a manager needs to do in helping fighters prepare for their next fight while making sure they maximize their opportunities.

The question is how much is a manager worth to a fighter? For top tier fighters, do they need a manager? Can the fighter have someone do the same tasks for less, without having to give up a portion of their purse or sponsorship payout. We will see if consolidation of management duties becomes a trend in MMA. There is a definite need for good representation, but at what cost?

Overeem sues Golden Glory

November 11, 2011

TMZ first reported that UFC heavyweight Alistair Overeem has sued his ex-management group, Golden Glory. According to TMZ, the lawsuit requests that the court break his contract with Golden Glory. Since the filing, Golden Glory has fired back at Overeem.

First the lawsuit.

Via the Fight Lawyer:

Overeem is suing “Knockout Investments, B.V., Golden Glory, Golden Glory California, Bas Boon” and a bunch of “Does.”  According to the complaint, KOI is the legal entity that manages Overeem and allegedly KOI performs its management function through its affiliate, Golden Glory.

According to the allegations in the complaint, Overeem’s contract with KOI and GG was signed in July 2007 and is for a 5-year term.  The agreement has an automatic renewal provision (for another five-years) unless either party does not want to renew and then any such notice must be served six months before renewal.

The agreement provides that KOI and GG were to provide a number of services–Overeem alleges that some of these terms are ambiguous and unenforceable (e.g., “acting as a ‘confidential agent,'” “looking for personal sponsors,” and “making publicity”) in a personal services contract.

Under the agreement, Overeem alleges that KOI and GG are entitled to 35% of Overeem’s pre-tax income.  Overeem alleges that under the contract the same 35% is due “for any deals ‘within one year after this contract has expired and/or were prepared during the duration of this agreement.'”  Overeem claims the management agreement also includes a provision that fines Overeem $10,000 for any breach of the agreement and a $5,000 per-day penalty for each day the violation continues.

Overeem asserts two claims–one for breach of contract seeking “an amount in excess of $151,000″ and a judicial declaration concerning the parties’ respective rights under the management contract.  Essentially, he wants the court to declare that KOI and GG are not entitled to his UFC money.  Overeem also seeks an accounting.

A few thoughts — and I am doing this quickly.  The liquidated damages clause — i.e., the 10k penalty and 5k a day add on as the violation continues– is not, in my view, by any stretch of the imagination enforceable. That said, there is no allegation that I saw that KOI or GG are seeking to enforce that provision.  So it may be a moot point.

Turning to the crux of the complaint.  Overeem lists a bunch of “failures” on the part of KOI and GG — chiefly, failures to pay, including money from FEG, Dream/K-1s parent, but he really alleges nothing specific, e.g., an amount.  He also claims he was not “properly informed” and alleges that KOI and GG failed to “protect [his] interests.”  Overeem also alleges that he believes KOI and GG received some undisclosed bonus arising from Overeem’s signing with the UFC–nothing more.

While certainly some of the provisions in the agreement could have been written more eloquently, whatever services Golden Glory provided, it seems pretty clear based on my read of the complaint (which is biased for Overeem) it is entitled to 35% of his pre-tax income and it also seems pretty clear that they have a trailing commission for a year even after the contract has expired.  Some of the allegations arguably make KOI and GG look bad, e.g., allegedly managing him in jurisdictions where KOI and GG were not licensed and allegedly pushing him to fight when injured.  But not sure that gets him around the 35% or somehow renders the management contract a nullity.

In any event, I read this quickly but sounds like Golden Glory has a nice little claim for the UFC 141 income, which would presumably include sponsorship money as well.

All of this said, let’s see how the story unfolds as there may be more out there.

Now the response by Golden Glory.

Via MMA Weekly:

“We are currently in receipt of a copy of Mr. Overeem’s lawsuit and our clients are assessing all available defenses and counterclaims,” read the statement from Golden Glory’s legal counsel at The Law Offices of Roderick J. Lindblom, APC.

“This lawsuit is a preemptive action on the part of Mr. Overeem and his counsel in response to KOI’s recent notification to Mr. Overeem of numerous violations by him of his management agreement with KOI, including but not limited to his failure to pay commissions for past fights and endorsement deals secured by KOI and Golden Glory.”

Payout Perspective:

The lawsuit makes one think about Dana White’s previous statements about Golden Glory business practices when Zuffa unloaded the Golden Glory stable. The lawsuit is in its infancy stages and we will have more as time goes on.

Justin Klein is an attorney at Satterlee Stephens Burke & Burke LLP in New York City where he concentrates his practice in commercial litigation and represents clients in the fight industry.  He regularly addresses current legal issues that pertain to combat sports, including efforts to legalize MMA in New York, at his Fight Lawyer website.  He is a licensed boxing manager with the New York State Athletic Commission as well as the founder and Chairman of the Board of the New York Mixed Martial Arts Initiative, a non-profit organization that gives inner city youth the opportunity to experience the emotional and physical benefits of martial arts training.  Justin lives in New York City where he trains in jiu jitsu and boxing.

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Alistair Overeem leaves Golden Glory

September 23, 2011

MMA Fighting reports that Alistair Overeem has left the managing stable of Golden Glory. Overeem’s decision to leave was due to “a breach of trust.”

Via MMA Fighting:

With Overeem only stating that “a breach of trust” was the reason for his departure, details behind the split are up for speculation and many people may be quick to point the finger at the recent issues between Golden Glory and Zuffa.

Overeem’s former manager, Bas Boon, indicated that Overeem’s departure was not related to the recent Zuffa-Golden Glory squabble which saw Zuffa cut Overeem, his brother, Valentijn, and Marloes Coenen. In a press release, Boon cited the current state of the fight business (outside of Zuffa we presume) as the culprit as he cited the fact that Golden Glory fighters are owed money from FEG and K-1. Boon cited the fact that Overeem is fighting in the UFC this December as a sign that the Zuffa-Golden Glory relationship is not fractured. But it appears that the money owed Overeem from other fight organizations may be the reason for the split.

Payout Perspective:

Overeem’s departure is interesting considering it occurred after Golden Glory negotiated his contract for the Lesnar fight. This is another example of the tenuous business of fight management. We will see if Overeem decides to sign with another agent and, if so, whether the agent will make an effort to collect the past debt from the organizations.

Pavia sells agency to Paradigm

September 17, 2011

MMA Weekly reports that MMA agent Ken Pavia has sold his agency, MMA Agents, to Paradigm Sports Management. The transaction includes Pavia’s company and his stable of fighters. Pavia is moving on to become Vice President of Business Development at sports agency Takedown Entertainment.

Via MMA Weekly:

Speaking to MMAWeekly.com on Friday, Pavia confirmed that he has sold his company and fight roster to Paradigm Sports Management, but will remain on in a consultant’s role to help the transition for his fighters.

Takedown Entertainment is a publicly traded company that produces and packages MMA shows for broadcast as well as digital release.

Mike Whitman of Sherdog spoke to Pavia about the offer from Paradigm:

“The timing and the opportunity were both right. Takedown represented an opportunity that, in the long run, not only benefits me, but also benefits my clients and the industry,” Pavia said. “The funny thing is that over the last four or five [years], because of my roster and connections, I’ve been offered two or three things a week — whether it’s helping out with a promotion or consulting or advising in some capacity, but it was never the right time or opportunity. With Takedown’s business model, it was an offer I couldn’t refuse.”

Pavia indicated that all employees of his company were going to Paradigm or staying with him in his move to Takedown so the transition would not leave anyone without a job.

Payout Perspective:

Its an interesting move within the industry and we will see if any of Pavia’s fighters will seek other representation. The report indicates that Pavia will stay on with MMA Agents for a period of time to ensure a smooth transition so maybe there will be no switching of agents. Based upon the recent MMA Fighting article on the state of MMA sponsorships, the role of the MMA agent can be a difficult task. It appears as difficult as an NFL or NBA agent without the market of sponsors or big financial payoff as the two sports. This could change, ever so slightly, with the UFC-Fox deal. We are not saying that Pavia left for any specific reason, merely pointing out the tough and competitive job it is to be an MMA agent.

The state of MMA sponsorship

September 14, 2011

MMA Fighting had a piece on the state of sponsorships in MMA. It was a revealing look behind sponsoring of fighters in MMA.

Overall the piece depicts the sponsorship game as a huge investment for companies with a tenuous rate of return. For fighters, its a necessity to supplement their fight income as well as keep them financially afloat waiting for their next fight. For agents, its the likely primary goal in helping their clients.

Via MMA Fighting:

If you’re a company looking to sponsor a UFC fighter, the hit to your pocketbook varies depending on everything from the fame and popularity of the fighter you’re doing business with to the location of your logo. Walk-out T-shirts can be among the most expensive items, sometimes edging into the six-figure range, while a small decal on the thigh of his shorts might only run you a couple thousand dollars.

There is also the dreaded sponsorship “fee” or “tax” which the UFC has imposed on sponsors:

…most (sponsors and/or agents reached) put the cost of the tax at about $50,000 per year for the majority of apparel and supplement companies in the UFC, though the fee has been knonw to vary according to the sponsor and the situation…

Then, there is the issue of the return on investment. If a company pays to play, will viewers buy what your selling, let alone know who or what you are. Hayabusa’s Ken Clement told MMA Fighting:

“It’s trackable, but it’s very hard to be objective,” Hayabysa’s Clement said. “It’s the simple question of how many fans watching the UFC saw your logo and recognized it, and of those, who cares? …It can be looked at quantitatively, but there’s a lot of guesswork involved.”

Agent Dean Albrecht breaks down a company’s goals to sponsor a fighter in three categories: advertisement, sponsorship and endorsement. As defined by Albrecht, advertisement is the lowest tier of sponsorship as the relationship between fighter and sponsor is short-lived. The agreement is usually meant strictly for eyes to be on the sponsor’s logo.  These are usually one-time sponsorship deals or done on a flat fee. Sponsorship is more of a commitment between the fighter and sponsor where the sponsor has the fighter wear its logo over a period of time. The idea is to become brand ambassadors for the company. Endorsements are an elite level of sponsorship as the relationship between fighter and sponsor is more exclusive. Its where the fighter will do more than just wear the sponsor’s patch or shirt during fight night. The fighter will exclusively wear the sponsor’s gear in and out of the cage.  They will also make appearances for the sponsor.

Payout Perspective:

An interesting tidbit of the article was the fact that less sponsors are interested in Strikeforce and focus more on the UFC. The fact that Zuffa imposed its tax on Strikeforce seemingly is driving sponsors from the organization. We reported this summer on sponsor Ranger Up as it no longer found it economically feasible to sponsor its Strikeforce fighters. Could this have been a harbinger for the impending demise of the organization?

The article reflects on the work of the agent as they broker the deals with sponsors for their fighters. This is something that is very important for fighters as we all recall the lack of sponsors was the reason Matt Mitrione famously relieved Malki Kawa of his duties.

With the Fox deal, we shall see if the sponsorship industry heats up. While we may see the downturn of certain companies, we could see major mainstream sponsors dipping its toes in sponsorship of fighters, perhaps in the “advertisement” stage of sponsorship. Hopefully, for all involved there could be a time where we see bigger commitments from sponsors.

Junior dos Santos fires agent

July 2, 2011

Junior dos Santos announced via twitter that he has left Ed Soares and has hired new representation. The change came as a surprise to Soares as dos Santos has been on a roll this year.

Soares talked about the separation via Tatame (h/t 5th Round):

“He wants to go a different way. If that’s how he feels, God bless him on his journey.”

“To tell you the truth, he hasn’t said why. I asked him, but he wasn’t much specific,” Soares added.” The only thing he told me was that the decision has been made. What am I supposed to say? If the guy wants to go another direction, who am I to tell him otherwise? I was his manager, not his father.”

Soares also represents many of the fighters under Team Black House including Lyoto Machida and Anderson Silva.

Payout Perspective:

An interesting move by dos Santos who is on a roll in the UFC. Not only is he scheduled to challenge for the UFC Heavyweight title this fall, but he was the featured coach on  The Ultimate Fighter. With this much momentum, a change in management seems unusual. It seems unlikely that he was neglected by Soares or that he was not receiving enough sponsorship opportunities. While Soares continues to have a venerable stable, losing dos Santos is a blow. It will be interesting to see how this management change affects his relationship with Team Blackhouse.

We have seen GSP and Frankie Edgar terminate their agent after much success. Here, dos Santos is doing the same. While nothing particular was mentioned for the reason for the change, it will be interesting to see what new management means for dos Santos.

Kawa leaves Authentic Sports Management

May 6, 2011

Only 3 months into the partnership, Malki Kawa, agent for Jon Jones and other UFC stars is leaving Florida-based Authentic Sports Management (ASM). From the press release, it appears that this will be an amicable breakup.

Via Authentic Sports Management:

This move was a mutual decision that both parties amicably agree is in the best interests of the athletes they represent.

“We agree that this decision allows us to provide more focus, deeper resources and only the absolute best management services for the athletes we represent,” said (Glenn) Robinson. “This agreement is mutual and on good terms with the best intentions for everyone.”

“As managers we both agree this is the right move,” said Kawa. “We understand and respect each other and at this point I will go in a different direction. Starting today, I will resume operation of First Round Management through which I will continue my representation of UFC Light Heavyweight Champion Jon Jones, Thiago Alves, Carlos Condit, Ben Henderson and other talent.”

Robinson will assume the role of president of Authentic Sports Management, which represents UFC athletes Rashad Evans, Kenny Florian, Anthony Johnson, Jorge Santiago as well as Cosmo Alexandre, Gesias “JZ” Calvacante and the superstar brothers Danillo and Yuri Villefort, and others.

Jen Wenk will maintain public relations representation of Authentic Sports Management and its entire roster of athletes including Rashad Evans through StarPR Las Vegas LLC, and effective today with a new agreement directly with Jon Jones, will continue as the public relations representative for the UFC light heavyweight champion of the world.

As you recall Wenk left the UFC PR department to start her own agency and conduct press for ASM athletes including Jon Jones.

Payout Perspective:

A very short marriage between Kawa and ASM. One would think that with the addition of Wenk, ASM would turn into a super agency for MMA fighters. It would be interesting to see how much planning the two parties did prior to entering into the partnership. Regardless, it seems clear that the parties wanted to make sure that everyone knew that the parting was mutual and amicable. Obviously, the cautious wording of the press release was to ensure their clients that everything was fine and that other agents would not poach them.

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