Silver Star President Talks ABG Deal
September 7, 2010
The fastest growing sport in the world just got put on an even faster track to mainstream awareness and one step closer to Madison Ave’s biggest dollars after one of the biggest brand licensing companies have jumped directly into the deep end of the mixed martial arts’ pool.
Authentic Brands Group LLC, a company with a giant global footprint in the worlds of apparel, consumer electronics and action sports has today announced the acquisition of TapouT, TapouT MPS, Silver Star Casting Company, Iron Star and Hitman Fight Gear to it’s portfolio, which also includes the Bob Marley Brands, among dozens of others.
In today’s press release, Authentic Brands Group’s Chairman & CEO Jamie Salter said, “This sport is still in its infancy. We strategically chose these acquisitions as our first big move because we’re getting into the right business at the right time. We’re looking forward to working with the best brands and the best athletes in the world as we transition these two companies into global lifestyle brands with our retail and licensing partners.”
In his first interview since the announcement, Silver Star president and founder Luke Burrett tells me the deal took about nine months to close, and it’s going to be mean big things for MMA fans.
“Authentic Brands Group is a brand development and licensing company. In conjunction with Leonard Green & Partners, our mandate is to acquire, manage and build long-term value in prominent consumer brands,” says Burrett, who will maintain his title for the Silver Star and Iron Star brands.
He said ABG’s overall strategy for the brands is to become a full licensing model.
“The beauty of a full licensing model from the consumer standpoint is that the products get better – at least it will with us because our internal mandate is to work with the best in class licensees,” said Burrett. “Its a simple formula really, the best brands work with the best licensees and best retailers. Plus, we have rigorous rules and regulations for our licensees – we literally approve every single product, ad, you name it. Because of this strategy, each partner gets to do what they do best, and we can focus on what we do best – and that’s marketing and building a brand.
That means TapouT’s Punkass and Skyskrape, along with Luke’s wife, Charis Burrett, will continue to be mainstays on the MMA scene, although today’s press release makes no mention of TapouT chairman Marc Kreinert.
Burrett says the acquisition of his company has always been part of his and wife Charis’ strategy.
“In business, every company reaches a point where they need to make the best decision for the company,” he said. “Charis and I have put many years into Silver Star and still have a lot of passion for the brand! ABG is the right partner and we look forward to a great future. This acquisition will strengthen every facet of Silver Star, not just MMA, so we look to our partnership with ABG to take the company to the next level in all of areas,” he said.
Silver Star sponsors UFC Middleweight champ Anderson Silva and fan favorite Clay Guida, and has had deals in place at one time or another with the likes of Georges St. Pierre and Jon Bones Jones.
The buzz about the ABG acquisitions, which may include more brands in the near future (think Sinister), was loud at last month’s UFC Fan Expo, where guys like Burrett, Skrape and Punkass were noticeably more relaxed than usual, with representatives from ABG doing most of the heavy lifting this time around.
“Since we are now going into a licensing model, I will have more time to work with our athletes and the marketing direction of the brand,” he said.
Toronto Company buys TapouT, Silver Star and Hitman
September 6, 2010
MMA Weekly reports that TapouT, Silver Star Casting Co. and Hitman Fight Gear have been sold to businessman Jamie Salter.
The MMA clothing brands will be merged under Salter’s Toronto-based Authentic Brands Group, LLC.
From Bloomberg:
Salter’s Toronto-based Authentic Brands Group LLC is betting the three labels — TapouT, Silver Star Casting Co. and Hitman Fight Gear — are ripe for expansion as mixed martial arts tightens its grip on the mainstream. J.C. Penney Co., Kohl’s Corp. and Macy’s Inc. already sell some of the gear, and the new owners and founders are looking to add sales both at home and overseas.
“These are some of the most exciting brands I’ve seen in years,” Salter said in a telephone interview. “The popularity of mixed martial arts and the UFC is soaring around the world. The last time I saw a sport with this much potential was 20 years ago with snowboarding.”
Salter wouldn’t say how much his firm paid for the brands.
Payout Perspective:
This purchase shakes up the MMA merchandise market as this merges TapouT with two of its competitors. According to the Bloomberg article, TapouT President Dan “Punkass” Caldwell and Tim “SkySkrape” Katz will be joined by Silver Star’s Luke Burrett.
The acquisition shows the growth of the MMA market and this marks the further expansion of the brands into mainstream awareness. What will be interesting in the coming days will be the organizational leadership of the new company. What changes will be made to the brands? Will Caldwell and Katz be able to work with Burrett and vice versa? What affect will the merged companies have on the identity of the individual brands? We will have more on this later this week.
Fedor Deposed and an Affliction attorney withdraws from M1/Affliction case
August 24, 2010
Last week we gave you an update on the case involving M-1 and Fedor Emelianenko suing Affliction for breach of contract due to Affliction abruptly canceling its third PPV.
According to Marc Hines, the attorney for the plaintiffs, Fedor and Fedor’s manager, Vadim Finkelstein were deposed two weeks ago in Southern California. Fedor’s deposition took one day and he utilized a court interpreter to respond to questions. “I thought our guys came across really well. We are really pleased with their testimony,” said Hines of his clients.
Hines stated that Todd Beard, the former co-owner of Affliction, will be deposed this week.
Also, Judd Burstein, the high profile New York attorney that served as co-counsel for Affliction has filed a motion to withdraw as its counsel. Burstein had represented Affliction for a little over a month as on July 20th the court granted Burstein’s application to represent Affliction. According to court filings, Affliction determined it “unnecessary to employ two sets of counsel in this matter.” A motion on this issue will be heard on November 1st. Hines indicated that Fedor and M-1 would not oppose Burstein’s motion for withdrawal. The law firm of Silverstein & Huston remains as attorneys of record for Affliction.
Tapout and Fathom Co-Promoting for UFC 118
August 23, 2010
Tapout Clothing and Fathom Events will partner to host the new UFC 4-Pack promotion at UFC 118. Purchasers of four tickets to UFC 118 at any Fathom Events-sponsored showing in the U.S. will be eligible to receive a free Tapout t-shirt.
Payout Perspective:
Co-promotions are probably under-utilized in sports today, but I tend to think we’re going to see an increase in their number over the next few years as companies look to maximize the impact of activation while also minimizing cost and risk. This particular promotion happens to work because Tapout is the presenting sponsor of UFC 118 and Fathom decided the event was big enough to show and promote in theaters.
MMAPayout.com has talked about the value of the Fathom Events theater distribution deal in the past. Tapout now has the opportunity to leverage the same exposure vehicle to not only further tie its brand to the UFC, but also increase general awareness and interest of the brand on its own.
Update on Fedor/Affliction Lawsuit
August 18, 2010
It has been a little over a year since Affliction had to cancel its third PPV at the last minute. Fedor Emilianenko, the company’s main attraction filed suit as a result of Affliction’s sudden demise.
In October 2009, Fedor Emilianenko and M-1 filed suit against Affliction for breach of contract in Los Angeles. Fedor and M-1 Global, Fedor’s promotional group, seek damages as a result of Affliction’s cancellation of its third PPV. Fedor’s contract guaranteed three fights. The lawsuit claims that Affliction did not make reasonable attempts to find a suitable replacement for Fedor’s opponent, Josh Barnett. Barnett was taken off the card as he was denied a license to fight due to a failed drug test.
The following are developments in the case:
- In February, Affliction’s original attorney, Michael Bassiri, was replaced by Judd Burstein of New York. Steven Silverstein of Orange, California is Affliction’s local counsel. According to Burstein’s web site, he currently represents Oscar de la Hoya and has represented boxer Lennox Lewis, Don King and Donald Trump.
- On July 15th the Fedor/M-1 legal team filed a motion to depose Affliction co-owner’s Tom Atencio and Todd Beard. Legal filings between the opposing sides show a failure to agree on dates to schedule the depositions.
- On July 28th, on a motion filed by the Fedor/M-1 legal team, the court moved the trial date from November 16, 2010 to June 7, 2011.
Payout Perspective:
Based upon the recent court filings, the lawsuit aims to be a tough battle inside and outside the courthouse. The depositions of Atencio and Beard should be interesting, if not contentious. The hiring of a New York attorney that has handled high profile figures reveals a possible shift in litigation strategy for Affliction. It will be interesting to see the amount of information that will be obtained through the discovery process. Hopefully, the information may shed light on the unique contractual relationship between M-1 and Affliction.
Tapout Generated $200 Million in Revenues Last Year
August 18, 2010
Michael Lev-Ram of CNN Money writes that Tapout earned $200 million in annual revenues last year, which is 16 times greater than the company’s $12 million in revenue from 2006.
Payout Perspective:
I imagine some people will scoff at the $200 million annual revenue claim, but the figure seems probable (or at the very least in the ballpark) when you take into consideration the growth of the sport over the last few years and how Tapout has set about expanding its business.
These guys aren’t just selling t-shirts out of the trunk of their cars anymore. Sure, the UFC has provided a platform to generate awareness for the brand and promote its products. But it’s been the diversification of its product lines and the cultivation of nationwide distribution channels that’s really made the difference for Tapout.
MMA is more than a sport – it’s a lifestyle. Tapout has played a major role in fostering that lifestyle. Making its products available to all those wishing to embrace that lifestyle has proven to be the key to its success.
Kudos to Lewis, Caldwell, Katz and Kreiner for their tremendous vision and hard work. May Charles Lewis also rest in peace.
UFC Store Promoting Silver Star Apparel
August 12, 2010
The UFC Store is now sending out e-mail blasts to promote Silver Star walk-out t-shirts from UFC 117.
Payout Perspective:
This is an intriguing move for the UFC. Zuffa has traditionally been loathe to promote any brand that isn’t its own, a partner, or one in which it has a financial stake. Yet, Silver Star does not fit the above criteria. This leads me to believe a partnership may be in the works. We’ve also seen the Silver Star logo appear on the canvas lately, which further suggests some sort of significant partnership – beyond an ad buy – is happening.
Clinch Gear Joins Strikeforce, Inks Deal with Collective Licensing International
August 9, 2010
Collective Licensing International (CLI) has quietly inked a deal with Dan Henderson’s MMA apparel and gear company, Clinch Gear. If you recall, CLI also inked a licensing deal with Strikeforce just a few months before, which was announce around the Nashville CBS event which took place on April 17. Here is an excerpt from the press release:
Collective Licensing International (CLI) announced their brand partnership and master license agreement with world championship Mixed Martial Arts (MMA) promotion STRIKEFORCE. The long-term brand partnership agreement provides CLI the rights to license and produce all facets of STRIKEFORCE brand merchandise including, but not limited to, footwear, apparel, accessories and equipment.
CLI plans to elevate the STRIKEFORCE brand through its years of successful action sports and performance athletic brand expertise, innovative marketing initiatives, and extensive retail partnerships. CLI will bridge the gap between core MMA athletes and worldwide consumers for the first time by bringing the STRIKEFORCE-specific product line further into the youth consumer market with an entirely new product offering. The collaboration with CLI will build the STRIKEFORCE organization into a complete lifestyle and culture brand, securing a commanding role in the fastest growing sport in the world.
In a similar press release announcing a deal between Above The Rim and CLI, Clinch Gear was shown as one of their Brand management/licensing acquisitions:
About Collective Licensing International, LLC Collective Licensing International, a subsidiary of Collective Brands, Inc. (NYSE: PSS), was formed in January 2004 and is the owner and/or license operator of Airwalk(R), Above The Rim(R), Vision Street Wear(R), Clinch Gear(TM), STRIKEFORCE(TM), Sims(R), Lamar(R) and LTD(R), World Snowboarding Championships(TM), genetic(R), Dukes(TM), Rage(R), Ultra-Wheels(R), and Hind(R). Collective Licensing International is based in Englewood, Colorado. www.collectiveintl.com
As to why Collective Licensing International appears to be focusing more on MMA recently, IndustryWatch gives us a great recap on the strategic move:
Consistent with strategic focus on youth sports and lifestyle, CLI recently entered mixed martial art space, fastest growing sport in country. Over 28,000 martial art studios offer training to more than 18m Americans, most of whom purchase equipment and supply. Mixed martial arts viewership in millions. Event attendance is breaking records. CLI signed new master license agreement with leading mixed marital arts promotion co., STRIKEFORCE and acquired Clinch Gear, premier performance apparel equipment brands led by mixed martial arts legend, Dan Henderson. Sees mixed martial arts as growth category for CLI.
Video of the new and improved Clinch Gear office facilities:
Clinch Gear New Promotional video featuring Strikeforce fighters: Dan Henderson, Fedor Emelianenko, Mike Kyle, Bobby Voelker, Cung Le, & Sarah Kaufman plus Bellator fighters: Joe Warren & Bryan Baker.
MMAPayout Perspective:
One of the benefits and main selling points which attributed to Dan Henderso’s exodus from the UFC was having the option to sign with Strikeforce, which has TV partners CBS/Showtime and video game giant EA Sports to use as channels to promote his apparel and equipment brand, Clinch Gear, outside of the UFC. Since Henderson’s involvement with CBS and Strikeforce, his apparel line has played a big role in Strikeforce and CBS/Showtime broadcasts, sponsoring the “Strikeforce: Fedor vs Werdum” event by having their brand on the mat and signing top MMA HW Fedor to walk into the cage in a customized Clinch Gear walkout-tee, after a last minute deal fell through between M-1 and Tapout. Beyond sponsoring key fighters like Fedor Emelianenko and other Team Quest fighters in Strikeforce, Clinch Gear has also expanded their sponsoring efforts by signing fighters in multiple promotions all over the world such as Bellator and DREAM. The flexibility that Clinch Gear now has to expand and take a bigger role within the MMA landscape outside of the UFC seems to be paying off, but was it the correct decision in the long run?
Does having more visibility within the MMA casual fan base (UFC) but paying Zuffa a sponsorship fee and working to meet their eligible sponsor guidelines or does having more flexibility to expand your business and take a bigger role within the non-Zuffa MMA landscape, which include their partners (Strikeforce, Showtime/CBS, EA Sports) payoff in the long run? Zuffa appears to be heading towards banning sponsors from participating with other MMA promotions and/or fighters outside of Zuffa who they deem are competitors. The described situation poses a dilemma and strategic dichotomy for sponsors within the MMA industry, a now common conflict which has reached several boiling points within the past few years (RVCA, Affliction, Tapout, Clinch Gear, Booya, MMA Authentics, etc). Some brands like Affliction have taken their losses and were able to cut a deal to get back into the UFC, Tapout and RVCA were able to drop their sponsorship deals with Fedor to stay in the UFC’s good graces, and others like Booya, MMA Authentics, and Clinch Gear have been permanently banned from the promotion.
K-Swiss Purchases FORM Athletics
July 30, 2010
Yesterday, it was officially announced that K-Swiss has purchased FORM Athletics from founder and CEO, Mark Miller.
California Sports Company K-Swiss (Nasdaq: KSWS) announced today the acquisition of Laguna Beach-based FORM Athletics. Terms of the deal were not disclosed.
FORM Athletics will operate as a division of K-Swiss led by Mark Miller, FORM’s incumbent founder and CEO. Under the agreement, Miller will become President of FORM Athletics, and has also been appointed President of K-Swiss Orange County (KSOC), where he will establish and lead a new division of the brand focused on the youth consumer. A force in the action sports industry, Mark Miller has built businesses for iconic brands for nearly three decades, launching M3 Snowboards in 1996, and more recently, playing a key role in the growth of DC Shoes, as SVP and General Manager in the Americas Region.
“Mark has incredible experience leading some of the most prominent action sports companies in history, and we are confident that he will create a progressive and successful program for K-Swiss,” said Executive Vice President of K-Swiss, David Nichols. “FORM plays well as a growth opportunity for our portfolio as Mixed Martial Arts is one of the fastest growing, and most relevant new markets in sports today. Viewership and participation in Mixed Martial Arts events is explosive, as is the market for Mixed Martial Arts consumer brands.”
Miller launched FORM Athletics in early 2010 in conjunction with MMA/WEC athlete and former Featherweight Champion Urijah Faber. The brand has quickly established itself as a successful and progressive Mixed Martial Arts (MMA) and lifestyle brand with a distinct surf-and-skate inspired aesthetic. Since its January debut, FORM has formed a global fan following, adding powerhouse athletes including Mark Munoz, Joseph Benavidez, and Jon “Bones” Jones to its roster.
Payout Perspective:
Just a few weeks ago, Billabong acquired RVCA and some people were questioning whether the company would be able to continue it’s commitment to the sport of MMA. Those concerns seem to be unfounded as Billabong is intent on maintaining the core essence of RVCA and its “artist network”.
I had the same concern when I first heard rumors that K-Swiss was looking to purchase FORM. Fortunately, the management team at K-Swiss seems to be saying all the right things about FORM’s continued participation in MMA. I am also intrigued by the possibility of K-Swiss using FORM as an entry point into the sport for the larger K-Swiss brand.
There’s a strong target market fit between K-Swiss and MMA. I also tend to think the brand aligns pretty well with the sport from an image perspecctive; both have that new generation swagger going for them. FORM affords K-Swiss the opportunity to dip its toes in the industry and learn the ins and outs before jumping in with its own, more established brand.
MMA Sponsor News
July 29, 2010
Nutritional supplement company MusclePharm has announced the signing of an exclusive distribution deal with PSI Distribution in Australia and New Zealand worth an estimated $2 million.
“Securing an exclusive partnership with PSI in the Australian market is a strategic move in taking advantage of the exposure the UFC partnership has created for MusclePharm,” MusclePharm Executive Vice President Leonard Armenta said. “We hope to leverage the popularity of the sport, expanding our distribution networks, resulting in increased brand awareness and sales. The UFC audience shows the passionate and loyal qualities that we are targeting for our products.”
Australia is home to the second-fastest sellout in UFC history, as more than 16,000 tickets were sold on the first day for UFC 110 in February and is the third largest pay per view country for UFC events. It quickly has made Australia an annual destination for UFC events and that surge in popularity has helped grow the MusclePharm brand, which has aligned itself closely with the UFC and the sport of MMA.
Suffer MMA, the apparel company that created Frank Mir’s UFC 111 walk-out t-shirt, has finalized its brand launch plans for August 7th – the same day as UFC 117.
The launch will take place at 3 p.m. in Tito Ortiz’s Punishment MMA Store and Frank Mir will be signing autographs.
The launch will be followed up with Frank Mir and SUFFER hosting a UFC 117 party starting at 6 p.m. in the IOWA THEATER & PORCH DOG’S located within Hooters.
MMAPayout.com has made a long overdue update to its Sponsor Blue Book.
Payout Perspective:
It’s interesting that the MusclePharm press release highlights its partnership with the UFC when MusclePharm’s deal is actually with the WEC. I tend to think the VP is simply using UFC as a synonym for MMA, but it’s an overstatement nonetheless.
[Pardon this brief tangent, but I'm intrigued by the UFC/MMA dichotomy. The sport is probably better known as UFC, which puts it in the same position as other popular brands that have managed to name their own categories (Kleenex or WD-40 come to mind). Sometimes there's a risk that the ubiquitous use of a brand name can lead to the loss of its trademark - like Aspirin or Kerosene, for example - but so long as the UFC continues to protect against the broader uses of its intellectual property, it should be fine.]
I’ve also begun to wonder what’s happening in the UFC’s supplement category. BSN currently holds the rights as official supplement provider, but seemingly does not own exclusivity: competitors like MP, Nutrabolics, Bodybuilder.com, and more, all see their brands enter the Octagon. This differs greatly from the approach in other categories like beer or energy drinks – there’s no way we’d see Coors Light or Rockstar in the Octagon – although it’s not dissimilar from the apparel category which Tapout owns.
If I’m correct, the BSN-UFC deal has just under a year left. I wouldn’t be surprised if, at the end of the deal, MusclePharm made a large bid for the UFC’s rights and also paid for exclusivity. MusclePharm has made a point of leveraging its association with MMA to build its own brand; I can’t say the same for BSN.
Unlike Tapout in the apparel category, BSN simply hasn’t done a whole lot with its sponsorship benefits: some activation that was paid for as part of the deal (PPV “Finish First” segments and UFC.com ads), but nothing on its own other than the periodic ad in Men’s Health or like magazines. We haven’t seen much, if any, unique activation such as point of sale material, fan contests, digital content, commercials, etc.
What’s the point of paying in the millions for the rights fee, then?
