Jones’s former sponsor, Form Athletics, went under, leaving Jones available to any sponsor.  While there was speculation that Nike may be a sponsor (and still may in the future), Jones will sport UFC-branded gear which is already for sale on the UFC.com web site.

via FighterXFashion

Lorenzo Fertitta spoke to  USA Today (via MMA Junkie):

To give you a little bit of background, I was going through the process of renegotiating with Jon and his management team on his fight contract. One of the things they brought up was that Jon was at a point where he didn’t necessarily want to sign contracts with some of these smaller, what I’ll call, T-shirt companies that you historically see in UFC, whether it be Tapout or MMA Elite or any of these other guys.

His aspirations (were) that he wanted to be signed by a Nike or an Adidas or an Under Armour, somebody like that. The reality is, those opportunities don’t present themselves to Jon right now, and that’s why I suggested, “Hey look, we’ve got this performance line of gear. Let us send it to you. You can test it. You can try it out. If you like it, then you can wear it in your next couple of fights.”

Fertitta added that the deal with Jones is non-exclusive so he’d be able to sign with another company if the opportunity presented itself.

Payout Perspective:

This is an interesting development for the UFC as no fighter this high profile has worn UFC profile gear.  In recent memory, Gilbert Yvel (in his last UFC fight before being let go) and Tiequan Zhang wore UFC apparel in their fights.  The article indicates Urijah Faber, Clay Guida and Phil Davis among others that have worn UFC gear but not necessarily during fights.

From another perspective, what becomes of the UFC sponsorship fee?  It would seem that the UFC sponsored clothing deals would negate any gains from the fees.  Is the UFC inching out sponsors to own the clothing business? Or, will a Nike or Under Armour partner with the UFC to become an official sponsor?  Thus, we may see something like the NFL or NBA with an official clothing sponsor.  Or, does this seem like a move to the WWE merchandise model–will we see no other fighter sponsors aside from the UFC?  It could mean that all sponsorship opportunities would be filtered through the UFC.

As for the Jones deal, was it smart for him to take the deal with the UFC rather than with another apparel company/sponsor?  It’s likely that Jones may have left money on the table to perhaps appease the UFC.  While his aspirations are Nike or Adidas, it wasn’t in the cards this time around.  But, he may have made more money with a “one-off” deal with other sponsors.

As an aside, the media gets another “uneducated” shout out as the UFC tries to clarify for us that despite only one of the two fighters is represented by the UFC in the main event, it does not show favoritism to the UFC sponsored fighter.  This is in response to those claiming that the UFC is favoring Jones in the fight due to this new deal.

Via press release:

TapouT’s 2012 ‘#MYFIGHTMATTERS’ campaign has been trending recently with supporters Tweeting why their unique struggles are important. In the case of Jim Miller, this notion hits particularly close to home. “My 2 year old nephew, Daniel, suffers from recessive polycystic kidney disease (PKD). I fight everyday to raise money and be there for Daniel so that he has the care and support that he needs. That’s why my fight matters.”

For his May battle against Nate Diaz, TapouT is creating a limited edition ‘MY FIGHT MATTERS’ shirt and will donate a percentage of the proceeds to the Daniel James Miller Foundation. The shirt will be sold exclusively on TapouT.com.

In the video clip below, Miller discusses the foundation set up for his nephew:

Payout Perspective:

You may recall Miller recently signed a deal with Bass Pro Shops.  The TapouT sponsorship is another good deal for both fighter and sponsor.  Not only is it another sponsorship for Miller, it also is tailored to bring awareness to a cause close to Miller.  For TapouT, it is able to tie in its current #MyFightMatters campaign while assisting a charitable cause.

Earlier this month, the lawsuit, filed in 2011, was leaked to the MMA blogosphere.  The lawsuit, filed by Daniel Diaz, is a salacious look at the purported inner dealings behind the TapouT brand and its eventual purchase by Authentic Brands Group (ABG)

The Lawsuit

According to the lawsuit, filed on March 29, 2011, Daniel Diaz, founder of MMA clothing brand Hitman Fight Gear is suing TapouT, ABG and other related entities as a result of claimed promises and a business deal which did not go Diaz’s way.  Diaz is also suing as a member of Fight Industries, LLC (F1) (known as a derivative lawsuit where a shareholder can bring suit on behalf of the company).

Diaz’s lawsuit alleges 12 causes of action (including 4 on behalf of F1) which includes: Breach of Fiduciary Duty, Conversion, Aiding and Abetting Breaches of Fiduciary Duty for Fiduciary Gain, Fraudulent Conveyance, Breach of Employment Contract – Wrongful Termination, Unpaid Wages, Unfair Business Practices for Personal Gain and Fraud in the Inducement.

The Alleged Facts

According to the lawsuit, Diaz and his brother established “Hitman Fight Gear” in 2001. In addition, Diaz did freelance design for other brands including TapouT.  In 2005, Diaz entered into a contract with Russell Lin on behalf of a brand named Roxwell.  Diaz would receive a 10% commission “on anything Roxwell made for TapouT” according to the lawsuit.  Diaz’s lawsuit alleges that his designs under Roxwell for TapouT were a success and his income was “steadily increasing.”

The lawsuit indicates that Marc Kreiner’s role with TapouT affected Diaz’s commissions under the Roxwell contract.  According to Diaz, Kreiner attempted to undercut the Roxwell contract by attempting to lower, by 10% the cost of goods on the TapouT-Roxwell contract.

According to the complaint in 2007, Punkass and Kreiner met with Diaz regarding “Hitman Fight Gear” in an attempt to purchase the company.  A limited liability corporation, F1, would be set up to purchase Hitman on behalf of TapouT.  Diaz agreed to a sale of his company in exchange for 1,125,000 Class B shares of F1 and an employment contract with the company.  In addition, Diaz would give up his contract with Roxwell. Diaz claims that he was led to believe that the Hitman brand would be given the backing to become as big as the TapouT brand.

However, Diaz claims that the F1 company was used for the personal benefit of Kreiner.  One of the allegations claimed in the lawsuit was that Kreiner was “accepting (indeed, demanding) bribes from vendors of both TapouT and F1.”  (page 9 of the lawsuit) The lawsuit alleges a “kickback” scheme which vendors would receive as high as “one dollar per t-shirt which – over the life of the contract – might pay the vendor hundreds of thousands of dollars as a “kickback” to the vendor for providing Kreiner with demanded gifts.” (page 9-10 of the lawsuit).

In addition to this claimed scheme, Diaz alleges the misappropriation of TapouT and F1 funds for Kreiner’s personal use.

Diaz claims that he was not reimbursed for business expenses, which were included in his employment contract, due to the fact that F1 purportedly lacked the money to pay him.

TapouT-ABG transaction

The lawsuit claims that after TapouT and F1 were depleted, the companies were purchased by ABG for the following:

1) the payment of some of the debt Kreiner and Caldwell managed to accumulate through their alleged scheme of skimming cash and other assets out of the company;
2) future cash payments to Kreiner and Caldwell, only, the amounts of which, were to be withheld from Kreiner and Caldwell pending the resolution of remaining creditor claims against those assets

The purported transaction would leave the companies with little or no assets to pay its creditors.

Diaz claims that ABG discovered the conduct claimed by Diaz when ABG conducted its “due diligence” prior to purchasing TapouT and F1.  Diaz claims that ABG used this information against TapouT and F1 (and to Diaz’s detriment due to his interest in F1) as leverage in negotiations by driving down the purchase price.  In addition, Diaz states that ABG attempted to buy his “silence” through an employment contract with the new ABG TapouT entity. When Diaz refused, he believed that ABG went around Diaz.  This led to, as Diaz alleges in the lawsuit, the diminution in value of F1 rendering his shares in the company worthless.

The Underground post

Earlier this month TapouT and ABG went into court seeking the return of stolen documents and disqualifying Diaz’s attorneys. The reason for this was due to an internet posting on MMA.tv (also known to most as The Underground) in which an article was posted which detailed the lawsuit.  A link to the article has been taken down. This was about the same time that details of the original lawsuit hit the twittershpere.  The internet post was discovered by an attorney for TapouT/ABG and a request to cease and desist was made to Diaz’s attorneys.

Prior to the posting, the parties agreed to a protective order during the discovery process which essentially means that the documents produced to each side would remain confidential.  Among the documents produced included information related to the purchase of TapouT.  Lawyers for TapouT claim that Diaz published information that were deemed confidential. In addition, TapouT lawyers state that the comments section after the article included information provided by Diaz which only would have been known by those privy to the documents under the protective order.

Some of the information has been released by others via twitter and/or other web sites.  Essentially, the inflammatory information Diaz provides relates to the claimed indebtedness of TapouT prior to its sale to ABG.  Also, some of the comments include information already identified in the Complaint related to the claims of a “kickback” scheme.

Despite the post and comments section, the court decided against immediate punishment for Diaz.  The Minute Order provided by the court stated the order sought by TapouT was denied.  The order did not include an explanation.

Payout Perspective:

The lawsuit appears to be heating up and there is a trial date set for this September.  The lawsuit is obviously personal for Diaz and the posting on The Underground reflects this.  The allegations against TapouT and ABG are serious and there may be more coming out of this lawsuit which may reveal a lot about one of the biggest brands in MMA.

The article which reports at a regional MMA card in Atlantic City focuses on youth interest in mixed martial arts. The article refers to the movie “Fight Club” which starred Brad Pitt and Ed Norton as the inspiration for many fans of MMA today. Not sure if this is actually true of most young MMA fans as that movie was filmed in 1999.  The mainstream popularity has only occurred in the past few years.  The article later devolves with comparisons to the XFL and “The Godfather.”

But, it also identifies, that in general, most people 35 years of age and older are not fans of the sport. In fact, the NY Times states that horse racing and figure skating are more popular than MMA in this segment.

Payout Perspective:

Getting past some of the minutiae in the article, one of the interesting takeaways coming from it is looking at how young fans get interested in the sport. TapouT and Cage Hero are  just a couple brands that have marketed MMA toward kids.  Last October, Cage Hero rebranded itself with an eye toward kids.  Having just attended a Jiu Jitsu tournament today and seeing so many kids under 10 in the sport one can see that grappling, and to a greater degree, MMA is a growing sport.   With MMA taking off, it will be interesting to see if the UFC begins to reach out, with more targeted campaigns, to the under 18 demographic.

Via press release:

Hayabusa has a long history of working with elite MMA fighters and has just partnered with Welterweight Champion Georges ‘Rush’ St-Pierre. St-Pierre is a consummate professional and an excellent role model for aspiring Mixed Martial Artists. Hayabusa feels St-Pierre compliments the brand very well, “Georges brings dignity, professionalism, honor and respect to the sport of MMA and we are excited to have him as the newest member of the Hayabusa team.”

Payout Perspective:

An interesting time to sign GSP but Hayabusa is a brand that looks for long term relationships.  The bigger question is what about GSP’s sponsorship deals with Under Armour and Affliction.  It appears that the Hayabusa deal may be for equipment only although GSP is pictured in a gi.  It looks like GSP’s management team is looking to capitalize on the GSP brand with MMA companies as opposed to pursuing mainstream brands. However, it could be that the mainstream brands are not looking at GSP right now considering he’s out of action until later this year.

Payout Perspective:

The commercial supports TapouT’s #MyFightMatters initiative in which the brand offers weekly prizes for those that follow TapouT on twitter and adds the hashtag. Its a good way for brand integration between platforms. The commercial includes its motorsports sponsorship and also includes scenes of baseball. I am not clear of the tie in so if anyone can chime in that would be great.

Via TapouT/UFC press release:

The multi-year deal gives TapouT exposure at UFC® events broadcast on Pay-Per-View, FX and FUEL TV via canvas logos, bumpers and billboards. In addition, TapouT will present the “Submission of the Night” feature on UFC broadcasts, as well as take part in on-site activation at UFC events globally. The agreement also includes an extensive digital media plan, with TapouT gaining visibility across multiple social media platforms and at UFC.com. Furthermore, TapouT obtains the rights to use “Official lifestyle apparel of UFC” on hangtags, point-of-sale and advertising.

TapouT, which is owned by New York-based ABG Tapout, LLC a division of Authentic Brands Group LLC, has a long history of sponsoring UFC athletes in the Octagon®.

“TapouT has been a big supporter of the sport and its athletes for a long time,” UFC President Dana White said. “We’re excited to have them as our official lifestyle apparel partner as we get ready for some of the biggest years in UFC history.”

“It’s been a dream of ours ever since we watched the first UFC to be an official partner of the best MMA organization in the world,” said TapouT co-founder, Dan “Punkass” Caldwell.

“The UFC is a world class professional sports organization with an aggressive global growth strategy in line with ours,” said James Salter, CEO of Authentic Brands Group. “This partnership with the UFC further reinforces TapouT’s commitment to supporting the sport, its athletes and beloved fans.”

“TapouT and the UFC have had a long standing relationship over the years, which would explain why many fans already consider us as the lifestyle brand of the UFC,” said James Ling, Authentic Brand Group’s SVP of Marketing and Global Brands in an email to MMAPayout.  “We made it official so there’s no doubt in the minds of retailers and consumers that TapouT is the leading lifestyle brand in the space.”

“TapouT and the UFC’s goals are in alignment as both continue to expand international reach and market penetration,” Ling added, “As the sport continues to grow and gets further ingrained into mainstream culture, we hope to see more fans wanting to represent the sport they love by supporting the brands that support the sport.”

Strikeforce imposed the sponsor fee starting with June’s Strikeforce event. The fee also applied to Strikeforce Challengers’ sponsors.  As a result, sponsors such as Ranger Up, CageHero and VXRSI are no longer sponsoring fighters in Strikeforce.

While some do not dispute the imposition of the fee, it severed relationships some fighters had with brands since they fought at small MMA promotions. For the sponsors unable to pay the $35,000 to $50,000 fee to have its logo on a fighters’ shorts, it meant revamping its marketing strategy.

Also this year, the state of sponsors in MMA was examined as many sponsors questioned the return on investment.

Recently, clothing brand Respect Your Universe (RYU) became the UFC’s newest sponsor and signed welterweight Jon Fitch. Despite RYU, some have been critical about the UFC’s lack of obtaining new sponsorships. It will be interesting to see how many new sponsors sign on in 2012. With the Fox deal, Zuffa should be able to take advantage of the momentum.

Via RYU press release:

“We are all very excited to have Jon join the RYU team as our first Mixed Martial Arts athlete,” commented John Wood, President of RYU.  ”Jon embodies the spirit and essence of respect, honor, strength and nature; the pillars of RYU. We look forward to working with Jon and his team in the continuing growth of RYU.”

Recently, RYU announced it was UFC’s newest sponsor as UFC 141 would be its first event with the brand’s presence. The sponsorship deals come in lieu of its first full line of clothing this spring, tagged “Built for Athletes, Suited for Style.”

Payout Perspective:

RYU follows in line of most UFC brands that also sponsor its fighters. We shall see how the RYU brand determines how it picks and chooses its fighters. Fitch is a calculated “get” as he could be a top welterweight depending on how he comes back from his shoulder injury. RYU stresses that it uses recycled and organic material in its clothing. It may fit in with Fitch’s lifestyle considering his vegan diet although that may be assuming too much.

RYU is a publicly traded company that is led by former Nike executives. The company is focusing its marketing efforts into the growing UFC market.

Via the Portland Business Journal:

…the RYU brand will be visible during and running up to the event (UFC 141), including logo displays, live announcements during bouts, TV promotions and placement on the UFC website.

The ads on UFC.com alone equal tens of millions of impressions, the company said. That’s before you tally the expected million-plus pay-per-view buys, a figure that grows exponentially figuring that as many as eight people are watching per buy.

RYU raised $5.3 million from investors this past summer in preparation for the release of its inaugural full clothing line coming out next spring. Its target is the MMA-inspired premium performance apparel market.

Payout Perspective:

With Nike-pedigreed executives managing this company, we will see if RYU can make an impression in the world of MMA. The sponsorship deal with the UFC should bring the company some notoriety and we will see how that equates to customers. The apparel market in MMA is competitive and there are many brands out there and we will see if the investment in sponsorship gives RYU an edge. Being a publicly traded company, we’ll be able to see how its doing financially as it goes.