Solution:  Transform Kimbo Slice from street-certified bad ass to a struggling, up-and-coming mixed martial artist, an underdog, and moreover, a good-natured family man.

UFC put together terrific television last night, as the organization turned what many were predicting to be a disaster (i.e., Kimbo’s presumed loss to Nelson) into, well, perhaps not quite gold, but something that’s likely to keep a strong level of viewer interest through the remainder of the season, even if Kimbo does not (as was hinted in the preview of next week’s episode) immediately receive a second chance in the tournament.

UFC took the exact opposite tack as that taken by EliteXC, which promoted Kimbo as an almost unbeatable freak (recall announcer Gus Johnson’s excitement at having seen the greatest “upset” in MMA history when Seth Petruzelli KO’d Kimbo). 

Last night’s Kimbo was likable and intelligent, and even turned introspective towards the camera discussing his need to defeat his “enemy,” his “enemy,” his “inner me.”  Truly great stuff.

I also give credit to UFC for taking a rather dull fight and promoting it beforehand as the most anticipated one in TUF history (just another example of a phenomenon recently discussed by colleague Kelsey Philpott).

Kimbo’s loss on the third episode presented a problem to UFC but things could have been worse.  I’m not certain what could have been done to save the Kimbo intrigue had he lost by bad KO or brutal ground and pound.  As far as losses go, it was fine; going the distance and losing on points was probably preferable, but Kimbo can still be brought back, and he’ll be viewed as a legitimate threat.

Regardless of whether he re-enters the tournament, Dana White has made it clear Kimbo will receive a second chance in the UFC, as he’ll be fighting at the TUF finale.  The smart money says that unless Kimbo is utterly humiliated, he’ll then receive a shot on ppv against a lower level heavy- or light-heavyweight.

You might have cheered him on in the past, but after last night, don’t you just want Kimbo to succeed at this game? 

Something’s changed, and I hand it to whoever was responsible for framing the story behind episode three.

Simply brilliant.

The genesis of the group complaint was the collective action by multiple agents in the industry to block the sale of fighter contracts by Showtime/CBS at auction in early November. Sources indicate to MMAPayout.com that a subset of that group of agents have banded together with their fighters and MMAFA in an attempt to expedite the the contractual status of the fighters still beholden to EliteXC.

While freedom from their contracts seems to be the overarching theme of the collective action, a by product of the suit could be to force a swift conclusion to the sale of ProElite. The company has been on the market with rumored interest from the UFC, Affliction, King of the Cage, and Strikeforce in attaining its assets. The crown jewels of the company are seen to be the fighter contracts and TV deals that are in place. A deal for the company’s assets has been thought to be in the works, but whatever parties involved in the deal have dithered away at the EliteXC fighter’s detriment. The action by MMAFA seems to force the hand of what ever negotiations are taking place.

Notable quote:

I don’t get paid what people think I get paid for fighting. Fighting is my career, it’s what I love to do, but I am taking offers and trying to expand because the more I expand myself, the more valuable I become to promoters. And sometimes, that’s the only weapon you have, so you don’t just have to say yes to whatever comes your way. The more valuable I make myself, the safer I am.

The fighter in question is looking to use California law and past precedent in George Foreman Associates LTD vs George Foreman and Oscar De La Hoya vs Top Rank Inc, both of which require going before CSAC to obtain its approval of the contract and Section 230 of CSAC regulations which requires contracts to be done using official CSAC forms as well as any blanket contracts (multi-bout agreements) necessitating Commission approval.

According to the document obtained by MMAPayout.com, said fighter is arguing that such approval was never sought or obtained from the commission, ProElite never had the contracts executed before the commission, and never filed them with the commission. The fighters lawyers argue that such failure leaves the contract void and unenforceable.

The document also argues that the suspension of the ProElite license activates a CSAC code that prohibits a fighter from having any dealings with any person or club that is currently under suspension, thereby voiding the contract.

An alternative theory presented in the document is that the contract is a personal services contract and under California law cannot be assigned without the consent of the parties thereto, with case law being put forth that supports this contention.

On the other side of the coin, some things indicate the agents for the fighters may have an uphill battle. ProElite in its filings (PELE.PK) was Sarbanes-Oxley compliant. There was full PUBLIC disclosure about its financial situation. It used its fighter contracts as leverage and pledged them as an asset. This is all in the public files.

The argument for this tack goes that ProElite isn’t/wasn’t a private company that made these contracts in bad faith. The agents knew or could have known that the organization is in financial peril. How do you have a two year contract with a company that says it has less then 6 months of capital? The time to challenge the contract may have been when the company made that 8k disclosure.

However the contracts are adjudicated, lawyers are one sure-fire winner as there will doubtless be many billable hours put in between now and next Monday.

MMAPayout.com contacted the California State Athletic Commission to clear up the rumors as to the status of ProElite’s license. Armando Garcia issued the following statement to MMAPayout.com:

Pro Elite/Elite XC’s and King of the Cage’s licenses are suspended. They were suspended yesterday, when after looking into the matter carefully the exact situation was determined. However, it is not due to any type of contracts.

We do not have any Commission approved contracts for them. Any contracts that they may have with athletes are most probably personal services contracts in whatever state they were signed in. These types of contracts are not under the jurisdiction of the Commission because they were not approved by and or signed with the Commission. In fact, the Commission does not know anything about the contracts people are talking about. I would assume that to have these types of contracts declared void the party (ies) would need to file a civil lawsuit in the appropriate court.

The primary reason that Pro Elite/Elite XC’s and King of the Cage’s licenses have been placed on suspension is because of their financial states and the fact that Pro Elite, the owner of King of the Cage, has suspended operations and their tangible and intangible assets are being auctioned on November 17.

Hypothetically, if the auction goes through and one or more entities purchase either or both of these companies they would have to go through the licensing process. In other words, whatever it is that is being auctioned is not their California licenses.

We have had a great business relationship with the present owners and operators of these companies and we pray that this association continues in the future no matter what name, entity, operator, etc. will then own it.

Regards,

CALIFORNIA STATE ATHLETIC COMMISSION
Armando Garcia, Executive Officer

“On October 31, 2008, Showtime gave the Issuer a notice pursuant to the Security Agreement, as amended, that it intends to sell all of the Issuer’s personal property, whether tangible or intangible, to the highest bidder at a public sale to be held on November 17, 2008. Showtime reserves its rights under the Security Agreement, as amended, and applicable law to adjourn or cancel the sale and thereafter dispose of such property in a public or private sale or in any other manner provided by applicable law.”

MMA on Tap had a listing of the public notice of Sale, including some assets:

Notice is hereby given that the Collateral (as defined below) will be sold by Showtime Networks Inc. (“Showtime”) at a public sale on November 17, 2008 at 10:30 a.m. (Pacific Standard Time) at the offices of Hughes Hubbard & Reed LLP, 350 South Grand Avenue, Los Angeles, California 90071. The term “Collateral” means all of ProElite, Inc.’s (“ProElite”), Real Sport, Inc.’s (“Real Sport”), ProElite.com’s (“ProElite.com”), EliteXC Live’s (“EliteXC”) and King of the Cage, Inc.’s (“KOTC”; each of ProElite, Real Sport, ProElite.com, EliteXC and KOTC, a “Debtor” and collectively, the “Debtors”) right, title and interest in, to and under, whether now owned or hereafter acquired by such Debtor, all present and after acquired personal property of such Debtor, whether tangible or intangible, wherever located and of whatever nature.

It should be interesting to see who enters and subsequently wins the bidding war for EliteXC’s assets. The UFC has made such moves in the past to take assets off of the market, with their Pride and WFA acquisitions, but EliteXC’s assets include two properties in Kimbo Slice and Gina Carano that the UFC has repeatedly stated they have no interest in. Also with the current economic climate, one would question the buying of assets that wouldn’t be fully integrated into the UFC.

Another possible suitor would be Mark Cuban. Cuban recently made a purchase of the IFL under similar circumstances. Cuban certainly has the wherewithal to make the purchase but the buying of assets on his part would seem to indicate a re-entrance into the promotional end of MMA, a move he has seemed hesitant to make since his initial HDNet Fights cards.

Strikeforce and Affliction will also be mentioned but might lack the size to make the deal feasible.

“I’m no closet genius,” said Shamrock.  “I learned through trial and error.  It took me 7-8 years to build my business and it was a good time for me because the sport was small then.  I was blessed in that way.”
But times have obviously changed.  “The days of gun slinging and hanging out in this business are gone,” he says. “The dollars are bigger and the sport of MMA keeps moving closer to the mainstream.  Everyone’s rushing to the sport because it’s very popular and cool, but your brand needs to be consistent.”

Shamrock business model in recent years includes 70% of revenue from fighting, 15-18% from licensing, and 12% from consulting.  The latter consists of fees Shamrock earns from promotions like Elite XC, and in the past, UFC, offering advice and support.  He takes cash and/or equity as payment, and sometimes will invest his own capital.

He believes in taking risks, but only calculated ones.  “I’ve taken some risks with my brand, but they were only risks where the payoff was way beyond the risk.”  Over time, he’s changed his approach.  “I’ve got a life and longevity plan,” he said.  “I want to be healthy and happy, but I have to be in really good shape and stay at the highest level.  Otherwise my brand will suffer and people will be kicking my ass.”  As a result, Shamrock has been much more deliberate about how he plans and promotes his fights.  “My plan is to fight for 10 more years, until I’m 45, but the risks get higher every year as I get older, so I work to raise the value of each fight each time,” by amping up the promotion and buildup, and commanding higher revenues.

At the same time, he continues to diversify his business outside the ring, landing some national, mainstream projects like “MMA for Dummies” with Wiley Publishing and one of the crown jewels of sports licensing deals, an MMA videogame by EA Sports that hits stores in 2010.

When he talks business, Shamrock peppers the conversation with phrases like “revenue targets” and “performance goals” which are more typical of an MBA than an MMA legend.  He credits “good mentors and partners” like his attorney Henry Holmes and Strikeforce co-CEO Scott Coker.   He has also worked hard to build a strong team.  “We train, develop and manage people from the MMA and business community.  I have good people.  Some are from the MMA community, some from other professions.”

Shamrock also believes personal integrity has been a strong contributor to his success.  “When you’re the type of business person that looks you in the eye, shakes hands and says, ‘You’ve got a deal,’ and you stick to it, you attract hungry, focused people.”

It’s a lack of integrity that he says contributed to the downfall of Elite XC, of which he was a “major shareholder.”  “You should treat people like athletes and artists,” he says, “they didn’t do either.”  The lesson from their failure, Shamrock said, is that experience, not capital, is the most important contributor to success in MMA.  “In a way they [Elite XC] were leaders because they lined up CBS and Showtime and no one had ever done that before.  But they burned through $60 million because no one modeled the business and industry.  It was inevitable.”  He also says the management team lacked any kind of focus, hiring people indiscriminately to work on various projects, none of which contributed to the bottom line.  “I can run out and hire 50 people, but I could also hire one person who knows what they’re doing.”

But can a viable competitor to UFC really emerge?  Shamrock thinks so, but “That person needs to be MMA 3.0.  He needs to understand the business, bring together disillusioned stars, bring them together and get ‘em functioning.”  In all likelihood, however, he believes a “joint venture” approach, ala Affliction and Elite XC, is more likely in the near term.

In the meantime, Shamrock will continue building “Shamrock, Inc.” regardless.  He offers some friendly advice to anyone entering the game.  “These days it doesn’t matter if you’re any good or not.  But you need to pick who you are and run with it.  If your radio call is at 5:30 in the morning, be there, because that’s what the pros do.”