As a passionate NFL fan who happens to also have unique insight into the number one mixed martial arts organization on the planet, I'd like this article serve as a formal warning to the National Football League...
The Fertittas owning the Oakland Raiders or having anything to do with that storied franchise, or any other NFL team with such a solid football history will forever taint your organization. To put it bluntly: the brothers Fertitta are bad news, period.
It is a wonder to me that the Fertitta brothers (now through Red Rock Resorts) can still legally hold and profit off a gaming license in the state of Nevada in light of their own HISTORY. Lorenzo and Frank Fertitta III are not now, and they never will be... real "team" players. Here are three reasons why:
1.) They are always paying themselves first in every business deal they design, and they will do whatever it takes to create vast wealth off of shady and ruthless business practices.
2.) They have a documented history of abusing the bankruptcy courts to benefit themselves off the backs of hundreds of innocent investors.
3.) The Fertitta ownership of the UFC is a prime example of why they would be the worst possible owners of an NFL team the league could even imagine. UFC fighters are often saddled with egregious contracts that are riddled with complicated performance clauses and other nuances that make it very difficult for them to maximize their earning potential.
These slick Vegas casino baron brothers might be making stadium plans after collecting a boatload of liquid assets through their IPO of Station Casinos, but they are far from suitable owners for a major sports franchise in the NFL.
In their case, NFL ought to stand for "No Frank and Lorenzo."
The Oakland Raiders would be a great fit in Las Vegas, don't get me wrong. I'd love to see that city with an official NFL team, and it would generate local and international interest. I lived in Las Vegas for about two years (thanks in part to the Fertittas and their lawyers), and the city needs something like a big NFL stadium to stimulate the local economy and bring a different demographic to the area to enjoy something other than gambling and showgirls.
The main problem here with the proposed move is the movers. There are plenty of other fair players and sports enthusiasts based in Las Vegas who would be better ambassadors for the sport of football. NFL officials, please beware of these evil-minded brothers who wield an iron fist over the sport of mixed martial arts as it is. Even if they divest themselves from their casinos and the UFC, bringing them onboard the big NFL ownership bus means bringing their whole ugly past with them. It sends a bad message to honest people everywhere...nice guys finish last and greed is great.
The prior business moves and absolute disregard for the people they built their fortunes off the backs of is proof enough of the Fertitta brothers being unfit for NFL ownership. If there is any way to prevent any sale of an NFL team to this brotherhood, NFL officials should take that course of action and seek other investors who are unrelated to the Fertittas and their ugly shadow cast by a history of family corruption and financial scheming. The Oakland Raiders may need a figurative Hail Mary to stay alive in the league, but involving the Fertittas in their franchise as financial backers is like inviting the devil himself to be part of the ownership group. The Oakland Raiders can choose from a multitude of "lesser evils" in Sin City to build the franchise on a new frontier.
As an NFL fan who appreciates the growth of the sport amidst so many challenges like the concussion situation and the criminal tendencies exhibited by so many players in the league, I look at Fertitta ownership of an NFL team as a stain on the sport it will never be able to erase. I consider Fertitta ownership of an NFL team to be a crime against the sport itself.
I sincerely hope the National Football League engages in a due dilligence investigation into the past business dealings of the Fertitta Brothers before they hand Lorenzo and Frank the keys to Raiders Kingdom. Their civil litigation history alone is enough to raise plenty of concerns as to their ability to fairly manage such an undertaking without resorting to their familiar MO of scheming and scamming to line their own pockets. The NFL is rife with enough scandal without the shade these two brothers bring to the collective bargaining table.
Frank and Lorenzo Fertitta were set to make out like bandits, raiding their cash cow corporation once again for a massive amount of funds with a single scheme. The "Red Rock Resorts" IPO was the talk of the town and Wall Street for a little while, but the brothers pulled back at the last second after feeling the shellshock of heavy market losses in late January.
Anyone who might be thinking about investing in this latest Fertitta financial scheme should also pull back.
This IPO debacle is par for the Fertitta course. If you know the real history of the Fertitta family, you know these folks are the type of people who ruthlessly screw over other people to make all their money. From the card tables to the boardroom, the Fertitta brothers have a knack for separating honest people from their savings and fortunes.
The only "offering" the public really gets in buying Red Rock Resorts stock is an offer to help the Fertitta brothers set themselves and their kids up with more voluminous, ridiculous, ludicrous wealth. And at the end of the day, the Fertittas will still run the whole Station Casinos show. And when the Fertittas run the show, history proves that they always pay themselves first.
According to BloodyElbow.com, the main beneficiaries of a Red Rock Resorts IPO would be two generations of the Fertitta family:
"...all net proceeds will go towards reorganizing the corporate structure, including an acquisition of Fertitta Entertainment LLC. It's expected that Frank and Lorenzo Fertitta will each take home $112.5 million while trusts for their six children will receive $53 million. Additional stock sales included in the IPO could net the brothers even more."
Instead of the Fertittas doing the right thing, they used fall guys to take care of themselves and stole Xyience with what the bankruptcy trustee called a "loan to own" scheme. The casino barons simply pumped a little money into their shady acquisition, sat on their stolen nest egg for a few years, and sold the whole operation off to a Texas company for way more than it was worth.
BUYER BEWARE
Wall Street regulators and speculators would also be naive to forget that Station Casinos went public before, only to find a way to allegedly underbid shareholders in reclaiming the brand as a private corporation a few years later. This is not to mention all the other small maneuvers and manipulations pulled off by these casino barons to line their own pockets and take care of their friends and family.
Dig just beneath the surface of the amusement park the Fertittas built over the bodies of their financial kills, and you will find enough skeletons to fill a cemetery. Rather than physical bodies that an "old school" mobster might leave, these new school gangsters leave broken hopes and dreams, other people paying their tabs and countless fighters on the UFC roster who are constantly and consistently underpaid and under-appreciated if they fail to "put on a show." Even banks end up feeling screwed over after agreeing to do business with these brothers and their associates.
The Fertittas and Station Casinos have a lengthy history of being involved in deals that allegedly favor them (and their friends and relatives) only to degrade and devalue their distant or direct partners at the same time. To call them duplicitous is too nice in this context, and to call them devious is also too much of a compliment. Yet, throughout the patterns of their business transactions, they seem to leave a ton of people on the other end feeling cheated, right down to the casino patrons who get comped by management just so they can lose their life savings trying to win back what's already lost. "The house always wins" is a concept that is well known and fabulously executed in the Fertitta family business acumen. Just take a gander at their litigation history:
Lawsuit over 2001 "sweetheart deal" (Station Casinos made $1.7 million on sale to former executive and family friend Blake Sartini): "Station Casinos failed to negotiate the sale of Southwest Gaming to [Blake] Sartini at arm's length, according to the suit. The company also failed to appoint a committee of independent directors to negotiate the deal or retain a financial valuation expert to determine whether the terms of the sale were fair to the company, the suit said. The board also failed to seek independent, third-party bidders for Southwest Gaming or otherwise shop around the company for the highest possible price, it said."
Back in 1998, investors accused Station Casinos principals of wasting company assets by paying a $54 million "breakup fee" to Crescent Real Estate Equities. Crescent, owned by billionaire Richard Rainwater, initially agreed to pay $1.7 billion to acquire the locals casino chain, but the deal went sour. The resulting fallout culminated with a federal lawsuit. Instead of getting roughly $18 per share in a buyout by Crescent, Station Casinos investors obviously felt shafted in having to foot the bill for another Fertitta family financial flop.
Station Casinos ended their first stint as a publicly traded company with a $5.77 billion buyout in 2007, which resulted in another slew of investor lawsuits. A few years, and around $6.5 billion in debt accumulation followed before the Fertittas put the chain through a very favorable bankruptcy process. As Donald Trump admitted to doing during his recent presidential run, the Fertittas "took advantage of the laws" in buying the bulk of the company's assets back on the other side of the bankruptcy (with the help of Deutsche Bank) for pennies on the dollar ($772 million).
The bankruptcy process victimized a long list of people (including a Texas Teachers' Pension Fund) who put money on the prospect of the Fertitta brothers building the brand into a bigger entity than their founding father Frank Junior could have ever imagined. Bondholders left in the cold by the massive bankruptcy filing sued, looking back at that 2007 leveraged buyout as the beginning of the end for the company. They filed their claims before the bankruptcy became imminent:
The Xyience bankruptcy suspiciously went down under "Fertitta Enterprises" ownership just before Station Casinos officially declared bankruptcy. It appeared like the Fertittas were testing the waters by casually steering a canoe down the bankruptcy river first, waving on the giant paddleboat to follow.
At some point it seems like this family figured out that making money off their various schemes required having really great lawyers on hand to fight inevitable lawsuits, get around business and financing laws, and avoid the loss of their gaming licenses. After all, associations with criminals or criminal enterprises are supposed to disqualify certain individuals from even being involved in gaming:
Nevada Revised Statutes NRS463.0129 state: “The continued growth and success of gaming is dependent upon public confidence and trust…that gaming is free from criminal and corruptive elements.”
It's hard to believe these brothers could ever be involved in gaming when you consider their involvement in the USA Capital scandal. The former President and COO of that company earned a 12-year prison sentence for fraud perpetrated there. Some of that fraudulent activity allowed the Fertittas to benefit directly through shady loan schemes providing millions in capital to Fertitta Enterprises. Fertitta Enterprises GM Bill Bullard was a gung-ho, pit-boss-type of mover and shaker for USA Capital before Joseph Milanowski's fraud brought the company crashing down.
According to the Las Vegas Review Journal: "The Fertitta family, founder of Station Casinos in Las Vegas, had $17 million invested in USA Capital and got it all back when one of their attorneys was on the oversight committee...The attorney then resigned from the committee." One scheme Bullard orchestrated prompted lawyers to draw up a diagram to explain it:
Bullard was even audacious enough to address company investors and tell them: "The longer this thing goes on (in bankruptcy court), the more the attorneys are going to get paid."
Deutsche Bank, one of the main partners in the current Station Casinos conglomerate, is also facing recent scrutiny for alleged illegal dealings. The bank agreed last year to pay more than $2 billion in penalties to US and British authorities after admitting to rigging global interest rates. Deutsche Bank is also the subject of two ongoing criminal investigations in the United States. The bank is also facing allegations of supporting the money laundering activities of Russian clients.
On top of all this, the Fertittas willfully supported the violation of federal gaming laws by allowing "Full Tilt Poker" to advertise in association with UFC events. These in-cage and on-screen plugs obviously sent more customers to a Web-site that was not only shut down for operating illegally in the United States, but it was also later determined to be a Ponzi Scheme. The Fertittas, who also pursued online gambling through legal channels in the wake of the poker site crackdown, obviously should have known Full Tilt was always operating outside of federal gambling laws. Ray Bitar, one of the founders of Full Tilt Poker, struck a deal on various charges in 2013 that included bank fraud, money laundering and illegal gambling. Station Casinos principals and a few of their associates launched "Ultimate Poker" the same year Bitar made that last deal.
The arrest of Bitar in 2011 also came at a time when the UFC was working on a deal to double down on their sponsorship arrangement with Full Tilt Poker. Reports in the wake of the Full Tilt bust additionally indicated that Station Casinos had their own plans to unite with Full Tilt in anticipation of favorable federal regulation regarding online gaming. Instead, Station Casinos tried and failed to do it themselves with Ultimate Poker. Even as the first and only operator in the niche for a short while, the profits made by Ultimate Poker were scarce, especially since only Nevada residents could legally use the site.
During the Xyience debacle, the Fertittas also had peculiar connections to people disgraced by a scandal at Global Cash Access. One of the GCA flunkies, Kirk Sanford, ended up being the co-CEO of Xyience during a time when the company's collapse was inevitable. I had a meeting with Sanford and the other co-CEO Adam Frank before UFC 78: Validation in Newark, New Jersey. The two executives authorized full payment for my trip from Cape Cod, Massachusetts to meet with them and talk about the future in New York City just before the event in November of 2007.
During that fateful sit-down, Sanford consistently maintained that the plan for Xyience was to go "scorched earth" on the investors. He also indicated this was the direction the Fertittas wanted to go with the situation. Throughout the holiday season that year, the supplement company that helped put the UFC on the map laid off multiple employees on the way to a particularly ugly bankruptcy, which was purposely orchestrated by the principals at Fertitta Enterprises.
THE STATION CASINOS AND UFC UNION FIGHT
The Culinary Union in Las Vegas managed to emerge in recent years as particularly sharp thorns in the side of the Fertittas, thanks in part to their wing of researchers and writers outlining the shady history and strange bedfellows associated with Station Casinos. The union also famously contacted performers scheduled to come to Red Rock Casinos and discouraged them from doing so, among many other public protests and stunts. Now, the union is even trying to shut down the latest Station Casinos IPO attempt.
Their tactics of relentless and expensive campaigns to degrade the opposition begs the question: why would you want to work--even under favorable union conditions--for such underhanded individuals and their manipulative, wheel-greasing friends? I imagine the answer is the same one given by Willie Sutton when someone asked him why he robbed banks: "Because that's where the money is." UFC President Dana White responded to union attacks once by claiming the Station Casinos union deal would represent a $10 million per-year benefit for the culinary union itself.
I even wrote an article myself at one point wondering aloud why the union would squawk so much about the rights of UFC fighters if they weren't doing anything to actually create a fighters' union. Though some recent anti-trust suits against the UFC are working their way through the courts, these are being brought by fighters on the roster. The Culinary attacks on the UFC came out of left field in the context of what they were trying to do with organizing Station Casinos. My article basically asked the union bosses to put up or shut up in a little more nuanced terms. Much to my surprise, the union did make a play to attract interest in the fighter union concept last year, but not much has been done since then to make the dream a reality beyond a Web-site with no recent updates:
The way the UFC brass treats some fighters and the poor pay rate prospects earn leaves too many competitors paying out of their own pockets to compete as professionals. Bills and expenses can bleed a fighter dry of any potential profits, and the lifelong negative effects of the injuries and stress of intense training and physical combat can be debilitating after retirement. The message sent by the UFC to many of their most hard-working young fighters is callous: working hard at your craft is worthless to your bosses if you can't entertain the fans when you step into the cage at an official UFC event. In the old school days of the Wild West, this mentality is the equivalent of the villain making his victim dance by shooting bullets at his feet. It was put on a show or die back then, and it's put on a show or forget about making a decent living now. DON'T BUY IT!
The Fertittas have become exceedingly talented when it comes to putting on a "show" of their own. They pretend to be honest, upstanding citizens in the public eye while behind the scenes they keep ruining lives as a means of lining their own pockets. The Red Rock Resorts IPO is yet another example of the Fertitta family making it look like they want to help other people make money when it's really their own bottom line they are ultimately and primarily concerned about.
As long as this family is involved as managing partners of this proposed RRR stock, they are free to execute the same scams and schemes they've used in the past to unjustly enrich themselves. My guess, based on years of investigation into Fertitta dealings, is that this family will make sure in the end that they will collect the highest dividends, even if the stock itself ends up being worth less than the paper it's printed on. That's how they roll, and the evidence and history doesn't lie.
Before you read this story, listen to Comedian Jim Gaffigan's take on legal documents for a good laugh:
Recently-filed class action cases brought
by former and current UFC fighters against Zuffa, LLC are generating
controversy and discussion from all corners of the MMA media. The first
of these California-based cases hit the docket just as press releases went out to announce the filing. There was also a full-blown press conference celebrating the start of this intriguing course of litigation against the parent company of the Ultimate Fighting Championship, the undisputed world leader of the sport of mixed martial arts.
At
first, Cung Le, Jon Fitch, and Nate Quarry (L-R above) were the three faces of the
legal action. Another filing naming plaintiffs Javier Vasquez and Dennis
Hallman hit the California docket Tuesday with language that is reportedly nearly identical to the other case. A third filing appeared on Christmas Eve, another lump of coal in Zuffa's stocking. This time it was Pablo Garza and Brian Vera as plaintiffs. Duplication of proceedings can be a nice way of forcing the other side to spend more money than usual defending the first salvo. If there is good reason for the cases to go on separately without quick consolidation, it will be three times the hearings the opposing lawyers need to attend, three times the paperwork, and three times the aggravation.
An initial statement from the UFC indicated that they had not even been served the
documents yet after the first round of stories emerged on the subject. Lawsuits traditionally begin with prompt service of
documents, which involves someone called a process server, or in some
cases a deputy sheriff or even a U.S. Marshall actually handing the
lawsuit documents to the company representative. This is serious legal
business, since you can't win if the opposition isn't even aware you're
suing them. Some defendants try to play games to refuse or avoid
service, but once they are served, the case is official. If the UFC
persists in saying they have not seen the documents, the plaintiffs can
also argue that service is already accomplished through publication,
which is sometimes a last resort.
Examining the crux of
the legal arguments in the initial filing, I can only conclude that the
case makes a ton of legal sense to me. I would even say it does not go
far enough. As a person who can say I've done legal battle with the
attorneys for Fertitta Enterprises (a holdings and investment company
owned by the same Fertitta family that owns the UFC), I'm also convinced
the UFC's parent company will attack this with a relentless army of
specialized attorneys. They won't be the ones who charge $500 an hour
that Gaffigan mentions above. Some of them will charge much more than
that for a phone call or a short consultation. The Fertitta-owned
Station Casinos chain paid some of their bankruptcy lawyers as much as
$900 per hour or more to carry that case through the court process.
These firms backing these fighters will have to be ready for all out war, and in many ways it was a crafty and cunning move to publicize this effort before it even became an official legal action.
It also makes sense to duplicate the proceedings on the off chance that
the cases end up before two, three, or even dozens of different judges as multiple stand-alone
litigation streams instead of being consolidated at some point. Legal
battles often hinge on the paperwork, and well-heeled firms aren't
afraid to kill a few trees to overwhelm their opponents with copious
amounts of reading material. Responses to everything in all cases would also have to be filed, each of those detailed legal documents requiring different content and unique defenses. It's actually more like what Zuffa does when pursuing their own worst enemies in the courts. They are used to being the big bully who always gets what he wants. This time, they might be facing an army of Davids against one Goliath.
Unfortunately, much of
the mainstream combat sports media wants to remain in the UFC's good
graces and will not publish a crooked word about the company. Most of
the "news" sites that support the UFC no matter what will dismiss these
legal proceedings as worthless and hopeless. That's really too bad,
since the UFC's objectionable and corrupt business practices are laid
bare in
these legal documents. If you really count yourself as a fan or
supporter of this promotion you should read this whole case despite the
difficulty of the language and the dozens of pages involved. To access
the full case document from the opening action, click here.
Trying as hard as I can to look at this case objectively, I do have some important questions to raise.
The
first question is where are the financial figures coming from in these
documents? There are claims like, "On information and belief, UFC
Fighters are paid approximately 10-17% of total UFC revenues generated
from bouts." Yet, there is no exhibit or affidavit this statement points
to for proof. This is not to say I do not believe this could be
possible. I just want to see where these financial estimations are
coming from.
The second major question is why are these
lawyers only pursuing this action on behalf of such a narrow group of
the larger spectrum of victims that their described monopsony/monopoly
scheme impacts? The reality of conditions exposed in these documents
cries out for other promotions, individual promoters, managers, agents,
burned sponsors, trainers and other supporting staff to be included as
plaintiffs. Perhaps I should just wait and see on this front. These firms filed three detailed lawsuits in a single week, so by next month there could be dozens. Like Gremlins, these furry little legal creatures could multiply and turn into monsters.
Finally, what is the average fighter's
costs for a year of full time training? There ought to be a reflection
of this somewhere in this suit. I would love to see a poll of UFC
fighters asking this question. Also, what is the average yearly income
of a mid-level UFC fighter, and what percentage does he or she keep
after taxes and expenses? Some of this information could come out of the
discovery process if the case goes that far. A Median Income Level would be an excellent baseline for these attorneys to show that the fighters were not getting their just due out of this raw deal they had to make with the UFC in order to compete at the "elite" level of the sport.
I am certain there are still fighters out there who literally wind up in the negative after each fight with their purses and bonuses going directly to paying off expenses. Travel and lodging, passports, training staff, management, medicals, and the countless other costs associated with a typical training camp can bring a fighter from $60,000 to zero in a heartbeat. I think this is the harshest reality that will be exposed in these litigation streams. Yes, the UFC has medical insurance, but fighters bear the costs of medical testing required for every fight. To get to the level where you are attracting huge show, win and bonus purses, you need to treat mixed martial arts training like a full time job. Fighters don't just drop out of the womb as seasoned experts at every discipline. It takes dedication, heart, patience, and in many cases copious amounts of money to get you and your entourage to the promised land. Sponsors can only chip in so much after they pay the UFC just for the privilege to be associated with you. Purses can dissolve before the fighter sees a penny.
This case tackles a plethora of actions the UFC took to lock down the MMA marketplace as the dominant, controlling force. The Federal Trade Commission investigated many of the same circumstances
and found no evidence that would lead to any formal action. The fact
that the FTC was even looking into the fight promotion at all was
headline news, but their lack of action made the UFC look as if it was
vindicated of all monopoly and monospony claims. The reality is there
are just too many obstacles to a government entity bringing such an
action against such well-funded and well-positioned opponents. These agencies
have to deal with red tape, politics, and influence peddling on top of
trying to build a rock solid case while fighting against highly skilled
corporate attorneys. It doesn't help that the Abu Dhabi government is in bed with the promotion by way of their 10 percent ownership of the UFC through Flash Entertainment. Talk about an unbreakable piggy bank!
The Fertittas are notorious wheel
greasers, and they promote and support powerful politicians like Harry
Reid with frequent donations and endorsements that Reid repays when he can. They are also
traditionally very supportive of the Republican Party. Just because all their direct Mafia ties
are long gone does not mean they forgot the art of maintaining
"connected" status. This is why the FTC's refusal to bring charges does
not really mean there was nothing concrete behind their concerns. The
Fertittas are also responsible for a large chunk of taxes paid in the
state of Nevada and California, and wherever else they do business
across the country. Being an average Joe taxpayer isn't going to get you
out of many major jams, but things change when you pay the kind of epic
tax bills the Fertittas foot every year.
At the same
time, a civil law firm does not have the same constraints to worry
about. They're not playing with taxpayer money. They listen to their
clients, not constituents or powerful politicians. They don't have to
fear a backlash. Still, the court system can also be influenced through
political channels. It's an uphill battle either way. So, even when
there's plenty of smoke, there's no guarantee any of it will catch fire
unless conditions are absolutely perfect. This may just be that time
when the blaze finally erupts, but I would be more inclined to expect a
quiet settlement once the first flicker of flame becomes visible here.
Reading
this suit reminded me of so many cases of fighter favoritism, payment
complaints, and the UFC's many moves made to squash the competition. I
am reminded first of the IFL's demise and their longtime feud with the
UFC. The creators of the IFL allegedly took the UFC's proprietary
information when they left the company's employ to start their new
team-based fight league. The resulting lawsuit revealed that Dana White
personally threatened company employees at the time with termination if
they did not all immediately sign a formal non-compete agreement.
I
also served as an informal consultant to one of the lawyers handling
the PRIDE suit against the UFC after promises to keep the top-tier MMA
promotion viable were quickly broken. The money to purchase PRIDE
actually came from something called a "senior secured credit facility"
that is due next year. This complex loan and credit package totaled
around $400 million, and even Billionaire Mark Cuban invested in the
debt. This is ironic, especially since I actually received
correspondence from Cuban during the time when he was battling the UFC
in court to retain the services of Randy Couture in his own fledgling
fight league (HDNet Fights) that never quite got off the ground. Cuban
was trying to put together a Couture vs. Emelianenko fight, but the bout
fans were screaming for would never happen due to the whole ugly legal
debacle.
Cuban told me in a personal email that he
was keeping an eye on my case against the Fertittas, and it came as a
bit of a shock. A true financial genius, he eventually figured out how
to make money off the UFC with or without Randy on his payroll. I later
questioned Cuban on the Fertittas owning Xyience, which at the same time
was sponsoring the UFC. Cuban wrote back and explained that there is
nothing inherently wrong with them doing that from a business ethics
standpoint and the arrangement was perfectly above board. Still, I
thought it was strange that the Fertittas seemed to go out of their way
to obscure their ownership of their own sponsor.
The recent class action lawsuit takes time to further explain Couture's issues with the UFC,
including his refusal to sign over his lifetime rights. At the time
Couture took a stand against his former bosses, it was a move that was
unheard of. Most fighters knew if they wanted to get anywhere in the
industry, they had to maintain a friendly relationship with the UFC
bosses and toe the company line. Couture was one of the promotion's
success stories and could claim a healthy fan base and a huge part of
the UFC's history. He didn't want to short change his legacy and struggled with the UFC over their demand for lifetime rights and other concessions. The feud would grow to be a bitter one. It's actually still
simmering quietly in the wake of Couture being excluded from even being able to
corner his own son when Ryan Couture was a UFC fighter for a brief
stint.
I interviewed Ryan Couture personally in Las Vegas a few years ago, and
he told me off camera that his father encouraged him to join Strikeforce
because, "The UFC likes to keep you under their thumb." The UFC's buyout of Strikeforce eventually led to Ryan having to take the best offer that came along, which happened to be the UFC's. Losses to Ross Pearson and Al Iaquinta were enough to force the organization to part ways with Ryan, and he now fights for Bellator.
So,
I have intimate knowledge of how this climate of dominance developed
and how fighters have been conditioned to think that you can't fight the
UFC, even if you have a legitimate beef. UFC fighters are taught from
their earliest involvement with the company that you're better off being
blindly loyal, staying perpetually quiet about any grievances you might
harbor. Typically, fighters who do speak out are those who are above
reprisal (i.e. Jose Aldo or Jon Jones) or obscure enough to dismiss as disgruntled nuts (i.e. Jacob Volkmann and John Cholish).
The bulk of the UFC masses want to remain employed and on the rise,
hoping for brighter days and bigger paychecks. Criticizing the company
leadership is a great way to earn a demotion or guarantee that you'll
never get a fight bonus again.
The case also highlights Quinton "Rampage" Jackson's past run-ins with the promotion he just recently re-joined
after referring to his old bosses as "the devil you know" in a Twitter
post. The complaint, which Jackson is not a party to but could still
actually benefit from, describes how Jackson secured individual deals
with a figurine company called Round 5 and sneaker giant Reebok before
the UFC moved in and blocked these moves in favor of arranging their own
longtime agreements with these companies.
Jackson and
Tito Ortiz both departed the UFC for Bellator amid very public
disputes regarding how their careers progressed under their UFC
contracts. They both once had plenty to say about how much they were
mistreated, but now they are singing what sounds like the same tune and
avoiding run ins with this all-powerful force in the industry. Business
is business, explains Jackson. Ortiz officially turned down the opportunity to join this round of lawsuits,
citing his ongoing responsibilities as a manager and agent for
fighters. In other words, he doesn't want to burn down the bridge he
just began to rebuild after burning down the first one.
The
basic gist behind Ortiz's motivation for opting out of the court battle
is actually explained on page 47-48 of the initial complaint by Le,
Quarry and Fitch:
"Professional
MMA Fighters who compete at the highest level of the sport cannot 'opt
out' of UFC because the UFC’s anticompetitive conduct has made it
impossible to maintain a successful MMA fighting career outside of the
UFC."
So, if that statement is indeed
correct, it's highly likely that Ortiz will bite his tongue and wind up
following Jackson back to the UFC in the near future. Still, where some
fighters are convinced the UFC will have their backs in the long run,
others are buoyed by the suit and want in. One such fighter is Sean Sherk,
who retired with a 36-4-1 record that included a long stint in the UFC.
Like many fighters who are no longer in the inner circle of the company
as fighting superstars or honorary executives, Sherk can't help but
look back and feel cheated. What he put in seems to be exponentially
greater than what he was able to reap in return as far as purses,
profits and residual income. Sherk is the first fighter I've heard of
supporting this case who actually owned a UFC belt at one time, so if he
gets formally involved it will certainly be monumental.
Though
many experts might think most current UFC fighters will refuse to sign
up as plaintiffs for fear of reprisals or retaliation, it might also be
hard for some to explain why they signed a petition that was reportedly
circulated to UFC fighters in 2012 (as described by Pablo Garza).
The petition reportedly asked fighters to confirm the promotion was not
a monopoly and that all its fighters were treated fairly. The
signatories of this petition might be used against the plaintiffs in
these class action cases as proof that the UFC is running a reputable
and upstanding operation with no hint of monopoly involved.
The
reality is, there really are "company" fighters who get all the breaks
while their lesser or equal counterparts continue to get the short end
of the stick. This group of pampered active and retired insiders
includes Chuck Liddell, Dominic Cruz, Gilbert Melendez, Daniel Cormier,
Brian Stann, Dan Hardy and Kenny Florian (among others). Other than
Liddell, they all have lucrative television gigs. Liddell has
commercials instead with Duralast and Bud Light. I have never personally
heard any of these guys present an argument that the UFC is in any way
corrupt, greedy, or worthy of any significant criticism. You often find the same level of intense blind loyalty with whoever gets picked as a coach for The Ultimate Fighter. The lone exception may be Jason "Mayhem" Miller, who was hired more for comic relief than being a yes man. Sticking to the old company line is obviously being rewarded for most of the fighters who bite their tongues when it comes to lashing out against the company's management.
Jon Jones and Ronda Rousey are stars who are really almost bigger than the promotion, but they still wind up being sponsored by who the company wants to highlight most. I suppose they are fighters who still get treated like they can do or say no wrong, but they still have to stand by the main causes the company champions. They are spokespeople by default, shilling whatever they have to in order to remain loyal to their bosses. Both Rousey and Jones were sponsored by Xyience when the Fertittas owned it. Ronda is also the "prettiest" face involved in the UFC's frequently-airing commercials for a major cell phone network. Cain Velasquez is also featured in the same commercials. Jon Jones is also the first MMA athlete to sign on with DraftKings.Com as they assemble their very first Fantasy MMA offerings in time for his upcoming bout with Daniel Cormier.
The
only hint of any major animosity shown toward the promotion by any of the
above-named "company" fighters in my recollection was when Brian Stann retired and
cited concerns regarding PED usage in the sport,
the same sentiment Longtime UFC Welterweight Champion George St. Pierre
pointed to as the main reason for his departure from the sport.
Stann
also recently made a telling remark during last Saturday's UFC
broadcast. During one fight that didn't live up to expectations, Stann
stated that as a fighter, "You have to take risks if you want to make a
name for yourself in the UFC." If anyone should know, it's Stann.
If you
end up washed up or not making enough money, so many fans and UFC
supporters (often called nuthuggers on MMA forums) will condemn you for
not trying hard enough. It's your fault, no matter what, even if you
spent half your own life savings trying to make it in the sport. Yet,
the UFC is not a powerhouse because it has only successful and dynamic
fighters. It takes some fighters who are not so dynamic and amazing to
actually show how good the best fighters really are. Having these
lower-tier fighters on board is essential, but their lack of
extraordinary talent also makes it easier for the UFC brass to abuse
these folks. The very design of the bonus system and the fighter pay
structure encourages fighters to take risks in every fight in order to
achieve success in the UFC. You can't just win by split decision on a
smart, boring strategy and expect to get all the spoils of fame and
fortune that fighters who always win by knockout get. It's no longer a
case of winning being enough. You also have to put on a show to get
anywhere in this organization.
Even though he's not a
perfect poster child for fighters who did everything right and still
got shafted, Cody McKenzie's recent retirement is worth noting here. He
recently expressed some major issues he had with working for the UFC
and trying to survive on the outer fringes of the sport and failing.
Though it would be easy to argue Cody and other complainers like the
Diaz brothers just don't work hard enough, you could also make the claim
that they were maybe convinced at some point along the line that working
harder just wouldn't matter. Some people just either don't have that
natural talent or simply have no chance of getting to the elite level of
the sport. The cards really are stacked against some fighters, even
though some of them possess all the talent in the world.
Whatever
the reason a particular contender has for lacking supreme ass-kicking
ability, being a halfway decent fighter also takes a tremendous amount
of work and sacrifice in this sport. The effort put in by these less
than superior combatants in the UFC is just as tremendous at times as
those fighters who hold championship belts. Yet, the same effort rarely
earns the same return under the UFC umbrella. It's all about popularity,
positioning and performance in the UFC. You can't just work hard. You
also have to suck up to the brass, align yourself with the right people,
and just be a good soldier in general. Even if you get booted from the UFC at some
stage of your career, you still have to keep quiet about
your bad experiences if you ever want to make it back into the fold.
The
UFC taught Cody McKenzie a hard life lesson. They basically told him to
"go fish," which is actually a career the Alaskan native would have been better off pursuing. After all, everything on the boat is
paid for. There's no on-the-job travel expenses, trainer and management fees, or
dependence on extra bonus money for superior performance. You show up,
you work hard, you get paid, and you go home if you don't wind up in the
hospital or on the bottom of the ocean due to some kind of tragic
accident.
The Ultimate Fighting Championship has a
serious problem with the way they treat fighters, plain and simple. Does
this lawsuit do enough to put a stop to it? I doubt it, personally. I
envision this whole situation fading away quietly with each fighter
getting a few million and the lawyers getting all their fees paid. All
it will take is one or two bigger names coming out in support of or
actually joining one of these classes of plaintiffs. There will be a
point when the bad publicity and mounting sense of revolution will
become too much for the UFC brass to bear, and they will pay a
settlement. Nothing will actually change for the better in the long run
if that happens.
For sweeping change to come out of any
of this litigation, it will have to go to trial. People will have to
testify, damning documents will have to be exposed in discovery, and
fighters will have to tell the sordid details of their awful personal
experiences with this all-powerful promoter for the record. No matter
how dedicated the plaintiffs and their attorneys are, I doubt
California's political climate and the possible favoritism of the
Fertittas due to their casino and property interests in the state will
allow this case to get to trial.
So, it makes for a
good story and promotes healthy debate on the monopoly subject, but if
any changes do eventually come out of this court battle, it will take
years for them to take effect. The
worst case scenario would be a climate where the lawsuit is actually
killed before it gets off the ground, which is entirely possible if the
UFC has that much behind-the-scenes influence in California.
Nevertheless,
this is a fantastic start in the quest to bring this organization to
task for the way their overbearing actions negatively impact the sport
of MMA as a whole. It is one thing to build something great while
focusing only on your own business model and building it up from the
initial concept into a worldwide force to be reckoned with. It is
something else entirely to focus on destroying and/or minimizing
everyone else in your niche to get to the top. Honesty is hardly ever
the best policy in our capitalist way of doing business, though.
Sometimes keeping secrets is actually crucial to a company's survival.
Consider the case of a guy named Ken Pavia who used to be a big player in the MMA industry and is now a bit more removed from the sport. Pavia shared some UFC contracts with Bellator and wound up on the business end of a Zuffa lawsuit against him.
The debacle eventually led to Pavia leaving the country to work for an
overseas fight promotion. Pavia told me during this period that Dana
White personally threatened him over the situation, telling him that the
company would do everything in its power to get revenge. He even
claimed White told him he would not be happy until Pavia's fiance left
him and he committed suicide. A countersuit filed on behalf of Bellator
and Pavia helped initiate a settlement in the case that is not allowed
to be discussed by either party. So, now the outcome of a case about
company secrets is itself a company secret.
The point
is, the UFC is constantly building up their power base, and they have
tremendous pull when it comes to making or breaking a fighter under
their employ. They can also make life difficult for anyone who may rely
on their support to do business in the industry.
Often
the courtroom can be the last place to look for any semblance of real
justice, but the tide has to turn somewhere. Maybe it will turn here,
but my outlook on the situation is colored by skepticism and personal
experience with the type of lawyers the Fertittas hire and how they
operate. I'm more inclined to think more publication and less legalese
would be a better way to inspire change. A blockbuster documentary
exposing fighter complaints, maybe with a few blurred faces and
distorted voices, might go a lot further in blowing the lid off this
corruption.
Unfortunately, there's also a chance that
this behemoth is just too big already and nothing will be able to keep
it in line. As these class action cases outline, the UFC has been at
this monopoly building thing for a long time, and they're very adept at
avoiding culpability for their worst transgressions. Still, all it will
take is one honest judge in California who is willing to hear the case
out and let it continue to a final conclusion. And it would certainly
help to have a few more high caliber fighters coming out of the woodwork
to join the cause and levy their own personalized complaints and
grievances.
I have been harping on the possibility of a
legal action like this against the UFC for a long time, ever since Dana
White started saying he wanted the UFC to be as popular and powerful as
the NFL someday. I predicted years ago that a class action lawsuit
could be the only way to stop the rampant abuse many fighters under UFC
contract face in trying to earn a respectable and comfortable living.
Even the highest paid UFC athletes no doubt make a huge chunk of their
income from sponsors and endorsements. The most famous fighters also get
movie roles on top of all that, so there's not much to complain about.
Yet, what does it say about the sport and the owners of the biggest
promotion in the sport when even their top athletes aren't making a
luxurious living off the actual wages they're paid? Why should they need
to depend on all this outside income when the profits of the promotion
make it possible for them to be compensated much better without all that
hoopla?
The answer to those questions may be more
simple than you think. It all amounts to one short word, just five
letters long: GREED. And the UFC brass is so downright greedy that I
can't imagine them spending more on a settlement than they would be
willing to shell out on the army of legal bulldogs it will take for them
to crush their opposition here. When you are as corrupt and conniving
as the Fertittas and Dana White, lawyers can be the most important piece
of the puzzle. Some of the sleaziest attorneys are just as likely to
advise you on how to break the law through sophisticated maneuvering as they are to help you make sure to
follow it to the letter. The kind of lawyers employed by these folks are the ones all
the lawyer jokes are really made for. Many of them already sold their
souls to the highest bidder, and they have no scruples or morals
remaining to stop them from taking these valid fighter complaints and
turning them into a puff of smoke.
I, for one, will be
rooting for the fighters to score a key victory here that finally
exposes the UFC for taking advantage of the very people who made the
organization what it is today. The publication of the suit itself goes a
long way in doing just that, but results are what will really matter in
this case. This legal team has the personnel and the persistence to
make things interesting, but what they really need is to secure a final
judgment or at the very least get to trial.
Stay tuned
as we follow this case to see if any of this legal wrangling will pan
out for the plaintiffs in the long run. I know one of the folks behind
this case is interested in starting a fighters union at some point, so
even if the case settles it might lead to some financing for that future
endeavor. This development might not represent a perfect plan to
revolutionize the way the UFC does business, but it's a damn good start
as far as attempting to root out some of the corruption and mistreatment
some of the promotion's fighters endure. I will keep a sharp eye on
these cases as they play out and pass on new documents and developments
as I acquire them.
It's only fitting that Xyience's star is falling and the brand is collapsing into debt just as Coca Cola's NOS brand of energy drinks cements a spot as the top sponsor of The Ultimate Fighter. TUF is the show that put Xyience on the map in the first place, so it's a strange coincidence.
News is trickling in lately surrounding the stable of fighters Xyience once sponsored, and it sounds like Xyience and Xenergy are at DEFCON X. Virtually all of the current UFC fighters on "Team Xyience" were cut from their sponsorship deals in recent days and weeks, and inside sources say the company owes at least 1.5 million dollars to Cott, the beverage giant responsible for creating and canning Xenergy. Without a bailout from the same Fertitta Family that owns the majority of the UFC, the company could be headed for a second bankruptcy or a fire sale. Fertitta Enterprises still owns and operates the brand, but a recent ultimatum from Frank Fertitta III and Lorenzo Fertitta forced the brand to make attempts to stand on its own without further financing from the billionaire brothers.
Inside sources also report that the Fertittas and UFC President and Part-Owner Dana White recently tried to convince Coca Cola's NOS brand to replace Xenergy as an official UFC sponsor. Right now NOS does not appear in any other octagon outside of the one on the TUF series. It's a relationship that the company fostered more with the Fox network than with the UFC itself. Yet, Dana is always drinking from his can of NOS whenever the show's camera crew catches him with one in hand. That's pretty interesting considering in past years fighters were sometimes caught "drinking" from closed Xyience cans. Dana's can is always open, much like his mouth.
What makes the NOS connection even more interesting is the fact that only a little less than six years ago, Dana White was telling NBC Sports that the UFC didn't need Coke's sponsorship:
The Fertitta-run Xyience is in crisis mode these days, recently laying off multiple sales personnel and leaving the rest of the staff in fear of an imminent implosion. The company the Fertittas surreptitiously acquired by stealing it out from under hundreds of earnest investors is now a money pit. The Fertittas don't seem to want to spend the capital to keep the operation going despite getting a hold of the company for a song. It's the ultimate payback for all those shareholders who didn't get a dime out of the deal when the Fertittas purposely bankrupted the company and then retained ownership through a scandalous scheme involving former Cott executives pretending to enter into a serious purchase agreement only to later default on that deal.
For a little while the Fertittas made all the right moves to make the brand appear stable and ready to X-pand. Sponsorship deals with top-notch fighters like Jon Jones and Anthony Pettis appeared to be signs of the brand's resurgence as a key UFC sponsor. None of the fighters pictured above represent the brand any longer according to inside sources at the floundering supplement company. For Matt Serra, this marks the second time he's getting screwed for associating with Xyience. His prize for winning The Ultimate Fighter ended up getting wiped out by the company's bankruptcy, and he was the only fighter from that Xyience stable to come back to the brand before Chuck Liddell came out of Xyience retirement in recent months. Since Liddell's sponsorship agreement came with a pre-paid setup, he is among the last of the Mohicans still repping the brand. That's also fitting seeing as his initial Xyience sponsorship was one of the most lucrative deals in the history of the sport at the time of his first signing with the company.
The operation of Xyience once the Fertittas had control of it certainly betrays their attitude toward the fighters they employ in the UFC. It shows these silver-spoon billionaires just don't give a damn about the people who line their pockets. These recent developments illustrate an underlying selfishness on the part of the UFC's royal family that pervades everything they do. Xyience only mattered to them when it was a way to get a HUGE LOAN or a way to pay the UFC with the same money they used to get the chief lien position over the company just before they rigged the bankruptcy process to work in their favor.
At the moment my own legal battle with Xyience and the Fertittas is in limbo. I've been waiting for the right moment to ask for a final hearing on my remaining claim asking for millions of dollars in sanctions against the Fertittas and their associates who made the whole fraudulent bankruptcy possible by silencing my reporting. Should Xyience and Xenergy fold due to the Fertittas failing to put their own money up to bail their UFC sponsor out, it will be the perfect cap stone for the case I've built brick by brick and year by year to prove that Frank and Lorenzo Fertitta only wanted Xyience to be a going concern if it operated as a personal piggy bank. Without any way to siphon money off the brand or use the brand to make the UFC look better than it actually is, the Fertittas just don't need it. Sadly, this has been the trend as long as Xyience has been in business. It's been passed from one abusive management and ownership crew to the next. Everyone seems to find a way to smack it around and treat it like another red headed stepchild with no real identity or meaningful purpose for living and thriving.
What seems to get lost in translation to most of the fans who stumble onto this story is that there are real victims behind this ongoing scandal. As the saga continues to unfold the people who suffered most are only reminded of the savings they invested into the fledgling Xyience. They saw all their hard-earned dollars put into the company get wiped out by a couple of scumbag brothers who have way too much money to begin with. Some of the children of these victims had to forego college. For many, their retirement plans were catastrophically altered. The money some of them spent their entire lives putting away for a rainy day is just gone, flushed down the drain by the careless and ruthless actions of a couple of casino barons who had all their wealth passed down to them from Daddy Dearest. They will never know what it is to truly earn a paycheck, but those they victimized over the years to keep themselves healthy and wealthy will always know what it's like to lose everything and have to start over.
Let it be known that the Fertittas just don't care about real people with real struggles. They don't have any genuine concern for their own fighters, and they don't get bent out of shape in ruining families just to make themselves a little richer. Making things right for every individual they burned in the Xyience bankruptcy would be a drop in the bucket for these two billionaires with their ever-growing business empires, but they choose to ignore the suffering and act like it never happened.
While I never rooted for Xyience to fail in the past, it seems to be sweet justice to see it failing now. I seriously doubt my fledgling BOYCOTT XYIENCE campaign made a dent, but I'm at least proud that I never really gave up the struggle to educate the public about who the Fertittas really are and where their motivations really lie. I will never forget the people who really put Xyience in position to be successful in the first place, and I will cherish the day I am allowed to put Frank and Lorenzo on the witness stand to answer some real hard hitting questions about the damage they've done and the lives they've destroyed in the name of pure greed.
In all honesty, I hope Xyience doesn't fail just yet. I hope that the Fertittas actually sink a few more million into trying to make it work. I hope they invest just enough so they wind up losing as much as the people they've screwed over the years have lost for believing the brand would be taken care of by the UFC owners. Now that would be real justice. Here's to hoping Karma catches up to these corrupt and spineless scamsters, so even if the burned Xyience shareholders don't get any financial relief they can at least get a little revenge...served with a cold can of Xenergy.
"Where ignorance is bliss, 'tis folly to be wise." Thomas Gray, Ode on a Distant Prospect of Eton College, 1742
From the oldest dimestore novels to the most current TV cop dramas, a classic element of detective stories is the old familiar line about the perpetrator always coming back to the scene of the crime.
As Xyience Inc. limped through a controversial bankruptcy process over the past few years, the Xyience and Xenergy branding was relegated to UFC fighters wielding cans of the energy drink and the Xyience.com and other Xyience and Xenergy logos appearing only on the outer ring of the mat or on the ring bumpers.
Saturday, May 5, 2012, marked a milestone for Xyience: a triumphant return to their old domain. Once again, the brand picked up where it left off, marking the center of the mat space for UFC on Fox 3 with the "Xenergy" (pronounced Zen-ergy) name, focusing on the company's sugar-free energy drink.
Ironically, this is the same strategy employed by Xyience Founder Russell Pike. Now facing July sentencing for being found guilty of tax evasion, Pike's been someone the current company wants to distance the brand from. Yet it was Pike who first decided to take the Xyience bar code off the mat and replace it with a Xenergy can.
Back then Pike's goal was to drum up interest in a potential buyout of the drink label while the rest of the company would continue under the Xyience name.
Though the Fertittas seem to paint Pike as the prototypical fall guy, they went to great lengths to lock the founder and his friends and family out of controlling the operation so they could bankrupt it after promising shareholders that their involvement and intervention would save the company from such a fate.
On Oct. 2, 2007, Xyience Co-CEOs Adam Frank and Kirk Sanford informed Russell Pike, William Pike and Michael Clark (shareholders who represented 25 percent of the shares outstanding) that if they did not sign the funding consent form for the Fertitta funding and give up their voting rights, Frank and Sanford would put the company into bankruptcy.
On Oct. 3, under duress, the Pikes, Clark and other major shareholders signed the consent forms. Only 11 shareholders, who represent over 50 percent of the shares outstanding, ever saw the funding agreement before it became official.
An email sent by Fertitta Enterprises GM Bill Bullard to Lorenzo Fertitta on Oct. 4, 2007 discussed a $150 million offer from Cott Beverages to buy Xyience. This email was only found due to an intense discovery process initiated by the trustee's counsel, Jon Backman. The full text of that message is below:
By January 2008, the Fertittas perfected their scheme by foreclosing on their loan and speeding the company ship toward the iceberg of bankruptcy.
Instead of letting Cott buy the company at full price, two former Cott executives wound up agreeing to purchase the brand out of bankruptcy for $15 million through a front company called Manchester Consolidated.
Coincidentally, that purchase price was exactly 10 percent of the $150 million mentioned above. Manchester would later default on their payment plan, ceding control back to Fertitta Enterprises.
All the golden parachutes were reserved for company insiders who were in on the scheme, and over the past four years and counting the result of losing their Xyience investments tore apart innocent families, caused individuals who lost everything significant pain and aggravation, and forced a ton of folks to start over on building their once-substantial nest eggs.
The Fertittas rode into the sunset with their own supplement company that is now making record profits.
The re-organized Xyience (Zyen, LLC) staff celebrated the announcement of the settlement recently with a huge catered dinner at Red Rock Casino, the most modern and luxurious casino the Fertittas own in Vegas. They're calling the next phase of the business "Xyience, Round 2."
Meanwhile, 385 original Xyience shareholders will be left with absolutely nothing once the final check is signed distributing the final dollar left in the trust.
Over 65 million shares issued in the company during their early days of rubbing elbows with the UFC will now be worth less than the paper they're printed on. Family trusts, retirement accounts and college funds were wiped out by the Fertitta takeover.
Some say life imitates art, while others argue it's the other way around. I stumbled upon the Xyience debacle for the first time as an independent investigative reporter covering the sport of MMA in 2006. The resulting project and related litigation eventually became a significant part of my everyday life.
This site will someday make a phenomenal book and/or documentary effort. The experience proves beyond any reasonable doubt that fact is truly stranger than fiction.
Those MMA fans who might wonder why they should care about scandals like Xyience need to look at the bigger picture. The Fertittas knew they could get away with this from the very beginning when they first pulled the trigger on this scheme. Consider this snippet from a Las Vegas Business Press article printed a month into the bankruptcy:
Attorneys for three unsecured creditors claimed that the deals were part of a "lend to own" strategy pursued by the Fertittas.
The Chicago law firm of Bell, Boyd & Lloyd filed papers alleging that Xyience's "bankruptcy case appears to being run for the sole benefit of Zyen -- the debtor's insider secured creditors."
It added: "Zyen is given a giant axe to hold over the debtor's head, while the debtor's credits are left with no opportunity to defend themselves against improper chopping."
Zyen, a Fertitta company, would have the right to make a bid for the company, the Chicago attorneys contended.
Chicago attorney Jim Morgan told the judge: "There is going to be possibly a forced sale with absolutely nothing left in the estate for unsecured creditors."
Greg Garman, attorney for the Fertitta's Zyen, rejected criticism from shareholders and unsecured creditors, even though his clients' crooked behavior was one of the main reasons why these parties were concerned in the first place. It is unlikely that Xyience shareholders will recover anything from the bankruptcy due to the large amount of debt, Garman said.
The bigger picture reveals that Xyience's bankruptcy basically served as a practice run for the much larger and more profitable Station Casinos bankruptcy. Both companies sit comfortably on the other side of bankruptcy as reorganized entities at the moment. Station Casinos just announced a $6.8 million profit for the first quarter of 2012.
The Fertittas are still rich and getting richer, but at what cost? The little people paid for it all, from the private jets to the tailored suits to the luxurious mansions.
Pension funds and savings accounts across the nation affecting countless average Americans in multiple locales were impacted negatively by the unethical and irresponsible behavior of the Fertittas and their minions.
Too many MMA fans and even more MMA media professionals stick their heads in the sand and pretend that the UFC's primary owners are great guys, model citizens, and all-around heroes. If you look into their past, you will see that Xyience is just the tip of the iceberg.
Since their transgressions have gone unchecked for so long, these powerful Las Vegas brothers keep generating bigger and bolder schemes, enlisting high-powered local lawyers to deal with the fallout. They grease the palms of enough national political forces to insulate themselves from any federal probe, too.
This penchant for pulling off fraud and stepping on the toes of little people most certainly carries over into their operation of the UFC at many levels. Silence is golden for the the Fertittas when it comes to the UFC, and there's millions of reasons for them to keep most of their financials private.
This is why no fighter is making a million dollars per bout in the UFC while there are a number of boxers who can command that amount and more.
Interestingly enough, Russell Pike reportedly gave Chuck Liddell a million-dollar contract to pimp Xyience back in the early days of the company. Pike's regime also signed multiple high-caliber fighters to the brand across the MMA landscape and not just in UFC circles.
Despite his criminal tendencies, the company founder made bold moves and laid the foundation for the UFC's current symbiotic relationship with Xyience.
The Fertittas have much more cash at their disposal now as owners of Xyience, but they don't have nearly the same number of talented fighters in the sponsorship stable these days. The Fertitta-owned Xyience also now only sponsors the UFC and their own fighters instead of branching out to other MMA leagues and sports as Xyience did in past years.
The little people in the UFC to the Fertittas are the fighters, even though many of the men and women fighting for the top dog in MMA become fiercely loyal to the Zuffa, LLC organization. Few fans and media professionals realize that this is a conditioned response.
The Fertittas and Dana White fostered a leadership environment leading to a whole new class of obedient fighters who rarely rock the boat or call out their bosses for any reason at all.
Over the next ten years as MMA athletes who fought the bulk of their careers for the UFC are retiring, we may begin to see the real toll a UFC career can have on a fighter's health. By then it will be too late for the fighters suffering from the worst symptoms to negotiate for a higher per-fight pay or a piece of the royalties the UFC makes off their past fights and likeness rights.
It's time for the truth to trump the lies. It's time for people to realize the Fertittas built their success off the backs of better men and women than themselves. These silver-spoon-fed brothers are much worse than whoever is responsible for JP Morgan Chase's $2 billion miscalculation the FBI jumped all over recently.
Why aren't any federal authorities taking a harder look at the tactics these billionaires are using to continuously get away with ruining the lives of average Americans who get duped into backing these economic hitmen?
In reality, Bernie Madoff and Wall Street's worst scam artists are not nearly as bad as the combined negative force of the army of financial wizards in this country like the Fertittas who get away with fraud considered to be legal (or only borderline criminal) and only subject to civil penalties. And those civil penalties only apply if those damaged by the fraud can afford the world's most fantastic lawyers.
Paying law firms to cover up their worst behavior becomes cheaper for businesses and billionaires than it would cost to do business the right way: with respect and responsibility.
The roadmap to riches for the Fertittas ripped apart the lives of regular folks from all walks of life, from firefighters and teachers bilked out of retirement funds, to Xyience investors who had their shares wiped out due to Fertitta greed, to all the fighters the UFC chewed up and spit out for not fighting up to the big dog of MMA's standards.
Don't believe the hype and never forget the people who bought out and rebuilt this league will take care of themselves first and screw the little guy any chance they get if it can make them an extra buck by doing so.
The Fertitta family's Galveston gangster ancestors would be so proud to see what kind of corporate crooks these grown brothers have become.
