Former Pride Owners Sue Zuffa Holding Companies, Fertittas
When Zuffa purchased Pride in March 2007, the MMA world immediately
began anticipating the epic battles that would follow. However, the
"Super Bowl of MMA" never materialized, and Zuffa ultimately
abandoned the Pride brand in October.
Now, one year later, the acquisition appears set to provide the
fireworks it initially promised -- only in the court room instead
of the cage.
Nobuyuki Sakakibara, Ubon, and Dream Stage Holdings sued Pride FC
Worldwide, both the Nevada and Japanese corporate entities, as well
as Lorenzo and Frank Fertitta individually on April 2 in U.S.
District Court in Las Vegas.
The suit is apparently the only response forthcoming to a Nevada state court action instituted Feb. 1 by
Pride FC Worldwide against the former owners of Pride. Neither
Sakakibara nor Ubon has entered an appearance in that case, while
Dream Stage Holdings, a Nevada Corporation, recently filed a motion
to dismiss because it is not a party to any of the agreements that
are the subject of the complaint.
In an ironic twist, the motion accused Zuffa of including the DSE
Nevada Corporation in an effort to defeat diversity jurisdiction.
Zuffa is currently contesting a similar legal strategy employed by
HDNet Fights in its suit against Zuffa for declaratory judgment on
Randy Couture (Pictures)'s promotional contract.
The suit filed by the former owners of Pride in federal court,
under diversity jurisdiction, seeks damages for breach of the asset
purchase and consulting agreements that were part of the Pride
transaction, as well as fraudulent and negligent misrepresentation
and breach of the covenant of good faith and fair dealing.
The complaint alleges that Pride was sold to the owners of the UFC
with the promise that the Pride brand would be maintained as a
"global top-level brand." This promise allegedly resulted in the
former owners' decision to sell to the Fertittas despite more
lucrative financial offers from other suitors.
According to the complaint, Sakakibara also met with another
"company which promotes martial arts related events, an operator of
another sports-related business and investors in the entertainment
industry, and received various offers to purchase Pride or to enter
into business partnerships with plaintiffs."
However, the suit alleges that the defendants had no intention of
fulfilling that promise.
"In fact, based on comments made by defendants' representative and
defendants' conduct, plaintiffs believe that defendants acquired
Pride to destroy it, thereby eliminating the biggest competition
they had in the industry," the complaint states.
The complaint also says Sakakibara never approached the Fertittas
about purchasing Pride. Instead he was "was unilaterally and
continually approached by the Fertittas. The Fertittas on multiple
occasions made offers for the purchase of Pride and continually
expressed a strong commitment to acquire the Pride brand."
Following these offers, Sakakibara first began negotiations with
the Fertittas on Oct. 22, 2006. The complaint alleges that Lorenzo
Fertitta told Sakakibara that "for the sound growth of the entire
mixed martial arts industry over the course of the next 20 to 30
years, it was essential for both Pride and UFC to have the same
owner who would manage and maintain these two brands from a
position akin to a commissioner so that appropriate order and rules
could be created to protect fighters and maintain and expand the
Instead, the complaint says the Fertittas' real motivation in
acquiring Pride was to destroy its biggest competitor, obtain
access to fighters under contract to Pride and acquire the Pride
videotape library and other intellectual property.
The complaint cites comments made in Japan by Jamie Pollock,
Zuffa's Pride representative, and subsequent statements made by UFC
President Dana White. It also alleges that the UFC signed several
fighters "who symbolized Pride" to contracts with the UFC without
the plaintiff's knowledge.
The suit notes that since acquiring Pride, the defendants have not
attempted to hold a single Pride event and fired all of the
company's employees in October 2007. The complaint references these
actions as proof of the defendants' breach of their promise to
maintain Pride as a global MMA brand.
Also addressed in the complaint are the background checks that form
the core of the dispute. Under Section 5.3 of the asset purchase
agreement, Sakakibara agreed to submit to and pass a "reasonably
necessary" background check. According the complaint, though, the
Nevada Gaming Commission Rules did not require Sakakibara to submit
to or pass a background check. Therefore the background check was
not "reasonably necessary" and therefore not required under the
terms of the agreement.
The complaint alleges that if a "reasonably necessary" background
check were required, it was with the Nevada State Athletic
Commission because the agreements pertained only to mixed martial
arts events, not gaming enterprises. Sakakibara submitted to and
passed a background check with NSAC as part of its licensing
Ubon is a joint stock corporation incorporated in Japan and owned
in full by Sakakibara. Dream Stage Holdings is a joint stock
corporation under the laws of Japan and is the parent company and
owner of Dream Stage Entertainment. Sakakibara owns more than 95
percent of DSH.
Adam Swift is the Editor of MMAPayout.com.
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