The California State Athletic Commission on Wednesday suspended promoter licenses for both Pro Elite and King of the Cage in its jurisdiction, sounding yet another strike against the all-but-expired organization that went into a tailspin on Oct. 20 after a deal for its purchase by Showtime fell through.
“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,” wrote CSAC Executive Officer Armando Garcia in an email to Sherdog.com on Thursday.
Garcia wrote that the CSAC’s decision was based on “a review of the facts” and was not stimulated by any outside influence.
Pro Elite’s suspension wouldn’t seem to have much impact on a company over $55 million in debt that was recently forced to close down its operations. However, it could serve to bolster breach of contract claims filed after Oct. 20 with Pro Elite by numerous EliteXC-contracted fighters who are looking to exit the failed promotion as quickly as possible to take assignments with rival promotions.
Fighters like EliteXC middleweight champion Robbie Lawler and welterweight champion Jake Shields have given Pro Elite 30 days to provide proof that they can honor the fighters’ contracts per their agreements. Though Pro Elite released replies to select fighters last week stating they were still in business and planning an event in early 2009, the company has now lost its ability to host events in the state that houses its headquarters. Pro Elite held 7 of its 17 EliteXC and ShoXC events in California during its 22-month run.
“If they can show me proof within the 30 days that they can provide me two more fights, then I’ll happily fulfill the two fights and my end of the bargain,” Shields said Wednesday. “But if they can’t fulfill what they claim in the contract, then I consider them in a breach. If they’re willing to offer me fights, I’ll definitely do it per the contract, but at this point, this doesn’t seem realistic.”
In the meantime, Shields was one of handful of fighters whose contract has been listed up for grabs at a public auction sale organized by Showtime on Nov. 17 at a law office in Los Angeles.
Showtime, a subsidiary of CBS, has claimed all “tangible and intangible” assets of Pro Elite, which it said defaulted on two promissory notes totaling $4 million that it lent to the promotion on June 18 and Sept. 10. In addition to airing EliteXC and ShoXC events on its channel, Showtime also had a 20% stake in the company prior to the promotion’s recent demise.
According to recent Securities and Exchange Commission filings, Showtime gave notice to Pro Elite on Oct. 16 that the promotion violated a term of its agreement requiring it to maintain a minimum bank balance of at least $550,0000 with a nationally recognized financial institution. Pro Elite has an outstanding balance of $6.3 million with the cable channel, and any default on the loans would give Showtime the ability to sell or assign the promotion’s collateral at its discretion, according to the filings.
Advertisements placed Tuesday on Sherdog.com announced the sale of fight contracts for Kevin “Kimbo Slice” Ferguson, Gina Carano, Shields, Lawler, Frank Shamrock, Antonio Silva, Brett Rogers, Dave Herman, Scott Smith, Nick Diaz, Eddie Alvarez and others, along with Pro Elite’s video library, still photographs and home videos also listed for purchase. (Sherdog.com’s advertising, including its assignments and revenue intake, are under the sole ownership of Crave Online.)
Attempts to obtain a complete list of items up for auction were unsuccessful, though EliteXC champion Shields believes any sales made will not be enforceable.
“To see us on sale online is ridiculous,” said Shields. “We already sent them a breach of contract letter. They don’t respond to that. Instead they put this up. It’s just completely ridiculous how they’re handling this situation and completely unprofessional. They should be in contact with us fighters and letting us know what’s going on instead of just putting things online and not responding to our faxes, emails, and phone calls.”
Both Pro Elite CEO Chuck Champion and Showtime representative Chris DeBlasio have not returned calls from Sherdog.com for comment.
However, an SEC filing made by Pro Elite on Thursday stated that, “The Company plans to take all appropriate measures to prevent the sale from occurring” by “raising additional financing, filing a lawsuit enjoining the sale, filing a bankruptcy petition or negotiating a settlement with Showtime.”
Monte Cox, who manages two fighters listed on the auction block in Lawler and Alvarez, said he wasn’t sure Showtime had a right to the contracts and has taken a “buyer beware” attitude with the potential sale.
“I find it interesting,” said Cox. “Nobody knows what they’re getting, so I’d be kind of surprised if any contracts get bought. You don’t know what you’re getting.”
As an example, Cox said Alvarez’s contract is set up to where a potential buyer will have to rotate the popular fighter’s bouts over two year’s time with three other promotions -- Japan’s Dream, Adrenaline MMA and Extreme Challenge. The latter two promotions are owned by Cox.
TJ Thompson, who sold his Icon Sport promotion to Pro Elite last year, said he might attend the auction to try and purchase back his company. Originally operating under the Superbrawl name, Thompson grew Icon Sport into the leading entity in Hawaii over 13 years.
“Who would want to buy [Icon Sport]? asked Thompson. “Without me, the Icon name isn’t really of value. So anyone that wanted to buy it would have to find me anyway.”
Cox, who has managed over 60 fighters over the last 11 years, said the 15-year-old sport has entered new territory with Showtime’s intentions to auction off his client’s contracts. Cox and others have their doubts that the sale of a personal services contract will be upheld in a court of law.
“I’ve never been in this situation before, so I just don’t have an idea what can or can’t be done,” said Cox.
After meeting with multiple lawyers, Shields is more certain of his stance. Believing the breach of his contract takes precedence over Showtime’s claims for it, Shields said he will give Pro Elite the full 30 days to provide proof they can honor his contract, or then make the rounds to other promotions in two weeks.
“Getting worked up over it isn’t going to do any good,” he said. “I’m just going to let it go its course and I’m pretty sure something is going to work out.”
Whether other promotions will be willing to court the EliteXC contingent of fighters after the Showtime auction and Pro Elite’s 30-day response period expires remains a question.