Zuffa, UFC, Xyience Bankruptcy Scandal

Posted on | February 5, 2008 | 4 Comments

By: Rich Bergeron

It may just be all over for Xyience and the UFC. It appears that the company is fast-tracking a sale of the supplement and energy drink maker, and early indications reveal that anyone hoping to get a piece of the scandal-ridden company must have at least $50 million in assets. UFC 81 was the first event in years that had no Xyience advertising attached to it. Previously Xyience ads were bumped from the center of the mat to the post pads, but last Saturday those ads vanished.

Burned shareholders are still mounting a fight for the company, but the outlook is bleak. The company’s reputation is shattered, and the whole debacle has also tarnished the image of one of the wealthiest families in Las Vegas. The Fertitta Enterprises role in the foreclosure has only recently been given front page press in “The City of Sin” despite our reports here on this site proclaiming knowledge of their investment plans as early as August of 2007.

The Fertitta Family and Zuffa officials have been strangely silent about their recent activities, leaving their appointed representatives at Xyience to do the public commenting. Meanwhile all kinds of allegations and rumors are swirling around the entire financial picture of the UFC. For the first time ever there is talk of the entire outfit following in Xyience’s footsteps and declaring bankruptcy themselves. Zach Arnold and Judge Jeff Thaler both raised the possibility in their recent Xyience discussion on Fight Opinion Radio. There are even rumors that the UFC might be for sale, though Dana White did recently deny any formal sales negotiations coming anytime soon. He simply admitted that anything is for sale for the right price.

Yet, it seems there may be a very real possibility of rough waters ahead for the UFC as the Mixed Martial Arts boom shows no signs of slowing down and other outlets continue to make strides in the marketplace. One of the major roadblocks for the UFC in the future will be their overall treatment of their fighters. The Randy Couture departure may just be the tip of the iceberg.

The Xyience situation elucidates the problem perfectly. Once Fertitta Enterprises bought into Xyience the first transaction they made involved sponsorship of the UFC. Millions of dollars went into past-due payments and a whopping $15 million premium for the 2008 Xyience sponsorship that would see them taken off the mat. Meanwhile, nobody took the time to address the concerns of the fighters sponsored by Xyience with disputes over their payments. For one, pictures of disgruntled fighters are still on the site as if they are all in full support of the struggling supplement maker. According to Adam Swift of MMAPAYOUT.COM and SHERDOG.COM a group of high-profile UFC fighters is still owed a grand total of $112,666.66 by Xyience. Yet, the infusion of Fertitta capital went directly to the sponsorship of the organization rather than first addressing the less costly needs of the fighters that put the whole show on the map in the first place. They put payments for advertising on an inanimate object ahead of paying their own fighters who take the most risk for the least return.

Even worse, after the Xyience sponsorship extension came to pass, officials at Xyience made no serious moves to find any funding to continue any expansion of the brand. They told the public that’s what they were planning to do with the Fertitta money, but they didn’t come through and actually do that. They put the cart before the horse and paid for marketing before production and distribution of goods to the marketplace. These men know business. They have billions of dollars in deals under their belts. How could they honestly claim to be bankrupting the company because they couldn’t stretch over $20 million into an operating budget? They easily could have gone without the 2008 sponsorship if they truly wanted to keep the company in business.

Unfortunately, it now appears that the $25,000,000 lawsuit against me played a huge role in this latest chapter of the ongoing scandal. Without the court’s injunction against me, the Fertittas may not have wanted to get involved. According to the initial complaint against me, there were certain investors who wanted to invest $15 million each, but only if my stories were removed from cyberspace. It’s clear now that Xyience had no plan to actually try and win the case or prove the merits of it after that injunction came through.

Xyience has now burned through one lawyer and is working on racking up even more fees with their new lawyer that they might not be able to pay. All told, they now claim over $84,000 in legal fees fighting a guy who’s representing himself. They have recently been trying to pursue what’s called a default judgment, basically a win by technicality. However, they don’t even meet the terms of that technicality. Two hearings loom ahead, and they should determine the final outcome of this litigation once and for all.

February 7th at 9:00 AM in Department 16 of the Clark County Courthouse, Judge Timothy Williams will oversee a hearing to determine whether I can actually get my chance to appear telephonically at a motion to dismiss hearing on February 14th at the same time and place. Xyience’s latest lawyer is trying to block the hearing with bogus motions and affidavits trying to claim that the default prevents me from defending myself in this matter. Not only is the new lawyer claiming I have no standing to defend myself, she is also trying to get me to pay for her legal fees of over $14,000. I’m lucky if I can pay my $19 a month hosting fees these days, so I had a good laugh over that one.

The bottom line is I’ve had hundreds of hours of my life wasted trying to defend myself against these frivolous charges. Look back at my reporting and you will see it was entirely accurate every step of the way. I predicted the future time and time again. I raised an issue other people in the press have now taken up as their own. I fought for bloggers’ rights, free speech, and victimized shareholders I’ve never even met even when I might have been better off walking away from UFC 78 with a $5,000 check and no case hanging over my head.

The saddest part of this whole situation is that I’ve had to put off a book project about a woman who desparately needs my help. Lucille Iacovelli, one of the stars of the HBO Documentary Plastic Disasters, is literally dying before her story can be told to the world to inspire someone to reach out to help alleviate her medical condition. Because of this case I have been unable to devote enough time to chronicling her experience with botched plastic surgery and the refusal of the medical establishment to address and fix her problems. I always wanted to help people with my writing, and her story was just the kind of work I’ve always enjoyed doing. Yet, there was always the threat of being hit with a $25 million judgment I’d spend the rest of my life paying off if I didn’t devote enough time to defending myself in this Xyience case. Lucille’s condition continues to deteriorate, and I’m still fighting this junk case against me.

I’m looking forward to finally putting all this behind me come February 14th, and I’m calling on everyone who believes in truth, justice, and freedom of speech to help spread the word. Stand up and be counted. If you are in the Las Vegas area and can make it to either one or both of my hearings this month, it would be a great help to me. It’s time for the little guy to come out on top for once.

[/mpinpage]

Comments