Strikeforce Landed EliteXC for $3 Million

Strikeforce parent company Explosion Entertainment LLC purchased selected assets of Pro Elite Inc. for $3 million, according to a United States Securities and Exchange Commission report released Wednesday.

As part of the multi-million dollar purchase announced last week, Strikeforce acquired valuable fighter contracts, media assets that include the ProElite fight library and inventories that include all EliteXC-related DVDs. Various promotional and marketing materials were also part of the deal.

Also a part of the agreement, Pro Elite was excused of all monetary debt it still owed Showtime Networks and its parent company CBS. Pro Elite had defaulted on two promissory notes from Showtime totaling $4 million last October and is said to have accumulated other debt with the pay premium channel that was left unpaid. Showtime will retain 20 percent ownership of Pro Elite.

The fighter contracts were viewed as the most significant part of the Strikeforce transaction, since they included world-ranked competitors who fought under the EliteXC banner -- Robbie Lawler and Jake Shields -- and Internet street-fighting legend Kevin "Kimbo Slice" Ferguson, women’s MMA superstar Gina Carano and UFC veterans Benji Radach and Scott Smith, among others.

Almost immediately after the purchase was made public, questions arose about whether or not the contracts were legally transferable. According to the SEC filing, the fighters affected can contest the contracts in court, though any legal battle would likely consume valuable time and cost the kind of money to which few have access.

“I talked to -- before we did the deal -- the attorneys, and the attorneys feel we have a strong position to have the contracts transferable,” Strikeforce CEO Scott Coker told the Sherdog Radio Network “Beatdown” show last week. “To me, it’s very simple; there could be a legal remedy or there could be a business remedy. I’m all about creating a business remedy. I want to be in business with people that want to be in business with me, and I think that we just increased our brand and ability to grow the sport with this distribution deal we obtained.”

The agreement Strikeforce struck with CBS and Showtime as part of its purchase includes the promotion of up to 16 live shows, with four of them airing on CBS. Ken Hershman, Senior Vice President and General Manager for Sports and Event Programming with Showtime Networks, cited Strikeforce’s proven track record and stability as major factors in the network entering into a partnership with the San Jose, Calif.-based MMA promotion.

“First and foremost, we wanted stability that I think Strikeforce has demonstrated in their long tenure of operating successfully,” Hershman said. “We like their roster of fighters, and we like the combination of rosters between the EliteXC fighters that we’re picking up and their current fighters. It presented a lot of compelling content in a very short time frame for us, so we didn’t have a building process.”

Strikeforce will hold its first event since the EliteXC purchase on April 11 at the HP Pavilion in San Jose, Calif. The promotion has already announced a pair of fights -- a main event matchup pairing former UFC and Strikeforce middleweight champion Frank Shamrock with the volatile Nick Diaz at a 179-pound catch-weight and a middleweight showdown between Radach and Smith.

Shamrock (23-9-2) knocked out Diaz’s mentor, Cesar Gracie, at a Strikeforce show in March 2006. That back-story gives the fight built-in momentum, according to Coker.

“It just made a lot of sense to me because of the history behind Cesar, the Gracies and the Shamrocks,” he said. “I thought it was a compelling story, and it would be a fantastic matchup because of the styles. That’s why we put that fight together.”