We’ve heard all the details of the ProElite-Strikeforce deal, but how much did it cost?
Well, according to ProElite’s latest SEC filing, Strikeforce paid $3 million for the select ProElite assets they acquired. That’s not the whole story though.
The company also disclosed it would receive a “contingent consideration” of a portion of licensing fees earned by the San Jose-based promotion’s new deal with Showtime Networks. Fees would be paid to ProElite until Feb. 28, 2012, and could be extended. The portion of the fee was not disclosed.
Strikeforce will assume “certain liabilities” of the assets purchased, likely the specific deals within fighter contracts purchased.
Pro Elite’s debt to CBS – the network was an investor in company and funded its last show – was eliminated as part of the agreement with Strikeforce. According to a report on SI.com, Strikeforce paid off all or a portion of the debt.
Basically, Strikeforce will be paying ProElite a “contingent consideration” of a portion of what Showtime pays them until at least 2012, Strikeforce will be responsible for paying the fighter’s purses and whatever else is in their contracts, and they also paid all or part of ProElite’s debt to CBS.
The part that puzzles me, however, is ProElite CEO Chuck Champion is claiming that the organization is now basically debt free, yet they were just $55 million in the hole. I’m 99.9% sure that ProElite didn’t owe Showtime and CBS $52 million combined, so how exactly are they debt free?
In all of college, the class I loathed more than any other was finance, so my understanding of high corporate finance is right up there with grasping where the freakin’ universe ends (yeah, try thinking about that one). However, I did actually go to class enough to know this shit’s incredibly complicated, so erasing $30-$40-$50 million of debt into thin air can probably be accomplished. If anyone has any insight into that, please share in the comments.
That said, $3 million? That sounds like a pretty fair deal. Hell, Affliction’s last main event cost that much.