December 18, 2008 by Sam Caplan
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In recent hours FiveOuncesOfPain.com
has been informed by sources that ProElite, Inc
. has accepted a bid to sell its assets to an outside company.
However, Five Ounces of Pain has been unable to verify the identity of that company. It is also unclear whether the company came close to receiving its asking price of $9 million. An announcement could be made by the end of business on Thursday, or possibly on Monday.
Several companies have submitted formal bids to ProElite in recent weeks, with the company believed to have set a Thursday deadline to decide on a buyer. Sources have indicated that if a bid was not accepted soon, ProElite would not have had enough money to continue operations and likely would have filed for bankruptcy.
Over the weekend, multiple sources identified a group led by King of the Cage
promoter Terry Trebilcock
and a financial backer as the leading candidate to acquire ProElite’s assets.
Other groups said to have made bids were Strikeforce
; a group led by former EliteXC
Director of Fight Operations Jeremy Lappen
; and another group headed by former ProElite COO William Kelly
. Sources have confirmed that neither Strikeforce or Lappen’s bids were successful.
Published reports also suggested that Mark Ecko’s Ecko Enterprises
had also submitted the bid, but two separate sources have informed Five Ounces of Pain that Ecko was never a serious contender and it’s uncertain whether they even submitted a formal bid.
Multiple sources have also revealed that the UFC expressed an interest in ProElite’s assets at one point before deciding not to pursue matters any further.
While ProElite’s fighter contracts are considered to be a valuable asset, industry insiders have stressed to Five Ounces of Pain that it’s the company’s television contracts with Showtime and CBS that are perceived as the most valuable asset.
However, it remains to be seen just how valuable the CBS contract is.
While the terms of CBS’ agreement with ProElite contains a mutual option, only one more fight exists under the current deal. Being that CBS is also a major network, it retains the right to cancel the contract at any time so the remaining broadcast is not guaranteed.
Furthermore, a source says that what CBS has told companies interested in placing a bid on ProElite that they would be paid a rights fee of $400,000 per show. However, any company that inherits the television contract would also be obligated to cover CBS’ production costs, which are believed to be as much as $500,000.
Under the aforementioned financial terms, a fight group could potentially lose money promoting shows on CBS. However, the same source indicated that under the terms of the deal, a company would have the ability to sell some of CBS’ ad inventory and if they were successful in that regard, they could turn a profit on the show.
The terms also do not factor in the intangible value of using free-over-the-air television to build potential pay-per-view drawing cards. But being able to take advantage of such a platform in order to build stars is far from a given, as EliteXC was only able to build Kevin “Kimbo Slice” Ferguson
and Gina Carano
into true ratings movers. And while Slice and Carano were legitimate ratings movers, their ability to draw pay-per-view buyers was never tested.