Apparently this was part of the contract Tito signed, guess he had something against Dana because originally Dana did not want to give Tito as much money as Tito thought he was worth. Then Dana had the brainstorm about TUF 3 (Shamrock vs Ortiz). Tito saw that his stock had risen, ie Dana wanted him now, so Tito thought well not only do I want the money I demanded, but how about 3 rounds in the ring (boxing, not MMA, Dana White is apparently a decent boxer in his own rights). LOL, pretty funny if you ask me. If only Tito wasn't such a loud mouth and arrogant on stage, he'd probably be pretty likeable.
That's what the story is as far as I know.