Ivan's Blog

Featuring Ivan Trembow's Self-Important, Random Rants on Mixed Martial Arts, Video Games, Pro Wrestling, Television, Politics, Sports, and High-Quality Wool Socks

Tuesday, August 17, 2004
Mixed Martial Arts--- K-1 Bellagio Fighter Salaries Raise Eyebrows
by Ivan Trembow
Originally Published on MMAWeekly

Before we get into the analysis and commentary on these numbers and an interview with Nevada State Athletic Commission Executive Director Marc Ratner, let's take a look at the numbers themselves. These are the dollar figures that K-1 submitted to the Nevada State Athletic Commission for the K-1 USA event that took place on August 7, 2004.

K-1: Battle the Bellagio III Fighter Salaries
-Marvin Eastman: $10,000
-Sergei Gur: $9,100
-Chad "Akebono" Rowan: $7,800
-Gary Goodridge: $7,800
-Rony Sefo: $7,800
-Brecht Walis: $7,800
-Jorgen Kruth: $7,800
-Jan Nortje: $7,800
-Ray Sefo: $6,550
-Alexander Ustinov: $6,500
-Carter Williams: $6,000
-Rick Roufus: $6,000
-Dewey Cooper: $6,000
-"Mighty" Mo Siliga: $5,550
-Tommy Glanville: $5,000
-Scott Lighty: $2,000
-Frank Cota, Jr: $2,000
-Rob McCullough: $2,000
-Anthony Brown: $1,800
-Brian Warren: $1,500
-Raul Romero: $1,500
-James Martinez: $1,000
-Alex Jucan: $1,000
Total Fighter Payroll: $120,300

Commentary and Analysis:

-You may be asking yourself how it's possible that not a single one of the fighters made more than $10,000 on a card promoted by a company with deep pockets like K-1. While there's no doubt that K-1 doesn't spend as much money on its American shows as it does on its Japanese shows, the company as a whole has the deepest pockets of any MMA/kickboxing organization in the world. K-1 as a company has more money to throw around and is more notorious for throwing such money around than its Japanese competitor Dream Stage Entertainment (which runs Pride), and is in a different league financially than the UFC.

-While exact figures are not known, by all accounts K-1's top fighters make six-figures per fight in Japan or at least high five-figures. Even if one makes the assumption that American fighters make a lot less money on K-1 USA shows since the shows don't generate a large amount of revenue, it would be naive to think that K-1's top fighters in the Japanese market are not well taken care of, especially considering the bidding wars that frequently take place between K-1 and Pride.

-K-1 is not legally required to disclose to the Nevada State Athletic Commission the complete financial structure of any given fighter's contract, and we'll get into why that's the case later in this article. It would certainly seem that K-1 is using its legal right to not disclose the complete salaries, because it would be hard to look at the salaries listed above and believe that K-1 is paying 20+ fighters a grand total of $120,300. That would be a very difficult to believe assertion in general, but let's look at three cases that would be particularly hard to believe.

1. Ray Sefo has been a huge star in K-1 for years, and this year has been groomed to become one of K-1's very top stars by being fed a burnt-out Bob Sapp in a match in Japan, which Sefo predictably won by TKO. He is listed as making $6,550 on this show. Okay, maybe Sefo just loves to fight and is willing to travel to America and do it for next-to-nothing. That argument can be made, but it's a lot harder to explain the cases of Gary Goodridge and Chad "Akebono" Rowan.

2. Gary Goodridge is one of many fighters who have been snatched away from the competing company in the ongoing war between K-1 and Pride in Japan. Goodridge had a contract with Pride that paid him high five-figures or low six-figures, and he was signed away by K-1 with the promise of more money. He is listed as making $7,800 on this show.

3. Chad "Akebono" Rowan, despite never having won a K-1 fight, is one of K-1's mega-stars in Japan, having drawn several of K-1's top ratings of all time. He makes well into the six-figure range per fight, and yet he is listed as making $7,800 on this show. To put that number in perspective, eleven of the sixteen fighters who were on the UFC 48 card made more than that... and the UFC has a small fraction of the money to work with that K-1 has.

Digging deeper only reveals more questionable numbers. Let's take a look very specifically at some of K-1's top stars in Japan and how much money they supposedly made for various fights in America over the course of the past three years.

-Perennial Grand Prix players Peter Aerts and Stefan Leko supposedly made $750 each for a K-1 USA show on August 11, 2001.

-Multi-time World Grand Prix Champion Ernesto Hoost was listed as making $100 at K-1 USA's show on August 17, 2002. On the same show, Stefan Leko and Mike Bernardo were also listed as making $100, while Gary Goodridge supposedly made $1,100. Additionally, all eight fighters in that night's tournament were listed as making between $100 and $500.

-Former World Grand Prix Champion Mark Hunt supposedly made $50 for his K-1 USA fight on May 2, 2003. Gary Goodridge and Stefan Leko also allegedly made $50 that night.

-Bob Sapp was listed as making $5,000 for his April 30, 2004 fight against Tommy Glanville in Las Vegas. When you consider that Sapp was one of the K-1's biggest stars of all time, and very likely K-1's highest-paid fighter of all time, it seems ridiculous to suggest that he would be fighting for $5,000 under any circumstances.

-If you think Bob Sapp fighting for $5,000 is questionable, consider this: For his K-1 fight against Kimo on August 15, 2003, Sapp supposedly made $50. One of the biggest stars in K-1's history... signing a bout agreement that pays him fifty bucks.

-How would it be legal for K-1 to not report the full amount that the fighters are making, you ask? Well, as a foreign company with foreign contracts that are not bound by US law, K-1 is fully entitled to have "promotional contracts" wherein a particular fighter might make X amount of dollars per year and X amount of dollars per fight on top of that.

These promotional contracts are not public record in Japan and are completely outside the jurisdiction of the Nevada State Athletic Commission and all other branches of US government. Therefore, there is no way to know how much K-1 fighters are making on their promotional contracts, or if K-1 is reporting these figures to the appropriate branches of government in Japan. In no way does MMAWeekly have evidence of K-1 doing anything illegal in this situation; all we seek to do is report on the numbers that K-1 has filed with the athletic commission over the years and then raise the obvious questions that those numbers bring up. K-1 has not responded to MMAWeekly's requests for comment as of press time.

If one assumes that K-1 has promotional contracts with fighters in Japan that pay the fighters a base salary and an additional amount for any given fight, it would still be hard to believe that Akebono's amount for any single fight would be $7,800; or that Peter Aerts' amount for any single fight would be $750, or that Ernesto Hoost's amount for any single fight would be $100, or that Bob Sapp's amount for any single fight would be $50.

After taking all of the above into consideration, one also has to consider that K-1's former CEO Kazuyoshi Ishii was convicted of massive tax fraud in Japan earlier this year and was sentenced to 22 months of prison time. According to court records and numerous Japanese newspapers, the court found that Ishii and at least two other K-1 employees concealed millions of dollars of income over several years and thus avoided paying millions of dollars in taxes. While K-1's business practices in Japan do not necessarily have any bearing on any of the company's US operations, Ishii's conviction means at the very least that one cannot simply give K-1 the benefit of the doubt in any legal matter without looking at the matter from every possible angle.

-For more details on the legalities of this situation, and the specific role that the Nevada State Athletic Commission is able to play in the process of K-1 fighters getting paid when they fight in America, we turn now to the Executive Director of the Nevada State Athletic Commission, Marc Ratner. After an initial exchange of e-mails in which I explained what my concerns were, I spoke to Mr. Ratner via telephone and here is how the conversation went.

Ivan Trembow: I appreciate you taking the time to comment on this...

Marc Ratner: ...Well, what you're asking me, we have these contracts and they say they're fighting for a thousand dollars or whatever that number might be. And there are other contracts, promotional contracts in foreign countries, which is legal. Our fiduciary duty at the athletic commission is to make sure that the fighter gets paid what's on the contract that they signed in Nevada, the bout agreement.

Trembow: So provided that K-1 reports the salaries in Japan or whatever country they're paying any given fighter, it would be perfectly legal for any given fighter to be paid additional money in Japan, or with money coming from Japan?

Ratner: Yes, it would be legal because a fighter might have a promotional deal that pays them a certain amount per year, and then whenever they fight they get an additional amount. But the purse that they get in the state of Nevada is what I go on. The contract they sign with the Bellagio... my legal duty, my fiduciary duty is to make sure that they have a check for that amount.

Trembow: So anything else in addition to that would be beyond the jurisdiction of the Nevada State Athletic Commission?

Ratner: Yes, that's correct.

Trembow: And it would be beyond the jurisdiction of the Attorney General's Office or anything else in American government as well?

Ratner: Right, that's correct, because what we're going by is the bout agreements. And I mean, certain fighters in boxing, they have promotionals where they get a certain amount, and then they make a certain amount for fighting, and they might get paid an amount by a promoter in England or wherever it may be. All we want to make sure is that we have the money for what they get paid as far as the contracts that they sign, the bout agreements signed in the state of Nevada. The tax liability is upon the fighter when they get paid and has nothing to do with the state. All the fighter will get here from the Bellagio is a 1099 [tax form that they can fill out] for whatever amount they earn here in Nevada.

Trembow: One big factor that raised a red flag in my mind in the first place is the fact that the former CEO of K-1 in Japan was convicted and sentenced to jail time for tax evasion...

Ratner: ...Right, but I understand that he may have been here, so he's not gone yet.

Trembow: Yeah, he had a suspended sentence as of a few months ago. I'm not sure if it's still suspended or if...

Ratner: ...That's K-1 Japan, and this is an important legal distinction. K-1 Japan is completely separate from K-1 America even though these guys, they're completely separate corporation-wise, I'll say that. And when K-1 fights here in America, the sole promoter is the Bellagio (Hotel & Casino), which has a very important gaming license. And they are aware of Mister Ishii's problems in Japan, and that's why they have an arms-length agreement to do business with K-1 America, because they couldn't do business with a felon in a foreign country. The gaming company wouldn't be able to. So we as the athletic commission, through our lawyer who is also with the gaming commission, made sure that the Bellagio/Mirage/MGM corporate lawyer was aware of everything that's going on in Japan with Mister Ishii, and they are.

Labels: ,