Is Yakuza Related Corruption Killing MMA in Japan?

Yes. That's the short answer. For a comprehensive introduction to the interconnections between Japanese MMA and organized crime read Fight Opinion's Yakuza section. Pride's tragic fall is directly related to their use of Yakuza fixers to try to intimidate rival promoters who briefly stole Fedor Emelianenko away from them. This post tells that sordid story.

Now it appears that FEG, the parent company of Dream and K-1, is sinking into the same abyss. From Fighter's Only:

Japanese mega-promoter Fighting Entertainment Group, parent company of K-1 and DREAM, has suffered a new setback, according to a long-established Japanese agent. The agent says that the much-trumpeted deal with investment bank PUJI has come to naught and that the investment bank has said that it can do nothing for FEG.
...
Unable to obtain loans or capital from investors FEG has, according to our souce, gone to the ‘black market' for loans with which to pay its fighters. This of course raises the spectre of the Yakuza links which killed PRIDE FC, but FEG has always been fastidious about avoiding such links (or at least, having any such links made public). Seeking capital from ‘unofficial' sources is a very risky move.

Despite the difficulty FEG and PUJI have had in raising investment, there are several interested parties hovering in the wings if the company is put up for sale.

We'll look at the Dynamite! NYE card and hear from HDNet's Andrew Simon, Zach Arnold, Fightlinker and Dave Walsh of Head Kick Legend in the full entry. 

Fightlinker breaks down how the annual New Year's Eve spectacular Dynamite 2010 is shaping up for FEG:

Is it just me or has FEG spent the better part of the year having all it's best laid plans fall apart? When your biggest fight of the year after Aoki / Kawajiri is a last second freakshow between Minowaman and Satoshi Ishii, then you know you've had problems putting shit together. And those problems continue into the promotion's year end Dynamite!! spectacular, which still isn't very spectacular a month away from showtime. Here's what's solid thus far:

• Bibiano Fernandes vs Hiroyuki Takaya
• Melvin Manhoef vs TBA

And here's what's on the more hopeful / speculative list:

• Kazushi Sakuraba vs Akebono
• Gegard Mousasi vs Jerome LeBanner
• Shinya Aoki vs Gilbert Melendez

Unfortunately, as of now LeBanner hasn't agreed to the Mousasi fight or even what kind of fight it would be. The Gilbert Melendez fight has officially been scuttled because of some weak sounding excuse about Gil's contract negotiation with Strikeforce. And unless FEG's TV partner TBS is willing to pony up the boatload of cash required to get Akebono back in the cage, there's no way that fight will happen. 

Sherdog is more optimistic:

At this point, we still have no way of knowing whether Dynamite will shape up the way Dream EP Sasahara has claimed it will, but we should be skeptical that FEG and TBS would abandon the chase for mainstream viewers on such an important day for television viewing. All FEG programming could use a ratings boost these days -- particularly so for their year-end effort -- and thus, we'll have to wait and see whom FEG and TBS will tab for Dynamite and just how exactly they'll rationalize each bout as having serious implications in the greater scheme of fight sport. However it turns out though, expect FEG and TBS to go all out and put on a great show, as they really have no other choice for New Year's Eve.

Andrew Simon of HDNet (which airs DREAM and is planning on airing Dyanamite! 2010) responds to the doubters on Twitter:

@andrewhdnet MMA websites for past 3 years said Japanese MMA orgs are on verge of bankruptcy.How long is the verge? Can you predict demise for years?    

Zach Arnold responds to Simon:

I was the one who spelled out the troubles of PRIDE starting in November 2005 up until the promotion crumbled and even on its final days people were still in complete denial about it.

There is no textbook to understand about the Japanese fight business. There's a lot of mafia elements to it and you have to understand the structure of the gangs. This isn't kid's play and this isn't some cute movie where mobsters are glorified.

Combine that with the fact that you have lots of dummy companies, shadow alliances, and many moving parts and you have to be a lifer or at least have a fundamental understanding of what's happening to really understand why things operate the way they do.

I'm not surprised that people are still in the dark but I'm disappointed by it because given past history with PRIDE, you can educate yourself relatively well on the warning signs of things to come.

And Dave Walsh of Head Kick Legend adds:

Andrew Simon is a good guy, but from what I've seen he tends to believe his business partners. He flipped out at me and called me a liar when I said DREAM.17 wasn't happening on the HDnet planned date, told me to talk to Mike Kogan and get my facts straight. I told him this was direct from Kogan.

At this point, they still had everything ready to go, crews waiting to go to Japan, travel, etc. That should be a sign, but he is still trusting. Kogan has admitted he has no clue if he will have a job in 2011 and there is some rumors pointing towards him possibly helping It's Showtime with their US shows coming up, so he might be angling to work with them (total speculation, btw).

I think the easiest way to explain (a lot of) Japanese companies to people is that they are a front for money laundering operations.

The scale and popularity of DREAM shows means they should be not only turning a profit, but flourishing, even with less ratings than before. But the truth is, they are set to be profitable after a certain amount is skimmed.

Here's hoping for the best for Japanese MMA. American UFC fans seem to be pretty complacent about the collapse of Japanese MMA, but that is a foolish response. 

Modern MMA was born almost simultaneously in the U.S. and Japan in the 1990s but for the first decade of the sport, Japan was by far the larger and more developed market. It's no exaggeration to say that it was the blockbuster success of the Japanese market that really propelled MMA's growth from 1995 to 2005. Hopefully, the U.S. market can carry the mantle of world-wide MMA leadership without a brutal collapse of its own.