Affliction's Counter-Suit of Fedor Emelianenko's Management Calls M-1 Global a Sham

The Affliction/M-1 Global team in happier days. Left to right: Donald Trump, unknown, Tom Atencio, Vadim Finkelchtein, Fedor Emelianenko, Apy Echteld, Oscar De La Hoya, unknown.

Loretta Hunt reported on Friday for Sherdog:

Affliction Entertainment filed a countersuit against M-1 Global, the management and promotional group that reps Fedor Emelianenko, in Los Angeles federal court on Thursday, asking for declaratory relief on the validity of a "Consultation Agreement" signed into by the two parties in April 2008 -- allegedly under false pretenses. Affliction is also asking the court to rule that M-1 Global return $2.4 million in consulting fees it was paid in conjunction with two Affliction MMA events the two groups co-promoted in July 2008 and January 2009.

In the filings obtained by Sherdog.com, Affliction claims it, under M-1 Global's directive, entered into two separate agreements with Emelianenko and the Holland-based organization to procure the services of the world's No. 1 heavyweight as a headliner for three events.

According to Affliction, the California-based promotion inked a "Fight Agreement" that tendered $300,000 to Emelianenko per bout he participated in, while Affliction was directed to pay the remaining $1.2 million of Emelianenko's $1.5 million asking purse per bout directly to M-1 Global under the auspice of a "Consultation Agreement."

"The reason for the two agreements, Affliction was told, was for personal tax implications," reads the countersuit.

Affliction claims no consultation was ever agreed upon or given by the M-1 Global group for the two events.

"Because the consulting agreement was a sham contract designed to avoid tax obligations, M-1 had no obligations to perform pursuant to the consulting agreement and therefore rendered no performance under the consulting agreement," alleges Affliction's filings.

This is a counter suit on Affliction's part. Our own Michael Rome broke down the original M-1 Global suit against Affliction when it was filed, including the details revealed at that time regarding the M-1 consulting agreement:

  • M-1 was to provide consulting on all the following topics: International bout consulting, international television, fighter scouting, location for future bouts recommendations, television-related opportunities, international sponsorships, and bout tourism.
  • M-1 was also required to fully cooperate and assist in the advertising and promotion of each fight.
  • In exchange for these consulting services, Affliction agreed to pay M-1 a consulting fee of $1,200,000 per fight.
  • Affliction was required to promote the M-1 Global brand through promotional activities including: Articles in event programs, M-1 Global's logo incorporated into Affliction advertising, M-1 logo recognition with event advertising, public address announcements during the bouts, the airing of M-1 videos announcements during events, and the creation and sale of co-branded M-1 and Affliction event posters.

I believe there is still one more consulting agreement out there based on my reading of M-1's lawsuit, but Affliction did not disclose it here. Just counting these two agreements, Fedor Emelianenko received $300,000 per fight while M-1 Global received 1.2 million. Fedor Emelianenko is a 20% owner of M-1 Global.

All in all, this is an ugly mess that looks like it will continue for some time. The more we learn about the details of entering a "partnership" with M-1 Global the worse it looks.

Fightlinker comments:

M-1 has been working it's ass off for the last year trying to prove that it's a valuable co-promotional partner that brings all sorts of positive things to the table. That claim is going to take a serious hit as Affliction has just sued them this past Friday, basically calling bullshit on the idea that M-1 did anything real other than shelter Fedor's money from taxes.
...
Keep in mind though that this is part of Affliction's counter-suit against M-1, who are trying to keep Affliction on the hook for that third Fedor fight that never happened. Affliction is liable to make things look as negative as possible, even if they just paid M-1 the money and told them to stay out of the way. For a less biased opinion on the situation, I'd say go ask Scott Coker what he thinks of M-1 as a promotional partner. But he'd just give you a nervous smile and talk about how great everything is even after they just fucked him (and themselves) over hardcore by skipping April's CBS show.

Also see these older Bloody Elbow posts:

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