Charles "Mask" Lewis, along with his friends Dan "PunkAss" Caldwell and Timothy "SkySkrape" Katz, built the TapouT clothing brand out of the trunk of his car. Starting in 1997, he traveled the country selling his unique vision to anyone who was buying. Almost two years ago today, on March 11, 2009, Mask passed away in a tragic car wreck. His surviving partners sold the brand a year later to Authentic Brands Group. Chaos and lawsuits followed. Bloody Elbow sat down with Authentic Brands Group CEO Jamie Salter, six months after the ink dried on his purchase of TapouT and a few days after the companies historic jump into the Nascar market (sponsoring a Nationwide series car and a Camping World Truck series race this August).
Jonathan Snowden: There have been a lot of changes in the short time you've owned TapouT. Is it a different business than where you found it?
Jamie Salter: We bought the company six months ago and when we bought the company there were definitely lots of issues at old TapouT. Obviously they didn't sell the company just because I came and I wanted to buy it. They sold the company because they needed to sell it for various financial reasons. I'm sure you're aware of that.
Jonathan Snowden: I think there's some confusion about that because of the ongoing litigation involving TapouT partners who believe that the company was healthy and was sold for a cut rate price.
Jamie Salter: Look - the old TapouT company definitely had their issues. I don't really want to get into them with you because a lot of them aren't really our issues and we weren't privy to them. The way we did our transaction, we were concentrating specifically on the intellectual property (IP) side because we are in the IP business. We aren't in the operating business. Being in the IP business we were more interested in if the trademarks were clean and whether they had proper registrations. What is the licensing loyalty around the world. Those were the things we were looking at, not necessarily their day to day operational business, even thought that's where TapouT turned out to have the most problems. Because that wasn't the business that we were going to go forward with.
Jonathan Snowden: They were running more of their business, like the sales and the warehouse, independently than you do with your brands?
Jamie Salter: Exactly. And they had good partners. They had Li and Fung on the apparel side. They had a good partnerships. It's where they did things on their own that they didn't do as well as they might have done. What really became evident towards the tail end of buying the company were the relationships with the athletes, all the fighters.
Jonathan Snowden: Just the number of them?
Jamie Salter: Right. It was almost unheard of for us, all of the contracts whether they be verbal, email, whether they were handshakes, or whether they were written contracts. There were a lot of strange ways they did their contracts. You've got to appreciate, when you buy a company, the only way you can pay out on a contract is if somebody can send it to us. 'Here's my contract. This is what it is. It's in writing.' We had no issues paying out on those things. Just like we didn't have issues paying out royalties on products sold.
But there are lots of areas where, when we bought the company, we didn't get the information.The information was in somebody's drawer. The information wasn't provided to us because they didn't want to provide it to us or the person who made the deal was no longer with the company. There was a lot of gray area we didn't know about until we actually closed the deal. Once we closed the deal, everyone came out of the woodwork. 'I had this deal, I had that deal.' No problem. Show us your contracts. Show us your email trails. Anybody that was honest and upfront and had proper documentation, we honored it or old TapouT honored it. They really were quite fair people when it came to that stuff.
The gray area was much harder to deal with. When it's he said, she said, it becomes much harder for us as the new company to deal with those situations. The only way to deal with some of those situations is to try to track down as much of the information as we can from both sides. Then we'd have to decide who was telling the truth and who was not telling the truth.
Jonathan Snowden: Can you give me an example of a situation that played out like this?
Jamie Salter: I'll give you a great example. Kenny Florian is a guy who never had proper paperwork. But Kenny Florian, after I met with him and I spoke with him, and my guys spoke to him and we spoke to Malki (Kawa) his manager, the more we checked out the story it was a real story. We said 'You know Kenny, you're good. We're going to pay you October, November, December, January, February. It's clear as day. You don't have proper paperwork, but we're good with it. But at the end of February at Fight for the Troops, we have an understanding that we either will or won't resign you. If you win, my guess is we'll want to resign you. If you lose, my guess is we won't sign you or if we do, it will be for less money.' He says 'I'm good with that.'
The next month, he got injured. I said 'Malki, tell Kenny he's good to go. He has nothing to worry about. We are still going to pay him and he still owes me one fight.' Now, he's not fighting until June. I may get the raw end of this deal. But I don't believe I will. That's a good example of somebody, when we did enough checking, we believed what we heard.
Jonathan Snowden: You guys were looking to do the right thing. That doesn't always happen in this industry and we have the horror stories to prove it.
Jamie Salter: Since we took over in September, everyone has gotten paid. There's been no issues. They get paid one week after their fight. If not sooner. The faster I can pay them the happier I am. They are working very hard when they go into that cage and win, lose, or draw, they deserve their money.
TapouT's move to Nascar after the jump
Jonathan Snowden: Is this move to Nascar a retreat from a crowded MMA landscape? Are you pulling money out of MMA?
Jamie Salter: That's not true. What we're doing is setting a legitimate budget based on what TapouT has spent in the past. And we're living by that budget. We're not making promises - we're setting a budget, following it, and living by it. That's important, because when you promise a guy $5,000 to fight and $5,000 to win or $20,000 to fight and $20,000 to win, you have to do what you say. What I'm hearing from all the managers is that there are very few companies that both pay the fighter what they say they are going to pay them and pay them on time. Some do, but there are lots that don't. Check and see if that isn't true. Check again in six months and you'll say 'I can't believe they paid those guys who were on an old TapouT verbal contract. I don't get why they even sponsored those guys because they were on the undercard.' We're still going to pay the people old TapouT had deals with as long as it's properly papered.
Jonathan Snowden: So when I hear from managers that say you guys are cutting back, some of those might be fighters with oral agreements from the old TapouT that are simply running their course? People who had talked with Charles Lewis in 2008 or whatever the case may be. Things they can't really verify to you guys right now.
Jamie Salter: That's correct. You're 100 percent correct. If somebody made an old deal for three fights and those three fights are up, we won't make a new deal. Unless we believe that particular athlete is good for the organization. If he had a three fight deal and he's only fought once -if he has good paperwork, he's getting paid.
Jonathan Snowden: In a lot of ways TapouT was a charity as much as a business. Charles "Mask" Lewis helped a lot of guys coming up the ranks in this sport. Is that something that changes as TapouT becomes a much bigger business?
Jamie Salter: There aren't any bro deals. We don't want any bro deals, we're not giving any bro deals. We want to be strictly business and professional with the fighters and the managers. The only way this sport will continue to emerge and grow is if people can play in the corporate world. I'm the farthest thing from being a traditional corporate guy, but a deal, is a deal, is a deal. There can't be gray in that deal.
If it's Georges St. Pierre or Anderson Silva, there is no gray in their deals. Anybody that has proper representation, which is lots of guys, there's no gray in their deals. The only gray is where there is no proper representation. And shame on the people who did those deals. I don't know if it was the old TapouT people or if it's the managers who are actually dads and uncles who did the deals, but I can tell you know, whether it is someone we sign five minutes before they go in the cage or someone with a multi-year deal, it's all on paper. It's all very up front. There's a rule book and as long as they follow the rule book they get paid. If you don't follow the rule book it states what happens.
Jonathan Snowden: Is it fair to say that the way TapouT has done business in the past was a product of a different sport? A more grassroots sport? And now you guys are helping take it to a new level, potentially hundreds of millions in revenue and it just can't operate the way it did when they sold shirts out of Mask's trunk?
Jamie Salter: One hundred percent. It's more mainstream than it's ever been. The UFC has done an amazing job taking this sport, legitimizing it, and making it mainstream in every household. It's growing up. The people in the sport have to do that as well. You can't just ship a guy 12 t-shirts and say 'Hey bro, I shipped you 12 shirts, can you send me a check?' You've got to send a proper invoice, you've got to send them in prepacks, you've got to make sure you send the right sizes. Because you are dealing with big retailers now.
Jonathan Snowden: I guess it is unfair to expect you guys would run things just like Charles did.
Jamie Salter: Charles did a brilliant job. May he rest in peace. I didn't know the man, but what I've heard about him is incredible, incredible, incredible. I can tell you, if Charles was here today, I'm not so sure we'd have the company. Charles was the driver of that business. Yes, Dan did a phenomenal job and so did Skrape. But when they lost Charles they lost a key piece of the business. Charles was the key and they lost that mojo when he passed away.
We sat down with Skrape and we sat down with Punkass and we said 'tell us why you were successful. What did you do when Mask was around?' The conclusion was it was all about people. It was all about their customers and the consumers. Not what Jamie Salter likes. Not what Jonathan likes. What do the consumers like. What do they want to see. And it wasn't just about sponsoring the biggest names. It was about supporting the undercard guys and the up and coming guys. That's something we have not given up on. They aren't bro deals - but they are supporting the younger generation that is coming up in the sport.
Jonathan Snowden: In the past TapouT has sponsored a wide spectrum of fighters, even guys on the amateur scene. When you talk about young guys, you're talking about a shift to the UFC undercard as kind of the starting point for being considered a potential TapouT fighter. Is that right?
Jamie Salter: Mostly guys on the UFC level. We are doing a few things with fighters not in the UFC yet, but mostly with the young guys coming into the UFC.
Jonathan Snowden: Nationwide was such a change of direction. How did it come about?
Jamie Salter: I'd love to tell you it was my idea, because it is such a brilliant idea and it's working very well for the company. It was Skrape's idea. He was talking to one of his buddies and thought we had an opportunity to do a deal with Nascar. It's a co-sponsorship, meaning they are going to sponsor us and we're going to sponsor them. There's merchandise on both sides of the fence, for us and for them.
The more research we did, the more we liked it. Because not only was it good for TapouT, it was good for Kevin Harvick's racing teams. I don't want to tell you the financial details, but some day over a beer you'll say 'You know what Jamie? I really like that deal.'
It was a mutually beneficial deal from a financial side. But I really like it because it opened the eyes of Nascar and their fans, which is a really big sport, to the MMA world. If you call Bryan Johnston (UFC Chief Marketing Officer) he'll tell you what he told me 'Jamie, this a really good deal. Really good for the UFC and the MMA world. It's showing it is mainstream, it is cool, that it's not a brutal sport.' It's all about fitness, and discipline, and training, and honor. He was really happy. I was a little nervous about what the UFC was going to think. But they really liked that we were expanding the business outside the Octagon.
Jonathan Snowden: I spent the morning chatting with Nascar people. And I know you just said you didn't want to discuss the specifics of the deal. But from what I've gathered, the primary sponsorship on a Nationwide series car runs from $100,000 to $300,000 a race. It that fair speculation or have I been misled?
Jamie Salter: You're in line. It's more to the latter. There's 33 races a year. If you wanted the entire car I think the entire car would cost about $15 million a year. Listen, I'm going to tell you Jonathan - it was a great deal for us. I'm really happy with the way it's working.
Jonathan Snowden: As someone from the South, who has family that loves Nascar, I see a huge opportunity in the apparel market, which is frankly rudimentary. You have to be bringing some of the famous TapouT style to Nascar right?
Jamie Salter: The TapouT/Kevin Harvick Racing Team line is in play. You will see that stuff come out for back to school.
Jonathan Snowden: Will it be done in a different artistic style to appeal to the Nascar fan, or just as wild as your MMA stuff?
Jamie Salter: It will be similar but cleaner. It will be something Kevin Harvick likes too. But we're not going to mess with the TapouT logo.
Jonathan Snowden: I'm not sure this is something Charles would have done -taken this money and put it into Nascar. But in the bigger picture, is it necessary to help take this brand beyond MMA?
Jamie Salter: We will never forget about the MMA fans. We'll always stay true to the MMA world. But we also need to expand the line to consumers beyond MMA. At the same time we won't forget about MMA. We believe that's the cornerstone of the brand. We will not forget where our bread is buttered. The MMA consumer is the most important consumer to TapouT. That will live with our company forever. That's a promise I'm making to Charles if he's listening.
Jonathan Snowden: I was just reading your initial press release. Do you feel, six months in, just as positive about the opportunities for TapouT and MMA as you did when you bought the company?
Jamie Salter: I just got back from Asia and what UFC is doing there - we haven't even scratched the surface. I love it. More importantly, I've got four boys, 22, 19, 16, and 14. The two youngest train and think it is the coolest thing in the world. So I'm pretty excited.
Tomorrow a look back at TapouT founder Charles "Mask" Lewis with Skrape and Punk Ass.