Is MusclePharm Really a Viable Sponsor In MMA? A Look At Their Finances

MusclePharm is one of the most recognizable and largest supplement sponsors in MMA. They were the supplement sponsor of the WEC and sponsor many fighters in the UFC including Bantamweight Champion Dominick Cruz, Rashad Evans, and Middleweight Champion Anderson Silva. They also sponsor NFL players Chris Johnson, Joey Porter, and Shawne Merriman. 

MMA Payout broke the news that MusclePharm added Eagles Quarterback Michael Vick to their stable of sponsored athletes. The details from Payout from the deal:

Vick's deal with MusclePharm would be for two years guaranteed, with an option for a third year, and include substantial bonuses based on the quarterback reaching the Pro Bowl and the Eagles making the playoffs and also the Super Bowl.

Vick's Pro Bowl and postseason bonuses would begin at $25,000, according to the source.

Vick would have a social media responsibility with the company, and the ease with which he works with MusclePharm executives would help determine whether or not the third year is picked up. Vick also would receive $100,000 in MusclePharm stock per year, and base compensation would be $200,000 in the first two years and $250,000 in the third.

The total deal would run for three years and net Vick $1.55 million. This appears to be a great deal for all involved as Vick seems to have turned his life and career around and MusclePharm seems to be a strong and well maintained company. It's a win-win for all parties as Vick is a recognizable name coming off the best season of his career and MusclePharm will be paying Vick some much needed cash. Unfortunately, a deeper look at their finances tell an entirely different tale.

A look at MusclePharm (MSLP.OB), you will note that the the stock is listed at $0.03 a share, which would mean that the $100,000 in stock to Vick would be granted with around 3.3 million shares, making the stock essentially worthless should Vick ever choose to cash out. There are currently 148 million shares outstanding and an average volume over a three month period around 3.5 million. 

A deeper look at the company's financials are even more bleak. Reporting a gross profit of $1.2 million and a total operating loss of $18.252 million over the previous fiscal year, the company's financial statement is interesting. In the first fiscal quarter of 2011 (ending in March 2011), the company listed total assets to the tune of $4.56 million while a total of $6.66 million in total liabilities. The net tangible assets are -$2.1 million and the net income is -$5 million after only producing a Gross Profit of $1.19 million in Q1 2011. 

With their finances as a much of a mess as they are, is it really possible for MusclePharm to expand their sponsorships in the sports of MMA and Football? Recently MMA management group VF Elite announced that MusclePharm had granted them exclusive control of the MMA marketing budget. VF Elite manages the MMA marketing budgets for HeadRush and SafeAuto as well. With a MMA manager in control of a budget, is there really any real opportunity for growth in the industry, or has MusclePharm transitioned from small start up to money mark? It's a story that needs to be discussed but one I'll save for another time.