The Secret History of Strikeforce - Part 5: Business As Usual

John S. Nash continues his look into the secret history of Strikeforce.

This is the final installment in what has become a five-part oral history of Strikeforce. Part one dealt with Strikeforce's lengthy efforts to promote the first mixed martial arts event in California. Part two took a look at the company's journey from a regional promotion based in San Jose to that of a national player airing on Showtime. Part three examined the signing of Fedor Emelianenko and their aborted plan to hold a pay-per-view headlined by him. Part four focused on the Heavyweight Grand Prix and future plans that never came to fruition.

March 12, 2011

The phone calls and text messages kept pouring in from confused friends, relatives, and co-workers.

"What's going on?" "Is it true?" "How could you sell to the UFC?"

Scott was just as surprised as they were. Not by the fact that his promotion, Strikeforce, had been sold to the owners of the Ultimate Fighting Championship, Zuffa. This he already knew. But the timing of the announcement had caught Scott as off guard as anyone else, for he had been led to believe he had a few more days before the sale would be announced to the public. He had planned to use those extra days to contact his friends, employees, and fighters and break the news to them personally. Instead Scott could only imagine what was going through their heads as he watched Dana White inform Ariel Helwani that he and his partners had just purchased Strikeforce.

The phone kept ringing but Scott didn't bother answering; he no longer had the stomach to answer their questions.

Fans of mixed martial arts were double checking their calendars to make sure it wasn't yet April 1st after first receiving news that Zuffa (or Forza LLC as the entity they created for the enterprise was named) had just purchased the second biggest MMA organization in the world. At first it seemed to defy logic: Strikeforce had recently launched their heavyweight Grand Prix and were setting record ratings for MMA on Showtime.

Perhaps people shouldn't have been so surprised for hadn't this been the inevitable outcome for every promotion that had competed with the UFC? The cost of going head-to-head with them had buried Elite XC, Affliction, WFA, and IFL before, so why should Strikeforce have been any different? In the end, this has become the accepted view, that Strikeforce was just another MMA promotion that made the mistake of entering the UFC's domain.

But is that view correct? Was Strikeforce another failed promotion or was it one who's success led to Zuffa's acquisition? Was there ever the possibility for a different outcome than the one that was announced on March 12, 2011?

SCOTT COKER, founder and former CEO of Strikeforce:

You know, it was not a good day, I can tell you that. We had agreed that we were going to break the news the following Monday. So I didn't really tell anybody what was going on. And then I started getting calls, "Is this true? Is this rumor true?" And what happened was that Dana had done an interview with Ariel and announced it. So then I started calling people to tell them what was going on.

I was going to personally call everyone but the news is already out there and I'm getting texts and I'm trying to respond. And after awhile I wasn't in the mood to call anyone.

GILBERT MELENDEZ, former Strikeforce lightweight champion:

I didn't know anything about [the sale of Strikeforce] so I contacted Scott as soon as I saw it on the MMA news sites and he told me "yeah, it's true." I was pretty surprised. But then I took a couple of seconds and I wasn't surprised. It made sense for the UFC to do it.

It was hard to see Strikeforce bought up and seeing people leaving, but I also thought to myself that while this door was closing maybe another one was opening for me.

JOSH THOMSON, former Strikeforce lightweight champion:

It really shocked me because I didn't hear anything about a possible sale. My brother was the first one who texted me. "I always knew you'd be back in Zuffa." And I was like what are you talking about? And he tells me it's all over the internet that Zuffa bought Strikeforce.

I thought it was a joke, I really did because I was already booked for my next fight. And It seemed like Strikeforce was doing really well. We had a great group of guys producing great fights. Guys like Jacare and Luke Rockhold. DC had just popped onto the scene. We had the heavyweight division on lockdown. We had Gil and I in the lightweight division. I felt that we had a good niche of guys we could build a promotion around.

There was always talk though. That we weren't going to last. That we were having financial problems. Blah,blah, blah. It didn't matter how good the shows were, there was always talk. That Fedor has bankrupted us. That we had no money and that Strikeforce is going under.

I didn't think any of that was true but when the time came the UFC snatched it up as fast as they possibly could.

CONOR HEUN, former Strikeforce lightweight fighter:

I came back from sparring that morning at Jackson's and a bunch of guys up at the ranch were "Oh, you're a UFC fighter now." I was wondering what they were talking about. So that's how I found out Zuffa purchased them and as soon as I heard I thought "Well, Strikeforce is no more."

TIM KENNEDY, former Strikeforce middleweight contender:

I was surprised the day it happened, but I wasn't completely surprised. I'd heard rumors. There was a reporter that was asking questions so I knew that it might happen, that they might be bought. So while I didn't know for sure it was going to happen, when it did I wasn't surprised.

JAVIER MENDEZ, head trainer and co-founder of American Kickboxing Academy:

I didn't know the sale was coming. Scott kept that pretty tight lipped. When I heard about it I was "Oh, crap. This is the end of Strikeforce."

Zuffa is a great business with a great business model so I'm assuming when they came to the bargaining table they came with their chips loaded up. The way I looked at it was there could only be one.

PAT HEALY, former Strikeforce lightweight contender:

I was excited and nervous at the same time. You didn't know exactly what their plans were going to be. Are they going to take a few guys over to the UFC and then close it down? They going to keep it running? So I was a little nervous but it turned out pretty good for me.

SHANNON KNAPP, President of Invicta Fighting and former fighter liaison for Strikeforce:

A reporter had contacted me and asked me if I heard anything about Strikeforce being for sale. And I hadn't so I went to Scott and asked him if this was for real? I was told no. And then I got another call from Josh Gross and I knew if Josh was on it something was up. That's when I went "Listen, something is going on, you're going to have to level with me." So they had to come clean.

It was disheartening because you spend so much time and energy on Strikeforce because we really wanted to succeed. So it was sad.

KENN ELNER, Strikeforce business affairs and legal counsel:

Somebody had called me that morning and told me "Congratulations." And I went "Oh, for what?"

I called [Ken Hershman] and told him what was going on. He wasn't shocked. Ken's a pretty level-headed guy so he was "Ok. Thanks for letting me know."

KEN HERSHMAN, President of HBO sports and former Showtime executive vice president:

At the time, Strikeforce was performing very well, especially in achieving its goal of reaching a younger demo.

We learned about the buyout at around the same time as everyone else. Although, it did not come as a surprise, given the momentum that Strikeforce had built up.

PAT MILETICH, former Strikeforce color commentator for Showtime:

I heard rumors about two weeks before, but when it happened I was on vacation in Florida in the damn swimming pool with my kids when I saw it come across the wire. And I said "you got to be kidding me." That was not a good vacation.

Showtime was very happy with what Strikeforce was delivering so when they heard about the sale they felt betrayed. They were pissed.

I know Strikeforce did not have to sell. I know Scott Coker was very bummed out that they did it. I think it generally broke his heart.

PHIL BARONI, fomer Strikeforce middleweight contender:

When I heard the news I was thinking it sucked. Scott had always treated me good and I always liked Strikeforce, so I didn't like hearing it was sold. It was also a major option and it being gone was bad for the sport.

If they hadn't sold they probably would have been on SPIKE and think what they could have done with that?

The assumption has long been that the financial strain of running a major promotion is what lead to the demise of Explosion Entertainment, LLC (dba Strikeforce). That the mounting burden of debt from too expensive of fighter contracts proved too much for their investors and they were forced to sell. While this interpretation may be common amongst MMA fans it is not shared by everyone who worked with Strikeforce.

SHANNON KNAPP:

Who knows what's true and not true because I wasn't privy to that information but it was my understanding that they were deeply in debt and that's why they were looking for someone to purchase. That they didn't want to invest any more money because they were losing money.

I don't know first hand what the financials are but if you got a good product and you're making money, you're not getting rid of it yet.

MIKE KOGAN, fighter manager:

Strikeforce was not bought because they were going under. They were bought because they were going upwards. They weren't about to fold, despite whatever stories you hear. They were bought because they were starting to become a serious pain in the ass. Look at all these stars in the UFC now, including Ronda Rousey. They came from fucking Strikeforce. Tyron Woodley, Kennedy, Robbie Lawler, Nick Diaz, Werdum, Jacare, Luke Rockhold, DC. They are all from Strikeforce.

SCOTT COKER:

The notion that Strikeforce was hemorrhaging money and that's why we would sell is not true. [Zuffa] reached out to us to buy and why would you pay that kind of money for a company that was bleeding to death? Unless you sat in on our excutive committee meetings, you weren't going to know what the numbers were.

There were four of us that made up the committee [Scott, Kenn Ellner, Jim Goddard, and Charlie Faas] and then two additional staff member who sat in [Matt Levine and Andrew Ebel]. We'd meet once a week to plan strategy and basically run the business of Strikeforce.

KENN ELLNER:

I didn't know that was a general view, but no, we didn't fall apart. And it does make me mad now knowing that people think that.

Our investors were very careful with how they spent. In fact, I thought we were often too frugal.

They also weren't looking to sell. That offer came out of the blue. Scott and I were sitting in a restaurant when Dana White called him.

SCOTT COKER:

In, I want to say, October of 2010, Dana called me personally and said "Lorenzo wants to buy Strikeforce. You guys interested?" And I said I'd talk to my partners.

We ended up meeting in late November and at first it was just dialogue so I was thinking maybe nothing's going to happen. But then after the New Years talks started to really heat up and within sixty days it was a done deal. It went so fast there was no time to find another buyer even if I could have.

I really wasn't interested in [selling], because I knew how much upside potential there was. But at some point it made a lot of sense for the HP guys to make the deal. These guys that invest in the Sharks, the actual finance guys, are from hi tech venture firms.

At the end of the day they're businessmen. They looked at me a couple of times and said they couldn't believe I didn't want to do this. Eventually I said I understand. It was a business deal and I didn't want to be in a situation where I had disgruntled partners.

FRANK SHAMROCK, former Strikeforce middleweight champlion and broadcaster:

I know [Zuffa] had come knocking before. And when they came knocking again I know Silicon Valley was like "OK, you've been knocking let's hear what you got?"

The Silicon Valley guys are money guys. God bless them, they were great partners, but they were money guys and they wanted more for their investment.

When we started out we were making cash hand over fist. But when we started competing with [the UFC] getting Henderson and Fedor and once we got in bed with Showtime, there were certain demands that made our investors uncomfortable.

Even at the end we were still making money hand over fist, just not as much. But even more importantly a viable buyer came around with an incredible offer. Still, I thought that if we had waited six more months we could have probably more-than-doubled our selling price.

ANDREW EBEL, Strikeforce director of business operations:

I think we became a real thorn in their side. I think we were stealing some of the media attention. I mean along comes little old Strikeforce taking some market share from them and I think that did have to do with the value of our company.

I also think at the end of the day that our financial backers were getting pinched not only backing Strikforce but they also had the Sharks and other properties all around the country. So when you get spread like that it puts pressure on you. So I'm not sure it was only MMA pressure that led SVSE to want to sell.

JIM GODDARD, Executive Vice President of Business and Building Management for the Sharks Sports and Entertainment (formally Silicon Valley Sports and Entertainment):

I think our company at the time, Silicon Valley Sports and Entertainment, made a conscious decision to refocus. Our owners are primarily in the National Hockey League business and operating a great arena. They made a business decision to refocus on that first priority and to divest ourselves of some of the other things we had grown into over time.

I would say there was mixed feelings within the organization [with regard to the selling] because we had enjoyed a lot of success with Strikeforce and we saw upside potential. At the same time the owners make decisions for the company and you have to respect that and we do respect it.

SCOTT COKER:

The original focus for Silicon Valley Sports and Entertainment was to bring other sporting properties to the Bay Area, to invest in other buildings, and to eventually become another AEG company.

At the end of the day they decided to get back to their core business which was the Sharks. If you look at it they got completely out of anything that didn't have to do with hockey. They are out of the tennis business. They got out of Strikeforce. They are only running the hockey team and that's what they wanted to get back to focusing on. It's no longer [Silicon Valley Sports and Entertainment] it's the Sharks Sports Group.

KENN ELLNER:

We were two and a half years into our business plan, and I think we had created a tremendous amount of assets. An unbelievable amount of assets. Our international business was doing well. We had a deal with Shine International and we were really doing well getting a lot of exposure internationally. We were just getting involved in some merchandizing projects. We were just at the point of breaking out.

What happened is we had a change in leadership at the top of Silicon Valley Sports and Entertainment. Greg Jamison was the CEO, and he resigned. He was the person that made the decision to do this joint venture [Explosion LLC] and he leaves and they didn't replace him. Two members of the investor group who were venture capitalist began to run the company. What do venture capitalist do? They build companies and then sell them. Someone offered them money and they looked at it and saw they could get that kind of return now, why not take it? Of course the first number the UFC offered they didn't take, there was a negotiation process.

There's no doubt in my mind that we were selling too early. And even at the time I had voiced my concern about that.

I think there was talk of the UFC and SPIKE having troubles. If you remember there were rumors of the UFC starting their own cable network. If they were going to leave SPIKE that would have left it open for us. I had always thought [the purchase of Strikeforce] was a television play, and I had actually made that comment several times.

SCOTT COKER:

I told my guys we should wait another year, but they saw what was on the table right now and it was attractive to them.

I never imagined that the UFC would leave SPIKE. If I'd known that I would have told them to wait and we could have had Viacom as a partner and we would have been on both Showtime and SPIKE.

But it's not true we had to sell. That we had to be saved. That's just not true. We were the only company besides the UFC that was doing arena shows that could do million dollar gates. We had a multimillion dollar deal with Showtime. We were bringing in seven figures a year from sponsorships and over seven figures a year from our international deals. We had a Rockstar deal. Full Tilt Poker. We had Shine International handling the foreign markets. We were a company that was making money on all of our events except for the Fedor fights.

The only reason we got sold is because Zuffa came in and offered to write a big check.

JIM GODDARD:

As I said, I think it was a success from start to finish for everyone involved. But like a lot of businesses it could have gone a different direction. Maybe the makeup of the ownership would have needed to change, but it certainly at that time it was a viable business and an alternative outcome would have been for it to continue on and to grow.


The official handover of ownership was on May 9th, 2011. While the fighters and staff of Strikeforce had been reassured it would be "business as usual," this was not the case. On March 11th, with the exception of Scott Coker and his assistant, the entire staff was let go.


MIKE AFROMOWITZ, Strikeforce director of communications:

We were led to believe that they were going to keep us on. There was a meeting in Stockton at the first event under their management, where we were pulled into a room and told that they wanted us to remain on. I was hopeful at the time, but what else can you be but hopeful when you're in a spot like that. You can either quit or go on with it and hope.

SHANNON KNAPP:

You always know, common sense will tell you, that there's going to be changes. So you hope they keep some of us on, but you know, for them the big thing is a smooth transition. After that, who knows? Either way I was prepared.

I remember Scott looking over at me and saying "hey, you're really relaxed." What are you going to do about it? It is what it is. I'd been here before.


New ownership also brought change for the fighters. There was the implementation of a "sponsor tax" as well as the frustration of watching some of the bigger names in Strikeforce being moved to the UFC, while others were unsure of what the future held for them.


CONOR HEUN:

The change in sponsorship rules affected us tremendously. When I fought Noons on my last Strikeforce card with the previous owners, I made, I think, $25,000 from sponsors. My first under the new Strikeforce, after they started charging a fee and banning Full Tilt Poker, I made a fraction what I made before. A lot of fighters took the same hit.

JAVIER MENDEZ:

It's was sad for the fighters to see [Strikeforce] go because they paid a lot of the main card guys very good money.

For the very top stars, the UFC means a lot more in sponsorship money because you're in the UFC, but for the lower guys the sponsor tax hurt. Hurt big time. I know a lot of friends who were involved in the business sponsoring guys but as soon as that tax came in they pulled out because they couldn't afford it.

GILBERT MELENDEZ:

It was a little bit frustrating watching some of the fighters go to the UFC and I just wanted a chance as well. Eventually I got that chance, but I'll admit it was a little frustrating waiting.

TIM KENNEDY:

On my last fight [against Trevor Smith] I was convinced I wasn't going [to the UFC] if I lost. I felt that I had to win otherwise they weren't going to bring me over. So I'm happy I won.

I'm sure the guys from the WEC felt the same [about being viewed as "second tier"]. Pettis, Cowboy. They were great fighters but overlooked. We felt the same. I fought Luke Rockhold and Jacare to five round decisions and no one thought anything of me or them because of where we fought. It's bittersweet that no one gave us our credit back then. Same time [our success now] is kind of a "go fuck yourself" to those who didn't think we'd do anything.

CONOR HEUN:

I was a little disappointed that I never got to fight in the UFC. They called me and asked me to fight [Pat] Healy for a chance to get into the UFC but I was on crutches so there was no way I was going to fight him. That never would have happened with the old Strikeforce because they knew what was happening with their guys. But Zuffa is so big with so many guys they didn't know I was out.

One thing I was happy about was that our guys got to go over and fight their guys and prove we were on the same level as them.

PAT HEALY:

I knew that the top guys were as good as anyone and we just needed a chance to prove it. I know we all came in with a little bit of a chip on our shoulders. We were like "Hey, we got something to prove." And Gil and Josh led the way in proving it.

CUNG LE, former Strikeforce middleweight champion:

I always wanted to fight in the UFC so I was happy that I was going to get that chance to fight there. But Strikeforce was not a minor league. It was never a minor league. You can see now how good it was.

I was happy to see that all of Scott's hard work paid off for him but I was sad to see Strikeforce go, I didn't want it to close. Competition is always a good thing for fighters. So I was hopeful that Strikeforce wouldn't close its doors because the UFC had said they were open to keeping it around.

KEN ELLNER:

I think competition was always better for everyone involved. Some people say there has been a waning of interest in MMA. When Strikeforce was around think of all the debates and energy there was over "Is Strikeforce a second class promotion?" Is Melendez the number one fighter at his weight? Look at how much fun Dana had in the competition between the two leagues. That he could go out and say something to get his fan base up and going.

CESAR GRACIE, founder and owner of Cesar Gracie Jiu-Jitsu:

Absolutely [fighters have less leverage] if you make the UFC the only show in town how can a fighter have any leverage? He's got to sign with them or make no money. Right now Bellator is out there, but there's only so many shows they can hold. There's only so many fighters they can sign and they [don't have the roster] to make fights for everyone. It makes things tough. Strikeforce was having a lot of shows and it was just one more company as an option.

If I had my way they wouldn't have sold at all because it took away another venue for the fighters. And make no mistake Strikeforce was a fun place to fight. It offered a lot of freedom for the fighters. It had a different feel. It was kind of like fighting in Japan. It was more like the rock and roll days of fighting instead of today which is more corporate.

SCOTT COKER:

For me it was hard to see some of the fighters depart. I understand why they did it, it was a business decision. These are all business decisions and sometimes business decisions are tough. They weigh on you and are tough to watch. And so it was tough to see some of the athlete dismantling and to see some of the staff let go and to basically become a skeleton crew here until it eventually just became Carie [Aana] and myself [in San Jose] while they ran everything out of Vegas.

I stayed in the Bay area and I would help them out with fighter relations, the PR, and host the press conferences and weigh ins. I was still actively involved but by no way was it like what it was before, where every important decision this company made went through me.


On January 12, 2013 Strikeforce held its last event. The remaining fighters were moved to the UFC and the promotion closed its doors for good. In the year since then there seems to be a newfound appreciation for the promotion amongst fans.


MIKE AFROMOWITZ:

It's the same with PRIDE, there's a sense of nostalgia with the fans. I'm not saying we were the best but there were a lot of great memories. Frank versus Cung Le. Fedor versus Rogers or Werdum. Josh and Gil. Nick Diaz and Frank. There are a lot of fights we had that people liked.

GILBERT MELENDEZ:

I was happy but I was also a little sad. Scott was a guy you could build a great relationship with, and I had a personal relationship with him. So I think many of us were sad especially the AKA guys and Gracie guys that had this organization in our back yard.

So many great memories and they usually involve my friends. Dan Henderson versus Jake Shields. Nick Diaz versus Paul Daley. Nick Diaz versus Frank Shamrock. Versus Zaromskis. Jake Shields versus Mayhem Miller. Robbie Lawler versus Manhoef. I got to see Fedor in action against Brett Rogers. The Heavyweight Grand Prix. So many great moments.

ANDREW EBEL:

I think the people that made up Strikeforce were a special group of people. People like Carie Aana who was Scott's assistant. People like Mike Rand who was our web designer. All these people played a very big role. We were a big family. The fighters were part of our family. We knew guys like Gilbert Melendez and Josh Thomson. They would come by the office and ask us what's going on. It became a family. And we were all in it because we had the same goal, we wanted to build something together.

SCOTT COKER:

We had Shannon Knapp working out of Kansas City doing fighter coordinating. Mike [Afromowitz] was out East doing our PR. In the Bay Area, there was Bob [Cook] who was a main consultant, Rich [Chou] as our matchmaker, myself, Andrew Ebel who was the VP of marketing for the San Joe Sharks and who we brought in as head of operations, our marketing girl Jen Cook, my assistant Carie Aana, who I've been working with for 15 years. We had an in-house graphic artist, Alex Jones, who I'd know for 10 years. Mike Rand was our internet guy.

These were people I'd known and worked with for years, so it was definitely like a family.

JAVIER MENDEZ:

My biggest memory of Strikeforce was the first show [Shamrock versus Gracie] and seeing Scott Coker's face light up when he saw all those people. Because he had worked so hard. That was awesome.

I don't think it's impossible [to have another promotion like Strikeforce] but I think it's going to be very difficult. It's going to take another Scott Coker. Someone who has the vision and drive that he did. Someone that knows how to deal with people, who has his connections, and has that desire to make it work.

BOB COOK, manager/trainer and special consultant to Strikeforce:

Scott had a really good vision, and had a personality and a willingness to work with everyone to get things done. In the short amount of time that Scott had built Strikeforce into an MMA league he'd also built up a lot stars and a lot of fan interest.

I think it's healthy to have competition so I'm hoping Scott gets back in [to MMA] and builds something good again.

PHIL BARONI:

Scott and Strikeforce was always the major leagues to me. If I didn't have my problems with the California commission, I would have never left. I would have been happy fighting there the rest of my career. So I definitely want to see Scott back in the fight game. We need more people like him in it.

SCOTT COKER:

For the last 27 years I've enjoyed my martial arts promotion career. And with Zuffa, everything they said they were going to do for me they did do that, and they honored their agreement with me. Which I'm very thankful to Lorenzo, he's very much a man of his word.

As for my future it's uncertain what direction I'm going to go right now. And that's the truth.

Scott's tenure with Zuffa ended in April of this year.

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