The Weirdest UFC Scandal You Never Knew About

UFC sponsors are literally everywhere. You may not realize it when you're locked in on a fight, but your eyes are being assaulted by 37 different spots for sponsor logos on the cage and an additional 36 on what they call sideline surfaces, like the little pad fighters stand on while the referee pats them down. That thing's usually sponsored by something or other. Now, what I truly love, though, about all these partners, last year there were over 100, is that the UFC still have their fair share of carny brands they associate with. After all, this is still cage fighting. Some of my recent favorites are Riz Pharma, an online direct-to-consumer prescription service where you can get hair loss and dick pills, hostage tape, which you're supposed to wear over your mouth while you sleep so that you die, I'm just kidding, to encourage nasal breathing, strongly encourage nasal breathing, and my absolute favorite, Ares Tech, a company that makes amulets, cards, and device stickers meant to protect you from 5G and EMF radiation. You know, so that George Soros can't turn you gay with his cell phone tower radiation or whatever people think 5G is doing to you. But as silly as I find some of these brands, the UFC pulled in $314 million last year in sponsorship revenue. And for every Love Hemp and Farmer Boys, there's truly huge blue chip sponsors like Anheuser-Busch, Hudson Shipping, DraftKings, and of course the official energy drink of the octagon, Monster Energy. Bottoms up and the devil laughs. The Devil's Favorite Energy Drink wasn't always the UFC's official brand partner in that category. No, if you were around when the UFC first exploded in popularity in the early 2000s, you absolutely positively remember Zyzz's supplement brand and their energy drink called Zenergy. They were literally everywhere. They were the center logo of the Octagon, they were sponsoring some of the promotion's biggest fighters like Chuck Liddell and Forrest Griffin and Rich Franklin, and their ads, which usually featured UFC fighters, would play over and over on UFC broadcasts. You could not get away from this brand. I was like 19 or 20 at the time, and I remembered thinking, why doesn't my podunk-ass grocery store have this massive company's product? The level of exposure they had on those fight cards really gave this sense that this energy drink must be in every supermarket and gas station on the planet, at least if you were a big UFC fan. If you were watching weekly, your exposure to Zyzz ads was higher than your exposure to clean air. But that's what's crazy. They weren't like the number one energy drink brand on the market or something at the time. Red Bull was already well-established. They weren't even really a known entity. In fact, when they started with the UFC in 2005, they were just a year old. And in their first year as a company, only made about $100,000 in sales. They were a supplement and nutrition company. That number would skyrocket though to over 20 million in 2006 just two years later with their UFC association and the huge success of Zenergy drinks, which were making the vast majority of their cash. The company's goal was to shortly become the number two brand on the market, the Pepsi to Red Bull's Coke, and it seemed like they were well on their way. But even with that $20 million 2006 and ambitions to be a household name, Zions was not the successful brand that people assumed it was because of their prominence with one of the hottest growing properties on television in the early 2000s. There were serious problems. As one blogger who would get sued for $25 million over this story put it, Zions was the Enron of MMA. The brand was quietly and secretly a runaway freight train heading for a ravine. And the truly bizarre part of this story is that it was the UFC ownership that might have allegedly purposely run Zion straight off the cliff. But why in the hell would the UFC want to sabotage their most prominent sponsor of that era? Well, gather around the campfire, children, because it's story time with Uncle Tommy, and do I have a ******* crazy one for you today. Before I get too deep, though, make sure to check out official UFC gear through our link in the description below using code .10 for 10% off all products and rep your favorite fighters with the UFC store. Now, let's talk about a different UFC than the one I just shouted out, the Fertitta-era UFC, and the weirdest scandal you never knew about. Okay, so remember how I told you about all those fighters that Zions was sponsoring? Well, that is where it started becoming apparent to hardcore fans who kept up with the news sites that maybe Zion wasn't doing as hot as everybody thought they were. Because reports were coming out that Chuck Liddell, Forrest Griffin, and Rich Franklin had all dropped Zion as a sponsor because, drumroll, they were missing payments. By, like, a lot. Franklin's manager was quoted by Sherdog saying that they hadn't paid him in seven or eight months. Other fighters came forward, too. Matt Hughes wanted removed from their website. Sean Shirk, his story was particularly interesting because after he was stripped of the lightweight title for failing a post-fight drug test, it was revealed at his hearing that a Zion supplement he took had tested positive for anabolics, although not the same one he failed for, and the theory that it was why he failed was rejected by the commission. Still though, you got an official UFC partner allegedly stiffing fighters and potentially having contaminated products that were brought up in a hearing for a UFC champion that was stripped of his title? Something was rotten in the state of Nevada. in California, too. Another red flag would come in the form of a formal desist and refrain order from the California Department of Corporations. The state said that Zion founder Russell Pike had allegedly sold stock in Zion in California and raised about $2 million while failing to disclose some, uh, relevant information about his past to potential investors. Guys, let me ******* tell you about Russell Pike, because this dude, the guy who made Zions, is a straight-up carney. I mean, the rap sheet this guy has is extensive, and it's not like fines and probation. This dude served hard time. Let's just run through the greatest hits, shall we? In 1987, Pike pled guilty to grand theft and forgery. Of what? I was unable to find, but he did a bid in the slammer as a result, so this wasn't something small. Convicted felon with jail time is not a great start to our profile of this guy. Then, in the late 90s, he gets in trouble for deceiving investors in a company that went tits up. A company, by the way, he used as a success story to allegedly deceive investors into investing in Zions. The California complaint we were just talking about specifically mentioned the company's bankruptcy to determine that Pike was lying to investors about his past success. So a theme is emerging here. He would end up essentially admitting he'd done the investors dirty and said he'd repay them. No idea if he did or not. Then, and this is my favorite story, he wrote a $300,000 check to the Mirage in Vegas. What for? Probably gambling based on the fact that it would later come out that this dude was living the Jordan Belfort life. Fast cars, a fortune hidden from the IRS, and literal millions spent betting at Vegas sportsbooks. So this $300,000 check to the Mirage, it bounced, and so did Russell. When the Mirage sued him for it, he just didn't show up to anything, and so he defaulted the case. Whether the Mirage ever got their money, I have no idea, but if I were a betting man, I would be betting probably not. The next year, he would plead guilty to federal money laundering charges, which was actually quite a bit less than his initial indictment, which also included bank fraud charges and aiding and abetting. Again, what this was even about, I have no idea, but he did his longest sentence as a result of this situation, more than four years. After his release, he would startup, Zions. That is the actual timeline. A bunch of crazy, questionable stuff, prison, and then an energy drink company. He ran the show pretty much unimpeded until early 2007, when a major lawsuit and his past caught up with him, and the board at Zions ousted Pike from the CEO position. But crucially to our story, he still held stock in the company. More on that in a bit. So fighters aren't getting paid, the convicted felon founder of Zions is being reprimanded by state governments for allegedly deceiving investors, things were looking pretty dicey. Instead of distancing themselves from the troubled brand, the UFC re-upped with Zions, extended their contract for three years. The perception of the UFC's move at the time was basically, well, the company had new people in charge, as Pike had been ousted, and they'd just received $12 million in new funding. So this brand that they'd already really closely associated with their own brand looked like it might be turning a new leaf. I mean, $12 million, that is a lot of money for a small company. And hey, if they win their $25 million lawsuit against Rich Bergeron, they'd really be doing well financially. Who is Rich Bergeron? He's a blogger. That's a thing people used to do before social media was all anybody does anymore. He's a mixed martial arts fan, and in the truest sense of the word, a journalist, who took publicly available information as well as information from first-hand sources he reached out to himself to write about his concerns over both Pike and a potential SEC investigation into one of the company's investors. He posted it on his MySpace page, and Zients filed a $25 million defamation suit and ordered the story to be taken down from his MySpace page, which probably got like 15 views total, suing some random guy who probably won't make $2.5 million in his entire life, let alone the $25 million they were asking for, seems like a giant waste of time. But of course, I think they assumed it would just be a legally dubious way of shutting him up. Unfortunately for them, they really fucked with the wrong blogger. In addition to bringing way more attention to the things that Bergeron was pointing out in the first place, Rich would handle the lawsuit pro se, meaning he represented himself in court, meaning the costs were pretty minimal, which is usually how the big guy beats the little guy in court. It's too expensive. At the four-year mark, yes, the four-year mark, Bergeron said he'd spent about six grand on the whole thing. He would also launch the protest website Zientsucks.com, where he chronicled in great detail all the problems with Zients. The site is still up to this day, and occasionally is updated. Now, his stories are more so about the UFC sucking, but the name has stuck for nearly 20 years now, a big middle finger to the brand that tried to silence him. But okay, let's shift away from an imaginary $25 million that Zients was never going to see and talk again about that $12 million infusion I mentioned them getting. Because only a month after the new money, a month after that new UFC deal, this fresh start, it was reported that Zients was laying off its entire sales force and letting them know they were being fired due to financial strain. Getting rid of entire divisions of your company at one time is never a good sign that things are going well. But what the hell? They just got 12 million dollars. What kind of energy drink company is in such dire straits that a month after getting 12 million, they gotta lay off 70 people in order to survive? Around the same time, fans began to notice that Zients branding at events was suddenly way less prominent. They just started a new deal. Why is the brand suddenly barely featured in the Octagon. There were lots of questions with very few answers. Well, behind the scenes, the new leadership tried to rally investors into pumping $7.5 million more into the company, money apparently they desperately needed. And that is where Russell Pike shows back up in our story again. Remember how I told you that while he was ousted as CEO, he still had stock in the company, so he tried to rally the other shareholders into forcing a bankruptcy as like a coup almost. And the new CEO alleges that, in part, he did that with death threats. Because Russell Pike don't play that ----. No, Pike denied any of that, any threats. But his effort would be in vain because two weeks later, two weeks after he tried to force Zions into bankruptcy, Zions would file Chapter 11 bankruptcy of their own accord. They said, you can't bankruptcy me, I'll bankruptcy myself. Suck it, Russell. Now, Chapter 11 bankruptcy is the one where the company gets to keep being a company. So this wasn't like the end of Zions, but clearly there were issues. And oh, did those issues come to light with this bankruptcy filing. So it turns out that Zions had $5.3 million in assets. Hey, that's not bad. The problem was they had $42.3 million in debt. The company was massively underwater. I didn't go to business school, but having eight times as much debt as you do cash seems like a bad ratio. Now, in all the disclosures that came out, the biggest holder of Zions' debt was a company called Zion LLC with $12.5 million in claims. They were the investor that put that $12 million in when the UFC re-upped. And as it would turn out, all that $12 million investment was not used by the company to further their operations. Instead, it went to debt, about half of it to Zufa, the UFC's owners. Then there was this other company called Bevanda Magica, that's Italian for magic drink. They had the third largest stake in the company at about 8% of the total stock and 10% of the voting rights. So this company was a major decision maker at Zions and had all the insider knowledge of the company's workings. What was weird though, is that Bevanda Magica had the exact same street address as the company that lent Zions that $12 million, Zion LLC. And even weirder than that, both of those companies had the same address as the UFC. That's right, that's the big twist in the story. Now we're getting into the juicy ----. The Fertittas were simultaneously Zions' biggest creditor, one of their biggest shareholders, and their biggest customer as the UFC, their partner. So what in the actual **** is happening here? Why would the UFC give Zions $12 million just to have them give it right back to them? I mean, that doesn't make any sense. Well, there's another aspect of that, because the terms of that $12 million loan were pretty steep. It carried a 15% interest rate, and if Zions defaulted on the loan, meaning they missed a payment, the investor, which was the Fertittas, would get controlling stake of the company. So they would essentially own Zions if they couldn't make their loan payments. And this is where we get into alleged territory because I'm not trying to get sued by rich people. Everything I am about to talk about is from claims made by either Rich Bergeron, the ZionsSucks.com guy, or a lawsuit that was filed by some Zions shareholders against the Fertittas. These parties, not me, claim that the Fertittas allegedly executed what is known as a loan-to-own scheme. The idea is fairly simple. With the inside track afforded them as major shareholders through Bavenda Magica, the Fertittas allegedly cooked up a scheme where, acting as Zion LLC, they would provide a major loan to Zions under the conditions that a default would give them majority ownership. It's then alleged that despite having a million dollars in cash in their coffers, Zions insiders allegedly purposely missed the 100k payment that was due to Zions so that their loan would go into default and the Fertittas would gain majority ownership of the brand. Now, this is just the first part of the alleged scheme. Because Zions LLC wasn't looking for majority ownership, allegedly, they were looking for total ownership. And that came when, allegedly following the bankruptcy, Zions was sold to a company called Manchester Consolidated from Canada. That was allegedly a front company for the Fertittas, that then also allegedly purposely defaulted on their obligations to Zion, leaving Zion as the sole owners of Zions. So the allegation was that all of this happened with no shareholder say, no voting, it was an alleged hostile takeover, and not a single party had any say in it but the Fertittas. Allegedly. Did I get that across, that this is alleged? Now, mind you, as well, this was never substantiated by a court finding. So this is just from the filing from the lawsuit. So it is quite literally just one side of the story. There's one other wrinkle to this that I think is at least worth mentioning, and it's something that Bergeron alleged. In June 2007, Zuffa borrowed $325 million in order to purchase Pride FC. One aspect of that loan agreement apparently required a certain amount of sponsorship money from an upstanding sponsor in order for the loan to be approved. So the allegation is that Zuffa propped up Zions in part so they could get the loan even though they knew that the company was actually a hot mess, with the idea being that the loan would have been revoked or investigated if the true extent of Zions' rot was found out by the loan company. Again, this is all alleged and speculative and from other sources than me. I am just conveying what they've said to give you the full picture of what was being said at the time. These are not my opinions, I'm not a lawyer. So in this alleged scenario, you can see how massively important Zions would have been to Zuffa. Not acquiring Pride FC could have a butterfly effect that I can't even wrap my head around. But that is pretty much the long and short of it. Now that you know the whole story, well, almost the whole story, but for the aftermath, but we'll get there, what exactly actually happened here? Did the Fertittas 4D chess their way into the ownership of a troubled energy drink company using genius business acumen? Or were they unethical cutthroats who sabotaged a company so they could essentially steal it away from its investors? Well, let's be fair to the Fertittas here first, because I'm sure they really care what some ******* YouTuber thinks about their business from 20 years ago as they hang out on their super yachts, but I think there's really two ways to look at this situation. If we're being as generous as possible to Frank and Lorenzo, they partnered with a company that was being run by a really shady figure and apparently run very badly. If you're being generous, that loan could be seen as rescue financing for a troubled company. And while the terms were steep, you could interpret those terms as the Fertittas protecting themselves from a volatile company. You could say the Fertittas acted aggressively but rationally to protect the UFC's brand and recover money owed to their entities. and a badly managed company failed because it was always going to fail. If you're not being so generous, though, you could see this entire scenario as an alleged coordinated loan-to-own asset stripping scheme where through secret ownership and lending, the Fertittas allegedly funneled cash back into their own entities, helped facilitate Zions into bankruptcy, and then acquired their assets for cheap after they were destroyed with no other parties allowed to have any say in the process despite having their own investments. Again, allegedly. But alright, so, Return of the King ending time. How did everybody involved in this whole thing shake out? What was the fallout? Well, for Russell Pike, it sounds like even if he did somehow get that coup he attempted to work, it wouldn't have been for long, as he would be convicted of tax evasion in 2012 over $7.9 million he made from Zions' stock that he just never bothered to tell the IRS about. For his troubles, he got 52 months in prison and three years of supervised release. He also owes the IRS $1.1 million. In 2021, he wrote a self-help book called Your Spiritual Reminders and apparently makes sports betting pics on YouTube to this day. For Rich Bergeron, the blogger, Zions never got that $25 million from him. The whole thing took six full years, and Rich represented himself the whole way. Ultimately, as far as I could find, no ruling was made either way in the case. So I think the company was forced to give up in time. Meaning, if we're going by pride rules, the little guy won. As I mentioned before, Rich's site, ZionsSucks.com, is still up today, with the most recent entry being from 2023 about Dana slapping his wife. But whatever happened to the Fertittas? Well, I'm sure you don't need me to go that far into things, obviously, but as far as Zions is concerned, after their full acquisition, they owned the company outright for the next six years, and eventually sold to Big Red, not the chewing gum, a Texas soda company, in 2014. While it's unclear how much the brand was sold for, we do know that it made $45 million in annual sales prior to the deal, so clearly the company was doing okay by that time. And Zions is actually still around today. You could hop on Amazon right now and pick up a 12-pack, which I guess really is a testament to just how valuable the brand name ended up becoming during that brief boom period with the UFC. I mean, brands that are hot for a second come and go all the time. But for this thing to now have a 20-year shelf life, clearly there was something there in this whole ass mess. Which brings me to the real question. Were there actually any consequences for any of these shenanigans? I mentioned briefly earlier that the shareholders brought forward a lawsuit against the Fertittas, or Fertitta-owned entities, whatever came of that. Well, in 2011, a sanction was brought down on Fertitta Enterprises, But it was related to the destruction of documents relevant to the lawsuit and that's really the only court finding you'll ever get There were never any criminal charges and I don't think there would ever have been anyway I don't think anything illegal took place here on the civil side of things though Like so many lawsuits this would not go to a judge. It would be settled out of court with the Fertittas paying 525 Thousand dollars a small price to pay for a brand that was making 45 million by the time they sold it As for the shareholders and any unsecured creditors outside of the Fertittas who had stake in Zions during that time period, well, once those defaults kicked in and that acquisition went through, none of them got a single dime of their investment back. And that's the weirdest scandal you've never heard about. I think in part fans don't know about this one very much because it's pretty complicated and really kind of confusing. I had to read so much stuff to try and understand any of this. and hopefully I was able to convey the story in a way that made sense and that was entertaining. But it's one of those situations that's so business-backroom-deal-corporate-arbitrage-heavy that no wonder a lot of people don't remember it or have never even heard about it. But now you can impress your MMA friends with this crazy-ass story that I still don't really know how to feel about. Good luck explaining it, though. What an absolute stud Luke Taylor was on the edit for this video. Show him some love by heading over to the title picture, our sister channel, where he and the boys are always chatting up whatever's going on in mixed martial arts. It's a fantastic time. A big shout out to our channel members. You guys make doing deep dives like this so much easier. Appreciate you all a ton. Fight fans, hit the join button because you'll get exclusive content and you'll have a great time, I promise. Like and subscribe because I promise you will not get anything like what we're doing here anywhere else. Leave a comment about everything you thought about this crazy ass story. I love reading your feedback. And thank you so much for watching. Have a wonderful day. Thanks for watching!