Xyience has been a ubiquitous presence during the UFC breakout that
began in 2005. Whether in the center of the Octagon, on fighter's
trunks, in television commercials or on cans during post-fight
interviews, the supplement maker was everywhere the UFC went.
In many ways, Xyience represented the financial promise of the MMA
industry, with ties to some of the sport's top stars, including
Chuck Liddell (Pictures) and Matt Hughes (Pictures), and shelf space in GNC and
health food stores across the country. But even in a rapidly
evolving industry, the company's fall from grace was sudden and
In 2007, cracks begin to emerge with missed payments to sponsored
fighters, constant turnover in corporate leadership, shareholder
discontent and rumors of insolvency. The days of rumored
seven-figure endorsement deals and prominent placement at UFC
events were gone, replaced by digitally distorted logos on UFC
replays and a move from the center of the mat to the Octagon post
On Oct. 13, Xyience announced what appeared to be a fresh start.
With Russell Pike, the company's notorious founder and convicted
felon, out of the picture, Xyience simultaneously announced a
three-year extension of its exclusive partnership with the UFC and
a new $12 million funding effort.
"We believe that the combination of new financing and the extension
of our UFC relationship firmly positions the company for success as
we embark on a worldwide expansion of the Xyience and Xenergy
brands," said then CEO Adam Frank at the time.
UFC President Dana White added, "Xyience has been a long-time
sponsor of the UFC, and we look forward to our future endeavors
together as both of our companies continue their explosive
Optimism was short lived, though, as the embattled company filed
for Chapter 11 bankruptcy on Jan. 18.
Bankruptcy filings obtained by Sherdog.com suggest a much deeper
relationship between Xyience and Zuffa, parent company of the UFC,
than merely a lucrative sponsorship agreement.
In fact, documents reveal that Xyience's third largest shareholder
is closely tied to Zuffa and the UFC.
According to a shareholder list filed in court, 5,166,667 shares
(7.9 percent of shares outstanding, which constitutes 10.1 percent
of voting shares) of Xyience stock are issued to "Bevanda Magica
(UFC)." An Italian phrase that translates to "magic drink," Bevanda
Magica LLC is listed at 2960 W. Sahara Avenue Suite 200 in Las
Vegas. The company was formed on May 17, 2007 with Frank and
Lorenzo Fertitta listed as its managers. Zuffa's corporate
headquarters, along with several subsidiaries, is variously listed
in filings with the Nevada secretary of state's office as 2960 West
Sahara Avenue Suite 200 or Suite 100.
Requests for comment from Zuffa LLC went unanswered.
Also named on the shareholder list are Zuffa Chief Financial
Officer John Mulkey, who holds 50,000 shares of Xyience, and
resident agent John Hertig, who holds 25,000.
The significant financial investment that UFC co-owners Frank and
Lorenzo Fertitta made into Xyience, first reported last October in
The Wrestling Observer Newsletter, has also been confirmed by the
bankruptcy filing. Xyience's single largest creditor is Zyen, a
company controlled by Fertitta Enterprises that is listed at the
same address as Bevanda Magica (UFC), according to filings with the
Nevada secretary of state's office.
Zyen holds roughly $12.5 million in total claims against Xyience,
including approximately $5.3 million in secured claims, which
matches all of the company's physical assets. Last week Zyen was
granted permission by the judge presiding over the bankruptcy
proceeding to make an additional $1 million loan to Xyience.
Xyience's UFC sponsorship is reportedly worth $15 million in the
first year, according to the Review-Journal. Zyen's loans to the
company total $12.5 million. The filings reflect Zuffa Marketing
LLC, a subsidiary of Zuffa, is still owed $3 million.
Requests for comment from Xyience President Omer Sattar on the
Fertittas' and Zuffa's involvement in Xyience, as well as the
identity of Bevanda Magica went unanswered.
Chapter 11 bankruptcy provides a company with protection from its
creditors while it attempts to reorganize. When the company's debts
exceed its assets, as is the case for Xyience, the proceedings
often result in the company's creditors assuming ownership of the
Xyience has $42,342,831 in liabilities, including $27,319,517 in
secured claims, compared to just $5,285,722 in assets, bankruptcy
filings show. Accordingly, the Fertitta brothers could stand to
become majority owners of the reorganized company.
Last week Sattar told the Las Vegas Review-Journal that Xyience
would have liquidated under Chapter 7 bankruptcy without the
continued support of the Fertittas. "We're excited about the
opportunity [to reorganize the company]," Sattar told the
newspaper. "Xyience has a great brand name and has a strong
affiliation with the UFC."
Xyience is currently involved in eight civil lawsuits and is
subject to a pending involuntary bankruptcy filing by Russell Pike
and other disgruntled shareholders, according to the bankruptcy
filings. The Las Vegas Review-Journal reported accusations of
physical threats by Pike and his associates against the current
management of the company.
A shareholder, who wished to remain anonymous, told Sherdog.com
that Xyience's original owners (Pike and his associates) approached
him and other investors to join a lawsuit against the
The shareholder has chosen to remain neutral in the dispute, but
told Sherdog.com that "anyone who invested in Xyience by taking the
necessary steps and due diligence should have understood from their
PPM (private placement memorandum) that it was extremely high
The filings also validate reports of Xyience's failure to honor
endorsement agreements. According to the filings, Xyience owes
Rich Franklin (Pictures) ($21,000), Anderson Silva ($11,666.66),
Matt Serra (Pictures) ($36,000), Travis Lutter (Pictures) ($36,000) and Heath Herring (Pictures) ($8,000).
In November, Sherdog.com confirmed reports that Chuck Liddell (Pictures), Forrest Griffin (Pictures), Matt Hughes (Pictures) and Franklin had struggled
collecting from the company. All four fighters were prominently
featured in Xyience's multimillion-dollar marketing campaign,
including a series of television commercials.
Adam Swift is the Editor of Payout: The Business of MMA and a contributor