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Flosports, the parent company of Floslam, filed an amended lawsuit against WWNLive Inc, the parent company of EVOLVE and its related sister promotions on 11/27. The lawsuit, seeking $1 million in damages, revolves around allegations that WWN, run by Sal Hamaoui and Gabe Sapolsky, had "robbed Flosports" by provided false information that led to the streaming provider paying inflated prices for WWN content.
The contract between Flosports and WWNLive was revealed in the 11/27 filings, noting that it called for WWN to be paid $75,000 in 2016, $500,000 in 2017, $550,000 in 2018, $605,000 in 2019, $670,000 in 2020 and $740,000 in 2021.
The contract also called for incentives to be paid to WWN under the following conditions: "In addition to the Rights Fee described in Section 3a, FloSports will pay an incentive to Events Rights Holder if financial performance exceeds specified levels. Events Rights Holder will receive the greater of the Rights Fee listed in Section 3a or 30% of total Net Cash attributed to WWN over the course of the year. Example: Net cash in 2017 equals $1,000,000. Events Right Holder receives a total of $500,000. Net cash in 2018 equals $3,000,000. Events Right Holder receives a total of $900,000."
The contract required Flosports to promote the WWNLive events promising they would "provide $250,000 of advertising value per year on FloSports (i.e. custom digital display, email newsletters, social media, editorial previews/coverage/recaps, etc.)." How that amount of advertising value may have been tallied is not directly explained in any of the court documents, but Flosports' amended lawsuit claimed, "FloSports performed on the Agreement and spent hundreds of thousands of dollars pursuant to its terms, including on its advertising spend for WWN and in the fees paid directly to WWN—all in reliance on WWN’s breached warranty and misrepresentations."
In the Amended lawsuit, Flosports claimed that "During the first year of the Agreement’s term, FloSports became suspicious that WWN’s data was inaccurate. Over the course of several months, FloSports repeatedly asked WWN to send FloSports more detailed data to support the original spreadsheet. WWN failed to comply, alleging that the information was lost or deleted. On August 18, 2017, WWN finally emailed the detailed viewership records, which contained additional misrepresentations: the records listed customers more than once and added purchasers of DVDs to the records, rather than limiting its numbers to the broadcast subscribers as it had promised were reflected in the original spreadsheet. Even with this fraudulent inflation of its data, the records showed viewership numbers far less than those reflected in the October 2016 spreadsheet, proving that WWN’s original representations were false."
WWNLive had previously responded to that, claiming, "That data was pulled from and compiled by a now-defunct third-party company named Fineline Hosting that was based in Florida."
What is interesting is that while Flosports alleges that, "Among the promises WWN made in the Agreement was that “all data provided by [WWN] regarding past financial performance of events put on by [WWN] was accurate, reliable and truthful.” - yet there is no language regarding that data (truthful or not) in the agreement filed with the court.
The lawsuit also alleges that "WWN breached the Agreement by failing to adequately perform under its terms, including its provision of inaccurate, unreliable, and false viewership data to FloSports" yet the Agreement filed with the court lists no description of what "adequately performing" would be.
Instead, based on the two page agreement, WWN was to produce events, handling the management of the video production (at no cost to Flosports) including Planning, Logistics and Production Teams, required video equipment including a two camera shoot, an Encoder to deliver the live stream to Flosports, personnel to "manage and run the video production for all events", Internet with a minimum upload speed of 5 mbps for all events, delivery of a fully produced live stream via RTMP feed to Flosports and that WWNLive would produce and deliver five live events per month (with the exception of December, where they were only required to produce three events). The agreement noted, "The quality of the events should be reasonably similar or better than the same events in 2015 and 2016 through the Term of the Contract."
The 11/27 amended lawsuiit by Flosports was accompanied by a number of other documents, including the original spreadsheet sent by Sal Hamaoui to then-Flosports Vice President Tobey Mergler, who handled the WWNLive deal and left Flosports in August 2017.
The spreadsheet lists buys for WWNLive events held in 2015 and 2016. For EVOLVE events, buys ranged from 539-2,479 purchases with the events on the higher end being shows specifically promoted by WWE online. SHINE iPPVs ranged from 525-729 buys. Full Impact Pro events ranged from 24 buys to 288 buys.
Back in September, after news of the lawsuit broke, PWInsider.com reported we had been "told that in actuality, in 2016, WWN (on average) was doing in the area of 1,300 iPPV buys for EVOLVE, 600-700 for SHINE and less than 200 buys for FIP events while selling those events. The year before, which they also provided to FloSports, those numbers were lower and the EVOLVE numbers were said to have been way up from the year before because WWE was promoting that brand."
It should be noted that the numbers in the lawsuit filings do match up with what WWNLive sources claimed to PWInsider.com shortly after the suit was filed.
In their 11/27 filing, Flosports alleged, "FloSports paid hundreds of thousands of dollars to WWN in reliance on this promise. But WWN’s data was false. When pressed for the data that backed up WWN’s representations, WWN originally claimed the data was lost or deleted. Ultimately, WWN sent records listing subscribers more than once and including customers who had not purchased broadcast services. Even accounting for that artificial inflation of its viewership, WWN’s numbers proved far less than originally represented."
It is also interesting to note the following language in the contract: "FloSports has the right to terminate this Agreement by providing notice during the month of January each year, starting in 2018. If FloSports exercises this option, the agreement will continue for 12 months after the date of notification before terminating."
It should be pointed out that Flosports terminated their deal with WWN in September of 2017 (well before January 2018) shortly after filing their lawsuit. So, by the letter of the contract, a judge could potentially consider an argument from WWNLive that Flosports actually breached their own deal.
While Flosports' Amended lawsuit alleges that "In fact, WWN contractually promised that “all data [it] provided . . . regarding financial performance of events [it] put on . . . was accurate, reliable and truthful.” - the legalese in the two page agreement between the two sides that was filed with the court on 11/27 does not appear to cover any other sort of termination of the deal, including whether the deal could be halted or terminated if the records provided by WWNLive Inc. actually turned out to be incorrect.
WWN had filed a motion on 11/13, requesting the lawsuit being dismissed, citing that the suit was filed in a venue (Texas) that lacks jurisdiction over WWNLive. In a response filed on 11/27, Flosports responded that WWN had induced them into paying hundreds of thousands of dollars with falsified records and that WWN had elected that their agreement, when signed in Texas, would be governed by Texas State rules.
In their 22-page filing requesting a change of venue, WWN had argued that their business was based in Florida, as are its business records and bank accounts, therefore they were not under Texas jurisdiction. They noted that their only dealings in Texas were WWN President Sal Hamaoui traveling to Texas in October 2016 and January 2017, the first trip to meet with Flosports during the courtship period and the latter to sign the deal. A copy of the deal that was filed with the court is actually dated October 21, 2016.
WWN's response noted multiple times in the filing that Flosports had initiated their business relationship, that WWN was not contractually obligated to focus their business in Texas and out of the 53 events they promoted under their deal with Flosports, only two were held in the Lone Star State. The majority of the events were held in Florida. WWN also argued that the case being heard in Texas would be a personal hardship for the company as those with working knowledge of the company live in Florida (Sal Hamaoui) and Massachusetts (Gabe Sapolsky) and would force them to travel regularly to Texas, a venue where they have no holdings, business dealings or connections to the community there.
Phil Wendler, who identified himself as FloSports' Senior Vice President of Global Rights Acquisition and Subscription filed a statement with the court arguing that the case should be heard in Texas, noting, "Discovery conducted so far has revealed at least 368 emails sent from WWN representatives to Flosports representatives based in Austin, Texas during the course of the parties' dealings, in addition to numerous text messages, several
conference calls between the parties and the in-person meetings in Texas."
Wendler also stated that WWN would have run additional events in Texas in November (Survivor Series weekend in Houston) had Flosports not revoked their deal with WWN and filed the lawsuit.
The FloSlam streaming service officially launched in October 2016, but PWInsider.com is told by sources that conversations with WWN began as early as January 2016. At that point, FloSlam was hoping to make deals with WWN, Ring of Honor and New Japan Pro Wrestling. In the end, WWN signed with FloSports first and the other two companies passed. The majority of the content on the streaming service came from WWNLive until their relationship was severed in September 2017. Since then, despite having active subscribers, Flosports has dropped the live streaming aspect of their Floslam offerings, yet still charges $30 a month or $150 per year for the service.
The Flosports situation has obviously put a financial hardship on WWNLive as they bumped up the number of events they were running as part of the agreement to five a month and made a greater investment into talents, including signing Keith Lee and others.
Flosports had not paid WWN during the final two months of their relationship, informed WWNLive of their plans to file a lawsuit while WWNLive was streaming a SHINE Women's wrestling event and canceled plans to stream several EVOLVE events the very weekend they were to take place.
In total, WWNLive lost out on three months of expected revenue from Flosports and has greatly cut back their event schedule. Earlier this month, the company claimed in an email to fans they were negotiating with four streaming platforms, but did not specify what they may be.
WWNLive promotion EVOLVE is scheduled to run in New York and Massachusetts in December with those events being streamed on the Fite TV App, which WWN had been working with prior to their Flosports agreement.
Obviously, this is going to be a long and winding legal road for both sides.
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