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Upstart company beats UFC to the toy aisle, ties up key contracts

As shoppers hunt for the best doorbuster savings this gift-giving season, there will be no shortage of products for the MMA fan. The sport has a larger presence at mass retail than ever before. You can walk into any major electronics retailer and pick up hundreds of hours of MMA on DVD. Then you can swing over to a sporting goods store and choose from various Tapout or Affliction T-shirts, while UFC-brand apparel is right at your local JC Penney and FYE.

Couture poses beside an enlargement of his action figure. (Round 5 MMA)  
Couture poses beside an enlargement of his action figure. (Round 5 MMA)    
Hop over the the Wal-Mart website and do a simple search for "MMA," and you'll actually find something called a "mixed martial arts heavy bag fitness set," complete with a heavy bag, gloves, hand wraps and a skip rope. They also have a dual-pad kickboxing trainer with a speed bag, or -- for the minimalist -- you can just buy a simple pair of MMA gloves. At Wal-Mart.

It was inevitable that someone would come out with a series of MMA action figures. What wasn't predictable is that somebody beat the UFC to the punch on that venture, given the value of the UFC name brand. The UFC has plans for its own line of action figures produced by industry-leading Jakks Pacific, hitting retail shelves in late 2009.

By that time, a small Canada-based company named Round 5 MMA will already be on its fifth or sixth series of collectible MMA figures, all of them available at mass retail at stores like Toys "R" Us, KB Toys and FYE. The second series hits shelves this week, and features some of the UFC's biggest stars in Anderson "The Spider" Silva, Wanderlei Silva, Rich Franklin and Sean "Muscle Shark" Sherk.

For a small upstart company, the fact that Round 5 has secured a chunk of shelf space at many large retail chains is pretty impressive. According to Round 5 MMA president and co-founder Damon Lau, the whole thing started as an off-the-cuff idea bandied around during a casual dinner with UFC legend Randy Couture.

During the dinner, Couture cracked a joke that he thought it would be funny if someone marketed a line of plastic cauliflower ears to sell at MMA events. Lau followed that with a suggestion for MMA action figures. What began as a light-hearted brainstorming session turned into a full-fledged business plan.

"We both sort of paused for a second," Lau recalled. "He said to me 'Damon, that's actually not a bad idea. If you ever do anything like that, let me know.' And that's actually how the whole thing started. He ended up being the first license that we signed."

Lau is an obsessive fan of MMA dating back more than a decade.

"I was the type of guy that when they were playing PRIDE fights in Japan and I couldn't find them on broadcast, I'd sit there on Sherdog late at night and just read the play-by-plays that people used to do in the forums," he said.

Lau was also a fan of Japanese MMA figures produced by HAO, which boasted very detailed likenesses of popular fighters, with somewhat exaggerated features -- large head and hands, bodies not exactly to scale. The Round 5 MMA action figures that first hit shelves in early 2008 are sort of a compromise between the HAO style and the conventional American standard of action figures. While there is plenty of detail and the head and fists are still a bit larger than normal, there is some articulation to the figures, and the bodies look more normal than the often stumpy depictions of HAO's much smaller figures.

The first series featured Couture, Tito Ortiz, Quinton "Rampage" Jackson and Matt Hughes. In putting together a lineup of famous fighters, many of them still under UFC contract, Lau said he offered the fighters very black-and-white, beneficial contracts. The fighters not only get a royalty per unit sold -- which means if a fighter's action figure flies off shelves, he shares in the profit -- but the fighters are also free to sell sponsorships on their figure's attire, just as they would for their real-life fight gear. In that way, Round 5 MMA enables the fighters under contract to make extra profit on the side.

"I was able to put some of my sponsors on there," Sherk said of his Round 5 MMA figure. "I was able to put the gyms that I train at on there. A lot of the sponsors were pretty excited about that. They're pretty excited to see their company logo on my fight shorts on my action figure."

Sherk said Round 5 MMA also gave him plenty of creative control in how his action figure looked.

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