TapouT taps into mixed martial arts craze

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An otherwise nondescript industrial plaza is actually ground zero for TapouT, a fast-growing commercial force in the self-described "InYaFace" counterculture world of mixed martial arts. Its loyal fan base of millions buy and wear the company's branded fashions and accessories, sporting dark and edgy symbols with snakes, bats and flames -- and some rabid followers even have TapouT tattoos. The company's conference room, done up in shades of black, dark reds and browns, sports a chandelier made of plastic skulls. Its following is such that TapouT now enjoys the trappings of celebrity, including its own TV show, Hollywood-agency representation and product licensing that goes beyond fight gear. There will soon be TapouT bottled water and energy drinks, and it's also considering lending its name to youth bedroom furniture. "It's very cool -- we're looking at what would be sort of a caged bed," said Dan Caldwell, one of the company's founders, What started out in a small apartment in San Bernardino in the late 1990s now gobbles up space in its beehive of a headquarters, where it makes and markets its branded shirts, caps, workout gear and accessories for shipment to more than 6,000 stores around the world. The privately held company reports that sales surpassed $25 million last year and are on track to hit $100 million this year. TapouT is now a major sponsor of fight events and reality shows produced for the cable network Spike TV by Ultimate Fighting Championship -- a Las Vegas-based promoter better known as UFC. TapouT also has its own popular reality show on the Versus cable network, starting its second season in late July, in which the TapouT Crew -- company leaders who use only those names in public venues and media interviews -- take to the road in a tricked-out bus, scouting the country for new mixed martial arts stars to sponsor in competitions. All three of the lead crew are trained in the sport, which combines boxing with elements of traditional Asian and South American martial arts. And the tough and edgy attitude exuded by the TapouT brand is not fake; the co-founders both grew up in the harsh neighborhoods in San Bernardino. In a recent interview, Caldwell said the company had a hard time turning passion into profits. Started by Mask, whose real name is Charles Lewis Jr., and Caldwell in 1997, TapouT originally sold only on the Web and had reached sales of about $29,000 by 1999. "We were basically just pouring the money back into the business to buy new inventory," Caldwell said. Things started to change about five years ago, as TapouT rode the cresting wave of popularity for mixed martial arts spawned largely by UFC competitions on cable TV, and later bolstered by its own reality show. Since 2006, TapouT has been selling its products through a growing roster of national retailers including Tilly's, Hot Topic, Champs, Pacific Sunwear and Dillard's. Like the fighters it sponsors, TapouT has become a business force to be reckoned with, and major corporate players have taken notice. A pivotal time for the company was last autumn, when it brought aboard Marc Kreiner, a former record industry executive who oversaw disco-era hits by artists including Chic and Evelyn "Champagne" King, to serve as president in charge of daily operations. Shortly afterward, PEMGroup, a private equity firm that manages $1.5 billion in assets, extended a multimillion-dollar credit line to the company. About the same time, TapouT became a client of CAA Sports, a division of Los Angeles-based Creative Artists Agency, which also represents LeBron James, David Beckham, Oscar de la Hoya and Peyton and Eli Manning. Last year TapouT acquired Hitman, a Huntington Beach company that also makes clothing and accessories tied to the mixed martial arts lifestyle. Caldwell said the company is looking into other potential acquisitions, and also at other licensing deals. "But we've turned down a lot of things," he said of licensing offers that have come the company's way as its profile has risen. "We won't attach our name to something that our audience wouldn't use or wear." Sheer numbers suggest that TapouT is in fertile ground for more years of growth. According to the Sporting Goods Manufacturers Association, a Washington-based trade group, there were 6.9 million U.S. participants in all kinds of martial arts in 2007, compared with 6.2 million in 2000. While the overall U.S. wholesale value of sports equipment and apparel rose 3 percent in 2007 from the prior year, the martial arts category was up 12 percent -- from $280 million in 2006 sales to $314 million last year. Association spokesman Mike May said televised mixed martial arts has apparently helped raise awareness of the sport as a way to get in shape, similar to the way in which boxing generated sales of punching bags, gloves and other protective gear to those training across several sports. "The mixed martial arts has sort of fed off the popularity of boxing," May said. E-mail Lou Hirsh at lhirsh(at)PE.com (Distributed by Scripps Howard News Service, www.scrippsnews.com.)