The MMA world is currently buzzing from the still hot-off-the-press news that Strikeforce welterweight champion Nick Diaz will be fighting UFC 170lb champ Georges St.Pierre at UFC 137 in October, but how exactly did the deal come about?

Diaz’ manager Cesar Gracie has informed USAToday that a new eight-fight contract for his client was the catalyst for the fight to become a reality.

According to Gracie, Diaz new deal with Zuffa allows him to continue fighting for Strikeforce and to compete in the UFC. The agreement also removes a previous clause that allowed Diaz to compete in boxing.

“They were very fair in their dealings with us,” Gracie says. “It was kind of a complex contract because of the boxing, so he obviously had to be compensated for not boxing and taking this fight instead.”

Only months ago Diaz had signed a lucrative new deal with Strikeforce that earned him $150,000 per fight. The outspoken fighter has publicly stated on numerous occasions that he’s still not being paid enough however, and by threatening to compete in boxing instead it seems that he’s given himself the perfect leverage to get what he really wanted – a bigger payday and bigger fights.

Update: Speaking to MMAfighting, Gracie indicates that Diaz new deal essentially now makes him a UFC fighter who has the option to fight for Strikeforce.  Gracie also makes it clear that he has no interest in seeing his client fight again in Strikeforce, stating that this is only likely to happen if he loses his fight with GSP.