To take something entirely promising and make a mess out of it. Currently becoming a popular phrase amongst gamers. The term comes from the actions taken by a certain game publisher to mismanage a certain franchise and their inability to support anything they do. (ED. Not unlike Norman Mailer's "fug" from 50 years ago, especially if "vug" is pronounced as if it were German.)
The Tribes franchise has been so badly vugged up that no one will ever touch the property again!