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25 SEPTEMBER 2018

 

Conflicts of Interest




By Thomas Hauser
Boxing has a lot of problems. And its biggest problem is that there's no central authority to set definitive standards for the good of the sport. Other major sports such as baseball, football, basketball, tennis, and golf are structured to encourage legitimate championships and protect the integrity of the game. Boxing, by contrast, has petty dictators in competition with one another at every level. Unholy alliances are rampant. There's no union to protect the fighters. And the worst conflicts occur outside the ring.

Conflicts of interest constitute the biggest ethical problem in boxing today. Yet they've become so ingrained in the sport that hardly anyone cares about them. Too many people wearing too many hats play too many roles.

This is one facet of the sport where it's unfair to put all the blame on promoters. Certainly, promoters feed into unethical situations, and their relationship with the world sanctioning organizations is at the core of corruption in boxing. But for the most part, promoters don't have a fiduciary duty to fighters.

Conflicts of interest arise in situations where a party is supposed to be neutral (as in the case of sanctioning bodies, government regulators, and ring officials) or has a fiduciary duty to the fighter (as is the case with managers, trainers, and lawyers). That means there's not much of a conflict-of-interest problem at the television networks. Is it in HBO's interest that its signature fighters like Oscar DeLaHoya and Roy Jones Jr. win? Absolutely. But the networks aren't fiduciaries and they aren't required to be neutral.

Having said that, though, it should be noted that the television networks are the de facto promoters of big fights today. They make the matches and fund them. As HBO Sports president Ross Greenburg acknowledged when he testified before Congress, "We are the bank, and a powerful one at that."

HBO, Showtime, and ESPN, if they chose to do so, could leverage their economic power to eliminate many of boxing's conflicts of interest. Also, the networks have their own conflicts problems. For example, ESPN hired promoter Russell Peltz to put together shows for ESPN2 Friday Night Fights, and he promptly used that position to advance his own economic interests to the detriment of other promoters and fighters who refused to sign with him.

Money is at the root of most conflict of interest problems in boxing, although family ties and personal loyalty also play a role. Let's look at some of the players.

THE WORLD SANCTION ORGANIZATIONS

"If you look up 'conflict of interest' in the dictionary," says Seth Abraham (now chief operating officer at Madison Square Garden), "you'll see the logos of the world sanctioning bodies. They have a no-shame policy."

The manner in which the world sanctioning organizations rate fighters is a classic example conflicts of interest run amok. Ratings are supposed to be based on the ring performance of fighters. But often, ratings are based on the influence within the organization of a particular promoter, manager, or other non-combatant.

Craig Hamilton (an adviser to Michael Grant) recalls attending a World Boxing Association dinner when Grant was a heavyweight on the rise. He asked Jimmy Binns (counsel for the WBA) what had to be done to get Grant rated by the WBA. According to Hamilton, Binns answered, "Hire me as a lawyer."

Binns calls Hamilton's allegation "absolutely absurd." But for whatever reason, many of the WBA's ratings are ludicrous, as are those of the other three world sanctioning bodies. When Frans Botha is the third-rated heavyweight in the world and Kali Meehan and Nicolay Valuev are ranked in the top 15, something is wrong. When Mike Tyson is rated as high as number three (by the WBC) and not at all by the WBO (which lists Sinan Samil Sam, Lou Savarese, and Attila Levin ahead of him), one can be forgiven for assuming that these discrepancies are based on something other than genuine differences of opinion regarding merit.

Ratings are often changed based on who a champion wants as an opponent. Fighters are frequently stripped of their titles and box-offs ordered based on questionable criteria.

Also, every major sanctioning body is based on an economic model with a built-in conflict of interest in that most of their revenue comes from championship-bout sanctioning fees. This means there's a huge incentive to rate bankable stars favorably and make certain that these stars get generous treatment from referees and judges.

So yes, there are instances like the International Boxing Federation stripping Vernon Forrest of his 147-pound title at the behest of its championship committee chairman, Joe Dwyer. But in a decision-making process that is supposed to be based on merit, the revenue-producing nature of a fighter is often the determining factor. That much was made clear on March 12 of this year when IBF president Marian Muhammad fired Dwyer because she "lacked confidence" in his ability to effectively perform the duties of his job.

"There's a natural progression," says Jim Thomas (Evander Holyfield's attorney). "When a promoter buys five tables for a sanctioning body's annual dinner, don't you think that effects ratings?"

And that's just the start. Things go downhill from there.

Defenders of the system argue that, while a phony ranking might work to the detriment of one fighter, it's another fighter's gain. But that argument is specious. Phony rankings are unfair to the disadvantaged fighter. They undermine the sport. And the true beneficiary of a phony ranking is the promoter or manager who paid for it and uses it to gain extra leverage in his dealings with fighters.

GOVERNMENT REGULATORS

Government regulators often serve political parties and specific economic interests rather than the good of the sport. Too often, money changes hands to create influence and alter the decision-making process.

The New York State Athletic Commission has been a slush fund for the state Republican party for years. The NYSAC is so oblivious to conflict-of-interest standards that it was left to HBO to draw the line and say that Harold Lederman could no longer judge fights for HBO and serve as a judge for the NYSAC at the same time.

The Tennessee Board of Boxing and Racing is a national joke. After a eight-day temper tantrum during which he refused to train, claimed flu-like symptoms, had a large tattoo etched on his face, and reportedly smoked marijuana for hours on end, Mike Tyson flew to Tennessee to fight Clifford Etienne. On February 21, the day before the fight, Iron Mike "passed" his pre-fight physical. However, pursuant to Tennessee law, the physical was conducted by a doctor hired by the promoter. When the Nevada State Athletic Commission (to which Tyson is expected to apply for a license) asked to see the test results, the Tennessee Board of Boxing and Racing refused to provide them.

Meanwhile, Nevada has its own problems. On January 13, Luther Mack (chairman of the Nevada State Athletic Commission) unilaterally designated Tony Alamo Jr as vice-chairman of the NSAC. Mr. Alamo's father, Tony Alamo Sr, is the senior vice-president who oversees boxing for Mandalay Bay. Mandalay Resort Group is both a licensed promoter and the major player in boxing in Las Vegas. As Jim Lampley noted after Alamo's elevation was announced, "That's not the kind of progressive movement that the Nevada commission has been known for in recent years."

Alamo Jr. says that he recuses himself from votes when necessary and adds, "We [he and his father] are completely independent. We don't talk about boxing. He happens to work in the hotel industry, and I'm a physician. If people are excluded from voluntary public service because they are related to someone in the hotel industry, that's not good for Nevada or any other state."

However, there's no record of Alamo Jr having recused himself on any matter that has come before the commission to date. It's hard to believe that he and his father never talk about boxing. And his father doesn't just "happen to work in the hotel industry." He happens to be the most important player in boxing in the entire state of Nevada. Nor is Alamo Jr. simply a "voluntary public servant." He's vice chairman of the NSAC. The issue here isn't Tony Alamo Jr's character. It's the obvious conflict of interest involved.

But that's just one of several burgeoning controversies in Nevada. In recent weeks, there have been reports that NSAC personnel accepted special room rates, free meals, and other gratuities from promoters. Initially, this controversy focused on a $115 room rate given to Luther Mack (chairman of the Nevada State Athletic Commission) at Mandalay Bay. The special rate was authorized by Tony Alamo Sr.

Luther Mack is personable and charming. He says that, contrary to reports, he was given only a fifteen-dollar discount on a room that would normally cost $130. "If it was a four-hundred-dollar room," Mack acknowledged recently, "that's a whole different story. I don't need a suite. This was a regular room. It was not a suite. That would certainly be in violation of the rule."

However, records from Mandalay Bay seem to tell a different story. They indicate that Mack stayed at Mandalay Bay on the following eight nights: November 15 and 16, 2002 (room 17233), December 6 and 7, 2002 (room 12334), December 27 and 28, 2002 (room 31201), January 31 and February 1, 2003 (room 27102). In each instance, Mack was billed $115 per night. Sources at Mandalay Bay say that each of these rooms is an "executive suite" that normally costs in the neighborhood of $400 a night.

Questions have also been raised about the receipt of fight tickets by members of the Nevada State Athletic Commission.

Under Nevada regulations, each of the state's five commissioners is given six tickets in addition to his own seat for every fight card held in Nevada. These tickets are provided by the promoter. Two of them must be ringside. The other four tickets may be anywhere in the arena. The goal of this rule is to eliminate the embarrassment and abuse that might otherwise flow from commissioners asking promoters for tickets. But ringside tickets can be in the first row or the last. "Anywhere in the arena" can mean more ringside tickets or nose-bleed seats. That leaves a lot of room for favors.

These tickets are no small item. Many of the issues surrounding the Nevada State Athletic Commission were first raised by Charles Jay of TotalAction.com. They began receiving national attention on January 31st when Teddy Atlas referenced them on ESPN2 Friday Night Fights. In the twenty-nine days after Atlas's remarks, there were four major fight cards held in Las Vegas. The ticket range for these cards was as follows: Medina Marquez ($50 to $250), Mosley-Marquez ($25 to $250), Austin-Marquez ($40 to $200), Jones-Ruiz ($100 to $1,200).

If the promoters of these fight cards gave each commissioner the least expensive tickets required by law, their face value would have been $4,660 for each commissioner. If the promoters gave each commissioner the most expensive tickets allowable under Nevada law, their face value would have been $11,400 for each commissioner.

And that's for one month alone.

Raymond Avansino, Jr. (the most recent appointee to the Nevada State Athletic Commission) was reportedly sufficiently concerned with the ticket issue that he asked the Nevada State Ethics Commission for a confidential opinion on the propriety of the system. Then, after some preliminary steps, his request for an opinion was withdrawn.

One might also ask whether the commissioners pay personal income tax on tickets that they receive and give to a family member or friend. According to the Internal Revenue Service, these tickets are taxable as items of personal income.

In dealing with the ticket issue, special room rates, and related matters, Nevada's chief deputy attorney general Keith Kizer (who represents the Nevada State Athletic Commission) cites Section 281.481(1) of the Nevada Revised Statutes, which states, "A public officer or employee shall not seek or accept any gift, service, favor, employment, engagement, emolument, or economic opportunity which would tend improperly to influence a reasonable person in his position to depart from the faithful and impartial discharge of his public duties."

The key loophole in this statute is the provision that gratuities are only forbidden if they "would tend improperly to influence a reasonable person." Kizer knows each of the commissioners. He believes that they are all honorable men and thus would not be improperly influenced by these perks of office.

However, Section 6308 of the federal Professional Boxing Safety Act is a different matter. This statute has a section entitled "Conflicts of Interest" that declares," No member or employee of a boxing commission, no person who administers or enforces State boxing laws, and no member of the Association of Boxing Commissions may belong to, contract with, or receive any compensation from any person who sanctions, arranges, or promotes professional boxing matches."

In other words, the federal statute contains a flat prohibition. There's no "reasonable person" "exemption. Moreover, under the federal law, "compensation" doesn't mean just money; it means anything of value.

The policies of the Nevada State Athletic Commission appear to violate the Professional Boxing Safety Act. That's a shame because, in many respects, the NSAC is the best-run commission in the country with the best executive director in the country.

It would be sad if the NSAC's signature standing were to end. Meanwhile, insofar as every state athletic commission is concerned, this isn't just a boxing issue. It's a good-government issue. When the government becomes a lawbreaker, it breeds disrespect for the law.

REFEREES AND JUDGES

In other sports, the integrity of officials is taken for granted. In boxing, too often, bias is presumed to exist.

Where big fights are concerned, referees and judges receive huge officiating fees and generous travel allowances that flow directly or indirectly from the promoter. They've also been known to get other gratuities from promoters, including ringside tickets for family members and friends. Their assignments might come through world sanctioning organizations and state athletic commissions. But the true source of their perks is the promoter, who usually has a vested interest in the outcome of the fight.

As Lou DiBella notes, "When a judge or referee asks a promoter for another first-class ticket so he can fly to a fight with his girlfriend or wife, there's an implied quid pro quo. Anyone who refuses to admit that is lying."

When someone who is supposed to be a neutral official understands that he (or she) can receive something of value by ruling a particular way, it undermines the integrity of the process. Yet in some jurisdictions, major promoters even have the power to blackball referees and judges.

Also, referees and judges know which fighter is favored by a particular sanctioning body. And the practice of certain judges and referees aligning themselves with one or more sanctioning organizations further undermines the neutrality that state athletic commissions should be seeking to ensure.

Bad decisions in boxing virtually never go against the house fighter. Referees and judges frequently compromise their roles by favoring a hometown fighter. Indeed, hometown decisions are a staple of the sport, based on the premise that local promoters need local fighters to be successful in order for their promotional companies to succeed financially. The assumption is that a fighter who loses a split decision in another guy's home town would have won had the fight been on his own home turf.

Marco Antonio Barrera stated a view held by many when, after his controversial 2000 loss to Erik Morales in Las Vegas, he declared, "I would have won the fight if Don King was my promoter."

The scoring of ring judge Bob Logist in the 1999 bout between Felix Trinidad and Oscar De La Hoya is an even more compelling example. Trinidad won a controversial majority decision in that fight. But because De La Hoya ran so shameless for the final two rounds, the public outcry was muted. Still, Logist's scorecard was a horror. He voted for Trinidad but somehow, against all reason, gave the last round to Oscar. One can be forgiven for wondering whether Mr. Logist went to that fight with an agenda; and that once he had Trinidad safely ahead after 11 rounds, he decided to even out his card a bit by giving the last round to De La Hoya.

The greatest source of power in boxing today is television, which puts up most of the money for fights. It would be nice to hear HBO, Showtime, ESPN, and their brethren say, "From now on, the quality of judging will be a factor in deciding the venues from which we choose to telecast fights." The networks already exercise veto power over sites on the basis of ambiance and production costs for given fights. The integrity of decisions should also be a factor, since bad decisions impact negatively on the viewer experience.

RING DOCTORS

"If you're a ring physician, you have to be neutral," declares Flip Homansky (former medical director for the Nevada State Athletic Commission). "But if you're a fighter's attending physician outside the ring, there's a whole different set of principles to follow. An attending physician is supposed to meet the needs of his patient; not be neutral."

Thus, Homansky posits, ""It's a conflict of interest for a ringside physician to be involved as the attending physician for any fighter. No ring physician should receive any compensation in any form for the treatment of any fighter other than the payment he receives from the commission for his work at a fight."

In other words, if a doctor wants to be involved with taking care of a fighter outside the ring, he (or she) shouldn't be a ring physician. It's that simple. But too many doctors violate that principle today because they're largely anonymous and state athletic commissions don't care. To put the matter in perspective, suppose Ferdie Pacheco had been a physician working at ringside for a state athletic commission at the same time he was the personal physician for Muhammad Ali?

Commission-appointed ring physicians in some states rack up huges fees from insurance companies for the treatment of fighters. Other ring physicians refer fighters to themselves for lucrative physical therapy sessions.

In California, the same doctor (1) conducted pre-fight physicals in his office; (2) ran the pre-fight-physical lab tests through his office; (3) worked the fights; (4) handled fighter aftercare in his office; and (5) was the personal physician for the same fighters.

Referees and judges shouldn't make money off a fighter outside the ring, and ring doctors shouldn't either. They should be responsible to the state athletic commission that assigns them, period. They should not have business relationships with fighters.

MANAGERS

A manager is a fiduciary. His loyalty belongs to the fighter. His most important function is to negotiate on behalf of his fighter and get the fighter the most money possible for each fight.

Yet some managers are subservient to certain promoters. The father-son relationship between Don and Carl King is a classic example, but by no means the only one. Other managers do business with only one promoter in return for what is presumed to be a piece of the promotional pie.

Attorney Judd Burstein states the obvious when he says, "The connection between certain managers and certain promoters is very troubling." And Jim Thomas adds, "There are too many instances where a manager's relationship with a particular promoter is more important to him than his relationship with the fighter."

There are times when managers put one of their fighters on the short end of a hopeless mismatch in order to curry favor with a particular promoter or get a good fight from the promoter for another one of their fighters. It's not unusual for a manager to say to himself, "Fighters come and go, but this promoter will be here for a long time."

No matter how one cuts it, a fighter's manager has to be independent of the promoter. Yet the situation is exacerbated overseas, where it's legal for the same person to promote and manage a fighter. How could Frank Maloney properly manage Lennox Lewis and work for Panos Eliades at the same time? Klaus-Peter Kohl manages and promotes both Klitschko brothers. A manager's job is to get as much money as possible for his fighter. A promoter's best interests dictate paying the fighter as little as possible. So when HBO offers Kohl "X" dollars for a Klitschko bout, which hat does Kohl wear when the fighter's purse is being negotiated?

Shelly Finkel declares, "There's no bigger inherent conflict in boxing than the same person being the manager and promoter for a fighter." That, of course, brings one to the issue of Finkel and Main Events. Shelly guided a lot of investment money to Main Events prior to the 1884 Olympics. That money enabled the promoter to evolve from a mom-and-pop organization to a major player in boxing. And with the exception of Mike Tyson, until recently when Gary Shaw left the company, Shelly took virtually every one of his fighters to Main Events.

Thus, the question frequently asked is, "How can Shelly Finkel deny being tied to a promoter when, for years, he brought virtually every fighter he had to that one promoter?"

"There have been accusations that I owned, a piece of Main Events," Finkel says in response. "That's absolutely not true. Main Events didn't have the cash to sign the 1984 Olympians and I put them together with two builders in Connecticut, but I didn't get a penny from the financing. When you look around at the promoters in boxing, you don't have many options. I had strength at Main Events, and I knew that I could always count on Main Events to give my new fighters exposure."

"Yes, Shelly brought his fighters to us," adds Pat English (the attorney for Main Events). "And the reason was, he knew he'd always get a fair deal for his fighters."

It's natural to do business with someone who treats you fairly and who you trust and like. Relationships of that nature are particularly rare in boxing; so if a manager finds one, he's well-advised to cultivate it. Deals made by virtue of good relationships aren't necessarily conflicts of interest.

But to inquire a bit further; it's generally believed that Showtime fronted the money for Finkel and Main Events to sign a quartet of 2000 Olympic fighters. The purported understanding was, Shelly would acquire the fighters as their manager; he would then sign the fighters to promotional contracts with Main Events; and Main Events would license their fights to Showtime. Contracts with Francisco Bojado, Juan Diaz, Rocky Juarez, and Jeff Lacy resulted.

Finkel is adamant in declaring, "There was no commitment from Showtime before the fighters were signed. Yes, I went to Sydney with Gary Shaw and we talked a lot about various contingencies. Then I signed the fighters and, about a month later after considering other promoters, the fighters signed with Main Events. We were talking with Showtime during that period, but the Showtime deal wasn't signed until November."

If commitments were made to Main Events and Showtime in advance, did that constitute a conflict of interest? Not if the fighters knew about the various deals before signing, understood them, and approved them. But in the absence of a knowing waiver, there would be an issue because Finkel wouldn't have been able to shop the fighters around for a better deal than Main Events was offering (even if it meant more money for the fighters), and Main Events wouldn't have been able to take the fighters to a competing network.

It should be noted that Lou DiBella had a deal with HBO prior to the 2000 Olympics that led to the signing of Ricardo Williams, Jermaine Taylor, Brian Villoria, Jose Navarro, Clarence Vinson, and Michael Bennett. But DiBella is quick to proclaim, "There were significant differences. I never said I was on the management end of the equation when I signed the fighters. The guys I signed knew in advance that I had a deal with HBO. And the six Olympians I signed were represented by five different management groups."

Questions have also been asked about the fact that, when Shelly Finkel was Evander Holyfield's de facto manager, he made a deal with John Davimos for a piece of Michael Moorer, who later defeated Holyfield for the heavyweight title.

Finkel's explanation for that bit of business is as follows: "After Evander fought and lost to Riddick Bowe the first time [in 1992], he indicated to me that he was retiring from boxing. Then Michael Moorer came to me and said he'd like me to manage him. Moorer still had a contract with John Davimos. So I called John, and John sold me a third of his piece, which gave me ten percent of the fighter. Then Evander came back. It all predated Evander fighting Moorer, which came much later."

Well and good. But when Holyfield fought Moorer in 1994, losing his championship in the process, he should have known that Finkel had a financial interest in his opponent. And according to Evander, he didn't. Shelly says that he didn't take a cut of Moorer's purse from that fight. But after Moorer won the title, Finkel did receive his share from future purses.

Also, there's another point that should be noted with regard to managers. In order to be certified as a player agent pursuant to the collective bargaining agreement that governs the NBA, a player's agent can take no more than three percent of a client's contract compensation. In the NFL, the number is four percent. In boxing, in most jurisdictions, a manager can take up to 33 1/3 percent. Think about that for a moment. The manager gets half as much as the fighter.

TRAINERS

Like managers, trainers have a fiduciary duty to the fighters they serve. Often, the trainer is a surrogate father. He has enormous input regarding a fighter's ring strategy and the choice of opponents. The trainer works for the fighter. But at times, the unambiguous nature of their relationship is compromised.

Main Events has a history of putting trainers together with fighters. The company did it with Lou Duva and George Benton in the past. It's doing it now with Buddy McGirt, who has a contract to train fighters for Main Events.

McGirt is a good guy, but where do his loyalties lie? Suppose Main Events has an average world champion and can get a promotional piece of a budding superstar by matching him against the Main Events fighter? Does McGirt counsel against the fight that Main Events wants? Or suppose the converse; that the Main Events champion wants to fight a Don King fighter who refuses to give options to Main Events. Does McGirt push for the fight even if Main Events doesn't want it? Suppose a fighter that McGirt is working with suffers a minor shoulder injury in training. And suppose further that Main Events needs this particular fighter to fight or the fight card will fall apart and a large TV license fee will be lost?

Enough said.

LAWYERS

Lawyers often represent both a fighter and his manager. That might be appropriate under certain circumstances where there's a unity of interest between fighter and manager. But too often, lawyers are inappropriately on both sides of the equation. Indeed, there are times when an attorney represents the fighter, his manager, the promoter, and even the venue in a single transaction. And the problem is exacerbated by the fact that there are very few capable attorneys with expertise in boxing to choose from and some of those attorneys are exclusively tied to one promoter.

Last year, a Manhattan jury returned a $1,175,000 verdict in favor of heavyweight champion Lennox Lewis against his former attorney, Milt Chwasky, who represented Lewis at the same time he was representing Panos Eliades (Lewis's promoter) and serving as an officer of the United States branch of Panix Promotions. Among other things, Lewis was awarded $1,000,000 for breach of fiduciary duty. Chwasky's practice appears to have been unaffected by the verdict.

Judd Burstein, who represented Lewis in the Lewis-Chwasky litigation, says, "I've turned down a lot of fighters because of conflicts of interest that were a lot less severe than conflicts of interest that exist between certain other lawyers and their multi-client representation."

And Jim Thomas states the obvious when he declares, "A fighter needs a good lawyer who understands his fiduciary obligation to the fighter; not a lawyer who wants a piece of everything from everyone. A lawyer has a legal and ethical obligation to put his client's interests above all others including his own."

CONCLUSION

The issues surrounding conflicts of interest aren't always clear-cut. Sometimes, it's a question of degree. It can even be argued that a manager shouldn't represent more than one world-class fighter in the same weight division because advancing the aspirations of one fighter might come at the expense of another. Nor are writers immune from criticism. Those of us who write for websites and other publications sponsored directly or indirectly by the boxing industry walk a fine line.

But the bottom line is that more has to be done to protect fighters, and no boxing reform movement will be successful unless it addresses the conflicts of interest that permeate the sport. Most conflicts of interest involve people putting money in their pockets at the expense of fighters. But right now, no one is seriously policing the sport; there's no real pressure to change the status quo; and virtually no one cares. Most onlookers simply view the exploitation, shrug their shoulders, and say, "That's boxing."

Fighters are risking their lives in the ring. At the very least, the people who are supposed to be working on their behalf should be completely loyal to them.



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