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24 APRIL 2014

 

The Tangled Web




By Thomas Hauser
On August 18th, I posted an article on this website entitled Shelly Finkel's Packaging Fee. The article outlined the complex contractual relationship between Finkel, Showtime, Main Events, and a group of young fighters that led to Shelly receiving a "packaging fee" of $1,725,000 from Showtime. This fee was paid to Finkel in conjunction with appearances by the fighters on Showtime at the same time that Shelly was managing or co-managing the fighters and thus had a fiduciary duty to them.

The $1,725,000 figure came in part from information provided by Finkel under oath in an arbitration proceeding brought against him by Joe Hernandez (his co-manager in guiding the career of Francisco Bojado). In a written response to interrogatories posed in that litigation, Finkel listed ten payments on ten specific dates. There now appears to have been an eleventh packaging fee payment in the amount of $200,000 for a fight card that took place on April 27, 2002. That payment raises the packaging fee paid to Finkel by Showtime to $1,925,000.

Finkel's interrogatory answers also acknowledge that he received an additional $2,200,000 from Showtime as reimbursement for signing bonuses and expenses. The best available information is that $200,000 of this amount was for reimbursement of expenses incurred by Finkel in signing the fighters, although a Showtime executive involved with the deal now says that the expenses weren't fully documented for the network and might have been designed to "give a little something extra to Shelly." Hernandez also received $50,000 as an expense reimbursement. The remaining $2,000,000 is believed to have been intended by Showtime to fund signing bonuses for managerial contracts between the fighters and Finkel as follows: Rocky Juarez ($1,400,000), Jeff Lacy ($250,000), Juan Diaz ($150,000), Francisco Bojado ($100,000), Malik Scott ($50,000), and Dominick Guinn ($50,000).

(Pic of Jeff Lacy by Tom Hogan)

It now appears that Finkel paid a signing bonus of $150,000 to Jeff Lacy (not $250,000); $100,000 to Juan Diaz (not $150,000); $75,000 to Francisco Bojado (not $100,000); and $20,000 to Dominick Guinn (not $50,000). The amount of the signing bonuses paid to Rocky Juarez and Malik Scott is unclear at the present time.

Finkel has said that the numbers quoted above are incorrect; that the fighters received everything they were entitled to; and that no impropriety occurred. But he refuses to say what the correct numbers are and, when asked, responds, "Please quote my entire response in your article. All the moneys received by me from Showtime for the reimbursement of expenses and for signing bonuses of certain fighters, including certain 2000 U.S. Olympic boxers, were disbursed as per the contracts with these fighters and the agreement with Showtime."

So let's recap what happened here.

Some promoters spend hundreds of thousands of dollars of their own money developing fighters and then beg for television dates. Showtime gave Finkel $2,200,000 so he could sign fighters to managerial contracts and cover his expenses. It gave Finkel a series of television dates for his fighters and a $1,925,000 packaging fee. On top of that, it paid Main Events a substantial licensing fee for the fights. And it did all of this without having a formal written contract with Finkel. Isn't that strange, even for boxing?

"I know it's unusual that we gave Shelly $2,200,000 without a signed contract," says a Showtime executive who was involved in the transaction. "But that's the sort of relationship we had with Shelly."

Meanwhile, a high-ranking HBO executive says, "We learned a lot about the way Showtime does business when we did Lewis-Tyson two years ago. We got to look behind the curtain, so this doesn't surprise me."

In the days after 'Shelly Finkel's Packaging Fee' was posted, I received numerous telephone calls offering information of interest. One caller pointed out that, in addition to his dealings with Showtime, Finkel has also enjoyed a profitable relationship with HBO.

TVKO was once the pay-per-view arm of HBO. In 1991, it planned on televising a pay-per-view card each month, with Top Rank and Main Events as the promoters. For about a year, TVKO paid Mike Malitz a consulting fee on each Top Rank show. Malitz worked for Top Rank and was an expert on the technical side of the pay-per-view business.

At the time, Finkel was actively involved in the management of a number of fighters who were under contract to Main Events and appeared on TVKO. Unlike Malitz (who worked for a promoter), Finkel had a fiduciary duty to his fighters. It has now been confirmed with present and former HBO executives that, each time Main Events promoted a TVKO show during that period, Finkel received a $25,000 consulting fee from TVKO.

But the most intriguing message received in response to Shelly Finkel's Packaging Fee consisted of five words: "Follow the money in Louisville."

"What?"

"You heard me. Follow the money in Louisville. Who paid Danny Williams? How did Williams get paid? How much did he get paid? How was the money divided?"

As most boxing fans know, Finkel has served as an advisor to Mike Tyson for nine fights beginning with Tyson versus Frans Botha in 1999. When Danny Williams knocked out Iron Mike on July 30th, I watched the fight on television but didn't pay much attention to the business end of things. Then, on August 20th, an Associated Press report caught my eye.

The gist of the AP article was that Chris Webb and Straight Out Promotions (Webb's promotional company and the promoter of record for Tyson-Williams) are suing Frank Warren, Sports Network (Warren's promotional company), and several other entities involved in Tyson-Williams. Webb claims that he has an interest in the promotion of future Danny Williams fights and is owed money from the sale of international rights to the July 30th bout.

Warren claims that Webb and Straight Out Promotions failed to fulfill their financial obligations prior to the fight. He further says that, as a result of this alleged breach of contract, he maintains exclusive rights to promote Williams's future fights.

I don't know where the equities lie in the dispute between Webb and Warren. But a sentence in the Associated Press article peaked my interest: "Minutes before the bout, the (Webb) suit says, a Sports Network official demanded that Straight-Out pay everything immediately -- $125,000 for future promotional rights, plus $125,000 owed to Sports Network for Williams's participation in the fight and $100,000 for a brokering fee."

A $100,000 "brokering fee" ?

Intrigued, I telephoned Michael Tigue, the attorney for Chris Webb. Tigue seems like a capable attorney who's getting a crash course in boxing ethics. He told me that Straight Out had a $350,000 contractual obligation to the Williams camp that was broken down as follows:

(1) $125,000 due to Sports Network for Williams to participate in the fight;

(2) $125,000 due to Sports Network for an option to co-promote future Williams fights; and

(3) A $100,000 "arrangement fee."

More specifically, Webb's complaint against Warren and Sports Network states, "Straight Out was to pay Sports Network an arrangement fee of $100,000 upon conclusion of the boxing match by wire transfer to a United States bank account to be designated by Sports Network."

This is confirmed by a June 24, 2004, letter agreement signed by Webb and Stephen Heath (the in-house solicitor for Sports Network), which states that the $100,000 "will be wired to Sports Network or, at its election, deposited in the US account of Sports Network Inc." The letter, which was written by Heath, adds, "This sum is in addition to the provision of services fee set out in the separate agreement."

Tigue says that, ultimately, Sports Network demanded that the $350,000 be paid as follows:

(1) $100,000 to Danny Williams in the form of $50,000 in cash, a $20,000 check, and an Internal Revenue Service certificate guaranteeing that Straight Out will pay $30,000 in taxes owed by Williams on income he received from the fight.

(2) $150,000 to Sports Network. Warren says that this $150,000 will be generously shared with Williams.

(3) That leaves the $100,000 arrangement fee. Webb's complaint states that, on the night of the fight, Sports Network, "demanded that Straight Out issue a check in the amount of $100,000 made payable to Sterling McPherson of Sterling Productions in full satisfaction of the Arrangement Agreement . . . Straight Out then issued a check made payable to Sterling McPherson in the amount of $100,000."

Then came another twist. On August 2nd, Straight Out learned that Warren was disavowing its future promotional rights and stopped payment on the check.

Frank Warren confirms that he instructed Straight Out to make the $100,000 check payable to McPherson. "Sterling was my representative," he says. "He told me that the money would have to be paid for Danny Williams to have the opportunity to fight Mike Tyson. I can't say for certain where the money was to have gone after he received it."

No suggestion is made here that Frank Warren or any of his companies or anyone else did anything improper. But one does wonder why it was intended that $100,000 be paid to Sterling McPherson (a small promoter who has served as an American representative for Sports Network and an interface with the Tyson camp on Tyson-Williams). One also wonders what was supposed to happen to the $100,000 once McPherson got it.

McPherson's explanation in the first instance was as follows. "Sports Network called me and asked me to work out something with Shelly Finkel to make the fight. My job was offering Danny Williams to Shelly and getting him to accept Williams as an opponent. After Shelly accepted the fight, my job was done. Then it was up to Sports Network to work out their own deal and Danny's purse."

Later, McPherson elaborated upon his remarks, saying that Chris Webb wanted to substitute Williams for Kevin McBride because Webb thought he could get Williams for less money than McBride and foreign rights would be more valuable with Williams as the opponent. It's not completely clear who first asked McPherson to act as a go-between on the fight.

What about the $100,000?

"That's what Sports Network offered me," McPherson says. "I've heard the talk that the money was going back to Shelly Finkel, but that's untrue. I did a job; I got a check; and the check bounced. I'm owed $100,000, and all the other stuff means nothing to me. All this talk about a kickback muddies the waters. I delivered a service to Sports Network. I got Shelly Finkel to accept Danny Williams as an opponent. So now Sports Network owes me $100,000."

Finkel says that none of the $100,000 "arrangement fee" was intended for him. SecondsOut is unaware of any evidence that contradicts him on this point. But the arrangement fee is illustrative of the strange manner in which large sums of money are distributed and redistributed in boxing. And given Finkel's packaging fee arrangement with Showtime, one can be forgiven for asking questions regarding his overall relationship with Tyson.

One person who has asked questions is Dan Goossen. Goossen was the CEO at America Presents when the now-defunct promotional company crafted a six-fight deal to become Mike Tyson's promoter of record. The first two fights pursuant to that contract were Tyson versus Frans Botha and Tyson against Orlin Norris.

"We were the promoter of record," says Goossen. "But virtually all of the negotiations ran through Finkel. Finkel was in control. It was Finkel who made most of the deals with the venues and suppliers and on foreign rights, and he kept most of the paperwork on those deals away from us. I never saw most of those contracts," Goossen continues. "That's one of the reasons I decided after Tyson-Norris to distance myself from future Tyson fights. I didn't have an understanding of what was going on behind-the-scenes. That made me uncomfortable, and I didn't feel it was in the best interests of Mike or myself for me to stay actively involved."

Goossen did not attend Tyson versus Julius Francis in London or Tyson against Lou Savarese in Scotland. In his words, he "boycotted" those bouts. He was at Tyson-Golota in Michigan, but not as the promoter of record. By the time Tyson fought Brian Nielsen in Denmark, Goossen had left America Presents.

"It would be interesting," says Goossen, "if the Tyson-Finkel relationship were to be audited as aggressively as the relationship between Tyson and Don King."

Stephen Espinoza (who has served as Tyson's attorney) says that there was an extensive audit of Tyson's finances by the trustee in bankruptcy in Tyson's bankruptcy proceeding and that this audit satisfied the creditors committee in the proceeding. Of course, Finkel was on the creditors committee from its formation on August 22, 2003, through his resignation on May 4, 2004.

Finkel says that he produced thousands of pages of documents from his files in the bankruptcy proceeding and that his deposition was taken for several hours. The transcript of his deposition has been sealed and is not available to the public. But given its brevity, one might assume that it dealt mostly with Finkel's claims as a creditor; not with a thorough study of each and every deal he made regarding the nine fights on which he served Tyson as an advisor. Also, one wonders how much the attorney who took the deposition knew about the intricacies of the business of boxing.

Finkel vigorously defends his conduct as Tyson's advisor. "Every day of my life since I've been involved with Mike, people have taken shots at me," he says. "I've been accused of all sorts of things, and the accusations are totally false."

Why does Finkel stay with Tyson given the headaches involved?

"One, I enjoy it. Two, it gives me a lot of strength in the business. Three, Mike winning the heavyweight title back under me would be an incredible thrill. And four, I like Mike. I like him a lot and I care about him a lot."

What about the financial rewards?

"My present contract with Mike began with the Williams fight," Finkel answers. "It calls for me to receive a small percentage of what Mike gets on each fight. For the fights before that when I was with Mike, I got a flat fee on each fight. Beyond that fee, I got nothing, zero, from anyone in any way, shape, or manner or in any capacity in connection with Mike. And I took less from Mike than I was entitled to because Mike needed money. That's why I'm a creditor."

"I know who I am," Finkel says, summing up. "I do what I feel is right. I live with myself. I sleep well at night. I know that I've done nothing wrong."

Finkel also requested that SecondsOut submit any questions it might have concerning his involvement with Tyson to him in writing. He says he will then answer those questions.

SecondsOut will submit a list of questions to Finkel later this month and post them along with written answers that we receive from Finkel on this website.

It's possible that Shelly Finkel has been a model of financial propriety in his dealings with Mike Tyson. But the truth is, it's easier to cross ethical boundaries in the business of boxing than in any other sport. The way the business works and the culture that has taken root afford ample opportunity for misconduct.

And more significantly, the tangled web of contractual relationships involving Finkel, Showtime, and others demonstrates the inadequate nature of current (and proposed) regulations for the governance of professional boxing. Whether there is wrongdoing or not, fighters will always be at risk of exploitation unless ironclad mechanisms are put in place to allow all participants and government regulators to follow every dollar generated by every fight.


Thomas Hauser can be reached by email at thauser@rcn.com



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