“What we’re seeing here,” adds another promoter, “is a classic example of how anti-competitive behavior hurts other competitors and the public. If HBO was giving preferential treatment to a promoter who was providing great fights, that would be one thing. But they aren’t. Golden Boy is giving HBO a few good fights and a lot that aren’t very good. I won’t go on the record with you because we both know that, if I do, there will be retaliation. I’m in a dangerous position. My livelihood depends on the dates I can get from HBO. But if Bill Nelson or Richard Plepler called me in and asked me what was going on, I’d tell them to their face. So would a lot of other promoters.”
Meanwhile, Golden Boy keeps rolling along. On July 12th, it announced a three-year contract with Brooklyn Sports & Entertainment to promote twelve fights a year at the Barclays Center, which will open in Brooklyn in mid-2012.
The Barclays deal signaled Golden Boy’s intention to move aggressively into the New York metropolitan area. Schaefer explains, “Making the deal now allows us to plan for the future. The situation is very fluid. But I would expect that we will have six club shows each year at Barclays that will be televised on an outlet like SportsNet, three Telefutura-ESPN-level shows, two shows on HBO or Showtime, and one pay-per-view event. The important thing is that there will be continuity. We‘ll lock in the dates and then we’ll fill in the slots. It’s an investment for Golden Boy in the New York market and it guarantees New Yorkers live shows.”
The deal is “exclusive” in that it would allow Golden Boy to provide the services of fighters for other shows in New York, but Golden Boy cannot be the lead promoter on those shows. Similarly, other promoters can co-promote with Golden Boy at Barclays, but Golden Boy must be the lead promoter.
“We cannot force another promoter to go to Barclays,” Schaefer continues. “I would assume, however, that co-promoters would want to go there, since the Madison Square Garden deal structure is about as unattractive as it gets and the Barclays Center’s is about as attractive as they come.”
On August 10th, Chris Mannix reported on SportsIllustrated.com that several industry sources “suggested that HBO was involved with brokering the deal with the Barclays Center.” The most vocal among them was Brooklyn-born Lou DiBella.
“Golden Boy goes to venues,” DiBella says. “They go to fighters, sponsors, and investors, saying, ‘HBO is our strategic partner.’ They give the impression that it will go on long after 2011 and that the deal will give Barclay’s exposure on HBO. And HBO does nothing to rebut that. This is a contract between a hole in the ground and a promoter for unnamed fighters in fights that won’t be made for years. The whole thing smells.”
One of the questions raised regarding the deal between Golden Boy and Barclays is the role, if any, played by HBO senior vice president Mark Taffet. Brett Yormark (president and CEO of Brooklyn Sports & Entertainment) declined to be interviewed for this article. However, he told Mannix, “For me, everything is about gut. [Golden Boy and Barclays] share the same vision. They want to grow the sport in Brooklyn. They have visions of going global. We do too. They were willing to make a commitment to us, help us grow this franchise.”
Mannix further reported, “Both HBO and Yormark emphatically deny the network’s involvement. ‘Absolutely not,’ Yormark said. ‘I have some friends at HBO that date back a long way, but they never brokered [a deal] or interfered in it.’ An HBO spokesman told SI.com, ‘In no way did anyone at HBO Sports suggest or recommend to Mr. Yormark what promotional company he should contact, nor did Mr. Yormark indicate that he intended to approach any promoter as a potential exclusive partner or sponsor. Yes, one of our executives had lunch with Mr. Yormark once in the past year, but the conversation was general and no recommendations or endorsements were made.”
Taffet elaborates on that theme, saying, “One of his [Yormark’s] family members knows one of my family members, so there’s a connection. In fifteen years, I’ve met him a few times at social functions. Five or six months ago, he asked to have lunch and we had a general discussion about boxing. I explained HBO’s role as a broadcaster and HBO’s role as a pay-per-view distributor, and that was it. He never expressed any interest in doing anything with any particular promoter.”
Golden Boy can’t be criticized for making the Barclays deal. As with the HBO output deal, it was in Golden Boy’s best interest to do so. Barclays might have been unwise to limit itself to one promoter. Schaefer notes that, when Barclays goes into the market to sell luxury-suite packages, now it can tell buyers, “We’re giving you twelve nights of boxing each year.” But there are a dozen promoters who would have been willing and able to furnish good fights on a date-by-date basis for the individual dates that Barclay’s will be offering. Still, if that’s bad judgment on Barclays’ part, it’s not Golden Boy’s fault.
If Yormark were to leave Barclays before the arena is built and take a job with a company that has financial ties to Golden Boy, it would raise eyebrows. Otherwise, the agreement would appear to be what it is on its face; nothing more.
As for the allegations that something improper transpired, Schaefer declares, “I would say to the other promoters, ‘Stop crying. Stop complaining. Get up, go out, and do something. No one said that Lou DiBella couldn’t approach Barclays. I did, and he didn’t. I’ve approached many people where nothing worked out. I didn’t complain and stop trying. Lou DiBella complains that I came into Brooklyn. Fine. Let Lou DiBella come out to Los Angeles and make a deal with Forum Boxing. And don’t stop with Los Angeles. Does Lou think that we’re going to stop in New York? I’m looking now at monthly shows in England and to use our relationship with AEG [an equity partner in Golden Boy] to set up a presence in China. The New Jersey Nets [of the National Basketball Association] will play at the Barclays Center. The new owner of the Nets, Mikhail Prokhorov is one of the richest men in Russia. Don’t you think that I will have conversations with him about a Golden Boy presence in Russia. Lou DiBella should go to England; Lou DiBella should go to Russia and other countries around the world and promote the way that Golden Boy is doing.”
“I’ve had it with Lou DiBella and all the other complainers,” Schaefer continues. “This is all just sour grapes. These other promoters cry all the time and don’t do anything to build the sport. Why did I get every Friday night on Telefutura, fifty shows a year? Because I walked in with sponsor commitments. Why did I get ten dates with Fox? Because I walked in with sponsor commitments. Lou DiBella can complain all he wants. How many times has he walked into a network with a sponsor commitment?”
“I know what Oscar said about UFC, but I’m not following the UFC model. I’m following the Golden Boy model. Our output deal with HBO guarantees us three Boxing After Dark
shows and one World Championship Boxing
show each year. I would hardly call that a monopoly. Yes, Golden Boy aggressively pursues free agents. I like to surround myself with people who have deep pockets. The major shareholders in Golden Boy are Oscar, myself, AEG, and The Brener Group [which invests on behalf of a wealthy Mexican family]. That allows Golden Boy to aggressively invest in talent. That’s why we get the fighters. Golden Boy doesn’t steal fighters. If somebody is free, they’re free.”
“You know, it really is sad that so many people in boxing, especially promoters, spend so much time attacking each other. One thing Todd DuBoef says that I agree with is that we have to improve the brand of boxing. Not enough people care about the sport. There’s a fight soon, Sergio Martinez against Paul Williams. Two of the best fighters in the world, fighters in the top five on almost everyone’s pound-for-pound list, will be fighting each other. Everyone thinks that it will be a good fight. And no one cares. That hurts all of boxing. So stop complaining and help build the sport.”
“I have November 27th on HBO. We agreed with HBO to do Juan Manuel Marquez against Michael Katsidis. Then I got a call from Kery. ‘Hey, Richard; could you help us out and give Lou [DiBella] the two undercard spots on your show for Berto and Caballero.’ I said ‘no problem.’ Then Lou sells HBO Berto against Hernandez and Caballero against Litzau. I would never have gotten away with those fights. If I made those fights, Lou would be screaming that they’re horrible and HBO wouldn’t approve them. But HBO approved Lou’s fights because he has scared them with all his complaining. So I gave up my undercard spots; Lou never called to thank me; and he’s still talking shit about Golden Boy. I’m really very tired of it. Lou does things like a mom-and-pop promotion company and then he complains when someone else tries to do more. And I’ll tell you something else. Many people in boxing said that, once Oscar retired, Golden Boy would be gone. They were wrong. Now they’re saying that, when the output deal with HBO is over, Golden Boy will be gone. And they’re wrong again. Golden Boy isn’t going to go away. All this complaining about HBO this and HBO that actually helps us, because it makes the fighters think that Golden Boy is even more powerful than we are.”
So . . . where does one go to further explore the allegations that HBO gives preferential treatment to Golden Boy?
Possibly, the May 15, 2010, Boxing After Dark
doubleheader at Madison Square Garden, featuring Amir Khan vs. Paulie Malignaggi, with Victor Ortiz against Nate Campbell on the undercard. Lou DiBella was Malignaggi’s promoter at the time. The other three fighters were promoted by Golden Boy (the lead promoter for show).
HBO paid a US$1,500,000 license fee for Khan-Malignaggi. Under the contract between Golden Boy and DiBella Entertainment, that license fee was to be divided sixty percent to Khan and Golden Boy, forty percent to DiBella and Malignaggi. Golden Boy was to receive the entire license fee for Ortiz-Campbell. There was confusion in some circles as to what the Ortiz-Campbell license fee actually was.
New York law requires that anyone who promotes a professional boxing match in New York file various fight-related contracts with the New York State Athletic Commission. Federal law has a similar requirement. The federal and New York reporting requirements supplement each other. One does not negate the other.
Golden Boy failed to provide the contracts in question to the New York State Athletic Commission in a timely manner. As a consequence of that, the NYSAC made requests for the documents on May 19th, June 3rd and June 10th. The requests were ignored. The commission then subpoenaed the missing documents. Golden Boy refused to comply with the subpoena. Its president (Dave Itskowitch) later told the New York Daily News
, "We didn’t want our contracts on the public record. We have confidentiality clauses in our contracts. We wanted to comply with what we needed to comply with; but at the same time, we wanted to protect our agreements."
Itskowitch is an honorable man, but his explanation ignored two factors: (1) Golden Boy can’t pick and choose which laws it complies with; and (2) there’s a confidentiality provision under New York law that Golden Boy could have invoked to protect the contracts from public disclosure.
On July 9th, the New York State Athletic Commission advised Golden Boy that it’s promoter’s license had been suspended because of its refusal to file documents as required by law. The Notice of Suspension further alleged that Golden Boy had made false representations to the commission regarding the existence of certain contracts.
On July 12th, Golden Boy issued a statement acknowledging that “a number of significant, but innocent, mistakes were made in failing to make timely responses to legitimate information requests from the NYSAC.” That same day, Judd Burstein (Golden Boy’s lead attorney in the matter) told ESPN.com, "There was no willful intent or false statement made. The guy who usually handles it [Dave Itskowitch] went on his honeymoon, and the guy who handled it didn’t know what the hell he was talking about."
Burstein further advised Michael Rosenthal of RingTV.com, “No one was minding the store. The commission made numerous requests for the documents, and no one really paid attention. The commission appropriately decided that Golden Boy was not responding and issued a suspension. I understand the commission was upset. The contracts should have been produced. It was an innocent error.”
Skeptics pointed out that a honeymoon doesn’t last for seven weeks.
On July 20th, Golden Boy and the NYSAC entered into a Consent Order, pursuant to which Golden Boy acknowledged “mistakenly” representing to the commission that all existing written agreements between Golden Boy and fighters participating on the May 15th card had been filed with the commission and, also, failing to file those agreements as required by New York law. In addition, it agreed to pay a US$10,000 fine. The suspension was terminated.
Immediately after the Consent Order was signed, Golden Boy issued a press release headlined, “NYSAC Lifts Suspension of Golden Boy and Clears Its Name.” In reality, the Consent Order left several questions unresolved.
The contracts filed with the New York State Athletic Commission confirmed reports circulated previously in boxing circles that HBO had paid a license fee of $750,000 for Ortiz-Campbell.
That $750,000 stands out like a sore thumb.
Ortiz-Campbell was the opening fight on a Boxing After Dark
telecast. A $400,000 license fee would have been generous payment for that bout.
There were suggestions that HBO and Golden Boy had conspired to shift money from the license fee for Khan-Malignaggi to the license fee for Ortiz-Campbell in order to deny Malignaggi and DiBella their forty percent of the amount that was shifted. But $1,500,000 was fair market value for Khan-Malignaggi.
Why did HBO pay a $750,000 license fee for Ortiz-Campbell?
Richard Schaefer says, “As with any World Championship Boxing
or Boxing After Dark
event, I negotiated the license fee with Kery. HBO really wanted that fight, and I needed that amount of money to get the fight done.”
Davis explains, “I kept Ross in the loop with regard to the negotiations. He ultimately approved what we paid. I’m not going to confirm the license fee. I will say that we paid what I thought was fair market value for that fight. Ortiz had been in three fights on the network that had done well. Campbell was a former champion.”
Greenburg notes, “I looked at it as one of the stars at 140 pounds fighting a rugged veteran, who was an ex-champion and had stymied the career of Juan Diaz.”
The problem with that rationale is that Ortiz isn’t a star at 140 pounds; not yet. He was knocked out by the only world-class fighter he faced. A lot of people have “stymied the career of Juan Diaz” lately. Diaz has lost four of his last six outings. Campbell has won one fight in the past thirty-two months. And Ortiz-Campbell was a lousy fight.
But the most compelling argument that Ortiz-Campbell wasn’t worth $750,000 lies in what the fighters were paid. Victor Ortiz received a $100,000 purse. Nate Campbell was paid $125,000 plus an additional $25,000 for training expenses.
The value of a fight comes from the fighters. The idea that a fight can legitimately generate a $750,000 television license fee (plus a portion of the live gate) with the fighters getting only $250,000 might appeal to Don King. But it’s not consistent with the stated mission of Golden Boy to ensure fair pay for fighters.
Moreover, Ortiz was managed by Shelly Finkel. There are people in boxing who like Finkel and people who don’t. But one thing everyone agrees on is that Shelly knows the value of a fight. He could have been expected to get a purse well in excess of $100,000 for his fighter if Ortiz-Campbell was really worth $750,000.
Ortiz and Campbell were fairly paid. Golden Boy appears to have been grossly overpaid.
“A license fee of $400,000 would have been in line with reality,” says Bob Arum. “Seven-fifty is ludicrous.”
“It’s not in my best interests to trash HBO for paying high license fees,” says another promoter. “But $750,000 for Ortiz-Campbell is absurd. I’ve asked around, and everyone I’ve talked with says it’s a joke. What really happened was, HBO subsidized Golden Boy’s acquisition of Ortiz [from Top Rank] and Campbell [from Don King Productions]. Both of those guys jumped ship to be with Golden Boy, and HBO paid for it.”
The $750,000 license fee that HBO paid for Victor Ortiz vs. Nate Campbell is an interesting entry point into the decision-making process at HBO. If enough people tug hard on that thread, the cloth might unravel. “HBO and the State of Boxing – Part One” by Thomas Hauser
.“HBO and the State of Boxing – Part Three” by Thomas Hauser
can be reached by email at firstname.lastname@example.org. His most recent book (Waiting For Carver Boyd
) was published by JR Books and can be purchased at http://www.amazon.co.uk/ or http://www.abebooks.com. Hauser says that Waiting for Carver Boyd
is “the best pure boxing writing I’ve ever done.”