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23 DECEMBER 2014

 

Why ?




By Thomas Hauser

Let’s start with some basic facts:

(1) On May 15, 2010, HBO televised a Boxing After Dark doubleheader pairing Amir Khan against Paulie Malignaggi and Victor Ortiz vs. Nate Campbell.

(2) HBO paid a US$1,500,000 license fee for Khan-Malignaggi and a $750,000 license fee for Ortiz-Campbell.

(3) New York State Athletic Commission records state that Victor Ortiz received a $100,000 purse and Nate Campbell received a $125,000 purse. These numbers have been confirmed by secondary sources. Campbell received an additional $25,000 for training expenses.

(4) DiBella Entertainment (Malignaggi’s promoter) and Golden Boy Promotions (which promotes Khan, Ortiz, and Campbell) had a contract which provided that the HBO license fee for Khan-Malignaggi would be split 60 percent to Golden Boy and 40 percent to DiBella Entertainment. Golden Boy was to receive the entire license fee for Ortiz-Campbell.

Now some questions:

(1) Why did HBO pay an inflated $750,000 license fee for Ortiz-Campbell? That number is clearly out of line with the value of the fight.

(2) If the license fee for Ortiz-Campbell was really $750,000, why did the fighters get only $250,000? Here, Golden Boy can point to the fact that it had to pay $150,000 to Don King Productions as part of a buyout deal for Nate Campbell’s contract and approximately $125,000 to Top Rank as part of a litigation settlement regarding Victor Ortiz’s contract.

Now we come to the heart of the matter.

(3) Was money shifted from the license fee for Khan-Malignaggi to the license fee for Ortiz-Campbell to deny DiBella Entertainment 40 percent of the amount that was shifted?

Ortiz-Campbell was the opening bout on a Boxing After Dark telecast. A $400,000 license fee would have been generous payment for that match-up. Indeed, it’s highly unlikely that another television network would have paid anything close to $400,000 for Ortiz-Campbell. Why the extra $350,000?

Golden Boy CEO Richard Schaefer says, “HBO wanted that particular fight. If HBO didn’t pay what it did, Ortiz-Campbell wouldn’t have happened.”

But there’s an alternative theory. Suppose HBO and Golden Boy shifted $350,000 from the license fee for Khan-Malignaggi to the license fee for Ortiz-Campbell? That would have deprived DiBella Entertainment of $140,000 (DBE’s 40 percent share of the $350,000) and put that money in Golden Boy’s pocket to help pay Amir Khan’s purse.

Since DiBella and Malignaggi had a 75-25 split in Paulie’s favor, that would have cost DiBella $35,000 and Malignaggi $105,000.

Bob Arum says that he’s entitled to 30 percent of Golden Boy’s profits on Ortiz-Campbell; not a flat number. The $125,000 payment to Arum referenced above is based on Golden Boy’s estimate of what the profit from Ortiz-Campbell will be. In that regard, it wouldn’t make sense for Golden Boy to move license-fee money from Khan-Malignaggi (where it’s paying 40 percent to DiBella) to Ortiz-Campbell (where 30 percent of the overage goes to Arum). That would be a minimal saving to Golden Boy.

The $150,000 payment by Golden Boy to Don King Productions is another matter. King says that the $150,000 that he’s entitled to from Ortiz-Campbell is a flat number, not percentage-based. It would make a lot of sense economically for Golden Boy to move money from Khan-Malignaggi (where it’s paying 40 percent to DiBella) to Ortiz-Campbell to pay King.

During the past few years, there have been complaints throughout the boxing industry of improprieties in the relationship between HBO and Golden Boy.

Is this an example? If so, the legal ramifications could be significant.


Thomas Hauser can be reached by email at thauser@rcn.com. His next book (a novel entitled Waiting for Carver Boyd) will be published in late-June by JR Books. Hauser says that Waiting for Carver Boyd is “the best pure boxing writing I’ve ever done.”


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