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How do you lose $430 million in a year? Al Haymon’s PBC could become boxing’s MySpace

By Zach Arnold | August 8, 2016

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The fight business is littered with skeletons of dead corporation bankrolled by money marks but Gary Shaw took it to the next level. Gary Shaw spent over $50 million dollars in Elite XC but at least we got Kimbo Slice, Nick Diaz, and Gina Carano out of the deal. Megane Super, the Japanese eye glass company that bankrolled Japan’s top independent fight promotions in the early 90s, burned through tens of millions of dollars.

Never in Gary Shaw’s wildest dreams could he imagine a rival boxing promoter finding the mother of all honey holes and ending up with a result comparable to Rupert Murdoch’s $580 million dollar purchase of MySpace.

Noted fight writer and Pepperdine professor Paul Gift dropped a gigantic stink bomb on Monday:

According to Mr. Gift, Kansas hedge fund Waddell & Reed has supposedly lost $434 million dollars in their boxing venture with Al Haymon in a single year. Addendum: The professor stated that he is basing this off of the recent financials/valuations released by Waddell and off of claims from the shareholder derivative lawsuit.

Al Haymon settled a lawsuit with Bob Arum and has an antitrust lawsuit with Golden Boy which appears to be on the back-burner for the time being. While both of those lawsuits undoubtedly revealed interesting information in discovery for amended complaints, neither lawsuit posed the kind of serious threat to Al Haymon’s financial backing like the recently filed shareholder derivative lawsuit in Kansas against hedge fund Waddell & Reed.

The shareholder derivative lawsuit, which we wrote about three months ago, features some of the biggest legal heavyweights from New York City and Los Angeles fighting over Waddell & Reed shareholders petitioning a Kansas court to order the hedge fund to recover investor money set aside for Al Haymon’s assorted companies in an LLC shell called Media Group Holdings. The lawsuit claimed that Waddell & Reed put $925 million dollars in the LLC to do business with Haymon.

A major court hearing will take place on October 26th regarding a motion to dismiss the shareholder derivative lawsuit. If the motion to dismiss fails, a discovery & deposition bonanza will take place. Even under an agreement of confidentiality, the pressure will build on the hedge fund and Haymon.

Paul Gift’s bombshell of the hedge fund reportedly re-evaluating their investment in Al Haymon’s companies by $434 million dollars in a year is going to rattle some very important decision makers. The clock is ticking.

The network television suits taking Haymon’s money bought into his dream of a UFC-style operation for boxing. They believed that Haymon was the guy who had the cash and the fighters to take out the establishment players in the boxing industry. With an alleged $925 million dollars in funding, there wasn’t much (if any) risk for networks to do business with Haymon. Haymon had the perfect marketing pitch for the suits and the masses — he was going to be the guy who would cure all of boxing’s political and business failures. Take Bob Arum and Oscar De La Hoya out in order to book the super fights that the public wasn’t getting.

And now reality has sat in, confirming the worst suspicions a lot of boxing fans had when Al Haymon made his push on network TV and ESPN. Antitrust lawsuits, allegations of Ali Act violations, and now a mother of a shareholder derivative lawsuit amidst Paul Gift’s claim that the hedge fund backing Haymon reportedly re-adjusted their investment valuation by $434 million dollars in one year on his venture.

Topics: Boxing, Media, Zach Arnold | 16 Comments » | Permalink | Trackback |

16 Responses to “How do you lose $430 million in a year? Al Haymon’s PBC could become boxing’s MySpace”

  1. Mike Johnson says:

    This article shows that anybody can write nonsense online. How embarrassing.

  2. Chris says:

    Yeah. The “Haymon” model does seem to be a real mess. And not just with the financials. We are getting some interesting fights, but you are also getting a ton of garbage that even hardcore Boxing fans don’t care about. So with PBC in the mix Boxing’s major issue of a having a fractured business model where promoters don’t always work together to put on the best fights, really has not changed at all.

  3. Mike Johnson says:

    It’s as if these guys at FightOpinion can’t do any basic math.

    Even an extremely sub-par analysis would make it difficult to fathom that $430 million was spent on PBC in one year based on estimated purses, production costs, marketing, staffing etc. Just dumb writing and reporting all around with no insight into the venture.

    • Zach Arnold says:

      You didn’t dispute the number in the first reply. In your second reply, you claim that I can’t do math.

      The claim of a $434 million loss is from Pepperdine professor Paul Gift, who has experience in economics and in combat sports. Either his claim is accurate or it is not. He is basing his claim, as far as I know, based on financials publicly made available.

      • Mike Johnson says:

        A Pepperdine professor who obviously has no grasp of the financials involved in putting together combat sports events. It’s honestly simply an embarrassing analysis.

        You are now claiming to be parroting the embarrassing analysis.

        • Zach Arnold says:

          The professor supposedly read the financials from Waddell & Reed. That is where he claims he got his information from.

          Waddell & Reed are the financial backers of Al Haymon and are legally obligated to disclose information on their investments.

          If the professor is accurate and the financial backers have disclosed a new valuation on their investment with Al Haymon, then what is incorrect in what he reported?

          Three months ago, a commenter on Reddit claimed that Waddell’s initial investment in Haymon of $528 million USD was valued at around $70 million at the end of March of 2016.

    • turd says:

      mike you are way off, zach isnt the first person to report that al haymon has went through this much money, he isnt makin this up, i bet you work for al haymon

      and zachs reporting is always accurate

      • Mike Johnson says:

        Zach is reading numbers. That hardly means that he did a true analysis.

        There is ZERO chance PBC spend $430+ million so far. Basic math.

  4. Mike Johnson says:

    Like I said… the analysis is embarrassing. It’s as if nobody is paying attention to basic financial fundamentals of boxing events. There is no chance that PBC spend over $250 million since inception. That includes time buy allocation.

    Embarrassing.

  5. Mike Johnson says:

    Paul Gift ?@MMAanalytics 51m51 minutes ago

    @FightOpinion Who knows how they recognize losses. Tell them to contact me.

    This idiot admits to having no idea how they recognize losses yet wants to provide some analysis? Like I said… embarrassing.

  6. Chris says:

    Touchy.

  7. nottheface says:

    The amount lost is in “fair value” not the actual amount spent. It shows a loss in the value of the investment which is not the same as spending $434 million more than they brought in.

    • Mike Johnson says:

      Exactly.

      Somebody actually gets it.

      Sure PBC spent money to get this thing going. Similarly to how the UFC took out nearly $600 million in debt to build their brand which recently sold for $4 billion.

      Is it that overly complex to comprehend that PBC is looking to do the same thing 8 to 10 years from now? Sheeeeeesh

  8. Todd Gumm says:

    Agree with Mike Johnson. This story is an embarrassment. A LOSS OF FAIR VALUE ISN’T NECESSARILY AN ACTUAL DOLLAR LOSS. IT’S A MEASURE OF THE DECREASE IN ESTIMATED VALUE OF THE BUSINESS, NOT A MEASURE OF DOLLARS SPENT.

    First of all, using plaintiff class action allegations as a source is risky at best and irresponsible at worst. Plaintiff allegations are, in many instances, based on unproven information and belief, not well-established, reliably objective facts.

    And as someone who works in TV production and has access to production budgets and purses for a variety PBC shows, as well as experience in the boxing business, I can categorically state that it is impossible for Haymon to have spent $434 million.

  9. Davey TwoFights says:

    Micheal Johnson YOU have misunderstood – noone said anywhere that Haymon or PBC has SPENT $43O million. It is the amount the value of Waddel & Reed’s investment in PBC has dropped by. That is acknowledged both in the original tweet and the article, nowhere does it say that amount has been SPENT on PBC, you just decided to argue a point that noone had even made. Either way, it does not look good for Haymon or PBC, so what your point is I do not know.

    Classic case of not reading & interpreting the article correctly. And calling OTHER people stupid lmfao

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