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The most audacious Al Haymon court argument yet: the TV networks are the promoters, don’t look at me
By Zach Arnold | November 1, 2016
The anti-trust court war in Los Angeles between Golden Boy and Al Haymon has gotten nasty in a hurry.
There have been depositions involving Al Haymon, Eric Gomez (Oscar’s matchmaker), Bob Diaz, Bernard Hopkins, and Oscar De La Hoya.
Last week, we noted that Haymon’s attorneys were moving for summary judgment in the case. Summary judgment is an attempt to ask the judge in the case, after discovery & deposition, to make a determination as to whether or not the case should go to trial. Factual questions go to a jury. Legal questions go to the judge. That hearing will take place on November 28th.
The last week has seen a crazy amount of motions & court filings ranging from Golden Boy filing a motion to strike Haymon’s designation of expert witnesses to Haymon’s side filing a motion for sanctions against Golden Boy’s attorneys.
Al Haymon’s two main legal arguments
First argument: the TV networks are the promoters
Haymon’s attorneys grilled Oscar De La Hoya over the role of HBO in helping produce boxing events. DLH called HBO a producer because they help with the television broadcasts. Haymon’s attorney asked if HBO is helping as a producer, how can you not call them the promoter?
The counter to this argument was illuminated by Golden Boy during deposition of Haymon regarding his “advisory” contracts with fighters. According to the deposition, Haymon admitted that changes were made to agreements in September 2015 regarding “promotional agreements” and that provisions were rescinded regarding restrictions. Haymon reaffirmed his position that he simply steers fighters into promotional agreements but that it’s up to the fighters to make the decision.
Court filing: “Defendants have never sought to enforce and have agreed to waive the contractual provision that allows them to select the boxer’s promoter.”
Haymon also waived PBC TV exclusivity with all the major broadcast networks and his commissions for his fighters in PBC fights.
This is hugely important to focus on. Haymon must convince a Federal judge that he’s not a promoter because he could face important legal issues regarding the Ali Act if a judge rules that Haymon is a promoter and not a middleman. This legal determination means everything!
Second argument: GB is using the same restrictive tactics they accuse me of
This court filing argues Haymon’s claim as to why his fighters can’t fight for Golden Boy:
In fact, in what is clearly designed to prevent a boxer from retaining a manager such as Haymon Sports that may fully protect the boxer’s interests, during the Covered Period, GBP has added language in its promotional agreements that its boxers will not “retain, hire, consult with, include, or involve any person or entity as a manager, advisor, consultant or any type of representative … not previously disclosed to Promoter … without first obtaining the express written consent and approval of Promoter” and a violation of this provision results in liquidated damages against the boxer. Thus, there exist ample alternative market-based explanations for why Haymon Sports-managed boxers would not want to sign GBP’s standard promotional agreements.
Haymon’s legal argument boils down to fighting with fire: you can’t say I’m restrictive in telling guys where to fight when your promotional agreements don’t allow fighters to get new representation without your permission. Unclean hands.
The battle of “experts” becomes a circus
Kerry Davis in his words:
“First, Mr. Shaw is incorrect in broadly asserting that boxing promoters take significant financial risk. While some promoters are willing and able to take financial risks, the business model pursued by many promoters is to first secure television license fees and sometimes site fees that cover most or all of their expenses in promoting a fight card. In this respect, many of these companies operate more as “packagers” than as actual promoters.”
The number of boxing promoters who have spectacularly failed is voluminous. There is a proverbial graveyard full of them. Ask athletic commissions how many promoters come and go, especially in California. The risk associated with making money as a fight promoter is ultrahazardous. Why do you think, historically speaking, old time promoters were stable? They were stable because of organized crime laundering money. The underlying fundamentals of risk have always been tremendous in promoting fight sports. It’s one of the most risky business endeavors you could possibly undertake.
Al Haymon is the perfect example of this. He’s burned through tens of millions, if not hundreds of millions of dollars in hedge fund cash and has floundered. His entire business model with PBC would look so much different if he relied upon the standard pay TV business model that Golden Boy & Bob Arum have been navigating. After losing tons of cash, Haymon’s business model is starting to shift into what a “normal” high-end promoter model looks like in the modern era rather than his audacious attempt to flood every broadcast channel with prepaid programming.
“Third, Mr. Shaw is incorrect in asserting that it is the exclusive province of the boxing promoter to deal with television networks in connection with televised boxing events. While I was at HBO, several prominent managers dealt directly with HBO on behalf of their star fighters. Mr. Haymon, who also dealt directly with HBO, was not at all unusual. Negotiating with a television network on behalf of a boxer does not make one a promoter.”
If Al Haymon is not a promoter, then HBO is a promoter. And promoters are required to be licensed in each state with athletic commission and abide by the provisions in the Ali Act.
“Fourth, Mr. Shaw is incorrect in asserting that the PBC series and its creators somehow have an unfair advantage over existing industry stakeholders like HBO, Showtime, Top Rank, and Golden Boy, or that the PBC series’ business model is somehow bad for the boxing industry. The PBC series certainly has made the boxing business more competitive, which may be uncomfortable for those who were content with existing arrangements. But if Haymon Sports succeeds in growing the audience for professional boxing by broadcasting fights on network television, broadly speaking that should help, not hurt, other industry players.”
Kerry Davis’ argument is undermined by the fact that Haymon’s side supposedly waived exclusivity clauses. If PBC contracts had exclusivity clauses, that would automatically stifle competition for other promoters.
But what if the TV networks are legally considered to be promoters? Accepting that legal argument would nuke the exclusivity argument because each TV network would be viewed as their own promoter while classifying Haymon/PBC as “packagers” selling a fighter service to the networks. Look at the legal definition of “promoter” in California’s Business & Professions Code:
18622. The words “club” and “promoter” are synonymous, may be used interchangeably, and mean a corporation, partnership, association, individual, or other organization which conducts, holds, or gives a boxing or martial arts contest, match, or exhibition.
This legal argument completely flips the script on classifying Haymon as a promoter because he’s arguing that it’s the networks who are making the money, giving the OK on which fights to book, and producing the events at the arenas. He’s supplying the fighters but it’s the TV networks who are really running the show as promoters.
On the other hand, Haymon has a huge number of fighters in his stable under the PBC umbrella and some big names have been woefully inactive when they could have, theoretically speaking, been fighting big name opponents associated with other promoters.
Which leads us to argument two. Haymon argues you can’t accuse him of restrictive, anti-competitive tactics when Golden Boy has fighters signing contracts barring fighters from consulting or hiring representation without their permission.
If Haymon can convince a Federal judge that TV networks are the real promoters, the legal consequences could be enormous regarding athletic commissions, the Ali Act, and contracts. TV networks would find themselves in an entirely different legal position of responsibility.
If Al Haymon is legally arguing that he’s not a promoter, doesn’t that legally make him a manager? Maybe? Managers are supposed to be licensed with various athletic commissions. It’s our opinion that Haymon would gladly take this concession in exchange for getting a judge to legally shift the burden of “promoter” away from PBC and onto the laps of the TV networks for the sake of this anti-trust and unfair competition lawsuit filed by Golden Boy.
There are other legal issues brewing for Al Haymon’s PBC
The real legal action remains in Kansas with the shareholder derivative lawsuit against the hedge fund financing Haymon. If that lawsuit survives the motion to dismiss on November 10th, then the war begins with discovery and deposition on information regarding the financing of Al Haymon. That is the nuclear bomb.