A legal breaking down of the Al Haymon lawsuit
- Updated: May 6, 2015
Hey, remember that guy who wrote long winded columns about New England boxing back in the early heyday of 3MoreRounds? No? Well I don’t blame you. It’s been an incredibly long time since I’ve been a productive member of the team here at 3MR, but thankfully Ramon hasn’t lost my number. In response to the significant (and sizable) lawsuit filed in Federal District Court for the Central District of California by Golden Boy Promotions, LLC and Bernard Hopkins against Al Haymon et. al., I decided to make my triumphant return.
It is my intention to follow this case through the Court. I have some things in the pipeline right now that will be forthcoming, but before we get too in depth I wanted to provide a primer so that we’re all on the same page.
Why should I listen to you?
It’s a valid point. I am me, and I rarely listen to myself. However, in the landscape of “people who sporadically write about boxing on the internet” I happen to be, at least marginally, qualified to talk about the legal process. My day job is attorney. In theory I am as qualified as anyone else to discuss legal issues. I am in no way insinuating that I have some specialized expertise with anti-trust, federal litigation, but I’ve participated in federal litigation, I bet Steve Kim can’t say that.
So, who are the players?
Golden Boy Promotions, LLC and Bernard Hopkins have sued Al Haymon, a number of companies owned and/or operated by Al Haymon, and a couple venture capital companies that have dealings with Al Haymon.
Can you break this down in the simplest way possible?
Basically Golden Boy is alleging that Al Haymon is acting as both promoter and manager for “Championship-Caliber Boxers”.
Is that against the law?
Actually it is. In 2000, President Clinton signed the Muhammad Ali Act (“Ali Act”) into law. The purpose of the Ali Act was to “reform unfair and anticompetitive practices in the professional boxing industry.” Obviously this has worked flawlessly and since 2000 the boxing industry has been a pinnacle of transparency.
All snark aside, the Ali Act is an incredibly important piece of legislation for the boxing industry. For purposes of this lawsuit, the focus is on Section 5(b) “FIREWALL BETWEEN PROMOTERS AND MANAGERS.” This section makes it illegal for a “promoter to have a direct or indirect financial interest in the management of a boxer” or “for a manager (i) to have a direct or indirect financial interest in the promotion of a boxer; or (ii) to be employed by or receive compensation or other benefits from a promoter, except for amounts received as compensation under the manager’s contract with the boxer.”
The complaint actually does a nice job of clearing this language up using the following analogy. In a negotiation the promoter sits on one side of the table, while the manager and boxer sit on the other. What Al Haymon is being accused of in this complaint is sitting at both sides of the table. That’s a violation of the Muhammad Ali Act.
Okay, so this is about the Ali Act only?
Actually, no. The Complaint also alleges that Haymon (and the other defendants) has violated the Sherman Anti-Trust Act.
What is the Sherman Anti-Trust Act?
The Sherman Anti-Trust Act is considered one of the most important antitrust law’s ever enacted, and has been with us since 1890. You’ll sometimes hear about the Clayton Act (including during this lawsuit), but for purposes of a layman’s understanding the Clayton Act only reformed and highlighted some portions of the Sherman Anti-Trust Act. Essentially, Sherman is used to prohibit business activities which the federal government regulators deem anti-competitive. You mostly hear about the Sherman Anti-Trust Act when issues of a monopoly are discussed by talking heads on the news.
How does that apply here?
What Golden Boy is alleging is that Haymon (and friends) have essentially created a “Championship-Caliber Boxers” monopoly, with the intent to squeeze legitimate promoters like Golden Boy out of business.
Here’s the key when you’re talking about Sherman and I’ll steal the words of Massachusetts Senator George Hoar, “… [a person] who merely by superior skill and intelligence…got the whole business because nobody could do it as well as he could was not a monopolist..(but was if) it involved something like the use of means which made it impossible for other persons to engage in fair competition.”
There is where Golden Boy’s complaint comes in. Golden Boy alleges that what Haymon has done, is essentially sign a vast majority of the “Championship-Caliber Boxers” to management contracts with caveats that they not be permitted to sign promotional contracts with legitimate promoters (like Golden Boy). By centralizing all (or most of) the “Championship-Caliber Boxers”, Haymon then dictates who, and when, they fight. Because he has all the big names, he can also control venues, and television dates. Golden Boy alleges that it is impossible for them to compete the marketplace, because Haymon, by ignoring the Ali Act’s Firewall, and acting as both manager and promoter for his fighters, has effectively locked Golden Boy out.
The Supreme Court is clear, the Sherman Act “directs itself not against conduct which is competitive, even severely so, but against conduct which unfairly tends to destroy competition itself.” Spectrum Sports Inc. v. McQuillan (citation omitted). According to Golden Boy, if Haymon is allowed to operate as manager and promoter, he will effectively destroy all legitimate promoters. The means of competition will be gone, the entire fabric of boxing will fold in upon itself, leaving only Al Haymon. He won’t win boxing because of his business acumen; he’ll win boxing, according to Golden Boy, because he’s not playing by the rules. This is precisely (as far as Golden Boy is concerned) the type of action which the Sherman Act is designed to protect the public against.
Should I care about this?
It’s a valid question. There are those, mainly in the Haymon camp that would tell you no. I’ve seen boxers in particular on twitter come to Haymon’s defense. Ishe Smith tweeted “Man pays he [sic] fighters top dollar, gives them opportunities no other promoter has, treats them with respect, and you sue him. Gtfoh” shortly after discussion of the lawsuit exploded on twitter.
Golden Boy addresses this very issue in their Complaint. “The Waddell Defendants (the venture capitalists in bed with Haymon) are not financing the schemes of the Haymon Defendants for the good of the sport.”
The Complaint continues “once the Haymon Defendants are the only show in town, there is no reason to believe that they will pay broadcasters to air their content. Not only will broadcasters be forced to pay the Haymon Defendants, rather than vice versa, they will be paying more than they ever would in a competitive promotion market.”
As it relates to the boxers themselves “if the competition is gone and the Haymon Defendants become essentially the sole promoters of Championship-Caliber Boxers, this discriminatory policy will make the careers and finances of every such boxer wholly dependent on the interests and dictates of Al Haymon.”
What does all of that mean?
Golden Boy is saying that Haymon is hemorrhaging money at an alarming rate right now. Yes, he pays his fighters top dollar. Yes, he finances television broadcasts. But the only reason he’s doing that is to ensure that every “Championship-Caliber Boxer” is required to sign with him. Once he dominates the landscape, when there is no competition left, he can put the screws to everyone because there will be nowhere for anyone to turn.
This scenario is the nightmare scenario for boxing. A world where one man controls all of the fights, all of the fighters, all of the promotion and all of the broadcasts – boxing as the UFC. Say what you want about boxing’s popularity, but nobody in mixed martial arts is making the type of money that “Championship-Caliber Boxers” are receiving, and there is a reason for that. Competition (in theory) breeds a marketplace that boxers can exploit to their own benefit. If the marketplace goes away, one man can decide every financial aspect of the spot. Regardless of how things are today, an Al Haymon-only future may be a bleak one for the fighters in particular.
Here’s how Golden Boy puts it: “The Haymon Defendants are exploiting their dominance in the market for managing Championship-Caliber Boxers to exclude all legitimate promoters from the market for promoting such boxers. If this conduct continues unabated, and the Haymon Defendants become the de facto sole promoter of Championship-Caliber Boxers, it will become increasingly difficult for any such boxers who are not controlled by the Haymon Defendants to obtain the quality opponents, major arenas or network television exposure necessary to their careers. In order to salvage their careers, Championship-Caliber Boxers will have no choice but to sign with the Haymon Defendants – as both managers and promoters. As the power and influence of the Haymon Defendants in both relevant markets grow, they will be able to exert ever more control over the entire boxing business , to pay boxers less and retain more.”
Anything else worth highlighting?
Golden Boy alleges that Haymon has violated 15 U.S.C. § 6307e(a) and (b) which requires promoters to “make financial disclosures with respect to each bout to the applicable State Athletic Commissions and to the boxers they promote, and preclude a promoter from receiving the proceeds of a bout without having complied with these requirements.”
Elsewhere in the Complaint, Golden Boy alleges that Haymon has utilized the services of “sham” promoters, basically promoters w/ licenses to promote fights that have no input on the actual event because Haymon is the promoter. My guess is that those “sham” promoters are submitting the required disclosures to the State Athletic Commissions. However, if nobody is submitting those disclosures to the State Athletic Commissions, then we’ve got a story. A violation of that portion of the Muhammad Ali Act is punishable as a federal crime.
Are there any holes in the Complaint?
The purpose of the complaint is to set the foundation of a case. A complaint provides a roadmap so to speak, with the factual, jurisdictional and legal bases of the proceeding. The other main goal of a Complaint is to set forth sufficient basis for the cause of action to avoid a Motion to Dismiss. We will deal with Motions to Dismiss when Haymon’s counsel files one (trust me its coming). For now I’ll just say that, I think this Complaint does a good job of setting out the cause of action, the legal and factual basis for the Complaint.
Golden Boy has indicated that they’ve suffered harm at least in the amount of $100 million. I’m not entirely sure where those figures come from, or what they’re even alleging their damages to be. I certainly think they’ve done a good job showing how damaging Haymon’s activities can be to the sport of boxing as a whole, but specifically as it relates to damage incurred by Golden Boy, it’s a little suspect.
What do we do now?
We wait. Golden Boy is seeking an injunction against Haymon effectively immediately which is going to have to be addressed in the short term. If an injunction enters it could very well put all upcoming PBC dates in jeopardy. As much as Golden Boy claims to be doing this for the benefit of boxing, I think the fighters who would lose big money, network television dates would disagree with that strategy. I’m going to hold off on commenting about that for another time, this piece has already gone on long enough. I plan on covering this extensively though throughout the life of the litigation so stay tuned.