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GEE GUYS - CAN I GET A STRATEGIC ALLIANCE TOO?

BY Charles Jay ON June 05, 2002
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There are no direct competitors to SRL Boxing"

- from business plan, Sugar Ray Leonard Boxing LLC

I know that when you're trying to put forth a presentation of your project for investors, you are going to "fudge" a little, representing a few things that might not be 100% true, but true enough that it doesn't start to create legal trouble.

Even so, I'll tell you what really intrigues me as I look through the business plan Sugar Ray Leonard Boxing has distributed among those it hopes to raise capitalization from.

It's the company's representation of its relationship with ESPN, the self-proclaimed "Worldwide Leader in Sports". I don't know; maybe it's just a bunch of "CorporateSpeak", but the business plan - one of the chief instruments by which a potential investor would make an educated decision as to whether to put money into this company, and in effect, into boxing in general - makes a specific reference to ESPN at the very top of its list of what it refers to as "Strategic Management Alliances".

Maybe it's just me, but I come away from that wondering just what the hell that's supposed to mean.

And so perhaps more of an academic explanation might be in order, if you would be kind enough to indulge me -

In their book "The Power of Two", authors John K. Conlon and Melissa Giovagnoli explain four common reasons for the formation of alliances: "to become larger and dominate a market; to acquire expertise, technology, money, or other resources the organization lacks; to fend off an aggressive move by a competitor, becoming bigger and stronger and in a better position to deal with that competitor; and, to do a deal - to use combined resources to jump on a market bandwagon."

And Professors Yves Doz and Gary Hamel of Harvard University, who have written perhaps the definitive book on startegic alliances - "Alliance Advantage: The Art of Creating Value Through Partnering" - give three primary purposes for one company to develop an alliance of this type with another: CO-OPTION, in which, according to the authors, "firms with complementary goods to contribute are wooed, creating network economies in favor of the coalition......often the most painless way to neutralize potnetial foes is to bring them into one's own camp"; COSPECIALIZATION, in which the "partners" contribute distinctly different resources, skills, and assets to a project; and LEARNING AND INTERNALIZATION, where "skills can be learned from a partner, internalized, and exploited beyond the boundaries of the alliance itself".

Any way you slice it, the SRL-ESPN relationship, as described by the SRL Boxing itself, hardly shows properties of the typical "vendor-customer" dynamic we have come to expect from promoters who have tried to peddle shows to networks. And it certainly is not representative of the conditions that exist today in ESPN's dealings with promoters other than, say, SRL or Russell Peltz.

Rather, it can be characterized as more of a SYMBIOTIC union; one in which two distinct entities co-exist in a mutually-beneficial relationship with more or less a common goal.

With that in mind, our curiosity is piqued by one particularly interesting line from the SRL business plan, which states that ESPN2, as

"SRL Boxing's network/cable PARTNER, provides the distribution channel for SRL Boxing's entertainment".

For a minute, that kind of leaves you with the question of just who is working for WHO here, doesn't it?

Now, I could think of probably a hundred reasons why SRL Boxing might want to paint this sort of a picture to people who they want to raise capital from. But I am most curious as to what ESPN thinks of these kinds of representations.

Another thing I wouldn't mind knowing - does ESPN have such a "strategic alliance" with any other promoters (not including Peltz, who is also an employee)?

And when represented in this way, what kind of message is that supposed to send out to those fighters who are worthy and hopeful of exposure on "The Worldwide Leader in Sports", when they go about choosing which promoter to sign a long-term deal with?

Likewise, what message does that send to promoters who would like to think there is at least a modicum of fairness when they put time and effort into presenting a proposal of worthwhile boxing projects to ESPN, but don't have the benefit of such "symbiosis" to trade on?

Yes, we know ESPN has guaranteed SRL Boxing a show on the first Friday of every month, and may even give them some extra dates here and there, but does the relationship in fact extend well beyond that?

And is ESPN affording the SRL group more money to televise its shows than it is offering other promoters who are actually bringing something (and I feel very confident in saying this) superior to the table, in terms of talent, significance, and quality, at least as far as some of the non-Peltz shows is concerned?

Does ESPN realize that by creating a playing field that is slanted toward one or two (you always have to say "two" as long as Peltz is also involved) entities, that it will have the affect of disadvantaging the promoters that DO NOT have the benefit of a "strategic alliance" with the network?

And does this have any restraint of trade implications, if those "strategic allies" of ESPN choose to directly, and aggressively, leverage their priveleged position to sign fighters away from promoters who are their competitors, by highlighting the fact that those promoters are not "in business" with the network?

We have endeavored to ascertain the answers to these questions from ESPN, but thus far have not received any.

We'll let you know when, or if, we do.

But don't hold your breath.

fightpage@totalaction.com

Copyright 2002 Total Action Inc.

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