DO PROMOTIONAL CONTRACTS NEED AN OVERHAUL?

BY Charles Jay ON July 30, 2003
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The 83rd Round

In the sport of professional boxing, promotional contracts are what make the world go 'round. You will rarely find an instance on national television where one of the featured fighters, either in the main event or the semi-main, is not under contract to the promoter who has the TV date.

And it has gotten to the point where even on a club-show level, fighters who want to get on cards in situations where they can actually win have to tie themselves up to a deal with a promoter. If it's a small-level promoter he signs with, he can expect that in order to take a step up, he will have TWO promoters, since the small promoter will have to split his deal with the bigger promoter with bigger connections. And in certain cases where he's looking to get on TV, he might find his promotional rights split between the small promoter and someone like Russell Peltz, who is playing both ends as an independent operative and employee of ESPN, and can effectively put up a "road block" against a fighter getting on the air.

I wonder if anyone, besides me, interprets that these kinds of deals are also "coercive" in nature, beyond that which is contemplated in the Muhammad Ali Act. After all, if a fighter is told he can't see action in a certain territory, or by way of a
certain medium, unless he makes a deal with the promoter who can produce that, I'm not sure you can get any more "coercive" than that.

So the question becomes - should the nature of promotional contracts be strictly regulated and perhaps even changed?

The answer is - I don't know. But certainly some constructive discussion is in order.

Let's start with what IS referred to as a coercive contract in the Ali Act - OPTION deals, since these are often the by-product of a promoter's exclusive contract with a fighter. Customarily, when a title challenger is not in the mandatory position, he must give up "title options" to the promoter who has the champion's promotional rights. What this means is that if the challenger does indeed win the title, the promoter who has granted him the opportunity to fight for the crown has the OPTION to promote his next fight or series of fights, for as long as he is the champion.

The Ali Act limits the way promoters can exercise title options; not in number, but to a period of one year in length. So conceivably, the promoter who holds the options can attempt to put on an unlimited number of fights, within reason, as long as they fall within that period of time. The limitation of one year is appropriate, and its inclusion is necessary. But the reality is that as this applies to options, the point is somewhat moot. Should a non-mandatory challenger beat a champion who is under contract with a promoter, you can bet that the promoter is going to do his best to use that first option to get the new champion beaten by another fighter he has under exclusive contract. So getting to the third option, or beyond a year, is something that doesn't often happen.

The most critical part of the provision dealing with coercive contracts in the Ali Act is that which prohibits the title option from being transferred from generation to generation, if you will. What I mean is that after the challenger wins the title, becoming the new champion, and the promoter is exercising an option, he can not compel the next challenger of the new champion to sign an option. This is useful, because it prevents a promoter from, in effect, taking extended control of a title, giving him the kind of power that has a way of perpetuating itself.

But let's analyze promotional contracts from another perspective.

I think it's important to mention at the top that I do not agree with the Florida commission's position on promotional contracts. The policy in Florida is that promotional contracts are not recognized at all, as if they do not exist. However, this particular stance does not do anything to aid in addressing the problem; rather, it can have the effect of exacerbating it. That is because promotional contracts DO indeed exist, and do indeed serve a particular function, a function that in some ways can be considered necessary in the development of boxing talent.

So instead of performing a regulatory or arbitrary function in disputes that may arise as a result of promotional contracts, those disputes are instead thrown exclusively into civil courts, where they may or may not ultimately be determined to have substance. And fighters may come to Florida from outside the state, for example, who have valid promotional agreements with organizations in other states. Are we to say that the promoters should not have an opportunity to enforce their rights, should a dispute arise, through the very entity that regulates boxing? What would be accomplished by that? If a commission is going to RUN from a problem, rather than tackle it head on, what constructive purpose that commission serve?

No one wants to begrudge the promoter the opportunity to profit from his investment in a particular fighter's career which comes by way of his performance on a promotional contract. The promoter performs a very important function, because nothing would really happen in the sport of boxing without a promoter making an investment of both financial equity and "sweat equity" to make it happen.

That having been said, let me take you through some problems that promotional contracts, in their present form, can create within the atmosphere of the industry today, and which can result in a loss for the consumer who supports professional boxing - a constituency we should be looking out for, first and foremost.

Let us say, for the sake of argument, that a promoter has a four-year contract with a fighter who may already be at the ten-round level or who is just getting ready to fight in ten-rounders. Obviously, the promoter has an ultimate objective, as he is pointing toward the realization of a major "payday" with the fighter; but until then, he is obligated to give the fighter activity.

Remember, we are in an era where losses are not considered to be potentially helpful in the development of a fighter, but instead harmful to that fighter's credibility and marketability as far as the networks or sanctioning bodies might be concerned. As a result, the tendency of the promoter is to take a very "careful" approach in terms of the bouts he arranges for his fighter.

The result becomes many sub-standard fights as the fighter is protected on an extended basis. And since these promoters, by and large, have deals of one kind or another with television, and want to maximize the visibility of the fighter with an eye toward pay-per-view dollars, the further result is that the public has to often endure an inferior product on television, and as the promoter is fulfilling his own long-term agenda, the fan, who doesn't share that agenda, becomes the loser, both in the short and long run. From the promoter's standpoint, presenting exciting fights for an audience, either live or on television, takes a back seat to "handling" the fighter with the purposes of cashing in eventually. This is where we are in professional boxing right now.

And it is not an inconsequential point. The quality of boxing on television in recent years is probably not what it COULD be - and I think this can be directly associated with the promoter's desire to "tie up" fighters in promotional deals.

Look at the fights we're seeing now - most people in the industry would agree that many of the fights we see on pay-per-view now would have been on premium cable or lower a decade or so ago. Some HBO or Showtime fights would have been on basic cable. And some cable main events would be nice headliners for non-televised club shows, but nothing more.

Promotional contracts are also unilateral in nature. They give the promoter the opportunity to turn the fighter into an "opponent" if he so desires, clearly contrary to the fighter's wishes. This is done with something I call the "one-loss-and-out" clause, which is standard in the promotional contract, and gives the promoter the option of dumping the fighter if loses a fight. Of course, he can elect not to exercise that option, instead, if he wishes, he can simply use the fighter in whichever way makes the most sense to him. If that happens, a fighter's career can wind up going in a direction he would never have chosen, and may be utterly helpless to do anything about.

Meanwhile, the fighter, of course, usually does not have a similar "out" clause.

The promoter can also use that clause to significantly reduce the minimums he must pay the fighter, by way of renegotiation. Some promoters have tried to position themselves to where the minimums are eliminated entirely after a fighter loses. If the promoter does not have to necessarily deliver fights, but only make "bona fide" offers, with no governing minimums, in order to fulfill a promotional obligation, it can have the effect of leaving the fighter with no bargaining power whatsoever.

This begs the question as to what function the promoter is really performing with the fighter. You know the point I have made along - that the promoter is not a FIDUCIARY of the fighter. But a lot promoters see themselves working on BEHALF of the fighter, with - theoretically anyway - that fighter's best interests at heart. Or does the relationship take on more of an "employer-employee" nature? Either way, it deserves more scrutiny. If the promoter tries to negotiate deals FOR the fighter, what he is saying is that he is working for the fighter. And if he is working FOR the fighter, no contract should allow him to use the fighter in any way that would not further the fighter's career.

Promotional contracts have also had the effect of making the manager an inconsequential part of the equation. It makes his role obsolete, diminishing the healthy "adversarial" relationship that is supposed to accompany the negotiation
process. Since the manager, ideally, is the ADVOCATE for the fighter, this is a dangerous state of affairs.

When a fighter has a contractual obligation with a fighter, the manager has very little to say about who the fighter's opponents will be, or for what amount the purses will be. He is generally reduced to the role of a "baby-sitter" for the fighter, only there to pick up his percentage of the purse. The promoter has absolutely too much power in this situation.

And the question is wide-open as to whether promoters with a long-term interest in a fighter are more apt to "protect" their investment by offering payoffs to, or engaging in any some other unscrupulous behavior with sanctioning bodies in return for favorable ratings. In this way, that long-term deal could inspire more corruption.

I think clearly some changes or adjustments are in order. And I will be happy to invite your input. I'll have my own ideas in the next chapter - then I'd like to hear yours.

fightpage@totalaction.com

Copyright 2003 Total Action Inc.

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