Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Boxing manager allegedly monopolized management profession, suppressed competition in promotions market, (May 6, 2015)

By Linda O’Brien, J.D., LL.M.

A professional boxing advisor/manager and his controlled business entities used their dominance in the market for managing championship caliber boxers to exclude all legitimate promoters from the market of promoting such boxers, according to a complaint filed in the federal district court in Los Angeles (Golden Boy Promotions, LLC v. Haymon, May 5, 2015).

Alan Haymon, a former music industry promoter, advises and manages American professional boxers through a group of controlled entities. Waddell & Reed, Inc. is a venture capital firm that provides financing to Haymon’s entities. Golden Boy Promotions is a licensed boxing promoter that is owned by former boxers, Bernard Hopkins and Oscar De La Hoya.

Professional boxing is a multibillion dollar industry. Those that deal with professional boxers and their bouts are divided into two categories: (1) managers who receive compensation for service as an agent of a boxer and (2) promoters who are responsible for organizing, promoting, and producing a professional boxing match. The Muhammad Ali Boxing Reform Act requires that there be a strict “firewall” between promoters and managers and expressly prohibits managers from having a “direct or indirect financial interest in the promotion of a boxer” or from receiving compensation from a promoter. The Act is intended to protect boxers since there is a conflict of interest between a manager as an advocate for the boxer and the financial investment of a promoter.

According to the complaint, Haymon and his companies hold an overwhelmingly dominant position in the market for professional boxing managers. They manage numerous current and former world champions and Haymon has been called “the most powerful man in boxing.” Every fighter managed by Haymon is required to sign an agreement granting him total control over the boxer’s career and revenue-generating abilities. No other manager in professional boxing represents nearly the number of boxers or exercises as much power.

While managing numerous championship caliber boxers, Haymon has actually functioned as an unlicensed promoter for those boxers, thereby using his illegal dual role to exclude legitimate promoters from business opportunities essential to their ability to compete. By such tactics, Haymon has intended to monopolize the boxing business. With massive funding from Waddell & Reed, Haymon seeks to buy up and monopolize every vertical channel — from locking up all of the top boxing talent to excluding legitimate promoters from the top boxers and boxing matches, best venues, and exhibition on network television, the complaint alleges.

The complaint also claims that the defendants sought to eliminate competition in the business of promoting championship caliber boxers by acquiring Golden Boy Promotions. Waddell offered to purchase 100 percent of the equity interest in Golden Boy Promotions but conditioned the offer on obtaining a non-competition agreement with its co-owner, De La Hoya. De La Hoya refused to accept such onerous restrictions and the proposed acquisition was not completed. Not having acquired Golden Boy Promotions, the defendants were determined to drive it out of business by restricting the boxers they manage from signing contracts with other promoters and buying air time on almost every major television network in order to preclude other promoters from doing so.

With respect to some of the boxing events they promote, the defendants seek to create the false impression that they are not actually the promoters by employing licensed promoters to pose as the nominal promoters of such events for a fixed fee. By such use of sham promoters, the Haymon defendants are not only taking a “direct or indirect financial interest in the promotion of a boxer” in violation of the Ali Act, they are the true promoters of the bout, taking the profits and making the key promotional decisions.

The plaintiffs assert claims for unfair competition, unlawful tying, conspiracy in restraint of trade, and attempted monopolization in violation of Sections 1 and 2 of the Sherman Act and California’s Unfair Competition Law. The action seeks declaratory and injunctive relief, treble damages, interest, costs of suit, attorneys’ fees, and any other just and proper relief.

The case is No. 2:15-cv-03378.

Attorneys: Bertram Fields, Ricardo P. Cestero, and James R. Molen (Greenberg Glusker Fields Claman & Machtinger LLP) for Golden Boy Promotions LLC and Bernard Hopkins.

Companies: Golden Boy Promotions LLC; Alan Haymon Development, Inc.; Alan Haymon Boxing Management; Waddell & Reed, Inc.

News: Antitrust CaliforniaNews