Muhammad Ali Boxing Reform Act

We have a number of concerns regarding H.R. 1832, as reported by the Committee on Commerce.

First, we take issue with sections 2 and 3 of the bill regarding the congressional findings and purposes. These sections unnecessarily denigrate promoters without there having been any formal fact finding investigation as to whether these statements are justified. We understand that what support there is consists principally of allegations from boxers and managers, who naturally are in an adverse economic relationship with promoters. To take these allegations as true, and to give these allegations the imprimatur of the United States Congress, is simply unfair without a formal independent fact finding investigation. These findings and purposes, to the extent they denigrate all promoters, are not necessary and we would ask that the inflammatory language be removed.

Second, the legislation takes away a boxer’s and promoter’s freedom to contract. As Americans, one of the most fundamental freedoms which we enjoy is the freedom to contract if we determine that an agreement is in our best economic interest. Baseball players sign seven (7) year contracts, but this bill would limit a boxer’s freedom to contract to five (5) years at the most and in certain instances, it would limit him to one (1) year, and in other instances, would prevent him from signing with a promoter altogether. While we can imagine certain situations where an uneducated boxer might be duped into signing an agreement which is not in his best economic interest, it seems to us that if the boxer is represented by a licensed attorney or a manager who is licensed by a state athletic commission, and the boxer and his attorney or manager want to sign a six-year deal with a promoter because they have determined that it is in their best interest, or if they want to sign with a promoter for two years so that they get a shot at the title, then this Congress should not stand in the way of their freedom to contract. Accordingly, I would propose an additional exception providing that the limitations on the freedom to contract do not apply if the boxer is adequately represented in his negotiations with the promoter.

Third, the legislation states that a promoter shall not be entitled to receive any compensation in connection with a boxing match until it provides certain information to the boxing commission and the boxer. While we do not take issue with a promoter being required to provide relevant information, we simply do not see how you can stop a promoter from receiving the benefit of, for example, a letter of credit which is being used to pay the boxer his purse, nor do we see the wisdom of preventing the boxer from being paid simply because the promoter has not provided the required information. In other words, this section should be revised to impose an obligation on the promoter to provide relevant information and if he does not, there should be a reasonable sanction.

Furthermore, we do not understand the logic of requiring a promoter to file every contract he has with a boxer with the commission. Suppose that a boxer has fought for a promoter twenty (20) times and in each contract the boxer gets clip rights that extend for ten (10) years. Under this provision, the promoter would have to file not only the bout agreement for the applicable bout, but each of the 20 other bout agreements with the commission. Also, a promoter may have a sponsorship deal with a boxer or a merchandise deal. It will be extremely burdensome on promoters to have to file all these contracts with the commission. The bottom line is that the promoter should have to file the applicable bout agreement for the bout and provide a written certification that there are no other agreements with the boxer regarding the match.

We also do not understand the reasoning behind requiring the promoter to disclose to the boxer how much compensation or consideration a promoter has contracted to receive for a match. The boxer and the promoter’s interests are adverse and the boxer is not entitled to this information. This information can also be misleading and make a boxer think that a promoter is actually retaining this revenue as profit. The promoter must, however, pay not only all of the boxers’ purses from such revenue as well as any fees to other promoters, but also all of the other expenses of the bout, and then the promoter either makes a profit or incurs a loss on the fight. Additionally, the promoter has the overhead of his company which he must pay for a bottom line profit or loss. The boxer simply is not entitled to this information because he is not taking the risk of the promotion. If, however, the boxer is getting an upside payment or is receiving part of the profit from the promotion, then of course the promoter should have to disclose the relevant information to the boxer so that he can verify that he is receiving what he is entitled to.

Fourth, we are concerned with section 5 of the bill because it would also eliminate the freedom to contract. We understand that for certain promotions, promoters, boxers and managers sometimes enter into joint venture arrangements whereby they agree to share their compensation. For example, in exchange for a piece of promoter’s profit in a promotion, the boxer and manager may agree to share a portion of the purse. In other situations, the amount of the guaranteed purse is reduced in consideration for a piece of the upside after certain revenue targets are met. We believe that there is nothing wrong with this practice provided that the boxer is adequately represented. Accordingly, we would provide an exception to this section so that it is not applicable if the boxer is adequately represented by an attorney provided that the relationship between the promoter and the manager is disclosed to the boxer. This would allow for the flexibility to enter into more complex arrangements like joint ventures on promotions.

Fifth, we take issue with section 6 of the bill with respect to the imposition of criminal penalties. We believe that the civil remedies are more than adequate and there has been no demonstration that criminal sanctions are warranted. If civil remedies subsequently prove to be inadequate, Congress can then address at that time the need for criminal sanctions. This bill generally affects the contractual rights of promoters and boxers and the remedy for a violation should be a contractual one, not criminal.

Sixth, the bill as currently drafted only applies to promoters, yet the version which was passed by the Senate also imposed rules regulating the contractual relationship between broadcasters and boxers. It is well known that certain broadcasters have been entering into exclusive long term relationships with boxers. In these cases, the broadcasters become the de facto promoter of the boxer, but they are not licensed and do not have to disclose their contracts with the boxers or report to the athletic commissions. In certain well publicized instances, boxers who have signed with two different broadcasters have been precluded from fighting each other because neither broadcaster is willing to allow their boxer to fight on the other broadcaster’s network. When this same situation arises between two rival promoters, the rules of the sanctioning organizations provides the mechanism of a purse offer, i.e., the public auction of the promotional rights to a fight, so that the boxers can fight each other. We submit that the rules adopted by the Senate with respect to broadcasters should not only be adopted here, but also they should be expanded to provide for same disclosures imposed on promoters to the athletic commissions. Additionally, we should create a mechanism, similar to a purse offer, so that the boxers who are signed with different broadcasters be allowed to fight each other.

Finally, after soccer, boxing is probably the second most recognized sport internationally. Because of the global nature of the sport, we are very concerned that our rules will impose an undue burden on U.S. promoters, whereas foreign promoters will not be subject to these rules. These rules will place U.S. promoters at a disadvantage with their foreign competitors. For example, these rules will not prevent a foreign promoter’s freedom to contract under the laws of a foreign country or prevent a foreign promoter from entering into more flexible financial arrangements with their boxers. We would urge that these rules be expanded to govern, to the extent possible, the activities of foreign promoters if they are exploiting bouts in the United States. This will help to level the playing field and will help to ensure that U.S. promoters do not take their promotions abroad.

EDOLPHUS TOWNS
BOBBY L. RUSH