Golden Boy loses antitrust case against Al Haymon in a big way

“[Golden Boy has] been unable to present any evidence of harm to competition. Instead, [Golden Boy has] merely presented evidence of harm to themselves.”…

By: Paul Gift | 7 years ago
Golden Boy loses antitrust case against Al Haymon in a big way
Bloody Elbow 2.0 | Anton Tabuena

“[Golden Boy has] been unable to present any evidence of harm to competition. Instead, [Golden Boy has] merely presented evidence of harm to themselves.” Those words from U.S. District Judge John Walter sounded the death knell for Golden Boy’s antitrust case against boxing manager and Premier Boxing Champions (PBC) creator Al Haymon.

It’s a point I recently emphasized on The Morning Punch-In Show with RB and Jae; Golden Boy seemed to spend a lot of time on how Haymon and the PBC have harmed them, but would need to do much more in order to win an antitrust case. Still, the odds seemed somewhat low that the entire case would go away on summary judgment. But that’s exactly what Judge Walter did on Thursday in Los Angeles, granting Haymon’s summary judgment motions and essentially saying there’s no need for a trial since no reasonable jury would ever side with Golden Boy.

The case helped expose behind-the-scenes details of the boxing business – as well as some disgusting, racist e-mails – that wouldn’t normally be public. But now it’s over, and the ending was a Lomachenko-Walters-esque legal beatdown.

This piece will review the key factors for Haymon’s victory as well as which, if any, of Judge Walter’s findings might also apply to the UFC antitrust lawsuit.

Golden Boy essentially made four claims of anticompetitive conduct: That Haymon (1) illegally tied his manager services to the use of his promoter services or a “sham” promoter of his choosing, (2) engaged in predatory pricing, (3) prevented Golden Boy from accessing television networks through the use of exclusive TV contracts, and (4) engaged in a scheme to block Golden Boy’s access to boxing venues.

Leveraging Power

With its tie-in theory, Golden Boy alleged that Haymon was an economically powerful boxing manager and tried to leverage that power into being a boxing promoter through management contracts that gave Haymon “sole discretion” in promoter selection. Haymon allegedly used this power to force his boxers to work with “sham” PBC promoters instead of Golden Boy or other “legitimate” promoters.

In his decision, Judge Walter nailed Golden Boy for failing to show that Haymon forced his boxers to not work with Golden Boy or “legitimate” promoters and failing to show that Haymon had sufficient managerial power to leverage in the first place.

According to the judge, Golden Boy didn’t submit testimony from a single boxer that felt coerced by Haymon into working with a particular promoter or not working with Golden Boy. Mayweather-Pacquiao and Canelo-Khan were cited as examples of Haymon working with “legitimate” promoters when it’s in his boxers’ “best interests” and consistent with his “fiduciary duties” as their manager.

The nail in the coffin for Golden Boy was that they supposedly didn’t submit a single proposal to Haymon to promote any of his boxers during the relevant time period. It’s hard to claim Haymon won’t let his fighters work with you when you haven’t even submitted any proposals to work together.

The argument about Haymon’s power as a boxing manager is where the academic nerds come in to play, also known as expert witnesses. Golden Boy’s expert witness claimed the relevant market was the U.S. market for managing Championship-Caliber Boxers, which means a coherent, evidence-based argument had to be made about the parameters of “Championship-Caliber” and exactly why the market is limited only to the U.S.

Judge Walter found that Golden Boy’s expert witness, Dr. Kneuper, “…did not analyze the qualifications or backgrounds of managers of Championship-Caliber Boxers” to assess their interchangeability with other managers, and that’s a big no-no. He also cited “no explanation” for why someone like Joe Smith, Jr.’s manager would go from not being championship-caliber to being championship-caliber in the span of a month following Smith Jr.’s 1st round TKO upset of Andzrev Fonfara in June 2016 and subsequent WBC rankings increase from #33 to #2.

The end result is that Golden Boy’s expert witness “grossly overestimated” Haymon’s market share, and Judge Walter wasn’t having it.

While the majority of Judge Walter’s decision was spent on Golden Boy’s tying claims, the other three claims were rejected relatively quickly as they seemed to have little to no merit.

Predatory, Exclusive, and Blocking

On Golden Boy’s claim that Haymon predatorily priced – incurring large losses to try to exclude competition and recoup those losses later – it had to show that Haymon had a “reasonable expectation” of recouping even more than his losses at a later date. But Golden Boy’s expert seemed to be twiddling his thumbs on this one. He didn’t perform a recoupment analysis and wrote about Haymon losing “…substantially more money than the hundreds of millions of dollars he anticipated…,” not exactly a ringing endorsement of recoupment.

Golden Boy’s claim that Haymon’s exclusive TV contracts were anticompetitive was discarded in short order. The idea is that if you need access to TV networks and I’ve got a bunch of them locked-up with exclusive deals, it might make it very difficult for you to effectively compete. And Haymon had exclusive agreements with NBC, CBS, ESPN, FS1, and Spike at one point.

In discarding this claim, Judge Walter noted that Haymon never had exclusive deals with the most profitable channels (HBO, Showtime, and pay-per-view), there were “numerous, potential alternative channels,” Haymon was able to convince channels that had not previously shown boxing to do so (and Spike even paid a rights fee), and, perhaps most importantly, there was “no evidence” that Golden Boy tried to build a relationship with an alternative English-language network during the relevant time period.

For a second time, according to the decision, Golden Boy’s lack of effort to even try came back to bite them.

The fighters suing the UFC for alleged antitrust violations make a similar TV claim, that the UFC locks up critical TV networks with exclusive contracts making it more difficult for other MMA promoters to effectively compete. Although we don’t know detailed evidence in that case, we might be able to use Judge Walter’s ruling to get an idea of where that claim might be headed in the UFC case.

Haymon had exclusive deals with five networks while the UFC has an exclusive deal with just one, FOX. When five networks were supposedly locked-up, Judge Walter still found “numerous” potential alternatives and stated, “…the reality of the extensive media platforms available today, demonstrate that there are many alternative channels of distribution (both English-language, Spanish-language, and basic cable) available to Golden Boy and other promoters.” Not a good sign for the fighters’ TV exclusivity claim against the UFC.

Golden Boy’s venue blocking claims are similar to, but not exactly like, the venue claims in the UFC lawsuit. Golden Boy argued that Haymon locked up desirable dates in major arenas to keep them out of Golden Boy’s hands. The judge noted that Golden Boy apparently recognized “that they have no evidence to support this claim,” and eviscerated it. “…there are numerous alternative venues in most major metropolitan areas of the United States,” wrote Judge Walter.

With the similar venue claims in the UFC lawsuit, I’ve previously written that the result “won’t be pretty” for essentially the same reason. It’s going to be damn hard to show there isn’t reasonable venue space available throughout the United States or that venues on the Las Vegas Strip are absolutely critical to an MMA promoter.

Towards the end of his decision, Judge Walter swiftly rejected Golden Boy’s claim that Haymon violated the Muhammad Ali Boxing Reform Act by simultaneously serving as his boxers’ manager and promoter (via the PBC). He noted that boxers and government agencies are the only parties with standing to claim a violation of the Ali Act, explaining, “…the conflict of interest provision in the Ali Act was not intended to compensate promoters for lost profits.”

In reading through the decision, one couldn’t help but imagine Judge Walter doing the Dikembe Mutombo finger wag as he tore into “failed” Golden Boy claims in key sections and the work, or lack thereof, of its expert witnesses. Golden Boy’s apparent reliance on “certain informal, vague, and hearsay conversations” and “utter speculation” was identified and squashed by the judge, a point driven home with a quote in the opening paragraph of his discussion, “…anecdotal speculation and supposition are not a substitute for evidence…”

While Haymon may now have this antitrust case off his back, his problems surely aren’t over. He’s apparently lost “…substantially more money than the hundreds of millions of dollars he anticipated” with the PBC experiment and Waddell & Reed’s $585 million funding of Haymon Holdings. And Waddell’s Media Group Holdings, which did the Haymon Holdings funding according to Michael Ring, has apparently plummeted from an initial value of $925,339,000 to $152,202,041 as of Sept. 30, 2016, a decline of 83.6% over roughly 3 ½ years (Q4 2016 numbers are not yet available).

Key to PBC’s business model is getting TV networks to pay for boxing content, “flipping the model” as they call it. We’re almost two years in to a model that Michael Ring has suggested probably needs to be flipped by three years, so this would seem to be a huge year for the evidently non-monopolistic Al Haymon.

Paul is Bloody Elbow’s analytics and business writer and former provider of expert witness support in antitrust cases. Follow him @MMAanalytics.

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About the author
Paul Gift
Paul Gift

Dr. Paul Gift is a sports economist with a research focus on mixed martial arts. A licensed MMA referee and judge himself, Dr. Gift’s interests pertain to many facets of the MMA industry including behavioral biases and judging, the role of financial and environmental factors on fighter performance, determination of fighter marginal products, and predictive analytics.

A regular MMA business contributor for Forbes, Dr. Gift also writes about MMA analytics and officiating in popular press for SB Nation and co-hosts the MMA business podcast Show Money. His sports research has been cited in the Wall Street Journal, ESPN’s Grantland, and popular media including Around the Horn, Olbermann, and various MMA and boxing podcasts.

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