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Golden Boy Promotions had its 90-day suspension lifted Tuesday by the New York State Athletic Commission, but questions still remain about the company’s licensing fee over a May 15 bout at Madison Square Garden.
In question are the actions of Golden Boy and, indirectly, HBO Sports, regarding the license fees the premium cable network paid for the right to broadcast the card that featured Amir Khan against Paulie Malignaggi in the main event and Victor Ortiz against Nate Campbell in the television opener. DiBella Entertainment co-promoted the Khan-Malignaggi fight and was contractually entitled to 40 percent of the profits from that bout.
Golden Boy admitted in a news release it sent Tuesday to announce the lifting of the suspension that it broke New York law by failing to provide NYSAC with the promotional contracts for all fighters on the May 15 card; the request for the documents was made on May 19. On July 6, NYSAC suspended Golden Boy from promoting in the state and fined it $10,000.
Golden Boy attributed the error to an employee's mistake, though it also explained why the company might not be willing to go out of its way to provide such documents. DiBella Entertainment had provided Malignaggi's promotional contract immediately upon the NYSAC's request.
"These contracts, the financial terms, how they're written and the language that is contained in them, are like trade secrets, and you certainly don't want your competitors to have that knowledge," Golden Boy attorney Judd Burstein said. "That's true in any business, including the business of boxing. You just don't make your trade secrets public knowledge."
Among the details in those documents were the salaries for Khan, Malignaggi, Ortiz and Campbell, which raised questions when compared to the licensing fees paid for those events. The promotional agreements also provide specific terms for future fights, which Golden Boy wanted to remain secret.
In a conversation with Yahoo! Sports, Golden Boy CEO Richard Schafer refused to explain why the $750,000 license fee HBO paid Golden Boy for the Ortiz-Campbell fight was so high. Several promoters and boxing managers who were not involved in the May 15 card said the fee was nearly double what could have been expected. Most estimated that the Ortiz-Campbell fight should have generated between $350,000 and $400,000.
HBO and Golden Boy have a strong and close business relationship and Golden Boy gets far more dates on the network than any other promoter.
Ortiz made $100,000 and Campbell was paid $125,000, leaving $525,000 remaining. Golden Boy owed Top Rank money for its interest in Ortiz and owed Don King Productions money for its interest in Campbell.
HBO Sports president Ross Greenburg declined comment on the license fee. His policy over the years has been to not discuss license fee issues.
HBO paid a $1.5 million license for the Khan-Malignaggi fight. Given the 60-40 split of funds agreed upon by Golden Boy and DiBella, Golden Boy received $900,000 of that and DiBella Entertainment received $600,000.
Golden Boy subsequently paid Khan $690,000 and DiBella paid Malignaggi $450,000, according to commission records, meaning Golden Boy covered just 30 percent of the license fee from Ortiz-Campbell in purses, but Golden Boy and DiBella paid 76 percent of the license fee received for Khan-Malignaggi in purses.
In all, Golden Boy and DiBella Entertainment paid out $1.14 million to Khan and Malignaggi when the license fee was $1.5 million.
Industry sources indicated to Yahoo! Sports that having the license fee so high for Ortiz-Campbell raised the question of whether Golden Boy and HBO diverted money from the Khan-Malignaggi fight to Ortiz-Campbell in an attempt to avoid paying DiBella Entertainment its 40 percent share, a charge Burstein arduously denied. As for the delay in producing the documents requested by NYSAC, David Itskowitch – as Golden Boy's chief operating officer, the person who normally handles such matters with the various state athletic commissions – went on his honeymoon days after the May 15 show and the initial duty of fulfilling New York's request fell on other employees.
Itskowitch, who worked for DiBella for several years and promoted many shows in New York, returned from his honeymoon more than a month before Golden Boy turned over the contracts on July 12. As recently as July 1, a Golden Boy employee sent an email to the NYSAC, questioning the commission's interest in the documents and requesting assurances that the promotional agreements would not fall under the state's public records laws.
Burstein attempted to give an explanation for the delay in Golden Boy's compliance upon Itskowitch's return to work and the July 12 delivery of the documents to the commission. He couldn't come up with an acceptable answer and sighed.
"I'm trying to give you an answer to a question that is unanswerable," Burstein said. "Someone just royally screwed up and, really, that's all that really is."
Golden Boy on the attack
In Tuesday's news release, Schaefer lashed out at reporter George Kimball, who in a column on the website The Sweet Science and in the Boston Herald newspaper had suggested that Golden Boy was in violation of the Muhammad Ali Boxing Reform Act. The Ali Act requires promoters to disclose to a fighter all sources of income it receives from a fight he or she participates, and is normally given to a boxer on the night of the bout.
Schaefer and Burstein insisted Golden Boy made all of the required disclosures to the fighters. Schaefer wouldn't discuss the license fee issue or the substance of the dispute with the New York commission, but said he was angered by what he thought was an intentional attack on his company by Kimball, who had inaccurately reported there was a commission hearing on the issue.
"I have a good reputation and I have worked hard to build that reputation and I'm not going to stand by while someone accuses me of intentionally violating a federal law," Schaefer said.
Kimball, who did not return a telephone call, is a highly decorated journalist who won the Nat Fleischer Award for career excellence in boxing journalism in 1985.
In the release, which Burstein wrote, Golden Boy threatened to sue reporters in the future that it believes have written factually incorrect news stories.
The final sentence of the release announcing the lifting of the suspension read, "Golden Boy wants to make clear that, going forward, it will not tolerate this kind of irresponsible journalism, and will move swiftly to vindicate itself in court and elsewhere."