BOXING IN AMERICA: CONSPIRACY IN RESTRAINT OF TRADE
A series of seeming unconnected and run of the mill occurrences in the boxing industry might very well be related in a complex web of intrigue….if what my sources say are accurate. If you know something about the boxing industry and have an inquiring mind, consider whether any of the following events, in the context of history, have anything to do with each other and draw your own conclusions:
- January 26, 1998, Shmuel Flatto-Sharon, arrested in Israel on suspicion of insurance fraud
- 2000—Richard Schaefer abruptly leaves banking, where he’d been Western U.S. Regional manager for Swiss UBS (he’s a Swiss national) and gets into the boxing business
- 2000—Al Haymon transitions into the boxing industry from the entertainment industry
Shmuel Flatto Sharon
Shmuel Flatto-Sharon is a Polish born ex-Communist resistance fighter who wound up making a fortune in France. He eventually had to flee to Israel ahead of French indictment alleging that he’d embezzled $60,000,000 in 1975. To get out of extradition, he spent a lot of money getting himself elected to parliament in Israel. While successful, he also wound up serving three months of probation for illegal campaign activities….buying votes.
Sharon has a brother in Las Vegas….who shall remain nameless except that my sources tell me that under the alias of “Rabinowitz” he was convicted of some kind of fraud in France and somehow still managed to get into the United States. He is VERY PROMINENT in the Las Vegas night club industry.
At this point let me digress and suggest that my readers consider this prior posting:
http://janbtucker.com/blog/2013/04/28/small-freaky-world-of-white-collar-crime/
One of the people mentioned in that blog is in fact aka Rabinowitz. “Mr. L” is also involved and two others mentioned there are peripherally involved in the events I am describing, according to my sources…which of course are always subject to question.
Richard Schaefer
So, according to my sources, when Sharon was arrested in 1998 he was in a panic to get money into the United States where it would be safely looked after by his brother, “Rabinowitz.” At this time of course, Richard Schaefer was still working for UBS (United Bank of Switzerland, where his father used to be Chairman of the Board). It’s not like Swiss bankers aren’t skilled at helping people launder money. In 1994 the Independent (http://www.independent.co.uk/news/business/ubs-in-drug-money-laundering-case-employee-suspended-police-arrest-colombian-woman-dollars-150m-account-frozen-1369982.html) reported that in light of the arrest of a UBS Bank Vice President for laundering Colombian drug money:
The Swiss Banking Commission, which supervises the country’s banks, is expected to launch its own investigation into UBS’s handling of the account and may look at its internal procedures for detecting money laundering - against the background of an international drive by central banks to raise the standards of vigilance among financial institutions.
See also: http://en.wikipedia.org/wiki/UBS_tax_evasion_controversy
So tying this together, one of my sources claims that a certain somebody at UBS who retired from UBS abruptly in 2000 – facts that coincide with Schaefer’s inexplicable departure – was the person that facilitated laundering money for Flatto-Sharon to his brother, “Rabinowitz,” in Las Vegas and that around the same time, Rabinowitz put together Al Haymon and Richard Schaefer….let’s call it, “networking.” Maybe my source is 100% correct, maybe only 50% correct or maybe it’s all a great fantasy in which at least it would make a great movie, kind of like the Swiss Banker money laundering scenes in Wolf of Wall Street.
Clayton/Sherman acts—monopolization of market share
If you have access to the kind of money that Flatto – Sharon has, if the French indictments are based on a solid case, and if that money is made available by his brother to reinvestment by Al Haymon and Richard Schaefer, it would sure enable you to eventually grab an enormous amount of the market share of a lot of different industries that they chose to put it into. So regardless of where they got their working capital from, lets take a look at the effect that the Haymon-Schaefer alliance has had on boxing since they came into it in 2000.
Although they represent technically separate business entities, Al Haymon and Richard Schaefer have effectively monopolized a market share forcing competitors horizontally and vertical level market participants into a take it or leave it business environment where the deal offered is a deal that market participants cannot refuse, in the sense that an LCN Mafia godfather might offer it.
The monopolization of this industry by Haymon et al is open and notorious, as are its effects. Examples of the open traffic in boxing media:
• November 3, 2012: Here’s a memo for Hip Hop dude turned prize fight promoter 50 Cent - Don’t piss off Al Haymon. I wonder if 50 realizes that having a good stable of fighter’s doesn’t mean squat if you can’t secure any TV dates for them. [http://www.examiner.com/article/50-cent-vs-al-haymon-equals-no-tv-dates-for-50]
• [http://www.thesweetscience.com/news/articles-frontpage/17953- fans-choice-for-floyds-next-khan-or-maidana]
The Shadow says:
[QUOTE=Carmine Cas;43539]The UFC/WWE model is what I was alluding towards, the one big promoter in the sport that every fighter seeks to be a part of. I know the promoters’ number one goal is to make money, but their goals are more instant gratification. If they were to unite and form a “league” they command a much larger part of the market share, and in the long run make more money. The brand would be better known to casual fans around the world. With Arum getting old it could happen, and hopefully it will.
The Oscar-Pac split is pretty funny[/QUOTE]
Did some research. The other two were 50-50 until Margarito started acting like a spoiled b*tch so HBO had to give him a little extra money on the side because he felt he was the bigger draw and the champion.
Which I guess in some way was fair enough but he allegedly started with the crap after everyone thought they had a deal. Good for him he got spanked.
As for market share, they already dominate it. GBP and TR already sit atop roughly 80% of the market, overall, if not more. There are no outside threats.
In 2013, GBP/SHO had a 80-85% market share of the domestic PPV boxing industry, which is damn near monopolistic. Google, by comparison, has 90% of the search engine market. [EMPHASIS ADDED]
• Al Haymon Boxing adviser and promoter This shadowy ring adviser doesn’t speak to reporters; instead he’s wielded his enormous influence at HBO and Showtime by dangling the idea that his top fighter, Floyd Mayweather Jr., would sign with or leave them. The result: Haymon’s stable has collected millions fighting inferior opposition. The 57-year-old’s latest client, rising star Adrien Broner, ensures Haymon’s influence will continue. [http://sportsillustrated.cnn.com/main/photos/1303/50-most-powerful-people-in-sports/42/]
• Haymon came to boxing in 2000 and worked initially with Vernon Forrest. He is licensed in Nevada as a manager, yet he also performs many of the same functions as a promoter. He received the Al Buck Award as manager of the year from the Boxing Writers Association of America in 2005, 2012 and 2013. Haymon’s biggest client is Floyd Mayweather Jr., whom he manages and helped maneuver out of his contract with Top Rank Boxing for $750,000. [Emphasis added, See [http://boxrec.com/media/index.php/Al_Haymon], which also provides a partial list of boxers affiliated with Haymon, demonstrating his monopolistic market share]
• Haymon’s small inner circle entered the boxing world with him. Sylvia Browne, his assistant, handled much of the day-to-day affairs. Sam Watson and his two sons represented the public face of Haymon’s boxing enterprise, accompanying Haymon fighters into the ring.
Early on, Haymon tenaciously sought connections with the networks. He called Xavier James, the vice president for sports programming at HBO until 2004, at all hours daily, on three separate lines, and yet Haymon remained a mystery to James. Haymon penetrated boxing, James said, “with a great deal of guile and almost no personal interaction.”
“If I wanted to,” James said Haymon often told him, “I could run boxing.” [Emphasis added, Al Haymon Quietly Shakes Up Boxing - NYTimes.com 12/18/11]
The California Court of Appeals issued a very recent decision reiterating the laws against monopolies in California, i.e. the Cartwright Act, California Crane School, Inc. v. National Comm. for Certification of Crane Operators (2014), Cal.App.4th [No. F063727. Fifth Dist. May 8, 2014.]. This court wrote that:
Section 16720 of the Cartwright Act defines an unlawful trust as “a combination of capital, skill or acts by two or more persons” for enumerated purposes that restrains trade. Section 16726 provides that “every trust is unlawful, against public policy and void.” Section 16750, subdivision (a), confers a private right of action on “[a]ny person who is injured in his … business or property by reason of anything forbidden or declared unlawful by this chapter ….” The Cartwright Act is patterned after the federal Sherman Antitrust Act (15 U.S.C. § 1 et seq.), so decisions under the Sherman Act are applicable under the Cartwright Act. ( Kolling v. Dow Jones & Co. (1982) 137 Cal.App.3d 709 , 717 ( Kolling ).)
To state a cause of action under the Cartwright Act, appellants must allege (1) the formation and operation of a conspiracy, (2) illegal acts done pursuant thereto, and (3) damage proximately caused by the acts. (Kolling, supra, 137 Cal. App.3d at p. 717.) California requires a high degree of particularity in the pleading of Cartwright Act violations. To be sufficient, the complaint must allege specific conduct in furtherance of the conspiracy to reduce competition. (Marsh v. Anesthesia Services Medical Group, Inc (2011) 200 Cal.App.4th 480, 493 (Marsh).)
The Cartwright Act prohibits combinations in unreasonable restraint of trade. Certain restraints, including some group boycotts, are conclusively presumed to be {Slip Opn. Page 53} unreasonable and illegal. (Marsh, supra , 200 Cal.App.4th at p. 493.) A vertical boycott consists of collaboration among business entities occupying different levels of distribution to deny a competitor at one level the benefits enjoyed by the members of the vertical combination. ( Id. at p. 494.)
Appellants assert they have alleged a third- party vertical boycott. That is, NCCCO, IAI and the unnamed co-conspirator crane schools conspired to boycott appellants from access to the essential testing services that are provided to other competing schools in the state. Appellants submit their allegations mirror those found to be sufficient in case law and the trial court erred in sustaining the demurrers.
The antitrust plaintiff must delineate a relevant market and show that the defendant plays enough of a role in that market to impair competition significantly. (Exxon Corp., supra, 51 Cal.App.4th at p. 1682.) Market power is generally equated with market share. It is usually inferred from possession of a substantial percentage of the sales in a market that is carefully defined in terms of product and geography. (Redwood Theatres, Inc. v. Festival Enterprises, Inc . (1988) 200 Cal.App.3d 687, 704.) The “relevant market” is composed of products that have reasonable interchangeability for the purpose for which they are produced. ( Exxon Corp., supra, 51 Cal.App.4th at p. 1682.) The relevant market may present a question of fact. (Ibid.) {Slip Opn. Page 68}
In another recent case Clayworth v. Pfizer, Inc. (2010) 49 Cal.4th 758 the California Supreme Court made the point that the effect on market share or of market share causes injury.
Out in the Open
A lawsuit filed in April in the UNITED STATES DISTRICT COURT, FOR THE SOUTHERN DISTRICT OF NEW YORK, NEW JERSEY SPORTS PRODUCTIONS, INC., d/b/a Main Events, v. GROUPE YVON MICHEL, INC., YVON MICHEL, AL HAYMON, GOLDEN BOY PRODUCTIONS, INC., SHOWTIME NETWORK, INC., ADONIS STEVENSON, contains some intriguing allegations:
13) Defendant Al Haymon holds himself out to be a manager or advisor to professional boxers. In point of fact, as we will explain later in this complaint, he actually operates in the role of promoter. He is the owner of an entity named “Al Haymon Development, Inc.”
14) Golden Boy Promotions, Inc. is a major promoter of professional boxing. Its president is Oscar De La Hoya and its CEO is Richard Schaefer. It is common knowledge in the industry that Schaefer is attempting to wrest control of Golden Boy from De La Hoya who is, on information and belief, the majority shareholder.
15) Showtime is a pay television network whose Executive Vice President for Sports is Stephen Espinoza. It is the chief competitor to HBO, which is generally considered to be the leading pay network in the United States. Each of Showtime and HBO prominently features boxing on their respective networks.
Stephen Espinoza is an attorney who has put his California Bar Status as “inactive” since he moved to New York to run Showtime Sports. He used to be an attorney with Ziffren Brittenham LLP in Century City. While with Ziffren, Espinoza used to represent Oscar De La Hoya’s Golden Boy, which in essence means that he was then-representing De La Hoya’s interests as the majority stockholder.
On March 24, 2014, David Kassel wrote [http://fighthype.com/news/article16473.html]
Is Al Haymon planning something huge? Anyone who is anyone in the boxing and music industries are very familiar with Haymon. Like it or not, he is the most influential man in boxing. Yes, I believe Haymon is more influential than Floyd Mayweather, Manny Pacquiao, Richard Schaefer, Bob Arum, Ken Hershman, Stephen Espinoza, or anyone else affiliated with The Sweet Science. Haymon is the man whom Mayweather (boxing’s most prized possession) seeks advice from, and whatever Haymon suggests, Mayweather usually listens. Over the last few years, Haymon has slowly and steadily built his stable of fighters. However, within the last year, the list of fighters to join Al Haymon has been unbelievable. These past few weeks have been no exception as Haymon has signed the likes of: Adonis Stevenson, Amir Khan, Lamont and Anthony Peterson, Deontay Wilder, and Robert Guerrero. Add that to names like Mayweather, Danny Garcia, Leo Santa Cruz, Chris Arreola, Devon Alexander, Peter Quillin, Keith Thurman, Erislandy Lara, Austin Trout, Adrien Broner, Lucas Matthysse, Paulie Malignaggi, Omar Figueroa, and plenty of other world champions, and you have one hell of an army. Don’t just think Haymon signs world titlists either. Haymon also has a growing list of up-andS-coming prospects who are the future stars of boxing.
I have a feeling Al Haymon is planning something big, and I have a feeling both Golden Boy Promotions and Top Rank are going to feel the effects. Could Richard Schaefer be a part of the big Al Haymon picture? A couple weeks ago, rumors surfaced that Haymon could be working on forming a promotional entity with Schaefer, currently the Golden Boy Promotions CEO, becoming the face of the company. We all know that Sam Watson and his sons, Marcus and Brandon, are the current faces of Haymon fighters while Schaefer stands behind his Golden Boy fighters, but it’s no secret that Schaefer doesn’t always see eye-to-eye with Golden Boy Promotions founder Oscar De La Hoya. Couple that with De La Hoya’s personal problems and Schaefer may see this as an opportunity to move into the future with a man who has had a track record of nothing but success. Someone once asked me why Haymon doesn’t have his own promotional company already, and I answered by saying that it didn’t make sense at the time because Haymon didn’t have enough fighters to put together a full show, on a consistent basis, making it worth his while and paying the promotional fees associated with putting on a show. Now, he has everything he needs because of his big name fighters and his young crop of talent. I’m not buying into the rumors of a Haymon/Schaefer collaboration yet, but the more fighters who sign with Haymon, the more I believe a big announcement could be coming sooner rather than later. [Emphasis added]
So surprise, surprise, on June 3, 2014, ESPN announces [http://espn.go.com/boxing/story/_/id/11024103/floyd-mayweather-vows-stop-working-golden-boy-promotions-ceo-richard-schaefer-resigns] that:
Hours after Richard Schaefer’s Monday resignation as chief executive of Golden Boy Promotions following months of infighting with company co-founder/majority shareholder/president Oscar De La Hoya, pound-for-pound king Floyd Mayweather Jr. dumped the company.
Mayweather, whose fights generate the biggest pay-per-view numbers in the sport, has worked with Golden Boy on a fight-by-fight basis for all of his nine bouts since his 2007 blockbuster against De La Hoya, which set the all-time pay-per-view buy record at nearly 2.5 million subscriptions.
Interestingly enough, Schaefer never got Mayweather to commit to anything but one at a time deals with Golden Boy, so now Oscar De La Hoya is screwed as majority stockholder. This raises a series of questions since Schaefer as corporate CEO of Golden Boy has had an ongoing fiduciary duty to Golden Boy’s shareholders, especially its majority shareholder, De La Hoya. Was it impossible all these years that Schaefer was at the helm for him to convince Mayweather not to commit to a long term contract, or was Schaefer jockeying for the ideal situation for himself to bail out of Golden Boy if he lost his battle for control with De La Hoya and thereby align himself with the triumvirate of Haymon, Stephen Espinoza at Showtime, and himself?
That brings up a similar question. Showtime’s official online biography of Stephen Espinoza says that:
Prior to joining SHOWTIME, Espinoza was a partner in the firm of Ziffren Brittenham LLP. At the firm, he specialized in representing athletes and sports personalities, including professional boxers Oscar De La Hoya and Mike Tyson, who generated a total of over $500 million in pay-per-view revenues under his representation. Espinoza has served as lead counsel for De La Hoya’s Golden Boy Promotions since the formation of the company. Through his representation of Tyson, De La Hoya and Golden Boy Promotions, Espinoza has been directly involved in several of the highest-grossing pay-per-view boxing events in the history of the sport. Other notable former sports clients include former NFL star and current broadcaster Michael Strahan and mixed martial arts fighter Gina Carano.
So, what are Espinoza’s fiduciary duties to Oscar De La Hoya?
The California Bar Association has a couple of rules that Stephen Espinoza should be thinking about in the event that he has dealings with Schaefer and Haymon that are now against the interests of his former client, Oscar De La Hoya. First, Rule 3-300:
Rule 3-300 Avoiding Interests Adverse to a Client
A member shall not enter into a business transaction with a client; or knowingly acquire an ownership, possessory, security, or other pecuniary interest adverse to a client, unless each of the following requirements has been satisfied:
(A) The transaction or acquisition and its terms are fair and reasonable to the client and are fully disclosed and transmitted in writing to the client in a manner which should reasonably have been understood by the client; and
(B) The client is advised in writing that the client may seek the advice of an independent lawyer of the client’s choice and is given a reasonable opportunity to seek that advice; and
(C) The client thereafter consents in writing to the terms of the transaction or the terms of the acquisition.
Also, look at Rule 3-310:
Rule 3-310 Avoiding the Representation of Adverse Interests
(A) For purposes of this rule:
(1) “Disclosure” means informing the client or former client of the relevant circumstances and of the actual and reasonably foreseeable adverse consequences to the client or former client;
(2) “Informed written consent” means the client’s or former client’s written agreement to the representation following written disclosure;
(3) “Written” means any writing as defined in Evidence Code section 250.
(B) A member shall not accept or continue representation of a client without providing written disclosure to the client where:
(1) The member has a legal, business, financial, professional, or personal relationship with a party or witness in the same matter; or
(2) The member knows or reasonably should know that:
(a) the member previously had a legal, business, financial, professional, or personal relationship with a party or witness in the same matter; and
(b) the previous relationship would substantially affect the member’s representation; or
(3) The member has or had a legal, business, financial, professional, or personal relationship with another person or entity the member knows or reasonably should know would be affected substantially by resolution of the matter; or
(4) The member has or had a legal, business, financial, or professional interest in the subject matter of the representation.
(C) A member shall not, without the informed written consent of each client:
(1) Accept representation of more than one client in a matter in which the interests of the clients potentially conflict; or
(2) Accept or continue representation of more than one client in a matter in which the interests of the clients actually conflict; or
(3) Represent a client in a matter and at the same time in a separate matter accept as a client a person or entity whose interest in the first matter is adverse to the client in the first matter.
(D) A member who represents two or more clients shall not enter into an aggregate settlement of the claims of or against the clients without the informed written consent of each client.
(E) A member shall not, without the informed written consent of the client or former client, accept employment adverse to the client or former client where, by reason of the representation of the client or former client, the member has obtained confidential information material to the employment.
(F) A member shall not accept compensation for representing a client from one other than the client unless:
(1) There is no interference with the member’s independence of professional judgment or with the client-lawyer relationship; and
(2) Information relating to representation of the client is protected as required by Business and Professions Code section 6068, subdivision (e); and
(3) The member obtains the client’s informed written consent, provided that no disclosure or consent is required if:
(a) such nondisclosure is otherwise authorized by law; or
(b) the member is rendering legal services on behalf of any public agency which provides legal services to other public agencies or the public. [Emphasis added]
The bar probably meant when it wrote those rules that they applied specifically to “employment” as an attorney, but outside of the lawyer-client context the language I’ve given emphasis to above certainly gives guidance as to Espinoza’s independent common law fiduciary duty to Oscar De La Hoya. Will Stephen do something now as an employee of Showtime that is adverse to the interests of his former legal clients? Whether or not it’s legal, it’s certainly an ethical issue.
The latest intrigue
Frank Espinoza
Boxing scene reported [http://www.boxingscene.com/mares-managerial-status-likely-land-arbitration--78752] this morning that there may be a move afoot for Abner Mares to switch over to the Al Haymon empire and this raises the spectre, like the scenario noted above in which Al Haymon purportedly orchestrated Floyd Mayweather away from Bob Arum’s Top Rank, in which Haymon steals Mares out from under Golden Boy and Frank Espinoza’s (no relation to Stephen Espinoza) Espinoza Boxing Club. As boxing scene wrote:
By Rick Reeno
Sources with knowledge of the details have advised BoxingScene.com that an arbitration proceeding, in Los Angeles, is a likely scenario to sort out the managerial contract of former three division world champion Abner Mares.
The Mexican Olympian recently stated that his contract with longtime manager Frank Espinoza had expired and he planned to explore his managerial options. Since the start of the year, there have been heavy rumblings that Mares was making a move to adviser/manager Al Haymon.
Since last August’s TKO defeat to Jhonny Gonzalez, Mares has turned down several fight offers and claimed injury to withdraw from a planned February rematch with Gonzalez. Those close to Espinoza believe that Mares was intentionally staying on the shelf in order to run out the clock on his managerial contract.
Because Mares claimed injury and rejected numerous fight offers, there is a heavy belief that Espinoza’s managerial contract would in turn be extended (at least for several months) to make up the time for Mares’ inactivity.
Mares is scheduled to face Jonathan Oquendo on the Canelo-Lara Showtime Pay-Per-View on July 12th in Las Vegas.
Espinoza gave a “no comment” when BoxingScene approached him with the information that his company, Espinoza Boxing Club, was already making moves to arbitrate the contract dispute with Mares.
Abner Mares
Now as I understand the back-story about Mares’ alleged injuries, they supposedly occurred in Mexico while Richard Schaefer was of course, still CEO of Golden Boy and that his corporate “due diligence” and exercise of his corporate duties of “reasonable inquiry” and “loyalty” consisted of his sending Mares’ to see an American doctor after he quite belatedly returned from Mexico. The question in my mind is, did Schaefer bother to obtain the X-Rays, MRI, and/or CT Scans from the Mexican physician(s) that Mares initially saw immediately after the purported injury? If he did, did he share or withhold those records from the physician he sent Mares to in the United States, let alone did he let Frank Espinoza, Mares’ own manager, see those records. You know, inquiring minds just like to know these little details.
If Schaefer didn’t do those things, which logic dictates any ethical and conscientious corporate CEO would have done in these circumstances, it sure makes me think about the coincidence of Schaefer’s potentially helping run out the clock on Mares’ ties to Frank Espinoza and Golden Boy until right around the time that he himself was going to bail out. With all the talk of whether he was going more overtly into a triumvirate with Haymon and Stephen Espinoza, one can’t help but wonder if there was a strategic angle—perhaps even as niche as capitalizing on trends like marijuana seeds in expanding markets.
Yeah, a coincidence!
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