What would Amending the Ali Act Mean for Boxing?
If TKO Boxing manages to amend the Ali Act in order to have their own titles, what would they have to change and what would be the possible consequences for boxers?
Ever since TKO Group Holdings’ president, Ari Emanuel, told Pat McAfee that the “Ali Act has flaws”, there has been a great deal of speculation that his company would work to have the Muhammad Ali Professional Boxing Act repealed or amended in preparation for their boxing league partnership with Turki Alalshikh. Any suspicions have since been confirmed.
On April 7, the Director of Athletic Regulation for the Mohegan Tribe and President of the Association of Boxing Commissions, Michael Mazzulli, sent out an email to the other members of the ABC. The subject of his correspondence mostly concerned the rules for nominating a new ABC president, but nestled in the email’s body were two sentences that mentioned the possible amending of the Ali Act. Mazzulli wrote that “presently the UFC/TKO is requesting an amendment change to the Mohammad [sic] Ali Act. The board of directors is working with them to make sure the ABC is still part of the federal law."
When Andreas Hale of ESPN asked the UFC to comment they confirmed it as true. According to a UFC spokesperson, "TKO is having preliminary conversations with members of Congress about how we can work together to expand the Ali Act to create more choices and opportunities for boxers. We believe the enhancements we are discussing could help to inspire a boxing revival in America, provide American boxers with access to greater opportunities and better protections, and lead to more boxing events across our country."
What kind of “enhancements” are they looking to make? Neither the UFC nor the ABC have been willing to reveal that. An anonymous official who spoke to Lance Pugmire of BoxingScene and was described as having been briefed on TKO’s position, said they were looking to be able to issue their own belts. “Like the UFC, they want to sign fighters, put them in a league and provide belts to them.”
So what kind of changes would they have to make to the Ali Act in order to accomplish their goal? And if they accomplished amending the Act, what would the impact be on the industry as a whole? Could such a simple change have greater repercussions, ones that were detrimental to the boxers the Act was meant to protect?
In order to answer these questions, let’s go over not only the relevant portions of the Muhammad Ali Boxing Reform Act, but also the Judicial and Congressional records from which the Act drew its inspiration.
What parts of the Ali Act does TKO need to be concerned about?
The Muhammad Ali Boxing Reform Act was passed in 2000, amending the Professional Boxing Safety Act of 1996, so any changes to it would actually be made to the PBSA. If their goal is to have their own titles then one of the sections under the United States Code they would be looking to target would be Professional Boxing Safety 15 U.S.C. §6308 (2000). This section relates to conflicts of Interest. Specifically they would be looking at the clause addressing conflicts of interest involving sanctioning organizations:
(c) Sanctioning organizations
(1) Prohibition on receipts
Except as provided in paragraph (2), no officer or employee of a sanctioning organization may receive any compensation, gift, or benefit, directly or indirectly, from a promoter, boxer, or manager.
(2) Exceptions
Paragraph (1) does not apply to—
(A) the receipt of payment by a promoter, boxer, or manager of a sanctioning organization's published fee for sanctioning a professional boxing match or reasonable expenses in connection therewith if the payment is reported to the responsible boxing commission; or
(B) the receipt of a gift or benefit of de minimis value.
One will immediately notice that this clause makes no mention of a promoter having their own title, it only prohibits compensation outside of a “sanctioning organization’s published fee for sanctioning a professional boxing match or reasonable expenses.” So why would this prevent TKO, which would be a promoter and not a sanctioning organization, from crowning its own champions? That would depend on which method you used to interpret this statute.
In the United States, there are two main theories of statutory interpretation that judges can use: textualism and purposivism. Under textualism, a statute is interpreted under the plain meaning of its text. Using this method, it would seem unlikely that the Ali Act would serve as a barrier to TKO’s plans.
The other method for interpretation would be purposivism (or intentionalism). Under this, the judge would attempt to ascertain the purpose of the statute, using the legislative history and findings that explain the intent behind its passage. When looking at the history of the Ali Act and the reasoning given for the passage of that clause (more on that later), it becomes understandable why TKO may feel the need to amend it. In fact, there seems to be a widespread assumption amongst those in the industry that a promoter having their own titles at all would be violating the intended purpose of the Act. [1]
Even if a court used the textual interpretation and ruled that there was no conflict of interest for a promoter to operate as their own sanctioning organization, only for compensating an outside party, TKO could still run into problems. If their intention was to be able to rate and crown as champion boxers that were signed exclusively to the promotion, then they would be in violation of current guidelines mandating objective criteria for ratings.
These guidelines are the result of Professional Boxing Safety 15 U.S.C. §6307c (2000), a section of the Ali Act which states that:
“Within 2 years after May 26, 2000, the Association of Boxing Commissions shall develop and shall approve by a vote of no less than a majority of its member State boxing commissioners, guidelines for objective and consistent written criteria for the ratings of professional boxers. It is the sense of the Congress that sanctioning bodies and State boxing commissions should follow these ABC guidelines.”
The guidelines that the ABC drafted not only require that “ratings must be based solely on win/loss records, level of competition and activity,” but also that the “rating of a boxer shall not be premised, directly or indirectly, upon a consideration of… The identity of the boxer’s promoter, manager or any other person with whom the boxer is affiliated.”
Thus any attempt to make a rating that was exclusive to only boxers signed to a single promoter would seem to be in violation of the Act. If TKO is adamant about the use of their own titles and ratings they will either have to remove those clauses or amend the Act so that they would be exempt from them.
Another section of the Ali Act that some think is of concern to TKO and any efforts to create a UFC style “league,” is Professional Boxing Safety 15 U.S.C. §6307b (2000), which offers “Protections from Coercive Provisions,” making any coercive provisions unenforceable if it is greater than 12 months.
A coercive provision described in this subparagraph is a contract provision that grants any rights between a boxer and a promoter, or between promoters with respect to a boxer, if the boxer is required to grant such rights, or a boxer's promoter is required to grant such rights with respect to a boxer to another promoter, as a condition precedent to the boxer's participation in a professional boxing match against another boxer who is under contract to the promoter.
In addition to banning any coercive provision that is more than 1 year in length, the protections against coercive contracts forbid a promoter from demanding any promotional rights whatsoever from any bout that was declared a mandatory by a sanctioning organization. While it is often (correctly) pointed out that the Ali Act has never been enforced by any state or Federal authorities, and has proven to be rather toothless, many in the industry will tell you that the Act, thanks to boxers having the right to private action, has practically ended coercive provisions in American boxing contracts.
This is a problem if your objective is to operate like the UFC and demand an exclusive contract from a boxer in exchange for a title bout. But there is also a simple workaround for TKO boxing. Since it applies to only boxers that are not already under contract with the promoter, and the plan is for the “league” to develop boxers from the ground up while also having their own title and rankings, TKO can just limit their offers for title fights to boxers who are already under contract and agree to a long term extension to their agreement in order to receive a title shot. As for mandatories they could just choose not to use them, just as they do with the UFC.
What does the historical record tell us?
Some may categorize these changes as nothing more than “tweaks,” but if we look at the reasons for why they were included in the Ali Act in the first place, what boxing was like before those protections were put in place, or the consequences from their absence in the very similar sport of MMA, the results of such a minor change may prove more pronounced than some have suggested.
When Lou DiBella was asked during his August 29, 2017 deposition in the Le et al v Zuffa, LLC case, if DiBella Entertainment issuing its own titles and rankings would increase the control the promoter had over boxers, his answer was this was obviously true.
The entity -- you would have total control. The entity paying the fighter would be the one determining who the champion is, determining who the challengers would be and basically, would put it into a, you know, a near total control over the fighter.
According to the Plaintiffs’ Experts in the UFC antitrust case, it was this forced division between promoters and sanctioning bodies that has fostered a much more competitive market in boxing compared to MMA:
Because independent sanctioning bodies, rather than a promoter, decide who has a right to be a contender for a championship bout, boxing promoters have less leverage than Zuffa has to coerce athletes into signing long-term exclusionary contracts in exchange for a shot at a title fight. This reduced structural leverage, in combination with a less concentrated market for boxing promotion, leads to more competition for boxer talent than exists in MMA, where the UFC also effectively acts as the sanctioning organization by awarding its own belts. [2]
What is missed by many people is that the Ali Act does not just offer protections to boxers, it is also intended to prevent monopolization in the industry. The purpose of the amendment, according to the House of Representatives report for the bill, it was “to reform unfair and anticompetitive practices in the professional boxing industry” as they found that “open competition in the professional boxing industry has been significantly interfered with by restrictive and anticompetitive business practices of certain promoters and sanctioning bodies, to the detriment of the athletes and the ticket-buying public. Common practices of promoters and sanctioning organizations represent restraints of interstate trade in the United States.”
As competition and restraint of trade are core components of antitrust, it should be clear that the Ali Act was also meant to address monopolization in boxing, a problem that had plagued the sport for decades. Congress, in fact, held its first public hearings concerning the monopoly aspects of professional boxing back in 1960 in the wake of the United States v International Boxing Club of New York antitrust case. While a court’s ruling had broken the IBC of NY’s hold over the sport, anticompetitive actions and restraints on trade would continue to be a problem (As Gene Tunney told Congress, in a statement read by his son on July 6, 1965 to the House of Representatives Committee on Interstate and Foreign Commerce, “monopoly is rampant” in boxing). It would take 40 years from that first hearing before Congress passed a law regulating the behaviors that led to monopolization.
One reason why boxing seems so much more susceptible to monopolization than other industries is the simple fact that it is a sport. Both fans and boxers are interested in knowing who is the best. For the fans, that means there is a greater interest in watching specific matches between those recognized as the best, while for the boxers, it means there is a strong desire to be crowned the best, thus imbuing a championship with a value beyond the materials used to construct it.[3] It is for these reasons that “the most lucrative asset to a professional boxer is recognition and designation… as ‘world champion’ in the division in which he competes.”[4]
Recognition as a world champion is a lucrative asset to any professional boxer and attaining the world championship is generally sought by all professional boxers in the division in which they compete. It places the individual so recognized in a position to obtain more for his services than those who have not been so recognized. Contests in which these champions participate have greater box-office appeal, arouse greater public interest, have larger audience participation and bring in more revenues from sale of admission tickets, or "gate," and sale of other rights to the contest. [5]
The value is compounded by the scarcity that comes with the title.[6] Even when there are multiple declared world champions in a weight class, the public will not recognize them equally.
Although there are sometimes differences of opinion as to who is the champion, such differences are infrequent. The field of champions and potential champions is limited by reason of the prowess of the few who have gained the public recognition of those who are "fans" or followers of the contests. It is reasonable to say that, at any one time, there are at most only six or so professional boxers who can defend a world championship title. [7]
The public’s discernment in who gets to be recognized as the champion, along with the requirement that a boxer earn it via taking the title from its previous owner, makes the world championship especially valuable. As former FTC Commissioner, Paul Dixon, put it, “the commercial property is the champion. He, in a sense, has a monopoly once he gets it.” [8] Thus it is extremely desirable for a boxer, as well as for their promoter or manager, to be recognized as the world champion. Knowing its value, it only makes sense that they will do whatever they can to retain ownership of the title.
Because world championship bouts are more lucrative to promote, and because it is also so incredibly valuable to a boxer, both in prestige and financially, a promoter will use the opportunity to fight for the belt to coerce a fighter into agreeing to terms that are in the promoter’s favor and the boxer’s detriment.[9] The promoter thus:
can demand a challenger accept a lower purse in exchange for the opportunity [10];
can also demand a challenger agrees to an exclusive promotional contract [11];
guarantees his continued promotion of the world champion, regardless of who wins [12];
a new champion is unable to negotiate to his full extent because he is locked into a long term contract. [13]
All of this was laid out fairly extensively in the Senate’s findings from their passage of the Muhammad Ali Boxing Reform Act, in which they found that “promoters had required an exclusive long term promotional contract with a boxing challenger as a condition precedent to permitting a bout against another boxer that the promoter has under contract,” and that this practice was “used by promoters to gain undue control over boxers and championship titles.” It also “enabled a single promoter to gain control over a majority of championship bouts” and “achieve a monopoly on a substantial portion of championship-level competition in that particular weight division.” In sports like “tennis and golf, such a business practice would be strongly challenged as an unreasonable restraint of trade. In professional boxing, it is business as usual.”[14]
In summary, it is easy to see how minor enhancements or tweaks to the Ali Act could lead to something much less benign for boxers. At its most extreme, the future for boxing could resemble MMA where a single promotion, unencumbered by the regulations that exist for boxing in the United States, holds a monopoly over the sport.[15] If that outcome seems unlikely, one only has to look at the business practices and conditions that existed before the passage of the Ali Act. The natural conclusion is that without any federal intervention, boxing inevitably moves towards monopoly and perhaps no one has been more prepared to take advantage of that than TKO.
END NOTES
For examples, see ABC President Tim Lueckenhoff’s letter to the Attorney General Loretta Lynch regarding the possibility of the PBC creating their own titles or the House hearing regarding the expansion of the Ali Act to MMA.
Expert Report of Andrew Zimbalist in Cung Le, et al. v Zuffa, LLC (August 30, 2017)
United States v. International Boxing Club of N.Y. United States District Court, S.D. New York, 150 F. Supp. 397, Decided March 8, 1957
A world championship in any of the recognized classifications is clearly the peak sought by the many boxers in each class. When attained, the champion has an asset which gives him not only the epitome of prestige, but also a most lucrative future so long as he wears the championship crown.
In matters of public appeal as well as financial return, championship contests are on a plane which clearly distinguishes them from non-championship fights. The great public interest in a championship match was shown to generate a separate and distinct public demand which attracts many spectators who do not patronize non-championship fights.
Appendix to Opinion of the Court Appeal from the United States District Court for the Southern District of New York. No. 53. Argued November 10, 1954 - Decided January 31, 1955
The title of “world championship much also be earned through competition:
A "world champion ” gains his title by defeating the exist ing champion or by eliminating all contenders, and remains world champion in his division until he is, in turn, defeated by a contender or resigns the title.
United States v. International Boxing Club of N.Y. United States District Court, S.D. New York, 150 F. Supp. 397, Decided March 8, 1957
Testimony of James D. Norris on “Boxing” to Subcommittee on Antitrust and Monopoly, of the Committee on the Judiciary, December 9, 1961.
Mr. [Paul Rand] Dixon [staff director for the U.S. Senate Antitrust and Monopoly Subcommittee]. Any manager who has a fighter who has won a championship and is holding it,in effect,for his weight class,has a monopoly, in a sense, at that time. Of course, the fighter is a valuable piece of property.
Mr. Norris. Yes.
United States v. International Boxing Club of N.Y. United States District Court, S.D. New York, 150 F. Supp. 397, Decided March 8, 1957
Testimony of James D. Norris on “Boxing” to Subcommittee on Antitrust and Monopoly, of the Committee on the Judiciary, December 9, 1961
Decision of the Supreme Court of the U.S. Affirming Decree of U.S. District Court in U.S. v. IBC et al. International Boxing Club of New York, Inc.,et al. v. United States. Appeal from the United States District Court for the Southern District of New York. No. 18. Argued November 13, 1958 - Decided January 12, 1959.
[A]ppellants perpetuated their hold on championship bouts by requiring each contender for the title to grant. to them an exclusive promotion contract to his championship fights, including film and broadcasting, for a period of from three to five years.
Corruption In Professional Boxing August 12 1992, Testimony of Joseph Spinelli, Inspector General, State of New York, and Former Agent, Federal Bureau of Investigation.
Option contracts work like this : If I am a promoter who controls the heavyweight champion and you, as a heavyweight, come to me and say, I want to fight for the title , I say, fine , but before I let you fight my champion, you have to sign a contract giving me the option to promote your next three fights if, in fact, you happen to win. Not only that, but I, the promoter, dictate to you whom you will fight and how much you will fight for, and if you don't like it, you don't fight for the championship.
Mr. D'Amato once classified option contracts as " legalized extortion ." They reduce fighters to nothing more than indentured servants, and make them obligated to one promoter, who in turn can dictate their future . Mr. D'Amato also discussed how promoters manipulate the ranking of their fighters by controlling sanctioning bodies,
Business Practices in the Professional Boxing Industry, March 24, 1998 Committee on Commerce, science, and Transportation, Statement of Fredric G. Levin, Pensacola, FL., Attorney and Negotiator for Roy Jones, jr., Light Heavyweight Champion
If Don King has-is the promoter for Mike Tyson and Holyfield wants to fight Mike Tyson, Holyfield has to agree that "If I win, Don King, you are now my promoter for my career."
So when we saw King come into the ring with Tyson, Holyfield win the fight, knock him out and King jumps up in the ring happy, well, he ought to be; now, he has the career of two fighters. And the next guy comes along, and it could be Lennox Lewis who wants to fight Holyfield. And pretty soon, he has three. Now, there is a difference they are going to come up afterwards and say, "Well, we put money in these fighters."
No. The difference here is it would be like if we had the-if you were running the Master's Golf Tournament and if Don King was running the Master's Golf Tournament, and Tiger Woods wanted to come play. And he says, Tiger, OK. I am going to let you in the Master's, but I want 10 percent of your career from now on. You would be incensed. Well, why do you let it happen in boxing?’
Corruption In Professional Boxing August 11, 1992 U.S. Senate Permanent Subcommittee on Investigations, of the Committee on Governmental Affairs, Testimony of Bobby Czyz, Professional Boxer, WBA Cruiserweight Champion.
This guarantees the promoter the ability to tie up and lock into a promotional deal with the champion, regardless of the winner. He is in a no-lose situation, and the loser of the fight is without consolation prize whatsoever, and the winner may very well be stuck with a promoter he is not happy with, and he may very well hate.
Hearings of a Creation of a Federal Boxing Board. Testimony of John Condon Before House Subcommittee On Labor, March 29, 1979
Multibout contractual commitments of fighters to major promoting entities have become commonplace in our business. These contractual commitments have resulted in a situation whereby most of the major world champions today are tied exclusively to one promoter for extended periods of time. The successful boxer is therefore often unable to sell his services to the highest bidder on a fight-by-fight basis under ordinary market conditions.
Muhammad Ali Boxing Reform Act (S. 305) Senate Report 106-83 June 21, 1999 Section 4: Protecting boxers from exploitation
Historically, promoters in the industry have required an exclusive long term promotional contract with a boxing challenger as a condition precedent to permitting a bout against another boxer that the promoter has under contract. The Committee believes, and hearing witnesses and industry members strongly concur, that this tactic is the key contracting practice that has been used by promoters to gain undue control over boxers and championship titles, to the clear detriment of the sport. Promoters have used this practice to extract ‘‘exclusive promotional options’’ from boxers who already have a promoter, and who would not otherwise enter into a contract with a new promoter. The athletes would be better served, as would open competition in the sport, if boxers were free to contract with those promoters they personally choose, rather than being coerced to contract with a promoter who is in the position of barring a lucrative bout.
This practice also has enabled a single promoter to gain control over a majority of championship bouts in a weight division because it results in one promoter having control over both the champion and the challenger. No matter which boxer wins a title bout, the promoter remains in control over who may compete for that title, since he has both contestants under exclusive contract. If a boxer who seeks to challenge a champion (or a more established boxer) refuses to provide long term contractual rights to the promoter, the boxer will be denied the right to compete in the bout. This practice frustrates the years of determined training and arduous competition that boxers endure, for they will be denied the opportunities that their successes in the ring have earned. No boxer will ever be able to compete for the title in that division unless they sign away future promotional rights to that promoter. The promoter thus has gained total control over an entire segment of a major professional sports industry. This contracting practice allows a promoter to achieve a monopoly on a substantial portion of championship-level competition in that particular weight division.
This practice of coercing options from boxers is also utilized by promoters and sanctioning organizations against ‘‘mandatory challengers’’—those boxers who are rated by a sanctioning organization as the top contender in a weight division. The top-rated contender is supposed to be assured of having a bout against the champion of that division, within a specific period of time. Despite the fact that top-rated challengers have clearly earned the right to compete for a title, sanctioning organizations have abetted restrictive contracting practices by allowing promoters of championship bouts to require options from them. As one hearing witness noted, this is akin to forcing a professional tennis player or golfer to sign an exclusive, long term contract with the promoter of whatever event they were seeking to win. The athlete would then only be able to compete when the promoter approved, against only those opponents who also were forced to agree to terms with that promoter. In self-governed and well organized sports industries such as tennis and golf, such a business practice would be strongly challenged as an unreasonable restraint of trade. In professional boxing, it is business as usual.
Order Granting Class Certification for the Bout Class Members in Le, et al v. Zuffa, LLC. Judge Richard Boulware III
In his written order granting class certification, Boulware found that “the sport industry that most closely parallels MMA” was boxing, but with.some noticeable differences.
Unlike in boxing, MMA championships are promoter specific. This is to say that the UFC awards championship belts to fighters within its own organization. There are no independent sanctioning organizations that either declare champions or regulate the rules as to who is declared a champion.
Boulware also noted that MMA could perhaps become as competitive as boxing “through the reduction of barriers to entry and restrictions on anticompetitive conduct within the industry.” One example he gave for why boxing was more competitive was because the sport had previously experienced an antitrust suit, brought by the Department of Justice against the International Boxing Club of NY, Inc, whose business practices resembled those alleged against the UFC.
Their scheme enabled them to gain almost complete control over the promotion of championship boxing matches, by among other strategies: (1) acquiring rival promoters; (2) signing the four championship-contender boxers to two-year exclusive contracts, with options to renew for additional two-year terms; and (3) requiring contenders for a title, as a condition of being afforded an opportunity to engage in a championship contest, to enter into “contingent” exclusive contracts pursuant to which the contender, if he won the contest and thereby became champion, was required to engage in title bouts exclusively under the promotion of defendants for a period of from three to five years.