Thursday, March 14, 2013

Boxing: Antitrust Superstar?

"Laissez faire, telle devrait être la devise de toute puissance publique, depuis que le monde est civilisé." - René-Louis de Voyer de Paulmy, marquis d'Argenson

Years of leaving sleeping dogs where they lay have marched us into an economic singularity waiting to collapse inward, pulling the rest of us into a gravity from which we cannot escape. Though the financial debacle that appeared to begin in 2008 has been made to decelerate some in the last couple of years, we still reside in the thick of it. 

A talking point repeated ad nauseum just about any time jobs reports are released is how the current economic crisis isn't all that unlike the Wall Street Crash of 1929. While not completely inaccurate, the pickle we find ourselves in appears to have the potential to be markedly worse due to the degree of deleveraging necessary to maybe turn matters around. 

But the point of comparison between the two is often that we're doomed to repeat mistakes -- or practice new unfortunate economic principles -- that crash us into a ditch. 

Not unlike the 2008 financial crisis, which in no small part was caused by deregulation, the sport of boxing has suffered from a borderline broken economic model from its mainstream inception. 


While boxing is only borderline "mainstream" at this point, it's still a major sport and a solid moneymaker for many involved. Even so, boxing is the closest thing to a pure free market in the sporting world. 

Both the National Basketball Association and the National Football League are closely regulated in a number of different ways, but especially in terms of how much participants can make, and how they're able to make it. By contrast, there is essentially no central governing organization in boxing, and therefore limit to how much any given fighter can make in a fight, which makes many major fights more about self-serving interests rather than the greater good -- in this case, retaining fans and creating new ones. 

It's no coincidence that boxing's laissez-faire business model led to mob involvement and influence, particularly around the time of the Crash of '29, and no surprise that boxing has seen a series of extremely harmful setbacks related to its cancerous business model; from the United States v. International Boxing Club of New York antitrust case of 1955, whereby the U.S. government ruled the IBCNY was attempting to create an unfair monopoly on the heavyweight crown, to Don King's failed "U.S. Boxing Championships" and "Ring Ratings" scandals of the 1970's, which resulted in the decreased interest of television networks in airing the sport. 

In boxing's wild west free market, the market price should be determined by supply and demand, yet, in boxing, nary a soul actively demands to have limited, near priceless major television dates occupied by mismatches, or going to fighters who have proven to be less than entertaining. As years go by, the importance of filling arenas and other venues has waned, and eventually bowed to a fighter's ability to bring in solid television ratings, yet fighters who consistently don't draw ratings nor crowds very well are given television dates and big fights. 

Left on its own, boxing has cannibalized its own self-interest and self-preservation by way of a handful of promotional, managerial and pay cable network entities controlling the vast majority of its assets. Though the sport is "regulated" by a state commissions who set rules in their respective jurisdictions, the outdated way in which the fight game is governed renders them near unimportant. 

Last October, as Mexican legend Erik Morales geared up to face younger foe Danny Garcia in New York, it was revealed that Morales had tested positive for a banned substance ahead of the bout. As the state commissions are in place to protect fighters and maintain safety, it was assumed the bout would be called off. Money was on the line, however, and strangely the New York State Athletic Commission allowed multiple tests to be conducted before Morales was cleared to fight without any clear conclusion drawn. And halfway across the country in Texas exists a state commission well known within the sport for its ineptitude -- and borderline corruption in bowing to the sanctioning organizations that control championship belts. 

Corruption and ineptitude likely aren't boxing's most insurmountable obstacles, though. The inherently unstable and unreliable economic base of the sport needs to be addressed before any true change can be made. 

As has been the case since boxing rose to its golden age(s), promotional entities have controlled much of the goings on and determined how exactly fighters are matched and paid. Today, there exists a sort of feud between the two major promotional companies in the sport, Top Rank and Golden Boy Promotions, where the two rarely do business despite the potential for bigger paydays all around, not to mention greater fan satisfaction. 

Perhaps the most glaring example of this is the failure to match Floyd Mayweather, Jr., vaguely handled by Golden Boy, against Manny Pacquiao, who remains Top Rank's crowning jewel. Cementing the rift was the non-negotiation negotiations between GBO's Abner Mares and TR's Nonito Donaire. 

Golden Boy Promotions' founder and namesake, Oscar de la Hoya, has said in the past that he would like to push boxing towards a business model that more closely resembles the Ultimate Fighting Championships. In other words, buy up as many fighters as possible so as to maximize profits and have freer reign over which fighters can be paired up. While the UFC's success as a brand, as evidenced by the fact that UFC is basically synonymous with mixed martial arts, would seem to suggest that boxing adopting the UFC's business model would make sense, it would far too much place trust in the idea that humans are not, by nature, innately greedy. 

Bernie Madoff, the perpetrator of one of the largest financial schemes in U.S. history, is a fine example as to why exactly relying on truckloads of money at the top to trickle down to the rest of the tribe doesn't work. The bursting of the tech and real estate bubbles in 2008, on the other hand, suggest that allowing the market to set fair prices might not be the greatest idea. 

In real life economics and boxing economics, the solution would seem to be not necessarily more regulation, but more intelligent regulation. Organized pugilism, not unlike real life economics, has ebbed and flowed in cycles predictable to those capable of paying attention and grasping more complex economic issues. 

Until such time as the boxing world can find out how to tip the balance of power towards the majority, it too will likely find itself in a never-ending fluctuation and sub-par popularity and worse.

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