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August 31, 2009

Throwing Stones When Living with a Glass Jaw?

A Look at the Arguments For and Against the Placement of Morals Clauses in Boxing Management and Promotional Agreements

By Paul Stuart Haberman

Allow me to take you on a trip back in time to April 1, 1993. The United States Senate's Subcommittee on Investigations is conducting a hearing on the connections between organized crime and boxing as part of its goal of creating a federal regulatory body to oversee the sport in the United States. At the witness table is Salvatore (Sammy the Bull) Gravano, former underboss to legendary Gambino family leader John Gotti. Within a matter of a few hours of testimony, Gravano links several prominent members of the boxing establishment to the Gambinos and other La Cosa Nostra groups throughout the country. (Richard Sandomir, "Names Fly Like Jabs at Boxing Hearing," New York Times, April 2, 1993, page B11. Available online at http://www.nytimes.com/1993/04/02/sports/boxing-names-fly-like-jabs-at-boxing-hearing.html (last visited August 21, 2009)). Although no wrongdoing is alleged by any of the individuals identified, their names are now linked in the international press to America's gangland.

Now imagine that you are an undefeated young prospect that is managed or promoted by one of the named individuals and pride yourself on a squeaky clean, all-American image. After all, it is less than a year after Oscar De La Hoya did the United States proud at the 1992 Olympics, so its en vogue to be an all-American type in boxing. And imagine further that you had no idea that your manager or promoter was linked to people like Gravano. Horrified, you contact a local attorney and ask him to review your management agreement and see if there are any provisions that would allow you to terminate the contract with your manager if he did something that could bring you ill-repute and cause your fans to second guess you and your cuddly, well-cultivated image. The attorney finds nothing that suggests that possibility. So what do you do when your agreement is up and you want to address this issue with your next manager or promoter?

The answer, perhaps, is negotiating for a morals clause in your next management agreement. A typical morals clause gives one or both parties to a given contract the option of terminating the agreement in the event that the other party does something to either bring ill-repute to himself, such as being charged with or convicted of a crime, as Mike Tyson was in the early 1990s, or otherwise does something to sully the other party's name or image, such as make highly controversial or otherwise offensive remarks in the press, as Australian super middleweight contender Anthony (The Man) Mundine did several years ago in regard to the September 11 attacks. (See, e.g., http://www.answers.com/topic/anthony-mundine#Comments_regarding_the_September_11_attacks (last visited on August 21, 2009)). However, requesting such a provision in an agreement that does not originally contain one could open some unexpected and potentially economically ruinous doors, as one day it could be you in the wrong place at the wrong time, or photographed with the wrong person. With that in mind, a look at that pluses and minuses as to the core parties involved in the negotiation of boxing contracts follows.

A Morals Clause for the Boxer's Benefit

Let's take our horrified friend from up above and see what can happen if he asks his next manager for a morals clause in his agreement. Suppose an attorney for the manager comes back to All-American Boy and says, "Sure, we'll allow you to add a provision whereby you can terminate the agreement is your manager is arrested, but we want the same provision to cover your actions as well." Content that his manager agreed to it and knowing that he does not put himself in position to get arrested in his every day life, All-American Boy agrees to this bilateral morals clause. Three months later, following a guest appearance at a local university, All-American Boy decides to accept the invitation of a fraternity to attend a party of theirs. Long story short, All-American Boy is photographed as "Iron" Michael Phelps and is later arrested for drug possession and underage drinking when the fraternity party is raided following a noise complaint from the neighbors.

Upon finding out of his arrest, All-American Boy's new manager has some decisions to make. Does he release his prized prodigy after he was photographed smoking marijuana, arrested, and sued? Does he stay on board and simply help All-American Boy in his public relations campaign following his arrest? Whatever the outcome, the fact of the matter is that All-American Boy would not have been at peril of losing his management agreement if he hadn't said anything in the first instance about a morals clause. Now he is at peril of losing the monthly stipend and the savvy negotiating skills of his manager that came with his management agreement.

On the flip side, what if All-American Boy's manager is arrested on felony charges? Although the manager is released on bail, he is facing 10 years in prison if convicted, and the management agreement lasts through at least three of those years. Perhaps All-American Boy can call the state athletic commission that has jurisdiction over the management agreement and tell them what happened. The athletic commission may invalidate the agreement on the arrest alone, but that's not certain. Boxing is full of people with criminal records, including many that have had productive careers in boxing since their incarcerations, such as Bernard Hopkins, Jameel (Big Time) McCline, and Don King. In the alternative, All-American Boy does have that morals clause in his agreement, so with a written termination notice he can now be free and clear to pursue a new management team if he so chooses.

A Morals Clause for the Manager's Benefit

Let's take a manager's worst nightmare from the pages of the boxing tabloids: Clifford (The Black Rhino) Etienne. One day, Etienne, 29-4-2 (20 KOs), was a manager's dream: a heavyweight with an exciting, fan friendly style who got a lot of opportunities for big fights because he's a vulnerable, but entertaining, name opponent. The next day, Etienne was arrested after robbing a check-cashing store, carjacking a vehicle containing a woman and her child, and attempting to gun down a police officer. His sentence: 150 years in prison without the possibility of parole. (See http://en.wikipedia.org/wiki/Clifford_Etienne (last visited on August 22, 2009)) But what if the facts were a little different? What if Etienne had not had a prior felony record and the court considered the fact that he was high on cocaine at the time? New sentence: two years, and five years of drug counseling. Now pretend that you are Etienne's manager, and have three years remaining on the contract at the time of his sentencing. Etienne calls you upon his release and asks you to begin seeking out a comeback fight. A morals clause in your management agreement allows you to terminate the agreement upon a conviction on criminal charges. You thought that might be a smart thing to add, given Etienne's previous incarceration. What do you do?

On the one hand, perhaps you can release him without a second thought. Etienne has now shown himself incapable of staying on the straight and narrow, even with a lucrative professional boxing career. In addition, all sponsorship possibilities for him have dried up. On the other hand, maybe you're not giving him any money between fights anyway and find that he is more marketable as volatile, bad boy-type heavyweight. Indeed, boxers like Mike Tyson and Andrew Golota have made some serious cash with similar personas.

Let's throw one more wrinkle in: Perhaps Etienne's attorney, in negotiating the management agreement, insisted on phrasing the morals clause such that Etienne can terminate the agreement in the event that the manager was sued by one of his other fighters. You know how litigious some boxers can be, especially after you refuse to give them a raise in their monthly stipend after someone's been whispering in their ear at their gym for a few months. Furthermore, you know that even the top managers in boxing get sued by their charges several times over the course of their careers. Do you agree to it and pray that your other boxers stay in line during the course of your representation of Etienne, or do walk away from a heavyweight with a lot of money making potential because you are uncomfortable with having such a provision in the agreement, given the litigious nature of boxing?

A Morals Clause for the Promoter's Benefit

A morals clause in a promotional agreement would give the promoter the right to terminate the agreement if the boxer fails to stay out of trouble to one degree or another during the term of their promotional deal. Like many contracts in team sports, this would make a lot sense for a promoter since you could unload your negative baggage if said baggage would bring you and the rest of your stable of boxers ill-repute and bad publicity. But what if the boxer came back and asked that the morals clause in the promotional agreement go both ways, such that he too can terminate the contract upon the arrest, conviction, or suing of the promoter? Maybe then the promoter does not want throw as many stones, as he is one of many owners of boxing's glass houses, and thus withdraws his request for a morals clause, replacing it with a provision that simply tolls the agreement in the event of the boxer's incarceration at the promoter's discretion. This compromise relieves the promoter of the need to commit himself to a morals clause and, at the same time, allows him the option to profit off of one of boxing's bad boys after the boxer's legal problems clear up.

A Morals Clause for the Television Networks' Benefit

HBO and Showtime have the high card in negotiations with boxers under almost any scenario, unless they are in a bidding war against each other for a particular boxer. As a result, there is little downside to holding the precious few boxers that are signed to multi-fight agreements with either network to a moral standard in writing. After all, they are the poster boys for major television networks who appeal to a far broader audience than just the boxing cognoscenti. While an individual promoter may not mind the negative publicity that a convicted felon can bring to their fight cards, HBO or Showtime just might, as it reflects on the channel as a whole.

As discussed above, a morals clause in your boxing-related contract may have considerable upside, considering boxing's reputation in some quarters as the red light district of sports. But given the litigious nature of its participants, the types of people those in boxing might associate with outside of the gyms, the questionable business practices of some of its managers and promoters, and the types of backgrounds some of its personalities come from, the addition of a morals clause has the potential to open a Pandora's Box under the right circumstances. One has to give some serious thought, therefore, to whether they wish to throw stones if they are living with a glass jaw and demand a morals clause.

Paul Stuart Haberman, Esq. is an attorney at the New York law firm of Heidell, Pittoni, Murphy & Bach, LLP. He is also a New York State licensed boxing manager and the Chairman of the Sports Law Committee of the New York County Lawyers Association. ©

Pro Bono Clinic at Actors' Equity Association

Elissa D. Hecker and Phillipa Loengard
EASL Section Pro Bono Steering Committee Members

On Monday, September 14, the EASL and IP Sections will be co-sponsoring a Pro Bono Clinic at Actors' Equity Association. The Clinic will take place between 4:00 and 7:00 p.m. at 165 West 46th Street.

If you would like to volunteer for one or more of the 30 minute time slots, please email Elissa D. Hecker at eheckeresq@yahoo.com and specify your contact information (name, firm/company, phone number and email address), which time slot(s), area(s) of expertise, and whether you are an EASL and/or IP Section member.

If you do not have pro bono liability insurance, you may be covered under EASL and IP's policy for this Clinic. Please also notify Elissa if you need such coverage.

About August 2009

This page contains all entries posted to The Entertainment, Arts and Sports Law Blog in August 2009. They are listed from oldest to newest.

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