Earlier this week, it was reported that a lawsuit had been filed in Kansas by two investors that claimed that it was misled about investments made by a fund which helped Premier Boxing Champions with seed money. Despite the fact that he lawsuit filed in federal court was voluntarily dismissed and filed in state court, the lawsuit reveals information behind the funding of PBC.
Ivy Investment Management, Co. and Waddell & Reed Investment, Co. were sued by three investors in the funds which helped fund PBC in a derivative lawsuit filed earlier this year. Ryan Caldwell, the portfolio manager, was accused of spending the money for his own intended benefit.
The federal complaint claims that the two funds spent approximately $925 million on “a start-up and potentially criminal” boxing promotion.
The plaintiffs claim that Caldwell’s actions were against the prospectuses for the Funds.
The complaint states that the investment strategy “primarily focuses on securities issued by large capitalization companies” which offered a “high probability of return or, alternatively, can provide a high degree of relative safety in uncertain times, with Strong cash flow streams and “high sustainable cash flow.” Plaintiffs claim that PBC was a “high-risk venture” which met none of the criteria.
They also claim that as a fund manager he should have been making objective investment decisions.
The lawsuit alleges that Caldwell did not disclose an affiliation with PBC or Al Haymon which plaintiffs infer was either a potential or actual conflict of interest related to the investment strategy for the fund.
Plaintiffs also state that Caldwell resigned as the fund manager to join one of Haymon’s companies.
Courthouse News reports that the funds defend the investments and cite the fact that two similar prior lawsuits were dismissed.
Last year, the Sports Business Journal did a story on PBC which indicated that the Waddel & Reed fund was $40 billion.
Payout Perspective:
One might expect the state lawsuit to mirror the federal lawsuit. The Complaint takes some information from the Top Rank/Golden Boy – Al Haymon lawsuit. Notably, the three plaintiffs are not residents of Kansas. However, Ivy Management’s principal office is in Overland Park, Kansas. It will be an interesting lawsuit as the funds will defend its investment strategy and likely characterize the plaintiffs as disgruntled investors. While the complaint is compelling, investor discontent happens especially when money is lost and/or the return on investment is not what was expected. Last April, the Sports Business Journal did a story on the investment behind PBC and the fact that Caldwell had helped infuse the startup with $425 million in capital from a $40 billion fund. The story also went on to discuss that Caldwell invested about $1.5 billion in Formula One racing out of the same fund.
MMA Payout will continue to follow.
Why boxing cost so much to operate? Geez
Correct me if I’m wrong though, but Caldwell didn’t go join Formula 1 after investing in them, correct? If not, this separates those investments dramatically in terms of interests.
He better make sure he did a good job hiding whatever money he may have skimmed off of the top of this.
Whats the situation with thurman porter….is CBS sponsoring boxing? On prime time? Hahaha….924 mil….more left…
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I think the investors have to prove that Caldwell did not act according to the prospectus. This may be true. Obviously, it doesn’t look good that Caldwell left to work for Haymon but it does not necessarily prove he was not acting according to the investment strategy.
I would imagine it is not easy to prove, but who knows what other info they are privy to that hasn’t been disclosed?
@Tops, those funds do not have 924m left. That’s what the suit discloses. The funds are down to around 300m and it has not been established whether or not that money is exclusively for PBC. So at best case scenario, they have around 300m left. That’s after burning through hundreds of millions in year one with poor ratings.
So cbs is paying for thurman porter on primetime Jason? Hahaha…is cbs putting money on boxing? hahaha
Showtime just signed joshua…hahaha….
This fight was postponed… if it was not pbc then cbs sponsored it….
If CBS starts doing Showtime fights on CBS, purses go down, star power goes down, ratings go down, boxing on the networks goes down. There is only one way any of this ends: massive financial failure.
Hahahaha….any promoter would want theyre product for free on national tv….getting paid for tv rights would be better….especially porter and thurman not yet ppv stars hahaha
Would want to.showcase theyre product for free
Hahaha. Yeah, promoters love it when they lose millions for their events.
Fox 36%, Disney 32% & NBCUniversal 32% (silent partner as they are owned by Comcast)
Hulu are planning to launch live featuring all their channels including ESPN & Fox Sports 1 as well as news like Fox News, this could be a game changer for cord cutters.
CBS own Showtime, it makes sense for them to promote new fighters, especially ones they hope to use on Showtime or preferably PPV.
Looking at PBC’s roster unless they bring back Floyd, then I don’t see any million dollar buys anytime soon
If im a promoter and showtime wants to get my promotion on free prime time tv,how is that not good? Hahahaha
How is it ever good if the fights lose money? Someone is footing the bill, and it won’t continue if it is a pattern.
Haymon buys blocktime…this one he does not..cbs sponsors it…which is better? Hahahaha…good thing cbs network investing in boxing
Again, it is irrelevant who or how it is being produced, the fact is this product is not sustainable. This has been proven.
CBS investing in boxing on the network again equals massive financial loss.
Yes its relevant…paying for block time or getting exposure for free…..im sure all promoters would want to be in a free offer….hahaha
No, its not relevant. Because the end result is the same….bankruptcy and failed proof of concept.
Any promoter would want free publicity of the product…..good thing cbs is sponsoring boxing hahaha
Network boxing has turned into massive lawsuits in every direction, failed proof of concept, atrocious ratings, loss of hundreds of millions with nothing to show, pay cuts for fighters. Hahahahaha!!
Hahahaha…cbs investing in boxing…..more shows,more promotions,more money…more name boxers
Hahahaha. CBS investing in boxing, money flushed down the drain, box office poison, less money to the fighters long term, concept failure.
HAHAHAHA!
Whatever it is Still its free exposure build next stars hahahaha…big network,prime time