Canelo Alvarez filed a lawsuit against Oscar De La Hoya, Golden Boy and DAZN for breach of contract among other claims filed on Tuesday in federal court in Los Angeles. Alvarez is seeking money damages as well as an order from the court granting him release from his promotional contract with Oscar De La Hoya’s Golden Boy Boxing.
The center of the lawsuit is based on Alvarez not being compensated his contracted amount. Since his 11-fight, $365 million deal with DAZN in 2018, Alvarez has fought 3 times on the platform. The lawsuit spells it out and how much he is seeking:
“Despite Alvarez’ success, both DAZN and Golden Boy have broken the promises they made to each other, Alvarez, and boxing fans; in doing so Defendants have breached their respective contracts and caused Alvarez damages of at least – $280 million.”
Alvarez has filed suit against Golden Boy and DAZN. The Golden Boy deal with DAZN was for five years starting in 2018 and ending in 2023. In the lawsuit, Alvarez cites DAZN’s license fee of $40 million per bout for 10 Canelo fights between 2019 and 2023. Alvarez contends that the bulk of the license fee to pay DAZN would “flow to Alvarez as his purse for the bouts.”
Also, key is the allegation that the “DAZN Contract [with Golden Boy] required DAZN to pay significantly smaller license fees to broadcast up to ten annual boxing cards promoted and arranged by Golden Boy Promotions that did not feature Alvarez.”
Thus, Canelo was the big-ticket item for DAZN and it was clear that there were rumblings that the parties could not agree on a fight for Canelo. Regardless of the boxing promotion or standings, DAZN and Golden Boy wanted a “premium” opponent for at least one of two Canelo fights each year. But the issue as Dan Rafael points out is what is considered “premium.”
Payout Perspective:
Two other key issues in this lawsuit are anticipatory breach and force majeure. DAZN anticipated breach of its contract with Golden Boy and in turn, Golden Boy’s inability to deliver fights for Canelo. Due to the pandemic, DAZN has not been able to put on events as boxing was dormant for so many months. In its return past June, it has done it with no fans. This has derailed the DAZN boxing business strategy and, in turn, the projected revenues are no longer viable. With this being said, there was no way DAZN had the money to pay for Canelo’s contracted price. The lawsuit outlines DAZN’s attempt to cure the anticipated breach by offering “a fraction of the contracted $40 million license fee in cash and some DAZN stock in advance of a potential IPO. However, the entire value of the package – for a bout against another World Champion – was substantially less than Alvarez’ contractual guarantee.”
Also, to note that there are hints of Ali Act violations that Canelo infers but does not explicitly allege. Canelo notes that despite the fact he has requested to see the contract between Golden Boy and DAZN he has not seen it. Under a previous promotional agreement with Golden Boy, he was able to audit the revenue split between himself and the promoter. The Ali Act provided this accommodation already. However, the Ali Act does not specifically address a boxer’s right to audit a contract for a third party. This contract is likely to be disclosed during the process of discovery if the lawsuit continues.
The lawsuit came on the same day that DAZN announced layoffs to the company. Its clear that despite its ambition to crack into the U.S. market, the pandemic has made DAZN to make decisions on its directions. While the company does have money for certain investments, it does not for other parts of its business. We may learn in this lawsuit the operating costs of the company as it relates to its boxing business.
What happens next is for De La Hoya, Golden Boy and DAZN to file responses to the lawsuit. Don’t be surprised if there are counter-lawsuits by Golden Boy/De La Hoya against Canelo and/or DAZN and vice versa. This could get really complicated and ugly.
MPO will continue to follow.
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