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All about the Benjamin's?    
Is Boxing Fixed? An Economic Analysis of Boxing and Corruption

By: Michael Kaczowka

June 6, 2001 (D-Day)

The sport of boxing suffers from an image problem, an image problem that has plagued the sport over time. Back in the golden age of boxing, when fighters of the likes of Muhammad Ali reigned, the sport was an accepted part of American culture. However, in the following years the American culture's view of boxing was altered. As violence increased in America, many experts suggested that the media was to blame. Contact sports such as boxing was viewed as barbaric and sent a bad message to the youth of America. As a result, boxing became taboo in this country. We can see this trend continue even today with the recent efforts to curb violent imagery in movies and video games.

The real problem with the sport of boxing is this tainted image. This image problem goes beyond violence, however. Boxing has become a parody of sorts for corruption. Correlations between corruption and boxing are abundant. It is very easy to take a look at the surface of boxing and instantly associate it with foul play. When you see people like Don King in constant litigation due to legal suits ranging from fighters to the IRS. People like Mike Tyson who was sent to prison only to return and act in a manner that suspended him from the sport. People are drawn to these so-called "Superfights" and pay upwards of $50 dollars for the event only to watch it end in one round or go through 12 rounds without any excitement.

The problem here is that sport is being judged by its worst examples; unfortunately, it is these examples that attract the most attention. There are a number of incredible matches that no one ever hears about because the media will always follow the largest draw (ie. Mike Tyson and Don King). It is unjust to base the integrity of the sport on just certain players, unfortunately, that is exactly what the media is doing. Boxing has created many of it's own demons, however, it is the media that is exploiting them and tarnishing the image of the entire sport.

Despite these negative images there is one fundamental reason that boxing is not a "fixed" sport, this reason is economics. Economic theory simply will not support corruption. To examine this further one must understand the gambling structure.

Las Vegas is a business, a business that specializes in gambling. As is common knowledge, the house will always have the advantage. For instance, if you were to play blackjack on a perpetual basis you would perpetually lose, as the house always has the odds in the long run. This may seem like an obscure reference but it can be carried to sports gambling as well. Las Vegas generates the line in the fairest way possible. The odds will always represent equilibrium where the house will earn money. Las Vegas cannot afford to allow fight fixes. If corruption were truly present, Las Vegas would lose massive amounts of money and you'd see betting on boxing cease immediately.

The newly formed, and now defunct, XFL league faced a similar "fixing" hurdle when it began operations in 2001. Las Vegas was concerned about the legitimacy based on the owner, Vince McMahon's, other operation, WWF. The XFL had to go to great lengths to prove that it was not predetermining the outcome of these games before Las Vegas would agree to post a line on the leauges games. Again Las Vegas cannot, and will not, tolerate any form of corruption in gambling; the economics will not support it.

For most high profile fighters agreeing to a fix is not in their best interest.   (AP)  

Another important factor is that boxing is trying to grab a share of the finite entertainment dollars available. In other words, they are looking to attract you to go see a professional bout instead of going to another professional sport. The last thing they want to do is lose this attraction because of a tarnished image. Look at what happened to baseball several years ago. After the players strike, attendance the following season was at an all time low. People had lost faith in the sport and they hurt the sport where it hurt most, at the bank. It took a long time for professional baseball to regain the trust of their fans. Boxing is the same way. The sport has had to fight an uphill battle to gain fan support over the years. With constant questions surrounding boxing's biggest names this has been a hard fought battle. Despite this adversity, boxing has been successful in reaching a Renaissance of sorts. The sport is currently the second largest growing sport in terms of fan base (based on an ESPN Chilton report and only behind figure skating) and televised boxing events are enjoying some the highest ratings ever. New shows like HBO's KO Nation probably would not have survived 5 years ago, but the fan base is now able to support this. Also ESPN, which already has Friday Night Fights, recently launched a new show for Tuesday nights this summer. So you can see that the demand is there for boxing. Boxing cannot afford to lose these fans due to corruption. The sport will take all measures to stay clean for risking this new fan base will have too big a detrimental impact.

There will always be skeptics. There will always be issues surrounding questionable discussions, rankings and losses. It is important to remember that boxing is one of the few major sports where the results are not based on an objective points system. Boxing is an incredibly subjective sport. Here you have three people making a subjective judgment about the performance of a fighter. This will often lead to negative speculation, but is by no means a representation of corruption throughout the sport. With respect to questionable rankings, these are the result of a power struggle between individuals who constantly want to out do one another. There are efforts in Congress (led by Arizona Senator John McCain) right now that suggest regulating the sport to ensure that rankings are fair. Though, whether or not legislation will ever be passed to help maintain the integrity of the sport remains to be seen.

Finally, the issue of fighters taking dives again is not good economic practice. Taking a dive means that that fighter is risking all future earnings for a short-term gain. Using the Trinidad/Vargas fight as an example, Vargas would have a lot more to gain by winning than taking a dive. Suppose he did, what would that mean an extra million and running the risk of losing his license not to mention not collecting his contracted compensation for the fight? Winning is a more viable alternative. A win would have propelled his career, thus allowing him incredible future earnings. Also, when examining the enigma called Mike Tyson, and his 'instant knockout' performances it is not really a question of, 'are his opponents taking a dive'. The question is why is he fighting inferior opponents. The answer is because that is what the world is willing to pay for. Tyson has the ability to get people to buy his fights even when he is fighting a no name (See BoxingGurus.com website for top 12 PPV fights). Until the public demands more, his promoters will keep him on this route.

Keep in mind that this article does not suggest that corruption doesn't exist in the sport of boxing. Corruption occurs currently and will almost certainly continue into the future. The purpose of this article is to dispel the belief that corruption commands the sport.

We believe that boxing is back on a path of enlightenment. As the fan base builds up the sport will become more accepted in American culture and there will be more pressure to curb the minor infractions that the sport is guilty of. With a number of high profile fights on tap, 2001 should be a great year for boxing.

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