2010 isn't exactly brimming with Fight of the Year candidates, so here's one for contention: Golden Boy vs. Top Rank. Golden Boy Promotions recently filed a lawsuit against Top Rank chairman Bob Arum and CFO David Lopez alleging accounting fraud and racketeering in regards to GBP's stake in Manny Pacquiao's contract. In 2006, Pacquiao somehow managed to sign with both companies at more or less the same time. After litigation was filed, the two parties reached a settlement in which both companies held a percentage of ownership in Pacquiao's contract.
When Pacquaio fights a GBP-promoted opponent, GBP is responsible for the accounting, but any non-GBP opponent and it's Top Rank's responsibility. GBP alleges Top Rank used racketeering and accounting fraud stemming from Pacquiao's fights against David Diaz, Miguel Cotto, and Joshua Clottey, all Top Rank fighters. There are a handful of different methods described in the complaint, some of which include failing to report sponsorship revenues, overstating travel expenses, and even grossly misreporting Pacquiao's fight purse. The end result, GBP alleges, was Top Rank intentionally misrepresenting earnings from the Pacquiao fights so as to wind up paying them less.
Aside from denying the charges and any wrongdoing, Top Rank responded by accusing GBP of neglecting to adhere to terms of their 2007 settlement, which stated that any accounting disputes should refer back to Daniel Weinstein, the retired judged who mediated the settlement. In other words, Top Rank claims GBP is playing to the public and media by airing all of this out instead of behind closed doors, per the terms of their settlement.
It'll be interesting to see how this all plays out for a number of reasons. First, much of the litigation is regarding net profits. Litigation stemming from net profit payouts is nothing new in the world of sports and entertainment. Whereas revenues are difficult to discreetly misrepresent, net profits can be easily manipulated. Accountants are expected to adhere to the Generally Accepted Accounting Principles (GAAP), but while many of the rules within are specific, others are vague and can result in various accounting methods deemed acceptable by GAAP. One method may involve allocating various cumulative expenses incurred to a company directly to one specific project, even if in reality said project was only responsible for a small portion of them. The result would reflect a lower net profit from the project. Example: the author of the novel "Forrest Gump" was to receive 3% of net profits from the film adaptation, which wound up being a huge hit by virtually any measure and made hundreds of millions worldwide. The author, however, ended up receiving no royalties as GAAP-approved accounting methods by "Forrest Gump" distributor Paramount were configured so as to show no net profits from the movie and thus no payout owed. Don't be surprised to see similar tactics described by Top Rank in their defense.
The complaint also makes it a point to single out Bob Arum in that they repeatedly allege there was no way any of this could have been going on without his knowledge. This, to some degree, plays into Top Rank's accusation that much of the litigation is for show, as Bob Arum is the figurehead of Top Rank, but should Top Rank be found guilty, or a significant settlement be owed to GBP, it will be interesting to see if Arum plays the Ken Lay card of "I had no idea there was millions of dollars in fraud going on; that stuff never comes across my desk."
While it will be a while before we get to see how this all plays out, one thing is for certain: don't expect the two promotional companies to bend over backwards in pairing each others' fighters against one another. The bad blood seemed to have resurfaced after the Mayweather-Pacquiao negotiations fallout, and a multi-million dollar lawsuit involving allegations of fraud isn't likely to simmer things down.