Solving the Pacquiao-Cotto mess

August 1, 5:57 PMHouston Boxing ExaminerMarv Dumon

Previous Next

84 comments Print Email RSS Subscribe

Subscribe

Get alerts when there is a new article from the Houston Boxing Examiner. Read Examiner.com's terms of use.

Email Address   Include other special offers from Examiner.com Terms of Use

In the transaction advisory business or investment banking, there is no more truthful saying than "Principals make deals."  That is, if you're the one with the money on the line, then it's your call - and only your call - to strike a deal (or decide to walk away) with the guy sitting in front of you who also has his money on the line.  The lawyers, the accountants, the promoters, the trainers, the doctor, the business manager, the pet dog, the tricycle driver, the popsicle vendor, the nanny, none of them are the principals.

Miguel Cotto vs. Manny Pacquiao: EA Sports

What do we know?

1.  Bob Arum is serving two masters.  Thus, he cannot serve either side "with utmost customer care."  He is more like an arbitrator, but in this instance, Mr. Arum has something to gain by making this fight happen.  He is attempting to lock in Miguel Cotto as a Top Rank fighter for fighting Manny Pacquiao.  It is likely that the Puerto Rican is resenting this hard ball stipulation, as his contract ends at the end of the year.  Oscar de la Hoya played golf with Cotto recently.  Understandably, Cotto wants the biggest paycheck of his life.  He is after all a family man, with an uncle suing him for $7 million.  If Cotto loses this fight (if it ever happens), he may see his earnings indefinitely be reduced by as much as over 75% per fight compared to what he makes fighting the Filipino phenom.  He wants to cash in.  But Arum won't let him leave Top Rank.  That's a heck of a situation to be in.  Arum needs Cotto more than Cotto needs Arum.  Besides Manny Pacquiao, who else does Bob Arum have in his stable?  Antonio Marga-cheato?  Golden Boy Promotions has Shane Mosley, Bernard Hopkins, Juan Manuel Marquez,

Now we see why Cotto's pride is sticking out.  The Puerto Rican is supposed to be the client here - he is the one paying Bob Arum's cut of his purse in order to represent him.  If the pizza delivery boy rudely places the pizza on the floor for you to pick up, would you still tip him?  You're the paying customer - the client.  The pizza guy needs to be respectful if he wants those $2 to $3 dollar tips.

Go to Page 2 of this Article (solutions, Congressman Pacquiao & President Aquino)

Bob Arum serving two masters in this case again nakedly illuminates an unfortunate systemic flaw that runs in boxing.  Here's an article on it, eat it up (pardon the pizza pun):  Mosley's Challenge to Pacquiao Betraying Boxing's Promotional Flaws.

In transaction advisory, you would never get away with an investment banker serving two clients who are each trying to do a deal or transaction with each other.  That is because the investment banker has to serve as an agent for either one, either the buyer or the seller.  But absolutely not both.  It can be a zero-sum game between buyer and seller.  In most states, the banker would probably go to jail or have a judgment ruled against him in court for breach of fiduciary duty, among other charges.  How can the banker effectively maximize the seller's price if he is also representing the buyer?  Conflict of interest.  If the banker (agent) is representing the buyer, then he needs to lower the transaction value, but how can he do that if he is simultaneously representing the seller? 

2.  Lack of coordinated diligence with Manny Pacquiao's team contributed to the mess.  You work on a contract for several weeks in order to try and effect a transaction with another party, but you fail to even recognize or bring up the most salient negotiating points?  "I represent the buyer, I speak on his behalf, and verbally agree to buy that house."  But you did not even discuss price on the front end?  You just assume that you would eventually agree on price?  Then what is the buyer paying you for?  The buyer is paying you for your professional judgment on significant business matters, not to take flights around the world, sip wine, have a good time, and not iron out the details.  "By the way, sir I forgot to tell you, there is no championship belt on the line."

Page 2 (Prospective Solutions, Congressman Pacquiao, and President Corazon Aquino)