By Ronnie Nathanielsz
JUST when it seemed that the legal battle lines had been drawn between Golden Boy Promotions and Top Rank’s Bob Arum shortly after Golden Boy chief executive Richard Schaefer sat through the deposition of Manny Pacquiao as he, in the words of Schaefer, wove a pack of lies and Oscar de la Hoya strengthened his already formidable legal lineup with high-profile sports lawyer Judd Burstein, the legal system in California mercifully came into play.
There is a mechanism in California, where parties involved in lawsuits are required to go through a process of mediation presided over by a retired judge in the hope that issues could be resolved and amicable settlements that are essentially fair and just are reached, through a healthy give-and-take on both sides.
To some extent, Arum must be given credit for pushing the possibility of a settlement, saying that confronting each other in court was insane because the lawsuits were costing both parties millions of dollars in legal fees with big name lawyers Daniel Petrocelli on the Top Rank legal team and Jeff Spitz and the legendary Bertram Fields, as well as Burstein, making up the Golden Boy panel.
Schaefer, who had long resented the nasty personal insults hurled at him as well as Golden Boy by Arum, appeared in no mood to sit down and talk with the Top Rank chief, telling us there was no need to. One could sense Schaefer’s bitterness over Arum’s reference to him as a “Nazi banker.”
In fact, Schaefer indicated to us that the trial on the tortuous interference charges filed against Arum for signing Pacquiao to a four-fight deal some two months after Golden Boy signed him to a seven-fight agreement in mid-September, was likely to open in October.
This was when the system where State and Federal Courts in California require parties to civil litigation to first go through some type of alternative dispute resolution or ADR came into play. Chosen to handle the mediation was retired San Francisco Superior Court judge Daniel Weinstein, who Schaefer described as the godfather of mediation in the United States.
San Francisco Chronicle senior writer Peter Sinton said Weinstein “exemplifies the new breed of legal negotiator.” In fact, Weinstein left the bench for his new career in alternative dispute resolution and as early as 1999 was at the top of his new career after mediating settlements worth a total of about $1 billion in 1998. Sinton, in his May 5, 1999 article, noted that mediation and arbitration were on the rise as courts became increasingly clogged and companies, government agencies and families realized they could “save time, money and their nerves by reaching a settlement outside the courtroom.”
Weinstein’s track record was impressive with more than 90 percent of the cases he handled settled out of court.
Arum clearly wanted mediation because in reality, he didn’t have the fighters Pacquiao wanted or needed to fight, to make the kind of money he had promised him in the first place. Besides, Pacquiao couldn’t cement his status as a legend by fighting unknowns such as Jorge Solis, whom he knocked out in the eighth round last April 14 for which he earned a purse of $2 million—far less than the $5 million Arum promised the Pacman would earn for every fight after Manny publicly announced last December that he had chosen Top Rank over Golden Boy.
The fact that Pacquiao had chosen Arum, who gave him a signing bonus of $1 million as against the $500,000 from De la Hoya, gave Top Rank some sort of an edge, but it did nothing to legally weaken the Golden Boy case or conversely strengthen Arum’s hand.
When they were called to mediation, Schaefer opened what seemed like a window of opportunity when he said he would rather not talk about the lies of Pacquiao at that point because, he said: “I am going into the mediation with an open mind.”
Schaefer spelled out his philosophy in an e-mail to Viva Sports/Standard Today: “It is to stand up for what is right,” adding “I do not like to be pushed around and expect to be dealt with in a professional manner just like I deal with people—respectful and professional.”
Then, an even more hopeful sense of a thawing of what seemed to have turned into a nasty cold war. “If Manny and Bob will recognize that,” said Schaefer, “then we will have a good chance to settle all of our disputes.”
However, he warned that “if they continue down the same road, then settlement will be impossible.”
It was the morning of June 18 when Schaefer informed us he was on his way to the mediation talks. “There will be an army of lawyers on both sides, but ultimately, it will come down to Bob and me and I hope that he will do the right thing.”
We noticed a slight change in Schaefer. He no longer referred to the Top Rank promoter as “Arum.” Instead, he called him “Bob” and we felt there was some significance in that.
Judge Weinstein clearly did a remarkable job, giving both sides his viewpoint and providing them with time to consider the options. Arum and Schaefer agreed that Weinstein “took ownership of the case and very quickly understood the issues at hand.”
Schaefer said he was able “to talk to us and talk to Bob and both sides were open to his points—and there were very valid points.”
Weinstein was described as a really sensitive man and after the initial, lengthy mediation talks ended with no settlement reached, the judge said: “Let me continue to work with both sides” and that’s what he did. Weinstein continued conversations with Top Rank and Golden Boy and ultimately created a period of two weeks or so when, in the words of Schaefer, “no fighting was going on.”
Weinstein, who is regarded as one of the primary forces behind the concept of mediation, clearly took ownership of the case. He outlined the strengths and weaknesses in the respective lawsuits. It put a stop to the hostility and as Schaefer told us, both sides started to realize “why don’t we give this mediation a chance.”
Weinstein came up with a concept and a framework, where both sides would work together. It was acceptable to Golden Boy, acceptable to Top Rank and as Schaefer revealed for the first time in all the stories on the mediation, acceptable to Manny.
Then, it was a matter of the lawyers putting the right language of the contracts and the right settlement contracts together.
Schaefer disclosed that Pacquiao was being kept abreast of the developments because he was “a party to the settlement agreement because he was obviously a party to the lawsuits.” He said it was an agreement which included Pacquiao, Top Rank and Golden Boy. “We all had to agree.”
The details, just like the mediation, are covered by a confidentiality clause. What facts emerged for public consumption was that when Pacquiao fights a boxer handled by Golden Boy, it will be a joint promotion presented by Golden Boy and Top Rank.
If it involves Pacquiao against any other fighter, it will be the other way around—a promotion where Top Rank takes the lead with Golden Boy having a role.
When asked to clarify, who Pacquiao’s promoter was now, Schaefer said: “We are joint promoters.”
On the issue of bigger purses for Pacquiao, Schaefer’s answer was a studied one.
“With everybody working together and being in big fights, ultimately bigger fights mean more money for everybody because the fight fans want to see these big fights [and pay for them] and this is the way it goes.”
Since Arum is on a much-needed vacation reportedly in Europe, Schaefer said he couldn’t provide any figure on what Manny’s purse for the Marco Antonio Barrera fight would be following speculations that he would earn $5 million, plus a share of the pay-per-view revenue. “I haven’t really discussed that with Bob.”
Clearly there were a number of elements that concerned both sides. Being in the business of boxing, they were losing millions in terms of income from mega-buck fights not only of Pacquiao, but other fighters under contract to Golden Boy and Top Rank—fights that could be made such as Sugar Shane Mosley and Miguel Cotto to begin with or Juan Manuel Marquez and Humberto Soto, Fernando Montiel and Jorge Arce and many others. Then, there was the money being siphoned off to pay pricey lawyers.
Arum was the first to point this out. As he told Steve Kim later, “this thing was becoming so enormous, this litigation, that it would never stop.”
The other possibility in a bitterly fought legal battle was the fact that often, skeletons are brought from the closet and into full public view. Indeed, the fact that Golden Boy had a suitcase stuffed with $250,000 in $20 bills which he gave Pacquiao and was soon used by some sectors of the US media apparently friendly to Arum as a sign of lack of business ethics on the part of De la Hoya was merely a hint of what could come later from both sides. The fact that celebrated trainer Freddie Roach, in his deposition, stated that Pacquiao wanted part of his goodwill money in cash hardly seemed to matter.
To be continued
