Abstract
In professional boxing, rags-to-riches-to-rags stories are as commonplace as elaborate ring entrances. In the wake of the Professional Boxing Safety Act of 1996, the U.S. Congress mandated that the Secretary of Labor undertake a study on the feasibility of establishing a pension plan for professional boxers. The results of the study have yet to be utilized for the development of such a plan. Employing data on those boxing in Nevada, 2008-2010, a model pension plan is developed herein, which may be used as a prototype for other states or a national boxers’ pension plan.
Introduction
Professional boxing has a long history of tragic endings. Stories of boxers fighting on for far too long out of financial necessity are integral parts of the sport’s folklore. In fact, arguably the three most recognizable names in the history of the sport, Joe Louis, Sugar Ray Robinson, and Muhammad Ali, all fell into the trap of being unable or unwilling to walk away at the right time. As a result, they each ultimately suffered from dementia puglistica (punch-drunkenness). Such a cruel end to a prizefighter’s career is not reserved for the household names of the sport, however. As Newfield, (2001, p. 14) mentions, “For every George Foreman who gets rich, there are 1,000 you never hear of who end up with slurred speech, failing memory and an empty bank account.”Sadly, the words of a famous boxing promoter1 appear to ring true, “Respectable society doesn’t really care.”
The financial hardships facing current and former prizefighters have, however, proven serious enough to merit studies by the U.S. Secretary of Labor (Levy, 1997), National Associations of Attorneys General (2000), General Accounting Office (2003), and a formal hearing before the U.S. Committee on Commerce Science and Transportation (1997). The conclusions drawn from these studies demonstrated overwhelming support for a national pension plan for professional boxers. However, such a plan has remained a lofty ideal to this point. Whereas the study from the U.S. Secretary of Labor (Levy, 1997) provided a model for the qualification, funding, and sustainability of a national pension plan for boxers, this research will narrow the focus to one state: Nevada. Improving upon the only state pension plan for professional boxers in the United States (California, begun in 1982), a model pension plan for Nevada will be developed to hopefully initiate change at the state level. Since no national boxing commission exists in the United States, and prior attempts at implementing a national pension plan for professional boxers have failed to materialize, it appears the logical approach is to inspire another major boxing state (and one long-respected for its commitment to the health and welfare of professional boxers) to implement such a program.
It is believed that a grassroots approach such as this will encourage other states to follow suit to prevent a “brawn drain” from their state to California and Nevada and improve their status in the professional boxing world.
Literature Review
It is a bitter irony that three of the most dangerous popular spectator sports in the United States, professional boxing, professional wrestling, and NASCAR have no national pension plan whatsoever, whereas the four major professional team sports—football, basketball, baseball and hockey—all have national pension plans dating back decades. The NHL and MLB were the first of these sports to implement a pension plan (1947), with the NBA being last sport in this group to institute such a plan (1965). It is hoped that, through this research and that which has preceded it, a national pension plan for professional boxers will ultimately be implemented and the way will be paved for long-overdue pensions in professional wrestling and NASCAR. With all the research confirming the desirability, feasibility, and sustainability of a national pension plan for professional boxers, policy makers in Washington have the tools to make forceful arguments in favor of such a plan. Time will tell whether such policy makers have the connections and moxie to pull it off. The literature review will be broken out into two segments for clarity: (1) prior studies and hearings on pension plans for professional boxers, and (2) analysis of current pensions in other professional sports:
Prior Studies and Hearings on Pension Plans for Professional Boxers
With the passage of the “Professional Boxing Safety Act of 1996” (104th U.S. Congress, 1996, January 3), the need for a national pension for professional boxers was brought to the forefront for public policy makers and those who run professional boxing. This legislation was amended in 2000 with the “Muhammad Ali Boxing Reform Act” (106th U.S. Congress, 2000, May 26). Due to a lack of organizational cohesiveness in professional boxing (relative to the major team sports), it is suggested in the seminal comprehensive study on the desirability and feasibility of a national boxers’ pension plan by Levy (1997, p. 11) that the most likely way to move boxing toward its benefit structure is legislatively, as was done in California in the early 1980s. The National Association of Attorneys General (2000) and U.S. General Accounting Office (2003) followed with their own studies of the state of professional boxing in the United States and a formal hearing was conducted before the U.S. Committee on Commerce Science and Transportation (1997) on the matter. A cohesive thread of three fundamental conclusions wove the analyses together: (1) Professional boxing is a sport in which exploitation of the boxer has traditionally been considered a normal and acceptable aspect of the business (see Hauser, 1986; Wacquant, 1995, 1998, 2001; Newfield, 2001; U.S. General Accounting Office, 2003, for more on this issue). Indeed, one of the more telling insights regarding the exploitation of professional boxers comes from the colorful heavyweight contender of the 1980s, Randall “Tex” Cobb: “I’m a whore who sells his blood instead of his ass. But that comes with the sport. I never made much money being good lookin’, but there’s always somebody who’ll pay me to take a punch” (as quoted in Hauser, 1986, p. 106). In the broader scope of business ethics, Altman (207, pp. 253-54) makes the point, “Some people have argued that placing ethical constraints on business decisions is simply misguided, that business is a game with its own rules, where deception is not only useful but expected. (2) There exists a need for a national or international governing body for professional boxing (as mentioned by Seth Abraham in United States Committee on Commerce, Science and Transportation, 1997, p. 32, the idea to develop a pension fund to assist boxers goes back to 1920s in the United States). (3) There is a dire need for the establishment of a national pension fund for professional boxers.
Despite a confluence of these studies and hearings regarding the significant need for a professional boxers’ pension plan, there are differences of opinion as to which boxers should be eligible to benefit from such a fund. The current plan in California requires boxers to compete at least 75 rounds and 10 or more rounds in the state in at least 3 different years (United States Committee on Commerce, Science and Transportation, 1997, p. 25). Levy, (1997, p. 3) recommends that participation in the fund be limited to those competing in at least 2 bouts of 8 rounds (or longer) in at least 3 separate years. Newfied (2001, p. 21) suggests access to such a pension should be limited to those boxing for at least 4 years and/or have competed in at least 20 bouts.
The proposal recommended herein for the State of Nevada would be open to all boxers competing at least once in the state during the period 2008-2010. The rationale for such open access is that limiting participation in the fund in any of the manners suggested above would be self-defeating. The fund is designed to help those with the greatest need, and scholarly studies over the decades have demonstrated that the vast majority of boxers fail to attain what might be deemed moderately successful careers in professional boxing. In a study by Weinberg and Arond from 1952 (as cited in Sammons, 1990, p. 237), 84.2% of boxers in the United States never make it past the local preliminary or semi–wind-up category. In a California Institute of Technology Working Paper by Balbien, Noll, and Quirk (1981, p. 23), it was revealed that 77.8% of all boxers competing in California in 1977 earned less than US$2,000 that year. That was far below the US$6,000 annual “minimum wage income” the authors estimated for 1977. The US$2,000 threshold figure amounts to only US$7,196.57 in 2010 dollars—well below the 2010 poverty threshold 2 of US$11,344 for an individual under age 65. The objective measure of woefully inadequate pay for professional boxers plying their trade in California in the late 1970s demonstrated above is comparable to a subjective measurement of pay of professional boxers in Illinois in 1991, as 88% of the 45 boxers surveyed reported being grossly underpaid for their services (Wacquant, 2001, pp. 185-186),
Summary of Current Pensions in Other Professional Sports
As mentioned previously, the major team sports in the United States—baseball, football, basketball, and hockey—all have well-developed pension plans that were initiated between 1947 and 1965. Although less comprehensive in nature and initiated more recently, three of the more popular individual sports in the United States—tennis, golf, and bowling—have some form of national pension plan (Guina, 2005; Levy, 1997). Although professional boxing shares many of the characteristics of these popular sports, such as more contractual vis-à-vis employer–employee labor relations associated with team sports and irregular income streams, it lacks one critical ingredient these other sports enjoy: a national governing body to coordinate events and bring a sense of unity and continuity to the sport. When contrasting these individual sports with boxing, Levy (1997, p. 11) notes, “Boxing is far less cohesive, so the impediments to retirement plans are even greater.” Lane (1995, p. 109) highlights the unusual role the professional boxer takes on in the realm of paid athletics as follows, “Boxers are independent contractors, not part of a system. The sport has no central governing body. If a boxer doesn’t hustle business, he doesn’t fight.”
The Benefits Principle of Taxation
There are many competing theories on the philosophical justification for the imposition of taxes. One of the leading principles is the ability-to-pay principle, which argues for higher tax rates on those who can afford to pay them. The progressive income tax structure in North America and Western Europe follows this philosophy. Second, there is the equity principle, arguing that one of the roles of taxation is to create a more equitable distribution of income. The Scandinavian nations have historically followed this principle. Last, there is the benefits principle, which argues for taxes to be predicated on the benefits received by the taxpayer. In the United States, property taxes, sales taxes, and user fees for national parks are examples of this tax structure. For the funding of the boxers’ pension plan, the argument will be made herein for the implementation of the last of these tax structures, exclusively. That is, the tax fund will be reliant, exclusively, on a 1% surcharge imposed on all tickets sold for live boxing events in Nevada.
The reasons for this are manifold: (1) Boxer and fan share a near-symbiotic relationship at a live fight—so much so that the sport had been dubbed “America’s tragic theatre” (Newfield, 2011, p. 13). Citing a story recounted by Dustin Hoffman, Joyce Carol Oates (1987, p. 108) notes, “Dustin Hoffman recalls a boxing match he had seen as a boy: ‘As the triumphant boxer left the ring to pass up the aisle, an ecstatic fight fan, male, followed closely after him, wiping all he could of the sweat from the boxer’s body onto himself’.” Gerald Early (1988, p. 28) provides a provocative parallel between a fan sharing in the experience of a boxing contest and a distinctly religious experience as follows, “In sports, particularly in boxing, the sport is very much like the Christian Communion: We partake of the body and soul of the athlete . . . touchingly vulnerable.” These tales provides graphic depictions of the strength of bond between boxer and live fan. Thus, there is a duty imposed on the fans who attend live fights above and beyond paying the price of admission; that duty is to support the long-term health and welfare of the men and women who risk so much for our entertainment. (2) The boxers’ pension should not be funded by a broad-based tax, as the sport does not provide benefits to a broad cross-section of society; rather the benefits are concentrated to the fan who is sufficiently hardcore to spend their hard-earned money and incur substantial opportunity costs for their time to attend live boxing shows. (3) It is unlikely there would be much effort on the part of consumers to “substitute away from” the tax, as there are few close substitutes for a live boxing match and—at a rate of just 1%—the tax is likely modest enough to create very little disincentive for fans of live professional boxing. In a study conducted late in 2011, California was expected to have the greatest number of boxing shows in the nation that year (www.fightnews.com, October 3, 2011). Furthermore, Engelmann (1932, p. 22) provides evidence of hefty taxes imposed by the state of New York on total gate receipts of 5%, in 1923; yet professional boxing thrived at the time in New York, with licensed issued to 1,738 boxers and total gate receipts totaling over US$10,000,000 (nominal) for the state. It is, however, important to consider possible substitution effects when devising the funding scheme for a pension such as this. California found that under their former funding scheme (which required the promoter of a show to contribute 3% of total gate receipts), there was a strong disincentive for boxing promoters to host shows there (Levy, 1997, p. 42). The plan was eventually abandoned in favor of the present per-ticket surcharge.
The Data Set
The data set is comprised of all boxers who competed at least once in the state of Nevada during the period 2008-2010. Included are 837 boxers, with a mean age of 29.8 and median age of 30 (see the Table 1 for complete summary statistics). Following the guidelines of the Levy study (1997), former boxers must reach a minimum age of 55 to receive their benefits (with exceptions for those who become disabled prior to the age of 55 or require occupational training to avoid long-term unemployment). Thus, if we use the midpoint for the period of analysis, 2009, boxers have a median waiting period of 25 years from 2009 (i.e., 2034) to receive their benefits. As will be demonstrated in the section, “Methodology and Statistical Results,” that provides ample time to generate significant growth for a boxers’ pension fund if the funding of such a program is begun straightaway.
Age Characteristics for the 837 Boxers Competing in Nevada at Least Once During the Period 2008-2010
Live gate receipts for professional boxing shows in Nevada have been the following over the past 3 years: 2008: US$42, 850,252.25; 2009: US$15,874,971.70; 2010: US$26,675,735.95. Applying a 1% surcharge to the median figure from this period yields a base year amount for the fund of US$266,757.
Methodology and Statistical Results
If a tax as suggested above were implemented in Nevada beginning January 1, 2012, investment of this amount in a boxers’ pension fund could begin January 1, 2013. To estimate the inflation-adjusted (real) amount available in the fund by the time the boxer of median age will be able to receive pension benefits (i.e., in 2034), the following assumptions were made: (1) The pension fund will generate a real rate of return equal to the average annual return of the DJIA from 1986-2010 (this amounts to an average nominal rate of return 3 of 11.2% minus the average annual inflation rate during this period 4 of 2.9%—for an average annual real rate of return of 8.3%). (2) Growth in the revenue base for the pension fund will be exactly equal to growth in its expenditure needs (i.e., the “pie” of tax revenue generated by the 1% surcharge on all ticket sales will grow at exactly the same rate as the number of boxers consuming the pie; thus, each boxers’ slice of the pie will remain constant over their tenure in the pension fund). Using these parameters, the fund is expected to have an inflation-adjusted balance of US$1,423,356 by January 1, 2034 (Appendix: Table A). Although this is a relatively modest amount to be distributed among 837 boxers, at approximately US$1,700 per competitor, it is well below the average amount per boxer in the California Boxers’ Pension Fund. However, the proposed pension fund for Nevada utilizes a shorter time frame than the California plan has been in existence; furthermore, the recipient pool for the Nevada plan is completely inclusive, while the California plan is limited to those competing in at least 75 rounds in the state (and 10 or more rounds in the state in at least 3 different years). (United States Committee on Commerce, Science and Transportation, 1997, p. 26) 5 . Despite its 30-year existence, it appears the fund has underperformed by “leaving money on the table” in the form of unusually modest live ticket surcharges 6 —40 cents per ticket in 1997 and 89 cents per ticket presently (with the fixed dollar-denominated surcharge absorbing an abnormally small share of higher-priced tickets)—and overly conservative investment in a money market fund (Koontz, 2010; United States Committee on Commerce, Science and Transportation, 1997, p. 26) until 2008, when a more aggressive strategy for the fund was adopted (Shallit, 2009).
Conclusion
In the words of legendary boxing referee, Mills Lane, “Let’s get it on!” That is, the time for talking about or analyzing the desirability/feasibility of a national pension fund for professional boxers has passed, and the time to take action is now. With such a fund proposed as early as the 1920s in the United States, the 30-year existence of such a fund in California and overwhelming evidence of the desirability and feasibility of such a fund provided by analysts in the 1990s and 2000s (Levy, 1997; National Association of Attorneys General, 2000; United States Committee on Commerce, Science and Transportation, 1997; United States General Accounting Office, 2003), there really is no excuse for the lack of such a fund on a national level. Although a national governing body for professional boxing in the United States, such as exists in the United Kingdom in the form of the British Board of Boxing Control (United States Committee on Commerce, Science and Transportation, 1997, p. 18 ) and a national pension fund for professional boxers, as exists in California, seems like a distant goal for those who have dedicated their time, money, and energy to the betterment of professional boxing, the aforementioned entities provide evidence that such a plan can be implemented. However, opposition to a national governing body by those who run most state athletic commissions (as it would mean an acquiescence of power over their own fiefdoms) makes the implementation of a national pension plan unlikely. It is hoped that a state that is progressively minded from the pugilistic standpoint, Nevada, will lead the way with a reasonably attractive pension program for professional boxers. With California and Nevada leading the way in terms of a commitment to the long-term financial welfare of those who box in their state, one would expect prizefighters to “vote with their feet” (and fists) and migrate to those states. Such moves would ultimately put pressure on other states (particularly those with a substantial number of professional boxing cards, such as Texas, New York, and Pennsylvania) to follow suit with pension plans of their own. With a greater and great number of state athletic commissions adopting their own pension plans, one would expect the combination of “boxer migration” to states with pension plans and the opportunity costs of sacrificed efficiency in not having a nationally administered pension plan for professional boxers to eventually overwhelm the political obstacles that have thus far prevented the implementation of such a plan.
Footnotes
Appendix
Year-End Balance From Base of US$266,757 by Number of Years in Fund
| Cumulative Amount 1,423,356 (US$) | Years in Fund 21 |
|---|---|
| 1,314,271 | 20 |
| 1,213,747 | 19 |
| 1,120,542 | 18 |
| 1,034,665 | 17 |
| 955,369 | 16 |
| 882,150 | 15 |
| 814,543 | 14 |
| 752,118 | 13 |
| 694,476 | 12 |
| 641,252 | 11 |
| 592,107 | 10 |
| 546,729 | 9 |
| 504,828 | 8 |
| 466,139 | 7 |
| 430,414 | 6 |
| 397,428 | 5 |
| 366,969 | 4 |
| 338,845 | 3 |
| 312,876 | 2 |
| 288,898 | 1 |
Acknowledgements
The author would like to thank research assistant at NNU, Blake Weber, the Nevada State Athletic Commission and paper discussant, John “Skip” Crooker of University of Central Missouri, for their contributions to this project.
Declaration of Conflicting Interests
The author declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author received no financial support for the research, authorship, and/or publication of this article.