The boxing Octupus laid bare; Supreme Court affirms IBC versus U.S suit

INTERNATIONAL BOXING CLUB OF NEW YORK, INC. V. UNITED STATES 358 U.S. 242

NO. 18.  ARGUED NOVEMBER 13, 1958 - DECIDED JANUARY 12, 1959 - 150 F. SUPP.
397, AFFIRMED.

(continued from The BAWLI Papers No. 21)

THE FINDINGS.

THE CONSPIRACY BEGAN IN JANUARY 1949, WHEN APPELLANTS NORRIS AND WIRTZ, WHO
OWNED AND CONTROLLED THE CHICAGO STADIUM, THE DETROIT OLYMPIA ARENA AND THE
ST. LOUIS ARENA, MADE AN AGREEMENT WITH JOE LOUIS, THE THEN HEAVYWEIGHT BOXING
CHAMPION OF THE WORLD.  WISHING TO
RETIRE, LOUIS AGREED TO GIVE UP HIS TITLE AFTER OBTAINING FROM EACH OF THE
FOUR LEADING CONTENDERS (FN2) EXCLUSIVE PROMOTION RIGHTS INCLUDING RIGHTS TO
RADIO, TELEVISION AND MOVIE REVENUES.  UPON SECURING THESE EXCLUSIVE CONTRACTS
LOUIS ASSIGNED THEM TO THE APPELLANT INTERNATIONAL BOXING CLUB, ILLINOIS,
WHICH WAS ORGANIZED BY NORRIS AND WIRTZ FOR THE PURPOSE OF PROMOTING BOXING
FOR THE COMBINATION IN ILLINOIS.  THEY PAID LOUIS $150,000 CASH PLUS AN
EMPLOYMENT CONTRACT AND A 20% STOCK
INTEREST IN I.B.C., ILLINOIS.

IN MARCH 1949 NORRIS AND WIRTZ APPROACHED APPELLANT MADISON SQUARE
GARDEN, IN WHICH THEY HAD FOR MANY YEARS OWNED 50,000 SHARES OF STOCK.  IT WAS
THE "FOREMOST SPORTS ARENA IN NEW YORK CITY AND IS THE BEST KNOWN ARENA OF ITS
KIND IN THE UNITED STATES, IF NOT THE WORLD."  (FN3)
HOWEVER, ITS FACILITIES WERE TIED UP BY AN EXCLUSIVE LEASE IT HAD GRANTED TO
MIKE JACOBS' INTERESTS - THE LEADING PROFESSIONAL BOXING PROMOTER IN THE FIELD
AT THAT TIME.  NORRIS AND WIRTZ PROPOSED THAT THEY SHOULD ALL "WORK TOGETHER
NOW AND KEEP THE EVENTS FOR OUR BUILDINGS AND NOT CREATE A COMPETITIVE
SITUATION THAT WOULD BE HARMFUL TO ALL."  IN ORDER TO EFFECTUATE THIS PROGRAM,
APPELLANT MADISON SQUARE GARDEN BOUGHT OUT MIKE JACOBS' INTERESTS, INCLUDING,
IN ADDITION TO HIS LEASE ON MADISON SQUARE GARDEN, HIS EXCLUSIVE LEASES TO
YANKEE STADIUM
AND THE ST. NICHOLAS ARENA AND HIS CONTRACT WITH THE THEN WELTERWEIGHT
CHAMPION SUGAR RAY ROBINSON.  THESE CONTRACTS WERE ASSIGNED TO INTERNATIONAL
BOXING CLUB, NEW YORK, ORGANIZED FOR THE PURPOSE OF PROMOTING BOXING FOR THE
COMBINATION IN NEW YORK.

ONCE JACOBS' INTERESTS HAD BEEN ACQUIRED, THERE REMAINED ONLY ONE
SUBSTANTIAL COMPETITOR IN THE FIELD OF PROMOTING CHAMPIONSHIP BOXING MATCHES.
THAT WAS TOURNAMENT OF CHAMPIONS, INC., OWNED IN PART BY THE COLUMBIA
BROADCASTING SYSTEM.  IT OWNED AN EXCLUSIVE LEASE ON THE POLO GROUNDS AS WELL
AS AN EXCLUSIVE PROMOTION CONTRACT COVERING THE NEXT TWO FIGHTS OF THE THEN
MIDDLEWEIGHT CHAMPION OF THE WORLD.  IN MAY 1949 MADISON SQUARE GARDEN BOUGHT
ALL OF THE STOCK OF TOURNAMENT OF
CHAMPIONS AT A COST OF $100,000 PLUS 25% OF THE NET PROFITS ON THE NEXT TWO
MIDDLEWEIGHT CHAMPIONSHIP MATCHES.  THE ASSETS THUS ACQUIRED WERE LIKEWISE
ASSIGNED TO I.B.C., NEW YORK.  BY A SIMULTANEOUS SEPARATE AGREEMENT, COLUMBIA
BROADCASTING SYSTEM AGREED FOR A FIVE-YEAR PERIOD NOT TO INVEST IN OR PROMOTE
ANY PROFESSIONAL BOXING MATCHES IN RETURN FOR A FIRST REFUSAL RIGHT TO THE
BROADCASTING OF CERTAIN BOXING MATCHES STAGED FOR A LIKE PERIOD IN MADISON
SQUARE GARDEN.

THIS SERIES OF AGREEMENTS, CONSUMMATED WITHIN FOUR MONTHS' TIME, GAVE
APPELLANTS EXCLUSIVE CONTROL OF THE PROMOTION OF BOXING MATCHES IN THREE
CHAMPIONSHIP DIVISIONS, I.E., HEAVYWEIGHT, MIDDLEWEIGHT, AND WELTERWEIGHT.
NOT SATISFIED WITH THIS TEMPORARY CONTROL, HOWEVER, APPELLANTS PERPETUATED
THEIR HOLD ON CHAMPIONSHIP BOUTS BY REQUIRING
EACH CONTENDER FOR THE TITLE TO GRANT TO THEM AN EXCLUSIVE PROMOTION CONTRACT
TO HIS CHAMPIONSHIP FIGHTS, INCLUDING FILM AND BROADCASTING, FOR A PERIOD OF
FROM THREE TO FIVE YEARS.  OVER THE FACILITIES FOR THE
STAGING OF CONTESTS APPELLANTS EXERCISED LIKE CONTROL, OWNING OR
MANAGING THE "KEY" ARENAS AND STADIA IN THE NATION.  (FN4)

TIGHTENING THE ROPES AROUND THE RING THUS BUILT, NORRIS AND WIRTZ INCREASED
THEIR STOCKHOLDINGS IN MADISON SQUARE GARDEN TO WHERE THEY CONTROLLED IT AND
WERE ABLE TO "DICTATE ITS POLICIES AND BOXING
ACTIVITIES."  THIS HAS CONTINUED THEIR CONTROL OVER I.B.C., NEW YORK, THE
STOCK OF WHICH IS NOW WHOLLY OWNED BY MADISON SQUARE GARDEN.  (FN5) THEY ARE
THE SOLE STOCKHOLDERS OF CHICAGO STADIUM CORPORATION WHICH IN TURN IS THE SOLE
STOCKHOLDER OF I.B.C., ILLINOIS.  THEIR CONTROL OVER THIS BOXING EMPIRE IS
REVEALED BY THE FACT THAT NORRIS IS PRESIDENT OF EACH OF THE FOUR TOP
CORPORATIONS, I.E., MADISON SQUARE GARDEN, I.B.C., NEW YORK, CHICAGO STADIUM
CORPORATION, AND I.B.C., ILLINOIS.  HE AND
WIRTZ ARE DIRECTORS IN ALL FOUR, WHILE I.B.C., ILLINOIS AND I.B.C., NEW YORK,
WHICH HAVE OWNED ALL OF THE PROMOTION CONTRACTS WITH THE CONTENDERS, HAVE A
JOINT BOARD OF DIRECTORS.

THE EFFECT OF THE CONSPIRACY IS OBVIOUS.  USING THE FACILITIES OF I.B.C.,
ILLINOIS, AND I.B.C., NEW YORK, APPELLANTS ENTERED INTO
EXCLUSIVE PROMOTION CONTRACTS WITH TITLE ASPIRANTS, REQUIRING EXCLUSIVE
HANDLING AGREEMENTS IN THE EVENT THE CONTENDER BECAME CHAMPION.  IN AMASSING
THEIR EMPIRE, APPELLANTS OBTAINED CONTROL OF CHAMPIONS IN THREE DIVISIONS.
THE CHOICE GIVEN A CONTENDER THEREAFTER WAS CLEAR,
I.E., TO SIGN WITH APPELLANTS OR NOT TO FIGHT.  WITH APPELLANTS IN CONTROL OF
THE KEY ARENAS AND STADIA OF THE COUNTRY THROUGH MADISON SQUARE GARDEN,
CHICAGO STADIUM CORPORATION, AND OTHERS, AN EVENT COULD NOT BE SUCCESSFULLY
STAGED IN ANY OF THESE AREAS, THE MOST FRUITFUL IN
THE NATION, WITHOUT THEIR CONSENT.  THE EXERCISE OF THIS POWER BROUGHT
IMMEDIATE RESULTS.  FROM JUNE 1949, WHEN APPELLANTS STAGED THEIR FIRST
CHAMPIONSHIP FIGHT, UNTIL MAY 15, 1953, THE DATE OF THE AMENDED
COMPLAINT, THEY STAGED OR CONTROLLED THE PROMOTION OF 36 OF THE 44
CHAMPIONSHIP BATTLES HELD IN THIS COUNTRY, GIVING THEM APPROXIMATELY 81% OF
THAT FIELD.  IN TWO OF THE CLASSIFICATIONS, HEAVYWEIGHT AND
MIDDLEWEIGHT, THE COMBINE STAGED ALL OF THE CONTESTS.  THE POWER OF THE
COMBINE TO EXCLUDE COMPETITORS IN THE CHAMPIONSHIP FIELD IS GRAPHICALLY
SHOWN BY THEIR PROMOTION OF 25 OUT OF 27 FIGHTS IN ALL DIVISIONS, A TOTAL OF
93%, DURING THE TWO-AND-A-HALF-YEAR PERIOD ENDING WITH THE FILING OF THE
AMENDED COMPLAINT.  THIS POWER EXTENDED TO THE SALE OF FILM AND BROADCASTING
RIGHTS - MOST VALUABLE ADJUNCTS TO SUCCESSFUL
PROMOTION IN THE BUSINESS.

APPELLANTS LAUNCH A VIGOROUS ATTACK ON THE FINDING THAT THE RELEVANT MARKET
WAS THE PROMOTION OF CHAMPIONSHIP BOXING CONTESTS IN CONTRAST TO ALL
PROFESSIONAL BOXING EVENTS.  THEY RELY PRIMARILY ON UNITED STATES V. DU PONT &
CO., 351 U.S. 377 (1956).  THAT CASE, INVOLVING AN ALLEGED
MONOPOLY OF THE MARKET IN CELLOPHANE, HELD THAT THE RELEVANT MARKET WAS
NOT CELLOPHANE ALONE BUT THE ENTIRE FIELD OF FLEXIBLE PACKAGING MATERIALS.  IN
TESTING FOR THE RELEVANT MARKET IN SHERMAN ACT CASES, THE COURT SAID:

"  ...  NO MORE DEFINITE RULE CAN BE DECLARED THAN THAT COMMODITIES
REASONABLY INTERCHANGEABLE BY CONSUMERS FOR THE SAME PURPOSES MAKE UP THAT
'PART OF THE TRADE OR COMMERCE,' MONOPOLIZATION OF WHICH MAY BE ILLEGAL."  DU
PONT, SUPRA, AT 395.

THE APPELLANTS ARGUE THAT THE "PHYSICAL IDENTITY OF THE PRODUCTS HERE WOULD
SEEM NECESSARILY TO PUT THEM IN ONE AND THE SAME MARKET."  THEY SAY THAT ANY
BOXING CONTEST, WHETHER CHAMPIONSHIP OR NOT, ALWAYS INCLUDES ONE RING, TWO
BOXERS AND ONE REFEREE, FIGHTING UNDER THE SAME
RULES BEFORE A GREATER OR LESSER NUMBER OF SPECTATORS EITHER PRESENT AT
RINGSIDE OR THROUGH THE FACILITIES OF TELEVISION, RADIO, OR MOVING PICTURES.

WE DO NOT FEEL THAT THIS CONCLUSION FOLLOWS.  AS WAS ALSO SAID IN DU PONT,
SUPRA, AT 404:

"THE 'MARKET'  ...  WILL VARY WITH THE PART OF COMMERCE UNDER CONSIDERATION.
THE TESTS ARE CONSTANT.  THAT MARKET IS COMPOSED OF PRODUCTS THAT HAVE
REASONABLE INTERCHANGEABILITY FOR THE PURPOSES FOR WHICH THEY ARE PRODUCED -
PRICE, USE AND QUALITIES CONSIDERED."

WITH THIS IN MIND, THE LOWER COURT IN THE INSTANT CASE FOUND THAT THERE EXISTS
A "SEPARATE, IDENTIFIABLE MARKET" FOR CHAMPIONSHIP BOXING CONTESTS.  THIS
GENERAL FINDING IS SUPPORTED BY DETAILED FINDINGS TO THE EFFECT THAT THE
AVERAGE REVENUE FROM ALL SOURCES FOR APPELLANTS' CHAMPIONSHIP BOUTS WAS
$154,000, COMPARED TO $40,000 FOR THEIR
NONCHAMPIONSHIP PROGRAMS; THAT TELEVISION RIGHTS TO ONE CHAMPIONSHIP
FIGHT BROUGHT $100,000, IN CONTRAST TO $45,000 FOR A NONTITLE FIGHT SEVEN
MONTHS LATER BETWEEN THE SAME TWO FIGHTERS; THAT THE AVERAGE "NIELSEN" RATINGS
(FN6) OVER A TWO-AND-ONE-HALF-YEAR PERIOD WERE 74.9% FOR APPELLANTS'
CHAMPIONSHIP CONTESTS, AND 57.7% FOR THEIR
NONCHAMPIONSHIP PROGRAMS (REFLECTING A DIFFERENCE OF SEVERAL MILLION VIEWERS
BETWEEN THE TWO TYPES OF FIGHTS); THAT ALTHOUGH THE REVENUES FROM MOVIE RIGHTS
FOR SIX OF APPELLANTS' CHAMPIONSHIP BOUTS TOTALED OVER $600,000, NO FULL-
LENGTH MOTION PICTURE RIGHTS WERE SOLD FOR A
NONCHAMPIONSHIP CONTEST; AND THAT SPECTATORS PAY "SUBSTANTIALLY MORE"
FOR TICKETS TO CHAMPIONSHIP FIGHTS THAN FOR NONTITLE FIGHTS.  IN ADDITION,
NUMEROUS REPRESENTATIVES OF THE BROADCASTING, MOTION PICTURE AND ADVERTISING
INDUSTRIES TESTIFIED TO THE GENERAL EFFECT THAT A
"PARTICULAR AND SPECIAL DEMAND EXISTS AMONG RADIO BROADCASTING AND TELECASTING
AND MOTION PICTURE COMPANIES FOR THE RIGHTS TO BROADCAST AND TELECAST AND MAKE
AND DISTRIBUTE FILMS OF CHAMPIONSHIP CONTESTS IN CONTRADISTINCTION TO SIMILAR
RIGHTS TO NON-CHAMPIONSHIP CONTESTS."  (FN7)

IN VIEW OF THESE FINDINGS, WE CANNOT SAY THAT THE LOWER COURT WAS "CLEARLY
ERRONEOUS" IN CONCLUDING THAT NONCHAMPIONSHIP FIGHTS ARE NOT
"REASONABLY INTERCHANGEABLE FOR THE SAME PURPOSE" AS CHAMPIONSHIP CONTESTS.  A
DETERMINATION OF THE "PART OF THE TRADE OR COMMERCE" ENCOMPASSED BY THE
SHERMAN ACT INVOLVES DISTINCTIONS IN DEGREE AS WELL AS DISTINCTIONS IN KIND.
ONE PRIME EXAMPLE OF THIS IS THE APPLICATION OF THE ACT TO TRADE OR COMMERCE
IN A LOCALIZED GEOGRAPHICAL AREA.  SEE, E.G., SCHINE THEATRES V. UNITED
STATES, 334 U.S. 110 (1948); UNITED STATES V. GRIFFITH, 334 U.S. 100 (1948);
CF. TIMES-PICAYUNE V. UNITED STATES, 345 U.S. 594 (1953); UNITED STATES V.
COLUMBIA STEEL CO., 334
U.S. 495 (1948).  THE CASE WHICH MOST SQUARELY GOVERNS THIS CASE IS UNITED
STATES V. PARAMOUNT PICTURES, 334 U.S. 131 (1948).  THERE, THE CHARGE
INVOLVED, INTER ALIA, EXTENSIVE MOTION PICTURE THEATRE
HOLDINGS.  THE DISTRICT COURT HAD REFUSED TO ORDER A DIVESTITURE OF SUCH
HOLDINGS ON THE GROUNDS THAT NO "NATIONAL MONOPOLY" HAD BEEN INTENDED OR
OBTAINED.  THIS COURT FELT THAT SUCH A FINDING WAS NOT DISPOSITIVE OF THE
ISSUE, SAYING:    "FIRST, THERE IS NO FINDING AS TO THE PRESENCE OR ABSENCE OF
MONOPOLY ON THE PART OF THE FIVE MAJORS (DEFENDANTS) IN THE FIRST-RUN FIELD
FOR THE ENTIRE COUNTRY, IN THE FIRST-RUN FIELD IN THE 92 LARGEST CITIES OF THE
COUNTRY, OR IN THE FIRST-RUN FIELD IN SEPARATE LOCALITIES.  YET THE FIRST-RUN
FIELD, WHICH CONSTITUTES THE CREAM OF THE EXHIBITION BUSINESS, IS THE CORE OF
THE
PRESENT CASES.  SECTION 1 OF THE SHERMAN ACT OUTLAWS UNREASONABLE RESTRAINTS
IRRESPECTIVE OF THE AMOUNT OF TRADE OR COMMERCE INVOLVED (UNITED STATES V.
SOCONY-VACUUM OIL CO., 310 U.S. 150, 224, 225, N. 59), AND SEC. 2 CONDEMNS
MONOPOLY OF 'ANY PART' OF TRADE OR COMMERCE."
PARAMOUNT, SUPRA, AT 172-173.

SIMILARLY, CHAMPIONSHIP BOXING IS THE "CREAM" OF THE BOXING BUSINESS, AND, AS
HAS BEEN SHOWN ABOVE, IS A SUFFICIENTLY SEPARATE PART OF THE TRADE OR COMMERCE
TO CONSTITUTE THE RELEVANT MARKET FOR SHERMAN ACT PURPOSES.  (FN8)

WE HAVE ALSO EXAMINED THE REMAINDER OF THIS CHARACTERISTICALLY LENGTHY RECORD.
WHEN THE CASE WAS HERE PREVIOUSLY APPELLANTS DID NOT DENY THAT THE ALLEGATIONS
OF THE COMPLAINT STATED A CAUSE OF ACTION AGAINST THEM, PROVIDED THEIR
ACTIVITY CAME WITHIN THE MEANING OF THE SHERMAN ACT.  WE HELD THAT THE
COMPLAINT STATED A CAUSE OF ACTION.  THE
DISTRICT COURT HAS NOW FOUND THESE ALLEGATIONS TO HAVE BEEN PROVEN.  WITH THE
CASE IN THIS POSTURE, APPELLANTS HAVE AN ALMOST INSURMOUNTABLE BURDEN.  THEY
MUST SHOW THAT THE FINDINGS, OR AT LEAST THE BASIC ONES, ARE "CLEARLY
ERRONEOUS."  RULE 52(A), RULES OF CIVIL PROCEDURE.  THIS
THEY HAVE NOT BEEN ABLE TO DO.  IT FOLLOWS THAT THE DECREE ENTERED ON THE
MERITS ADJUDGING THE APPELLANTS TO HAVE VIOLATED BOTH SECS. 1 AND 2 OF THE
SHERMAN ACT MUST BE AFFIRMED.

(to be continued in The BAWLI Papers No. 24)