Donald Trump: the art of the boxing deal

Photo by Ed Mulholland

Photo by Ed Mulholland

 

The business of boxing is like no other. With little or no barrier for entry, the sport has seduced and lured countless people with deep pockets into a world in which, for the right price, anyone can be a “player.” Being a player in boxing often means paying to play the role, not actually making money from calculated risks based on returns in normal business practices. When it comes to making a deal in boxing, there is no exact science or formula to guarantee a return on investment (ROI). It requires very unique business savvy, to put it mildly. It takes one with vision, ego, bankroll and brains to make it big in the business. A person also has to enjoy boxing and be a fan in order to tolerate the dysfunction that happens behind closed doors as just being a fan will leave you broken in more ways than one. It takes the skills of a quick real estate investor and a professional gambler to see the right opportunity, to get in for the right price, and get out when the time is right.

 

Enter real estate mogul Donald Trump. When Trump got involved in the casino business in Atlantic City, he did not want to be a just another player; he wanted to be the only player who mattered. Because of his involvement with staging some of the largest fights in the sports history, the town by the sea became the Mecca of boxing, overshadowing that neon oasis in the desert known as Las Vegas for the last “boom time” in network-televised boxing.

 

Trump brought his knack for dealmaking to the Boardwalk and in less than one year’s time, he was the dominate player in boxing, eclipsing the longtime ruler of the boxing empire, Caesars Palace. In 1985, the Trump Era officially began with Trump Castle and with it, also ended the state luxury tax as well as cutting the remaining event tax by 50%. By May of 1986, with the Trump Plaza up and running only three months later, the property hosted a young Mike Tyson vs. Jose Ribalta for a modest site fee of $100,000 in the ballroom, broadcast on HBO.

 

While the ballroom went on to host some of the best-known names in boxing (broadcast on network TV and pay-per-view) like Julio Cesar Chavez Sr., Vinny Pazienza, Hector Camacho Sr.; Trump knew that to bring the big crowds in, he would need a venue like the 16,000-seat Convention Hall next door. So rather than build a large venue, Trump strategically had a walkway built directly from his casino to the venue. This enabled him to host his first large scale event in June of 1986 featuring Gerry Cooney vs. Michael Spinks. While Cooney-Spinks may not have been big news out west, it was the perfect fight necessary to draw part of the 60-million-plus population in close driving distance to Atlantic City from Boston to D.C.

 

The investment paid off. Trump paid $3.2 million to host the event and on fight night alone, gamblers dropped $7.2 million at the tables, around 500% better than normal and an estimated $10 million dollars over all over normal revenues (it’s worth noting that in May of 1990, Japan’s “Whale” Akio Kashiwagi lost $10 million dollars in baccarat at the Trump Taj Mahal, not in Las Vegas as the movie “Casino” would have you believe). Atlantic City needed someone who was willing to risk the millions necessary to bring big-time events to the boardwalk. In Trump, they found their man. He negotiated feverishly with Don King and Mike Tyson’s management team to bring the champion back from Vegas to a venue located only a close hours drive to estate in New Jersey. In doing so, Trump hosted all the significant bouts that mark the time period associated with the “prime” of Mike Tyson’s career.

 

Trump, along with his then-VP of Trump Plaza and Casino Mark Etess and executive Stephen Hyde, understood the added value of the marketing exposure that big fights brought to the Trump Brand. With no exact science to gauge success, Trump himself took a bit of a gamble in boxing. But like all great real estate investors, the gamble paid off. Trump put up the site fees in the neighborhood of around $6 million dollars to host Tyson vs. Larry Holmes and Tyrell Biggs; high rollers dropped a reported $7 million on the night of the Biggs fight and $8.5 million on the night of the Holmes fight.

 

Then in June 1988, the Super Bowl of boxing was to be fought, Tyson vs. Spinks. The previous April, since they were out of the heavyweight championship business, Caesars put up a record breaking $6.5 million dollars to host Sugar Ray Leonard vs. Marvin Hagler and they wanted the right to host Tyson vs. Spinks badly. Trump stepped up with a fee of $11 million dollars and $2 million more for expenses to host the fight (I know a lot of boxing guys are reaching out to Trump right now and will not even continue reading this article!).

 

Against the advise of his counsel, Trump agreed to price ringside tickets at only $1,500; he had wanted to price them at $2,000 and he would have gotten it! Imagine that; pricing tickets too cheap for a fight and missing out on profits to be made in boxing? It is unheard of and perhaps the only time in boxing that Donald Trump did not make as much money as he could have. In the videos building up the fight, both Spinks and Tyson both said, “Thank you” to “Mr. Trump.”

 

Up until then, all big boxing matches had been hosted on a Saturday night, but Trump negotiated to have the Tyson vs. Spinks fight take place on a Monday night, pretty much guaranteeing people would book reservations at his properties all the way through Tuesday morning as a result. There was a tidal wave of tourists, VIPs and high rollers at the tables that long weekend. At the personal invitation of Trump, Hollywood celebrities like Don Johnson, Barbara Streisand, Jack Nicholson, Kirk Douglas, Sean Penn and Madonna all came to town. Then on Monday June 27, 1988, Trump Plaza guests and gamblers alike (including 20 high rollers with ringside tickets purchased from Trump by a Las Vegas casino) all made the short walk from his hotel/casino right across the walkway into the Boardwalk Hall and watched a 91-second destruction of Michael Spinks take place. As for the drop, it was reported the tables did $15+ million on the night of the fight alone. It might be the highest Monday night ever in the history of Atlantic City casino gaming.

 

Trump went on to host Wrestlemania IV and V, Tyson vs. Carl Williams and many more historic fights of the era. Trump even made $2 million dollars when Don King sued Buster Douglas and the Wynn Group after Douglas upset Tyson and they staged a fight with Evander Holyfield in Las Vegas. Thanks to Trump’s vision and his bankroll, Atlantic City was the country’s new fight capital, the new Mecca of professional boxing.

 

Just how successful was Trump in the world of boxing? It might be difficult to track in terms of exact millions of dollars he profited but as far as the priceless power of branding, each time ESPN airs a fight like Roberto Duran vs. Iran Barkley or Tyson vs. Spinks, The Trump Brand is right there for the entire world to see for generations to come.

 

This article was written in memory of former Trump executives; Mr. Mark Etess and Stephen Hyde. They tragically lost their lives, October 21, 1989, in a helicopter accident while returning home from a press conference in NY to announce the fight between Vinny Pazienza and Hector Camacho Sr.

 

 

You can follow John Lepak on Twitter at http://www.twitter.com/Lightning_JL and you can drop him a note at boxing@powerhousegym.com.

 

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