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SPORT'S $5 MILLION PAYDAY

Jan. 25, 1971
Jan. 25, 1971

Table of Contents
Jan. 25, 1971

Big Mistakes
$5 Million
Crazy Cat
Pro Basketball
Golf
19th Hole: The Readers Take Over

SPORT'S $5 MILLION PAYDAY

It's the biggest in history—the brainchiid of show biz promoter Jerry Perenchio, who got Jack Kent Cooke to put up the money. Now they own the Ali-Frazier fight and they make a mint themselves

Just three weeks have gone by since Los Angeles talent agent Jerry Perenchio came along to grab off the richest prizefight in history, which makes it too early to tell for sure whether he will win his brave gamble or lose. For now, you would have to call it even-money, the same as the fight itself. "I'm trying to stage the Normandy invasion" is how Perenchio describes the situation, but as his promotion of the Muhammad Ali-Joe Frazier fight winds toward its March 8 consummation, he admits to just one possible problem: "I really don't know the first thing about boxing."

This is an article from the Jan. 25, 1971 issue Original Layout

Few understatements are heard in the fight business, and this is not one of them. Until he signed them last Dec. 30 to fight at Madison Square Garden, Perenchio had never met either Ali or Frazier, and to this day he has yet to see Frazier in the ring. Before his emergence as an instant Tex Rickard, he had seemed content enough as president of Chartwell Artists Ltd., a successful (annual bookings: $30 million) Beverly Hills talent agency with such clients as Elizabeth Taylor and Jane Fonda. Perenchio's interest in boxing was strictly a fan's. He went to the Ali-Jerry Quarry fight in Atlanta last October, for instance, and he had hopes of attending the Ali-Frazier showdown wherever it might be held, but that depended, of course, on his getting tickets.

Now, far from merely going to the big fight, Perenchio owns it through a joint venture called The Fight of the Champions that he has formed with Jack Kent Cooke, the irrepressible owner of the Los Angeles Lakers and Kings. The money behind the promotion is largely Cooke's, but the deal is very much Perenchio's. As he works on the match out of Chartwell's offices in Los Angeles and New York, the 40-year-old Perenchio has a slightly harried air about him these days, but his boyish face becomes particularly anxious when you ask him about the financial projections—"the numbers," he almost mystically calls them—that he carries around in a ubiquitous black briefcase. They are very big numbers, for Perenchio bullishly expects Ali-Frazier to gross up to $30 million before his fingers get too tired to count farther.

Whatever disadvantages it might otherwise have, Perenchio's inexperience in boxing has certainly kept him from being lured into regarding this as just another fight.

"This one transcends boxing—it's a show business spectacular," he said last week in the kitchen of his hilltop Los Angeles home. It was barely 7 a.m. and his wife Jake was still asleep, but Perenchio, in pajamas and bathrobe, already had his briefcase open and the numbers spread out on the breakfast table. "You've got to throw away the book on this fight. It's potentially the greatest single grosser in the history of the world. It's like Gone With the Wind. And that's why I'm involved. I don't think it takes any special talent to put a couple of guys in the ring. The trick is to merchandise them properly."

Perenchio's idea of merchandising is the same as the whaler's: don't waste any part of the carcass. He plans to work every possible angle, from peddling a line of fight-night souvenirs and memorabilia ("This is a historic event, remember") to producing a feature-length documentary on the bout and its behind-the-scenes drama ("We hope to break some hearts") for distribution to movie theaters within 60 days after the event. The exploitation extends even to the two fighters' gloves, trunks and shoes, which become his property after the fight. "If a movie studio can auction off Judy Garland's shoes, these things ought to be worth something, too," he says.

Considering his enthusiasm, it is not surprising that Perenchio should occasionally be guilty of overreaching. In scaling the house at Madison Square Garden, for instance, he pushed for $250 ringside with a $500-a-seat "Golden Circle," but the Garden prevailed on him to back off. "We didn't want to be accused of gouging the public," explained a Garden official, the resulting $150 ringside price apparently being below the gouge level. Another Perenchio scheme is to sell commercials during the closed-circuit TV coverage for a total of $4 million or so. Apart from obvious problems that would result from an early-round finish, and assuming that a $4 million figure is otherwise realistic, potential sponsors are sure to have some questions before hitting a noisy captive audience that has already paid up to $30 a seat (the closed-circuit TV top scale envisioned by Perenchio) with commercials.

But then, the finances of this fight have an almost surrealistic quality and anything is possible. At stake, first of all, is the record $5 million payoff—a fiat $2.5 million each—that Cooke and Perenchio have guaranteed the fighters. To cover that guarantee, Cooke put up $4.5 million, with the remaining $500,000 coming from Madison Square Garden. Delighted to put on the fight after making an unsuccessful bid of its own against Perenchio's, the Garden, in fact, agreed to pay Fight of Champions a little more than that: $700,000 or 70% of the live gate, whichever is larger. Its own gross would be 30% plus a cut of the closed-circuit TV proceeds from New York and Illinois.

For the Garden, which has had its financial difficulties of late, it adds up to a tidy windfall. A sellout crowd of 20,000 will yield about $1.25 million, and if there is one certainty it is that the Garden will be sold out.

The stakes Perenchio and Cooke are playing for go far beyond the live gate. To cover Cooke's $4.5 million investment, plus $1 million or more that Fight of Champions is likely to incur in promotion expenses, the fight would have to gross something like $9 million from all sources. Although documentary films, historic mementos and the rest are nice, the only proven way to make a heavyweight title fight pay these days is with closed-circuit TV. Allowing receipts of $1 million-plus from the live gate and another $1 million or so from foreign rights, this means the match would have to gross roughly $7 million from domestic closed-circuit TV for Fight of Champions to break even. The biggest closed-circuit take to date is $3.2 million for the first Patterson-Liston fight in Chicago in 1962.

For all Perenchio's talk about a $30 million gross, there are qualified kibitzers who question whether the fight will bring in the necessary $9 million. "Perenchio has a shot at breaking even or maybe making a little," says Fred Hofheinz, who co-promoted the closed-circuit portion of last December's Ali-Bonavena set-to. "But he also is taking a chance on losing plenty." Hofheinz, whose father is the man with the Astrodome, aided a syndicate that tried to land Ali-Frazier for Houston, and it is noteworthy that his group, like Madison Square Garden, was not prepared to bid anywhere near as high as Perenchio. Says Hofheinz pointedly: "Contrary to what some people say, boxing isn't show business."

Hofheinz is simply at odds with Perenchio's numbers. Where the record Patterson-Liston promotion drew 563,000 closed-circuit customers in 253 locations, Perenchio is thinking in terms of 2.5 million in 500 locations. Where the average ticket for Patterson-Liston came to less than $6, Perenchio is projecting at least a $10 average. There is something else, too. In their yearning for the potential riches of Ali-Frazier, local boxing promoters blithely assumed that the fight would go for the usual 50-50 split with the distributor. But Perenchio, driving what he frankly calls "a ruthlessly hard bargain," is insisting on a 65-35 split, and you can guess who gels 65. Moreover, he is also demanding substantial cash guarantees.

For those who balk, Perenchio has made clear his willingness to bypass the fight crowd and deal with his far-flung friends in the theatrical business. "I'm not discriminating against boxing people," he says. "It's just that nobody's automatically getting the fight. It's competitive and open to all. That's what makes America great."

The upshot is that oldtime fight promoters like Philadelphia's Herm Taylor and Boston's Sam Silverman stand in real danger of being left out of boxing's biggest night. Significantly, when Perenchio announced his first closed-circuit deal last week, it was with Concerts West, a promotional firm owned by Danny Kaye, the Doug Isman Company of Vancouver, B.C. and Sterling Recreational Organization of Seattle; the three groups bought the closed-circuit rights for Texas, Oklahoma, Colorado, Arizona, northern California and the Pacific Northwest. According to Fight of Champions' announcement, the deal was made strictly on Perenchio's terms, and with a $1 million guarantee.

If it all goes the way Perenchio plans, Ali-Frazier will be only the latest, if certainly the biggest, in a line of business coups that started when he took to booking bands for fraternity parties as a UCLA freshman in 1949. It was a sideline that had mushroomed by his graduation into a $400,000-a-year party catering service stretching from San Diego State to Berkeley. Later, after serving in the Air Force as a jet pilot, he hired on with MCA, then the world's biggest talent agency, and in the space of 18 months became one of the youngest vice-presidents—he was 30—in the company's history.

When MCA was broken up by Government trustbusters in 1962, Perenchio went out on his own and within two years founded Perenchio Artists with $105,000 of borrowed money. Chartwell was created by a merger of Perenchio Artists with another agency in 1968, and Perenchio's 60% share today is worth close to $2 million. One of his specialties is booking pop concerts, which is what really emboldened him to undertake the Ali-Frazier promotion. "I know how to book Andy Williams into Salt Lake City," he says, referring to one of his longtime clients. "Well, this fight is like booking Andy Williams into 500 Salt Lake Citys all at once."

It was a friend from the pop-concert circuit, Chicago Promoter Franklin Fried, who plugged Perenchio into the fight business. In early December, Fried had met with Herbert Muhammad, Ali's closest adviser, who was looking for somebody to back the match. Until then, essentially the same bid was on the table from both Madison Square Garden and Fred Hofheinz' Houston group: a $1.25 million guarantee against 35% of the total box-office gross for each fighter. Although they ruled out neither offer, Frazier and Ali were still shopping, and what they had in mind was a flat guarantee of $3 million each.

When Herbert Muhammad spelled out this demand, Fried told him he would try to find a taker. On Dec. 15 Perenchio was in London on business when the phone rang in his Dorchester Hotel suite. It was Fried. "I knew right away I wanted it," Perenchio says. "This was the sort of thing I'd been training 20 years for. I told Fried I'd put a pencil to it." A few hours later Perenchio called Fried back with an offer of $2.5 million to each fighter.

Perenchio then set out to raise the $5 million. Running up $16,000 in phone calls in London, he went through a list of 70 possible backers, including Aristotle Onassis (whom he never reached directly) and Jim Aubrey (who advised him that $5 million was too much to spend). When he returned to Los Angeles on Dec. 20, his 40th birthday, he placed a call to No. 71. This was Jack Kent Cooke, who, it turned out, had been preparing an offer of his own for the fight, which he hoped to hold in the Forum, his sports arena in Inglewood.

They had never met, but the two men proved to be "compatible spirits," as Cooke later put it. Over lunch at the Forum they talked about joining forces, assuming, of course, that Perenchio could definitely land the fight. There was reason to wonder. During lunch Cooke took phone calls from three or four parties claiming, to Perenchio's embarrassment, exclusive rights to the bout. Afraid that somebody else would snatch the prize—one brief suitor was ex-New York Jets owner Sonny Werblin, in partnership with NBC and Johnny Carson—Perenchio flew East to try to negotiate a firm deal.

In New York he ran into many obstacles, the main one being that he was still unable to tell negotiators for the fighters where the $5 million was coming from. At one point he offered earnest money of $250,000, but that only seemed to convince everyone that he did not have the rest. The break in the impasse finally came at a meeting in Philadelphia on Dec. 23. There had been sentiment at one point within the Ali fold in favor of the Astrodome, but now Chauncey Eskridge, Ali's lawyer, as well as Yank Durham, Frazier's manager, urged Perenchio to approach Madison Square Garden in an effort to get the deal closed once and for all. If the Garden would, in effect, put its prestige behind Perenchio, the fighters would trust him for the money. The next day Perenchio called on Alvin Cooperman, the Garden's executive vice-president and a former booking agent for the Shuberts. Cooperman evidently spoke the same language as his visitor. By that night, Christmas Eve, Perenchio and the Garden were partners.

The only hitch was that Perenchio still did not have the money. On Christmas Day he placed a call to Cooke's 7,000-acre cattle ranch in the California Sierras to report that the fight would be held in the Garden rather than the Forum. To Perenchio's surprise, Cooke did not back off. "I'm disappointed it won't be in the Forum, Jerry," he said. "But I want the fight anyway. I think we're going to have a lot of fun."

Cooke did at least salvage something, and it could be a big something—the contract calls for any return match to be held at the Forum for a guarantee of $750,000 against 25% of the profits for each fighter. Otherwise, there was one last crisis before the much-delayed signing finally occurred Dec. 30. Somebody at the Garden, which, as the licensed promoter, is required to pay the purses within 24 hours after the fight, thought to ask where Cooke's $4.5 million might be.

An urgent call went out to California. "I'm insulted," Cooke replied when asked to put the money up in advance. "Don't you think I'm good for it?" Then he said he wanted some time to reach a decision. The next morning, scarcely an hour before the signing, there was a letter of credit for $4.5 million at New York's Chase Manhattan Bank. Cooke chuckled about that later. "I just wanted them to squirm a little," he said.

Now, having rushed in where other financial angels feared to tread, Cooke and Perenchio must prove they are no fools. One relatively favorable development was last week's Supreme Court decision to hear the appeal of Muhammad Ali's draft-evasion conviction, which all but eliminated the possibility that he might be jailed before March 8. Another was Perenchio's hiring of Management Television Systems Inc., a New York firm that handled closed-circuit TV for last year's World Cup, to cope with feared shortages of the necessary projection equipment and telephone lines. Promising that "if Perenchio can sell 750 closed-circuit locations, we can service them," the firm's president, Bill Henry, former chairman of the Federal Communications Commission, said that a survey of the available equipment and recent meetings with phone company officials convinced him most logistical and supply problems can be overcome.

If there remained some question about how many closed-circuit sites Perenchio could sell, it was because his proposed 65-35 deal had run into widespread resistance. A few promoters, like Detroit's Lou Handler, had some bargaining power of their own. Handler had shrewdly rented 12,000-seat Cobo Hall for March 8, and he allowed that he could conceivably keep the facility dark—even at a rental loss of $5,000—if Perenchio did not back down on his demands. As similar cases arose, the only U.S. closed-circuit deal Fight of Champions could definitely point to as of last weekend was the Concerts West package, although Cooke insisted that he and Perenchio had nearly $5 million in "commitments."

But some principals, including Bruce Wright, the lawyer for Cloverlay Inc., Joe Frazier's syndicate, were concerned. In view of his fighter's flat guarantee, Wright theoretically had nothing to worry about, but he said, "You never know what can happen. There's just not enough time to be fooling around like this. Things should have started jelling with those closed-circuit sites." Offering his own assurances that all was going well, Perenchio drove off one afternoon in his powder-blue Mercedes, his black briefcase at his side, for a strategy meeting at Cooke's Bel Air home. Seated in the study, Cooke proceeded to grill the younger man in the manner of an amiable Perry Mason. "How many arenas are there over 10,000?" Cooke asked. "Do you know where they are?" "Do you have a list of them?" At one point, while informing Cooke about TV negotiations, Perenchio said, "Now, Jack, I'll try to be succinct."

"Just go ahead and be brief," dead-panned Cooke.

It was obvious that the two partners were having fun, just as Cooke had said they would. If the fight should bring in anywhere near the $30 million Perenchio was talking about, they stood to make a staggering profit for a one-night stand—as much as, say, $12 million. In a more subdued mood, though, Perenchio was ready to set his sights somewhat lower. "I'd be satisfied if Jack and I came out of this making as much as the fighters," he said. He paused, then said as an afterthought, "That's $2.5 million each." It was almost as if he had to grope for the number.

TWO PHOTOSResponding to a request from Sports Illustrated, Cooke blithely drew up and signed these two checks. On the day after the fight Ali and Frazier will receive $2.5 million apiece.PHOTOThe "compatible spirits," Cooke (left) and Perenchio, meet in Cooke's Bel Air home.