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New insurance rules in New York have boxing on the ropes

The Barclays Center in Brooklyn has hosted boxing events since opening its doors in 2012. Lucas Noonan/Premier Boxing Champions

Middleweight titleholder Daniel Jacobs, who hails from Brooklyn, New York, and has boxed regularly in his hometown at Barclays Center since it hosted its first card in October 2012, was recently named the face of the arena's "Brooklyn Boxing" branded merchandise and clothing line.

His selection made perfect sense given where he is from, his exciting style, growing popularity and friendly demeanor.

But when Jacobs faces Sergio Mora on Sept. 9 in a rematch of Jacob's second-round knockout win 13 months ago, when Mora fractured his ankle and was unable to continue, they will not be fighting at Barclays Center, site of the first fight. Instead, they will square off at Santander Arena in Reading, Pennsylvania.

One of the reasons is because, as of Thursday, it became onerous for promoters to put on boxing events in New York thanks to a bill that went into effect that dramatically increased insurance premiums that promoters must pay in order to run a show.

"The law gives the commission the power to adjust the amount of insurance needed for a traumatic brain injury, but that was not done on Wednesday. You would hope they will adjust and realize the damage done to the state financially because of the impact it has on fighters and everybody else that has a financial stake in events that take place in the state of New York."

Joe DeGuardia

In April, the New York State Assembly legalized mixed martial arts in the state following years of lobbying efforts by UFC. Part of the bill included higher insurance rates for all combat sports. They went from $10,000 to $50,000 for general medical coverage per fighter on each card. Most don't view that as overly problematic, but the bill also included a new $1 million minimum requirement for each fighter in the event one suffers a traumatic brain injury. That does happen -- Magomed Abdusalamov's high-profile case comes to mind -- but it is rare.

With the new rates becoming law this week, promoters say they will no longer be able to afford to put on shows, particularly smaller cards in which every dollar counts, in New York and will be taking their business elsewhere.

Promoters Lou DiBella of DiBella Entertainment and Joe DeGuardia of Star Boxing have kept boxing alive on a regular basis in New York for the past several years. While they have promoted their share of major events at venues such as Barclays Center and Madison Square Garden they run monthly club shows at smaller venues. They say an increase in costs would be detrimental to their ability to do as many shows or employ as many fighters, if they can even find somebody to write a policy.

Others also promote regularly in New York, such as Bob Arum's Top Rank and promoters who put on events as part of the Premier Boxing Champions series. But promoters say those days are a thing of the past unless the law is amended.

Despite protests from boxing promoters, the NYSAC approved the changes during its meeting on Wednesday in the final step in making the bill intended to legalize MMA law. While UFC, which recently sold for $4 billion, will be able to afford the larger premiums, the same can't be said for boxing promoters.

DiBella and DeGuardia both have spoken out against the new law and voiced their opinion during the 45-day public comment period before Wednesday's final approval by the commission.

"We respectfully request that the NYSAC eliminate the life-threatening traumatic brain injury limit set forth," they wrote in a joint statement given to the commission. They also called the $1 million figure "unnecessary" and "arbitrary."

Even a bigger company such as Top Rank said it will stop promoting in New York because of the new law.

"I assume down the road there'll be major changes. If not, they'll have a few UFC shows and an athletic commission sitting on their ass with nothing else to do, and the promoters will be going elsewhere, like over the bridge to New Jersey."

Bob Arum

Arum said he has no issue with the increase in the general medical coverage minimum because he said Top Rank has already been taking out $50,000 policies for many years.

"For the last at least 10 years we've had $50,000 in coverage for the fighters and that's appropriate, so that part of the law has no impact and I think it's a good change," Arum said. "It costs like an extra $400 or $500 a fighter. It's reasonable."

But he said that is not the case for the $1 million brain injury insurance now required.

"I don't know how you can afford that," Arum said. "Paying the premium on that policy is probably more than the gate receipts you can take in on some cards so if that stands we couldn't do shows there. I don't even know if they can find a company to write a policy for that. If they can't, that's sayonara for New York boxing."

According to the commission, however, there are insurance companies about to enter the market with a willingness to underwrite those policies. Some have estimated that it could cost a promoter about $10,000 extra to get a policy to cover all of the fighters on a 10-bout card, but others believe it will be much more. That would not be that big of a deal on a major card but would still present issues when it comes to club cards in which that amount of money might be the difference between profit and loss.

Arum said UFC was responsible for having the language put into the bill during its lobbying efforts as a way to force boxing out of the state so it could claim prime dates and venues.

"UFC, which is a monopoly and instituted the legislation, will absolutely freeze out any MMA competitors and destroy boxing in the state the way this is written," Arum said. "These things don't happen by accident. But if it stays this way we cannot go to New York and promote fights. It's as simple as that."

UFC has denied the charges.

"No, UFC did not advocate for the insurance language in the statute," UFC told ESPN.com in statement. "The organization learned of the proposed policies at the same time as the legislature and the other promoters. We pride ourselves on the initiatives we have put in place to continuously elevate athlete health and safety in the sport of mixed martial arts, and have consistently provided accidental insurance above and beyond any state requirement."

Regardless of who proposed the new insurance regulations, Arum said Top Rank will not put on shows in New York until they are changed.

"We were planning events for next year at Madison Square Garden and booking dates and now we'll have to unbook those dates," Arum said. "For Top Rank to miss out on a few shows in New York, OK, but the guys I feel for are the ones who have kept boxing alive in New York: DiBella and DeGuardia."

Arum, known for getting emotional when something is bothering him, was quite calm when talking about the situation. He said it was because he believes the language will eventually be changed once it is clear that the law has driven so much boxing business out of the state.

"I don't want to blow my stack like I usually do because I hope reason will prevail and they'll make a change," Arum said. "I assume down the road there'll be major changes. If not, they'll have a few UFC shows and an athletic commission sitting on their ass with nothing else to do, and the promoters will be going elsewhere, like over the bridge to New Jersey."

But the commission said no changes are planned even though it does have the power to adjust the amount of insurance needed at its discretion.

"The New York State Athletic Commission voted to approve the final regulations governing combat sports in New York State. NYSAC's primary objective is to ensure the safest environment for combative sports in the nation so that combat athletes competing in New York State incur the fewest and least severe injuries possible," commission spokesman Laz Benitez told ESPN.com in a statement. "While some combative sports industry professionals expressed concern over the premiums for the $1 million coverage, these amounts are as yet determined. However, from discussions with insurers about to enter the market, we believe the costs will be reasonable.

"Ultimately, the frequency and severity of life-threatening brain injuries incurred in New York State will drive the premiums. NYSAC believes the best way to keep premiums down is to keep injuries to a minimum."

Brooklyn Sports & Entertainment CEO Brett Yormark, who runs Barclays Center and has made boxing a cornerstone of the programming at the building, said he believes that even with the increase in insurance costs there still will be regular boxing at a high level at his arena. In fact, he said he plans to announce two major cards in the coming weeks, both of which would take place before the end of the year, regardless of whether the commission changes the insurance language.

"I feel very confident that the major championship fights we have hosted will continue," Yormark said. "As far as my commitment, it will continue at the highest level. I don't think the ruling by the state will have a great impact on our boxing programming, but I can't speak for the smaller fights even though I am very supportive of all the promoters."

DeGuardia, who has used his club cards at the Paramount in Huntington on New York's Long Island to develop fighters, most notably former junior welterweight titleholder Chris Algieri, has Oct. 14 on hold for a card there. But he said he will cancel it next week without a change in the rules.

"We didn't schedule a show for September because of this situation but if there is no change by next week -- and there probably won't be -- I will tell the Paramount to scratch it and move the show out of state. I'll move it to Connecticut, New Jersey or Pennsylvania or I'll go to one of the New York casinos, where it will be outside the jurisdiction of the commission."

At casinos in New York, such as Turning Stone in Verona, a regular host of boxing, the sport is overseen by tribal commissions with their own rules and regulations.

"The law gives the commission the power to adjust the amount of insurance needed for a traumatic brain injury, but that was not done on Wednesday," DeGuardia said. "You would hope they will adjust and realize the damage done to the state financially because of the impact it has on fighters and everybody else that has a financial stake in events that take place in the state of New York. Unfortunately, although the new rules might have been done with good intentions, the road is not going to lead to where they think.

"It's going to make it much more difficult to promote boxing and MMA, for the smaller MMA promoters, and the result will be the reverse of what they desired, which was to bring MMA in and increase revenue for the state."