A Bruising Bout Looms Over Cap on Boxing Tax

Two old friends are combatants in a legislative debate over the future of big-time boxing in California--and it’s shaping up as an ugly fight.

In one corner is former Assembly Speaker Antonio Villaraigosa, who promised boxing promoter Bob Arum and Staples Center that he would pursue a $350,000 tax break for the two if they brought Oscar De La Hoya home to Los Angeles for a title fight.

In the other corner is new Assembly Speaker Bob Hertzberg, a fellow Democrat who thinks giving tax breaks to boxing impresarios smells of special-interest politics.

The dispute began when Arum and the Los Angeles arena sought help from Villaraigosa to bring De La Hoya to Staples Center for a June 17 championship welterweight bout with Shane Mosley. The lawmaker promised to push “urgency” legislation that would take effect in time for the fight.

Before ceding power to Hertzberg (D-Sherman Oaks) in April, Villaraigosa, a mayoral candidate, assigned Assemblyman Gil Cedillo (D-Los Angeles) to quickly shepherd a bill through the Legislature that would cap--at $50,000--the 5% state tax that boxing promoters pay.

“Staples made a case that they did not have a level playing field, that world-championship bouts were not coming to Southern California and a hometown hero could not fight here,” Villaraigosa said. “We need leadership in the city of Los Angeles that wants to attract investment and jobs.”

Now Cedillo, who walked smack into a flurry of opposition from fellow Democrats, is fighting back with a reworked proposal that would cap the tax at $75,000 instead. The legislation would still take effect immediately, thus saving the arena and Arum $325,000 of what would otherwise be a $400,000 tax bill.

Arum’s Top Rank Boxing organization contends that the tax break could represent the difference between a profit and a loss for those who stage major bouts. But few people who understand the overhyped boxing industry take that seriously. The fight is expected to rake in millions in pay-per-view money alone.

Nevertheless, supporters say a tax break would send a signal to boxing promoters that California is a boxing-friendly state, and lure them back from Las Vegas’ palatial casinos.

“I grew up in this city at a time when Mexican American fighters were a major part of the sports scene,” Cedillo said.

Backers of the bill also point out that New York instituted a similar tax cap several years ago and that Madison Square Garden has since experienced a boxing rebirth, hosting several title bouts.

If Los Angeles does not do the same, boxing boosters say the De La Hoya-Mosley clash could be the last big fight in the city for a long time.

It is, in fact, the biggest prizefight in years for California, which has never collected more than $35,000 in taxes from a boxing match. And many powerful Los Angeles interests--from Councilmen John Ferraro and Alex Padilla to the Greater Los Angeles Chamber of Commerce--back a tax cap to keep the fights coming.

Opposed by Hertzberg and the state Athletic Commission, Cedillo’s bill suffered a technical knockout this spring when he was persuaded not to introduce it in a committee.

Though the commission is funded in part by the boxing tax, it was not included in negotiations on the tax break until recently, upsetting some of its members.

“They’re trying to fix something that’s not broke so some people can make even more money, and I think that’s wrong,” said Commissioner Al Ducheny. “They’re sitting in a back room somewhere writing legislation for the special interests.”

Undaunted, Cedillo has modified another bill, one dealing with health care for illegal immigrants, that has cleared Hertzberg’s clutches in the Assembly and is now in the Senate, and turned it into a compromise version of his boxing bill.

The legislation, AB 52, contains “sweeteners” intended to soften up the opposition. Besides raising the proposed cap for major fights to $75,000, it lowers the tax rate to 3.5% for bouts generating less than $1 million in ticket sales. But it also applies to the ever-popular “sport” of pro wrestling, whose theatrics generated three times more state tax money than boxing last year.

But Cedillo’s new bill still includes the urgency clause. Under the state Constitution, lawmakers are expected to pursue urgency bills only when “the immediate preservation of the public peace, health or safety” of Californians is at stake. If Cedillo removed the urgency clause, some lawmakers say, even Hertzberg’s opposition could disappear.