PARADIGM FILES MOTION TO STOP ERROL SPENCE FIGHT, MANNY PACQUIAO SUES
DAN RAFAEL, WBN, JULY 31ST, 2021
Audie Attar of Paradigm Sports Management, the company that sued legendary eight-division world champion Manny Pacquiao for breach of contract in late June, filed a motion in California’s superior court in Orange County on Friday seeking a preliminary injunction that would bar Pacquiao from participating in a fight with unified welterweight world titlist Errol Spence Jr. on Aug. 21.
Also, on Friday, Pacquiao filed a cross-complaint in the same court against Paradigm Sports in which he accused Paradigm of breach of conduct, breach of fiduciary duty, and fraud, among other allegations.
“Manny Pacquiao’s cross-complaint filed (Friday) reveals in detail the complete sham nature of Paradigm’s complaint,” Pacquiao attorney Dale Kinsella said in a statement. “We look forward to exposing Paradigm’s conduct in front of a jury and recovering both general and punitive damages.”
Pacquiao and Spence are scheduled to meet at T-Mobile Arena in Las Vegas in one of the most significant fights of the year in the main event of a Fox Sports pay-per-view card — unless a judge rules in favor of Paradigm Sports’ motion. The sides are due to argue their cases before a judge via a video hearing on Thursday, a source with knowledge of the schedule told World Boxing News.
If Attar cannot win an injunction, the motion, a copy of which was obtained by World Boxing News, asks the court to grant a preliminary injunction that would bar Pacquiao from participating or entering into any agreement to participate in any bout after facing Spence until Paradigm’s claim for a permanent injunction is resolved, and that Pacquiao be ordered to deposit into an escrow account “up to $8,125,581,” the total Paradigm asserts it would be owed from Pacquiao-Spence.
The suit filed in June said Pacquiao agreed to pay Paradigm 10 percent of income received from his fights and 20 percent of income derived from marketing, commercial, and media contracts.
In the June suit, Paradigm Sports, which is best known for managing UFC superstar Conor McGregor, said it originally signed Pacquiao to a management agreement in February 2020 and was seeking repayment of a $3.3 million advance given to Pacquiao after he breached the agreement in a variety of ways, including by announcing the fight with Spence. Paradigm said it was never made aware of or consulted about the fight, which Pacquiao announced on social media just hours after Paradigm said it was notified that Pacquiao would sign a contract for a fight it had negotiated for him to have this summer against former four-division world titlist Mikey Garcia.
Paradigm Sports also alleges that because Pacquiao disregarded his contractual obligations to the management firm, it has suffered a seven-figure financial loss and damage to its reputation that has caused other potential boxing clients to walk away from the company.
In the motion, Paradigm Sports said that even with Pacquiao breaching his obligations, it still negotiated a fight for him in Dubai against Garcia “that met Pacquiao’s financial criteria of a $25 million guaranteed purse and share of the net profits. Pacquiao, however, failed to sign the Mikey Garcia bout agreement despite repeatedly promising to do so. Pacquiao’s dithering required Paradigm to go to great lengths to preserve the opportunity.
“Then, on May 21, 2021, after verbally accepting Paradigm’s fight offer, Pacquiao instead tweeted that he is participating in the Spence bout, which was never discussed with Paradigm in violation of Pacquiao’s express contractual obligations. Pacquiao’s blatant violation of Paradigm’s exclusivity rights caused Paradigm to suffer money damages consisting of the revenue it would have earned on the Pacquiao/Garcia fight and the $3.3 million advance Pacquiao has kept; as well as irreparable injury to its reputation.”
Pacquiao’s cross-complaint, a copy of which was obtained by World Boxing News, says of the fight with Garcia, “Pacquiao was very skeptical of PSM’s proposed Garcia fight. PSM claimed that Pacquiao would receive a guarantee of $25 million, although that amount continued to decrease in subsequent paperwork PSM sent to Pacquiao.”
Pacquiao’s cross-complaint also details his contractual obligations under a promotional agreement he has with TGB Promotions, which has promoted his past two fights (against Adrien Broner and Keith Thurman) and is promoting the Spence fight.
The cross-complaint argues that Pacquiao had a promotional deal with TGB Promotions before he signed with Paradigm Sports and that because his agreement with Paradigm “specifically stated that Pacquiao’s pre-existing obligations had priority, Pacquiao’s participation in the August 21, 2021 fight against Errol Spence is not in violation” of the Paradigm deal.
According to Pacquiao’s cross-complaint, he signed with Paradigm Sports because Attar promised to set up a late 2020 or early 2021 fight between him and McGregor, who had crossed over to boxing for a mega-fight with Floyd Mayweather in 2017, and because he was promised: “upwards of eight endorsement deals lined up for him, ready to be delivered upon his signing the agreement.”
However, the fight with McGregor did not happen because he was already set to face Dustin Poirier in a UFC match on Jan. 26. McGregor lost and also lost a rematch on July 10 due to a broken leg in the first round.
“Paradigm Sports Management has now attempted to derail the August 21, 2021 (Pacquiao-Spence) bout,” Pacquiao’s cross-complaint said. “PSM frivolously seeks to enjoin that bout based on a series of fraudulent promises, contractual and fiduciary breaches, and shady backroom dealings with one of Pacquiao’s trusted advisors without Pacquiao’s knowledge or consent. To say that PSM has unlawfully attempted to take advantage of Pacquiao is an understatement.
“PSM repeatedly, emphatically, and falsely promised Pacquiao that PSM would immediately secure a ‘mega fight’ between Pacquiao and McGregor if Pacquiao signed with PSM as his manager. This bout was undoubtedly appealing, especially given that Pacquiao’s historical rival (Mayweather) fought McGregor in a very popular and lucrative bout on August 26, 2017.
“To further induce Pacquiao into an agreement, PSM also falsely promised that it had eight endorsement deals already ‘lined up’ for Pacquiao and that PSM would advance Pacquiao $4 million if he signed an agreement for PSM to serve as his manager. In reality, PSM never intended to arrange a bout between Pacquiao and McGregor.
“PSM never secured any of the many endorsement deals it claimed were ‘lined up.’ And PSM never intended to advance the full $4 million to Pacquiao. As further proof of its fraudulent scheme, before Pacquiao and PSM entered into any agreement, PSM had entered into a secret contractual relationship with Pacquiao’s own trusted advisor Arnold Vegafria.”
According to Pacquiao’s cross-complaint, Vegafria, Pacquiao’s business manager, worked with Paradigm “to produce the best contract for PSM and Vegafria, not Pacquiao. Nor did Pacquiao know that Vegafria – not PSM – was responsible for procuring a large portion of the promised $4 million advance. Pacquiao thought that Vegafria acted in Pacquiao’s best interest. It turns out that Pacquiao’s business manager and would-be boxing manager made a deal behind Pacquiao’s back to profit off of him – yet another example of unscrupulous sports managers serving their own interests over the interests of their clients.
“Through the foregoing fraud, deceit, and concealment, PSM induced Pacquiao to sign and enter into (a revised) management agreement with PSM in October 2020. However, shortly thereafter, PSM informed Pacquiao that the promised bout with McGregor would not happen. PSM also informed Pacquiao that there were no endorsement deals, contrary to what it promised him.
“Paradigm has done nothing for Pacquiao. PSM has swindled him and selfishly attempted to exploit Pacquiao’s name to expand its business to include professional boxers in addition to MMA fighters.”
In Paradigm Sports’ motion, it says that “Paradigm has further sustained and continues to suffer injuries that are not quantifiable in money damages — including, among other things, loss to its goodwill, harm to its reputation, and lost opportunities. Emblematic of the harm to Paradigm’s reputation, the only other boxer in its roster, Mikey Garcia, terminated his contract once Pacquiao breached.”
If the court does not stop the fight, Paradigm said in the motion that “the court should require Pacquiao to pay sufficient funds into escrow to satisfy Paradigm’s damages claim. If the court does not preliminarily enjoin Pacquiao from participating in the Spence bout, Paradigm asks that the court order Pacquiao to place sufficient funds in escrow to satisfy Paradigm’s damages in this case because Pacquiao will otherwise abscond (to his native Philippines) with the funds. This relief will maintain the status quo until this matter is resolved.
“The sums to be paid into escrow should include but are not limited to payments to be made by TGB, Fox Sports PPV, and/or PBC. In particular, Paradigm is entitled to have $8,125,581 in monies paid or to be paid to Pacquiao for his participation in the Spence bout to be deposited into Pacquiao’s attorneys’ escrow account or with the clerk of this court.”
Paradigm further argued that if Pacquiao-Spence is allowed to happen, the harm to the company would “far outweigh any inconvenience to Pacquiao” by the fight being put on hold.
MANNY PACQUIAO “BREACH”
“Paradigm’s reputation throughout the professional boxing world and beyond has been besmirched by Pacquiao’s breaches. If the Spence bout proceeds without Paradigm’s involvement, its inability to enforce its rights will be public knowledge,” the motion said. “With no consequences for Pacquiao’s violation of Paradigm’s exclusive rights, it will be unable to rehabilitate its reputation in the sport of boxing and lose out on a huge swath of new business opportunities.
“In contrast, while Pacquiao’s immediate fight will be delayed if he is enjoined from participating in the Spence bout, he created the situation by flagrantly breaching his express contractual obligations to Paradigm.
Furthermore, boxers at Pacquiao’s level do not fight frequently. Pacquiao’s last fight was on July 20, 2019, against Keith Thurman. If Pacquiao is compelled to honor his obligations to Paradigm, a replacement fight could be negotiated quickly, especially considering the speed with which Paradigm was originally able to secure opportunities for Pacquiao.
“Indeed, Pacquiao partnered with Paradigm based on the premise that he only contemplated one or two more fights in his career, and so he need not actually lose an opportunity if the Court grants a preliminary injunction. Rather, the remaining one or two fights that Pacquiao intends to engage in to conclude his career would simply be delayed by a short period of time.”
Pacquiao issued a statement at the time the suit was filed in June that said it had “no merit. I have an absolute right under the agreement with Paradigm to engage in the upcoming bout with Errol Spence. If this frivolous lawsuit continues, I will be proven correct in court.”