The opinion of the court was delivered by: RYAN
This civil anti-trust suit was filed on March 17, 1952 by the United States under Section 4 of the Sherman Act, C. 647, 26 Stat. 209, as amended, 15 U.S.C.A. § 4, to prevent and restrain violations by the defendants of Sections 1 and 2 of the Act, 15 U.S.C.A. §§ 1, 2. The amended complaint alleges, in substance, that the defendants combined and conspired in restraint of, and to monopolize, and have monopolized, interstate and foreign commerce in the promotion of professional championship boxing contests, including the sale of radio, television and motion picture rights thereto.
Defendants' motion to dismiss the complaint for lack of jurisdiction over the subject matter, i.e., for lack of interstate commerce and for failure to state a claim upon which relief can be granted, was granted on February 8, 1954. The United States appealed directly to the Supreme Court, which reversed the judgment of dismissal and remanded the suit for trial, United States v. International Boxing Club of New York, Inc., 1955, 348 U.S. 236, 75 S. Ct. 259, 99 L. Ed. 290. This determination was a holding that accepting the allegations of the complaint, a claim was stated entitling the Government to some form of relief and that '* * * the Government is entitled to an opportunity to prove its allegations * * *.'
I note, with gratitude and appreciation, that I have had the utmost cooperation from counsel both in the pre-trial hearings and at trial. This expedited the presentation of the evidence and shortened the trial.
The complaint alleges that the defendants, beginning in 1949, combined and conspired in restraint of and to monopolize interstate trade and foreign commerce in the promotion, exhibition, broadcasting, telecasting and motion picture production and distribution of professional championship boxing contests in the United States. The Government contends that the combination and conspiracy resulted in a monopolization, and that it consisted of a concert of action among the defendants to exclude others from the promotion and exhibition of and the sale of radio, television and motion picture rights in professional championship boxing contests in the United States.
The acts alleged to have been committed by the defendants, pursuant to the conspiracy and combination, are: (1) purchasing of promotional control of certain championships, (2) acquiring the assets of competitors, (3) acquiring the exclusive use of principal stadia and arenas, and (4) requiring each of certain contenders for a title, as a condition of being afforded an opportunity to engage in a championship contest, to enter into a contract pursuant to which the contender, if he won the contest and thereby became champion, was required to engage in title bouts only under the promotion of defendants for a period of from three to five years.
The complaint alleges that defendants have promoted, or participated in the promotion of, 80% of all championship contests presented in the United States during the period between January 1, 1949 and May 15, 1953.
Specifically, then, the complaint alleges that the trade and commerce involved in suit is the business of promoting championship boxing contests on a multistate basis, which includes the staging of the boxing contest in a suitable arena, the sale of tickets of admission, and the negotiations and sale of rights to broadcast, televise and to make and distribute motion pictures of such contests. This, the Supreme Court has held, 'constitutes 'trade or commerce among the several States' within the meaning of the Sherman Act', United States v. International Boxing Club of New York, Inc., supra, 348 U.S. at page 240, 75 S. Ct. at page 261. The complaint further alleges that, in addition to monies received from the sale of tickets of admission, a substantial portion of the total revenue from championship fights comes from the sale of rights involving radio, television and motion pictures.
The answers deny that defendants have unlawfully conspired or combined, or that they have, either individually or collectively, a monopoly within the meaning of the Sherman Act. The main thrust of the defense lies in the contention that championship boxing contests are not independent of and would not exist without non-championship contests and, therefore, the promotion of championship boxing contests does not constitute a relevant 'market' for purposes of testing violations of Sections 1 and 2 of the Sherman Act.
The Government argues that promotion and exhibition of, and the sale of radio, television and motion picture rights in professional championship boxing contests constitute a 'market' for purposes of determining whether there were restraints of trade and monopoly as alleged. The defendants urge that the relevant market is the entire entertainment field (or, at the very least, the promotion of all boxing contests). They contend that if the sale of radio, television and motion picture rights with respect to championship bouts have material significance, such a finding would serve only to establish that the correct and relevant market is the entire entertainment field.
The Government, charging the defendants, as it does, with having violated Sections 1 and 2 of the Act, has the burden of establishing the relevant market as well as the elements of the offense as set forth in the Act. Thus, to sustain its charge that the defendants conspired to monopolize, the Government must prove that the defendants had a specific intent to monopolize, Swift & Co. v. United States, 1905, 196 U.S. 375, 396, 25 S. Ct. 276, 49 L. Ed. 518; and to establish that the conspiracy charged was successfully consummated, that the defendants did in fact monopolize the relevant market, that they were '* * * able, as a group, to exclude actual or potential competition from the field', American Tobacco Co. v. United States, 1946, 328 U.S. 781, 809, 66 S. Ct. 1125, 1139, 90 L. Ed. 1575.
The basic issues presented for determination as they have been framed and submitted by the defendants are:
1. Were the activities of defendants in connection with the promotion and exhibition of championship boxing contests interstate trade and commerce within in the meaning of Sections 1 and 2 of the Sherman Act? and
2. If the defendants' activities were interstate trade and commerce, was Section 1 or Section 2 of the Sherman Act violated by them?
The Government called eight witnesses and introduced 268 exhibits; defendants called seven witnesses and offered 13 exhibits. On consideration of all this evidence, I make the following findings of fact.
I. Description of Defendants and Others.
1. Defendant International Boxing Club of New York, Inc. (hereinafter referred to as IBC(NY)), is a New York corporation with offices and principal place of business in New York, New York. It was formed on March 14, 1949. From about July 1949 to May 15, 1953, the end of the period covered by the Amended Complaint (hereinafter referred to as Complaint), about 80% of its voting stock was substantially equally divided between defendants Wirtz and Norris and the defendant Madison Square Garden Corporation, while the remaining approximate 20% was owned by Joe Louis or Trustees for his benefit. It has been engaged in the promotion of professional boxing contests including professional world championship boxing contests. During the period July 1949 to the present it has held a license to promote boxing matches in New York issued by the New York State Athletic Commission. It is found and transacts business in this District.
2. Defendant International Boxing Club, Inc., an Illinois corporation (hereinafter referred to as IBC(Ill.)), has offices and principal place of business in Chicago, Illinois. It was formed on March 1, 1949. From about July 1949 to May 15, 1953, about 80% of its voting stock was substantially equally divided between defendants Wirtz and Norris and the defendant Madison Square Garden Corporation while the remaining approximate 20% was owned by Joe Louis or Trustees for his benefit. It has been engaged in the promotion of professional boxing contests including professional championship boxing contests. During the period July 1949 to the present it has held a license to promote boxing contests in Illinois issued by the Illinois State Athletic Commission.
3. Defendant Madison Square Garden Corporation (hereinafter referred to as Garden), is a New York corporation with offices and principal place of business in New York, New York. It was organized to own and operate the arena building in New York City known as Madison Square Garden which was built in 1925-6. Throughout the period covered by the Complaint, it has engaged, among other things, in the management and operation of the Madison Square Garden Arena including the promotion of various spectacles and contests held there. It is the foremost indoor sports arena in New York City and is utilized for various indoor sports events, including professional boxing contests and other events and spectacles. It is found and transacts business in this District.
4. Defendant James D. Norris, a resident of Chicago, Illinois, was president and a director of IBC(Ill.) and IBC(NY) from March 24, 1949 and July 8, 1949, respectively, and thereafter throughout the period covered by the Complaint and since. He has been a director of IBC(Mich.) since its incorporation and the president of that corporation since August 11, 1949. He has also been the president and a director of IBC(Mo.). He has been a director of the Garden since December 19, 1950, and has been its president since June 9, 1955. At all times mentioned in the Complaint he had a substantial stock interest in the Garden.
5. Defendant Arthur M. Wirtz, a resident of Chicago, Illinois, was a director of IBC(Ill.), of IBC(NY), and of the Garden from March 24, 1949, July 8, 1949, and December 19, 1950, respectively, and thereafter throughout the period covered by the Complaint and since. He has been a director of IBC(Mich.) since its incorporation; he has also been a director of IBC(Mo.) since September 26, 1950, and vice-president and secretary since January 12, 1950. At all times mentioned in the Complaint he had a substantial stock interest in the Garden.
6. The International Boxing Club, Inc., a Michigan corporation (hereinafter referred to as IBC(Mich.)), was organized under the laws of the State of Michigan on July 12, 1949 to promote professional boxing matches in Michigan. It was a wholly owned subsidiary of IBC(Ill.) until December 28, 1950, and thereafter throughout the period covered by the Complaint, it was jointly controlled by the defendants Wirtz and Norris.
7. The International Boxing Club, Inc., a Missouri corporation (hereinafter referred to as IBC(Mo.)), was organized under the laws of the State of Missouri. From October 23, 1950 and thereafter throughout the period covered by the Complaint, it was jointly controlled by defendants Wirtz and Norris.
8. The defendants Norris and Wirtz participated in the direction and management of the defendants IBC(NY), IBC(Ill.), IBC(Mich.), IBC(Mo.) and, since December 19, 1950 of the defendant Garden, and particularly in those affairs, policies, and acts of the said corporations described more fully in these Findings of Facts. Each of the individual defendants has authorized, ordered, or done some or all of the acts hereinafter described.
9. Professional boxing is a legalized sport which has become a business and which is conducted as a form of public entertainment. All who engage in it, either as boxer participants, managers or promoters are motivated to some extent by the desire of profit or monetary gain. It consists of a contest between two individuals each of whom uses his fists, bandaged, taped and encased in padded gloves, to attack his adversary with blows above the waist line and to ward off his adversary's blows. The winner is the boxer who either renders his adversary unable to continue, or failing that, receives the decision of the official judges at the end of the contest. A boxer may also win by the disqualification or default of his adversary.
10. The contest takes place on a square, covered, platform, enclosed by ropes, located in an arena to which members of the public are admitted upon presenting tickets of admission, which may be purchased at the gate.
11. The contestants are matched according to weight classes. There are eight recognized weight classes: flyweight (to 112 lbs.); bantamweight (to 118 lbs.); featherweight (to 126 lbs.); lightweight (to 135 lbs.); welterweight (to 147 lbs.); middleweight (to 160 lbs.); light heavyweight (to 175 lbs.); and heavyweight (over 175 lbs.). In the United States the two lightest classes have little practical importance. No flyweight championship bout has been held in the United States since 1935, and no bantamweight championship has been held in the United States since 1947.
12. In each weight class there is at any one time ordinarily one recognized world champion. Recognition as a world champion is a lucrative asset to any professional boxer and attaining the world championship is generally sought by all professional boxers in the division in which they compete. It places the individual so recognized in a position to obtain more for his services than those who have not been so recognized. Contests in which these champions participate have greater box-office appeal, arouse greater public interest, have larger audience participation and bring in more revenues from sale of admission tickets, or 'gate,' and sale of other rights to the contest. There are other emoluments which come to the recognized world champion by way of commercial endorsements and advertising programs.
13. The champion becomes such either by defeating the existing champion in a recognized title contest, or, if the champion has retired or his title is declared vacated, by engaging with one or more recognized top contenders in a contest, or series of contests, recognized as title, or title elimination contests by authorities such as the New York State Athletic Commission and the National Boxing Association (an association of the state and municipal boxing commissioners, hereinafter referred to, from time to time, as NBA). Although there are sometimes differences of opinion as to who is the champion, such differences are infrequent. The field of champions and potential champions is limited by reason of the prowess of the few who have gained the public recognition of those who are 'fans' or followers of the contests. It is reasonable to say that, at any one time, there are at most only six or so professional boxers who can defend a world championship title.
14. A boxing contest is a single bout between two boxers. Depending upon the circumstances it may be scheduled for 4, 6, 8, 10, 12 or 15 rounds of three minutes duration with rest periods of one minute between rounds.
15. A boxing contest is not staged in an arena except as part of a program or series of boxing contests, known as a boxing card. Each boxing card includes a main event. The professional championship boxing contests are generally staged with a number of 'preliminaries,' minor or insignificant contests, usually five or six in number. The minor contests have little or no interest to those who attend the championship contests; they have no drawing power or box-office appeal, and are staged only that the main or championship event may be orderly presented and allow for the entrance and exit of the spectators with a minimum of confusion.
16. Promoting professional boxing contests includes negotiation and execution of contracts with the boxers, the arranging of details necessary to the exhibition of the contest, the selling of tickets of admission, the staging of the contest, and the sale, if any, of radio, television, or motion picture rights to such contests.
III. State and Municipal Regulation of Professional Boxing.
17. Professional boxing is conducted in many of the states and localities under rules and regulations of governmental authorities; in many instances under a licensing system by which control and supervision is exercised over the boxers and their managers, promoting corporations, the referees, judges, match-makers, time-keepers and those in charge of the sales and distribution of admission tickets. This governmental regulation oft-times extends to specific proposed boxing contests and boxing cards. Under the laws of New York and Illinois, and in certain other states in which professional boxing is permitted, a promoter's license may be issued only to a corporation organized under the laws of that State.
18. In New York the governing authority is the State Athletic Commission which is a Division of the Department of State. In Illinois that authority is the State Athletic Commission.
19. In New York the boxers and their managers, promoting corporations, the referees, judges, match-makers, timekeepers, box office employees, ticket takers, trainers, and announcers, among others, must be licensed by the Commission. The proposed boxing card must be submitted to the Commission for approval by it. From time to time the Commission disapproves proposed boxing contests.
20. In New York, the rules and regulations provide, among other things, for: the filing and some of the terms of the contracts between boxers and the promoter, and between boxers and their managers; the printing and handling of tickets; the actual conduct of the bout; the rules governing the functioning of officials, including the judges, referee, and timekeeper; the manner of scoring the contest; the classification of contestants on a weight basis; and medical examinations of the contestants. The rules and regulations in illinois are similar and apply to the same subjects generally.
21. In New York all judges and referees must be assigned by the Commission. In any principal or main bout the contestants must be paid on a percentage basis and the licensed promoting corporation, without advance approval of the Commission, cannot pay the contestants an amount in excess of 50% of the net proceeds of the boxing program after the State tax and the compensation of the ring officials have been deducted.
22. Licensed promoting corporations are not allowed to conduct more than one program per week without the special permission of the Commission, and no such program may be called off or adjourned without the consent of the Commission.
23. It does not lie within our jurisdiction, to interfere with or attempt to modify or dictate the conditions under which those engaged in this professional boxing business shall operate on a local basis. It is our sole concern to inquire into such activities only insofar as they affect the interstate trade and commerce which has grown up and become an integral part of these activities; to that extent our jurisdiction is limited and by that limitation our inquiry is bound.
IV. The Trade and Commerce Involved.
24. The trade and commerce involved in this suit is the promoting and holding of professional championship boxing contests and all the commercial activities, which are an important and integral part of a successful and complete operation of such business. This includes the staging of such championship boxing contests in a suitable arena or stadium; the sale of tickets of admission; the negotiation and sale of rights to broadcast and to telecast through home television consumption or closed circuit theatre television consumption; and to make and distribute motion pictures.
25. Each of these business phases of the professional championship boxing contests provides substantial sources of revenue for the promoters and participants; not the least of which are the payments received from the sale of rights involving broadcasts by radio and television and the distribution and exhibition of motion pictures of the events.
26. The efficient promotion of these professional boxing contests includes the negotiation and execution of contracts with the boxers, the arranging of details necessary to the exhibition of the contests, the selling of tickets of admission, the staging of the contests, and the sale, if any, of radio, television or motion picture rights to such contests.
V. The Interstate Character of This Trade and Commerce.
27. The defendants IBC(NY) and IBC(Ill.), in promoting professional world championship boxing contests, have made frequent use of the mails, the telephone, telegrams, cablegrams, radiograms, and their officers and agents have travelled across state lines and, in some cases, to foreign nations, to negotiate between themselves, with other promoters, and with boxers and managers. The defendant IBC(NY), in promoting championship contests, has sold a substantial number of admission tickets to professional world championship contests through the use of the mails to customers located in states other than those states in which the contests were held. A substantial number of people who purchased tickets in that manner crossed state lines to be present at such professional boxing contests.
28. Likewise, the defendants IBC(NY) and IBC(Ill.) have negotiated and executed contracts for the sale of rights to broadcast and telecast championship contests. Such negotiations have involved the frequent use of the mails, telephone and telegrams, and means of personal travel across state lines. The purchasers of such rights have broadcast and telecast, or caused to be broadcast and telecast, descriptions and views of such professional world championship boxing contests to private homes located throughout the United States and in the case of some radio broadcasts, in foreign countries.
29. The telecasting of championship contests is of such significance and importance that championship contests held outside the Eastern time zones are staged at unusual times, sometimes as early as 7 p.m. in order to be seen on television in the East at the traditional time of 10 p.m.
30. The locality in which a championship contest is presented is frequently 'blacked out,' i.e., the contest is not televised in such particular locality.
31. The defendants IBC(NY) and IBC(Ill.), in promoting professional world championship boxing contests, have, in some instances, negotiated and entered into contracts to sell the right to telecast professional world championship boxing contests, under which the contract purchaser agreed to arrange for the exhibition of such telecasts in motion picture theatres located in various states throughout the United States.
32. The defendants IBC(NY) and IBC(Ill.), in promoting professional world championship boxing contests, have, in some instances, negotiated and entered into contracts to sell the rights for the distribution of motion picture films of such contests, under which the contract purchaser agreed to arrange for the distribution of motion pictures of such contests for exhibition in theatres located throughout the United States and in foreign countries.
33. The thirty-six championship boxing contests which defendant promoted or had an interest in during the period June 1, 1949 through May 15, 1953, were held in the States of New York, Illinois, Michigan, Missouri, Massachusetts, Florida, Pennsylvania, Ohio and California.
34. The defendants, as promoters of championship contests, derive substantially all of their revenue from the sale of tickets of admission and from the sale of radio, television and motion picture rights to such contests, on the occasions when such rights are sold. The sale of tickets of admission and of the radio, television and motion picture rights are in the control of the promoter.
35. The gross gate receipts plus monies received from the sale, if any, of rights to television, radio and motion pictures for the 44 professional championship boxing contests held in the United States during the period June 1, 1949 to May 15, 1953, were $ 8,759,326. Of that amount $ 6,347,594 or 72.4% was attributable to ticket sales and $ 2,411,740 or 27.6% was attributable to sale of said rights. In arriving at this gross receipts figure, and in making this comparison, gate receipts before payment of federal admission tax figures have been used because the price on the tickets includes such taxes.
36. The revenues derived from sales of tickets of admission to those 44 contests varied between $ 27,166.56 and $ 768,719.32.
37. The revenue derived from the sale of television, radio and motion picture rights to those 44 contests varied between $ 4,650 and $ 386,413.92 in the 29 bouts in which one or more of these rights were sold.
38. The 36 championship contests which the defendants promoted or had an interest in during the period June 1, 1949 through May 15, 1953, produced a total revenue of $ 7,100,944.92, of which $ 2,391,740.92 was derived through the sale of radio, television and motion picture rights.
39. During 1949 four championship contests promoted by the defendants, or from which defendants received income, produced total revenues of $ 569,859.73, of which $ 59,650.00 or about 10% was attributed to the sale of radio, television and motion picture rights to such contests.
40. During 1950 seven championship contests promoted by the defendants, or from which defendants received income, produced total revenues of $ 856,752.72, of which $ 215,000 or about 25% was derived from the sale of radio, television and motion picture rights.
41. During 1951 thirteen championship contests promoted by the defendants, or from which defendants received income, produced total revenues of $ 2,365,536.37, of which $ 946,531.92 or 40% was derived from the sale of radio, television and motion picture rights to such contests.
42. During 1952 nine championship contests promoted by defendants, or from which defendants received income, produced total revenues of $ 2,398,030.89, of which $ 863,558.00 or about 36% was derived from the sale of radio, television and motion picture rights to such contests.
43. The sale of television and radio broadcast rights to championship contests plays an important role in the promotion and staging of these contests, and is a matter of prime business importance. This is evidenced by the fact that the revenue from the sale of home television and radio rights to the Maxim-Murphy light-heavyweight championship contest, promoted by IBC(NY) in the Garden on August 22, 1951, was two and a half times greater than the revenues from the gate receipts after deduction of federal admission taxes, and in the Gavilan-Graham welterweight championship bout, promoted by IBC(NY) at the Garden Arena on August 29, 1951, the revenue from the sale of home television and radio rights produced approximately twice as much revenue as the sale of tickets of admission after deduction of federal admission taxes.
44. The telecasting of championship contests is of such significance and magnitude to the promoter that the presentations of such contests in New York City have become fewer because of the fact that with so many home television receivers in the New York metropolitan area, that area cannot be blacked out without materially reducing the value of the television rights to the sponsors.
45. The business of promoting championship contests is substantially dependent upon revenue from the sale of radio and television rights thereto and that fact is responsible, in great measure, for the manner in which the business is presently conducted.
46. The revenue received by defendants through the sale of motion picture rights to six championship contests presented between June 16, 1949 and May 15, 1953 and their participation in the filming and distribution as described in Finding 33, amounted to $ 616,560.19.
47. The income of the defendants from such a film usually depends on the amount of revenue derived from the distribution of the film in theatres located throughout the United States and in foreign nations.
48. The income of the defendants from the sale of rights to televise a championship contest through closed channels to moving picture theatres is based on a royalty for each seat in each theatre to which the bout may be transmitted or on the number of tickets sold to each such theatre.
49. A professional championship boxer, directly, or through his managers, negotiates with promoters on a bout-by-bout basis for a percentage of the gate receipts, plus a share of the revenue, if any, from the sale of radio, television or motion picture rights.
50. The revenues received by such boxers from the sale of radio, television and motion picture rights to the contests in which they engage represent a substantial part of the revenues received by the boxers from such contests.
VI. The Promotion of Championship Contests -- a Separate Part of This Interstate Commerce.
51. The gross income from gate receipts (less federal admission taxes) and from the sale of radio and television rights, and the distribution of motion pictures from all championship bouts promoted by the defendants from June 1, 1949 to March 17, 1952, averaged, as to each bout, $ 154,000. The gross income, computed in the same manner, from non-championship bouts promoted by defendants at the Garden Arena, Chicago Stadium, Yankee Stadium, and the Polo Grounds, all important stadia, between June 1, 1949 and March 17, 1952, averaged, as to each bout, $ 40,000.
52. The Charles-Maxim heavyweight championship bout held in the Chicago Stadium on May 30, 1951 was promoted by IBC(Ill.) and radio and home television rights to this bout were sold to Pabst Brewing Company for $ 100,000. However, similar rights to a non-championship heavyweight bout between these same contestants held about seven months later on December 12, 1951 were purchased by Pabst from defendant IBC(Ill.) for less than half of that price, i.e., for $ 35,000 in addition to a payment made on a series contract of about $ 10,000, or a total of $ 45,000.
53. The Nielsen Average Audience rating is a percentage which purports to show the number of residential television sets that were tuned in to the program expressed as a percentage of the total residential television sets, whether turned off or ...