$925 million lawsuit filed over investments with PBC’s ‘shady entrepreneur’ Al Haymon

Boxing fans who enjoyed last Saturday’s rematch scrap between 2011’s Fight of the Year winners Andre Berto and Victor Ortiz are no doubt familiar with Premier Boxing Champions (PBC), the television series helmed by power manager Al Haymon.

PBC rocketed to prominence early last year with its frequent and sometimes compelling matchups on channels including NBC, NBCSN, ESPN, CBS, FOX, Fox Sports 1, Spike TV, and Bounce. It garnered even more attention on the business end as a time-buy with money flowing from Haymon’s corporate entities to the television networks instead of the other way around.

Naturally, this requires massive amounts of funding – hundreds of millions of dollars – which came from the asset management company Waddell & Reed via fund manager Ryan Caldwell. As Caldwell put it, “You have to be capitalized for three to five years to do this. To weather the storm. Because in some regards you were going to be the irrational player for a while…You’re turning the model completely upside down.”

Well turning the business model upside down seems to have made some shareholders of Waddell funds extremely unhappy. Fight Opinion’s Zach Arnold was first to discover a February lawsuit in Kansas City federal court filed against Waddell by shareholders of funds purportedly invested in Haymon’s corporate entities. The investors are looking to recover “at least $300 million, and perhaps as much as $925 million, of losses and other damages” as a result of “willful and gross breaches of fiduciary duty towards shareholders to i) prudently monitor and supervise the Funds’ investments to meet the investment objectives as stated in the Funds’ Prospectuses, ii) supervise the Funds’ portfolio managers, and iii) rigorously enforce the Funds’ compliance and ethical codes of conduct.”

The complaint describes Haymon as a “shady entrepreneur” of a “potentially criminal” company.

“Unbeknownst to investors, starting in or about April 2013, the Trustees permitted and approved purchases by Ryan Caldwell, one of the two portfolio managers of the Funds, of approximately $925 million of private securities in a start-up and potentially criminal company in the field of professional boxing promotion. These purchases had no economic justification, but rather were motivated by Caldwell’s personal interest and benefit. In fact, Caldwell …

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