Rahman's finances have taken a big hit

WBC champion latest in long line of boxers to have money problems

November 30, 2005|By LEM SATTERFIELD | LEM SATTERFIELD,SUN REPORTER

Hasim Rahman "won" the World Boxing Council heavyweight championship when his title bout with Vitali Klitschko fell through. But Rahman also lost the $4.2 million purse.

The title belt might be nice, but it won't pay his bills - and Rahman has plenty of them.

The Baltimore native filed for Chapter 11 bankruptcy on Oct. 4, disclosing a debt of nearly $5 million to as many as 20 creditors, including $2.1 million in unpaid taxes and another $2 million to promoter Don King.

How did it come to this for a boxer whose purses for two bouts with Lennox Lewis totaled nearly $5 million? In this sport of high-priced purses, it's not an uncommon question.

Rahman, 33, was the third former or current world boxing champion to file for bankruptcy this year, joining Riddick Bowe and Antonio Tarver. Last year, Mike Tyson - who has made $300 million in purses - filed for bankruptcy.

For some boxers, the sudden rise from obscurity to the multimillion-dollar limelight can be overwhelming. Between fights, they may spend in anticipation of income that doesn't necessarily materialize. They can get burned by unsavory managers or promoters who manipulate contracts in favor of themselves.

Friends and relatives often become financial liabilities in the form of "entourages that hurt more than they help because they enable fighters to spend," said Jeff Fried, a Washington-based attorney who advises boxing managers and promoters as well as NBA athletes.

"Some professional boxers think, `I'm never going to lose,' and they spend commensurate to what their expectations are in the ring. They believe, `after I beat this guy, my next fight's going to be against that guy for so many millions,'" said Fried, who has authored The Sweet Science, Legally Speaking. "Where you and I get paid once a week or twice a month, fighters only get paid when they fight, so between-fight budgeting becomes an important issue.

"Whatever expenses or obligations Hasim had earmarked for his contemplated purse must now be re-evaluated. It impacts materially upon his personal financial planning and budgeting."

Rahman's knockout of Lewis in 2001 earned him the undisputed heavyweight crown, which he lost in their rematch seven months later. But Rahman didn't always hold onto the money he made, and the window of opportunity for big-money fights closed almost as quickly as it had opened.

A clothing store deal went bad. Taxes went unpaid. And as his entourage grew, so did the financial expenses of sustaining it.

"That day in April of 2001, when Hasim Rahman defeated Lennox Lewis to become heavyweight champion, I don't think any of us anticipated how big that was or how many distractions would come out of it," said Rahman's manager, Steve Nelson. "There was a lot of fun being had, focus was being lost, and wrong decisions were being made in a lot of areas. The truth is, there were mistakes made - that's the bottom-line truth that no one can deny."

Also, the amount of money that actually finds its way into a fighter's pocket ends up being far less than the purse totals reported in the newspaper.

Fried's book details the cuts taken from a fighter's purse. Managers receive 10 to 25 percent and trainers up to 10 percent, with sanctioning fees taking 3 percent. Then, taxes claim up to 45 percent.

Cedric Kushner, Rahman's promoter for his first fight with Lewis, estimates Rahman took home "about $700,000" of the listed $1.1 million purse. Kushner estimated that $275,000 went to co-managers Stan Hoffman and Steve Nelson, $50,000 to trainer Adrian Davis, $30,000 to sanctioning fees to the World Boxing Council and another $15,000 toward sparring partners and training expenses.

Fried estimates that up to half of the $750,000 remaining was taxed, leaving Rahman with about $350,000.

According the records obtained from Marc Ratner, director of the Nevada State Athletic Commission, Rahman was to receive about $3.6 million of the $5 million listed on the contract for his November 2001 rematch with Lewis.

"The fighters are like, `I'm making a million dollars,' when, after you pay taxes, that's almost half," Fried said. "You hear `a million dollars,' but when you start dealing with the other expenses, it's not the unlimited gravy train that you might otherwise think, which reflected in the different bankruptcy filings."

Chapter 11 bankruptcy allows businesses or individuals that are looking to continue operating instead of shutting down to reorganize their debt.

Rahman's move was in response to a $2.1 million lawsuit King filed against him in September, claiming entitlement to half of Rahman's $4.2 million purse for fighting Klitschko. Rahman settled with King for $740,000.

Rahman owes nearly $99,000 to Mondawmin Mall Business Trust for a clothing business that failed.

"I can't tell you how many deals come across my desk for a bar or a nightclub that don't always contain sound business foundation," Fried said.

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