BOXING GETS A SUDDEN CASE OF THE SHORTS
Four years ago Harold J. Smith didn't have the price of air fare from Los Angeles to New York. Two years later, on May 25, 1979, he promoted his first boxing show at a small club in Santa Monica, Calif. through a corporation named Muhammad Ali Professional Sports (MAPS). Within another year Smith, who suddenly seemed to have a limitless supply of cash, was threatening to take over the sport. Champions were delighted to fight on his cards, because he offered much bigger purses than anyone else. Occasionally questions were raised about where all the money was coming from. Last week we may have gotten the answer. A bank in Beverly Hills, where one of Smith's partners was an officer and where MAPS had accounts, discovered that it was missing millions upon millions of dollars. Missing, too, was Smith.
The big paydays ended with the discovery that the Beverly Hills branch of Wells Fargo Bank had, through a routine audit, uncovered an apparent embezzlement that may reach $50 million. One source said that $20 million allegedly had been illegally transferred to MAPS accounts and had then vanished, while another unaccounted-for $30 million is still being tracked down.
The FBI quickly stepped in and Wells Fargo froze all remaining funds in MAPS accounts. Quietly a search began for the missing Smith, 37, the executive director of MAPS, who hadn't been seen since Jan. 21, and for Benjamin Lewis, a bank official who was also a member of MAPS' board of directors, and had himself been missing since Jan. 26. Ali, who said he'd been suspicious for some time of how Smith was getting his money, demanded that his name no longer be used by the beleaguered company.
Repercussions were immediate. In Philadelphia CBS threatened to cancel its telecast of last Saturday's Jeff Chandler-Jorge Lujan WBA bantamweight title fight. MAPS was co-promoting the bout with J. Russell Peltz of Philadelphia. "We were afraid the fighters wouldn't get paid," said Mort Sharnik, CBS' boxing consultant. A few hours before the fight, Sammy Marshall, the noticeably haggard MAPS president, signed all rights over to Peltz.
In New York a frenzied search began for a way to salvage the Feb. 23 $8.1-million MAPS promotion at Madison Square Garden that was to include three title bouts and the ballyhooed Gerry Cooney-Ken Norton heavyweight fight. Elsewhere at least eight world champions under MAPS contracts started seeking new, if less generous, promoters.
When the bearded, 6'2" Smith was last seen, he was reportedly leaving for Puerto Rico to complete the plans for an Ali-John L. Gardner fight tentatively scheduled for San Juan in mid-April. But 10 days later Mrs. Pepe Cordero, the wife of the boxing promoter Smith was supposed to contact in Puerto Rico, said neither she nor her husband had seen or heard from Smith in two weeks.
Smith, a native of Alabama, has always been something of a mystery man, even to those close to him. In the 1960s he was often seen with civil rights activists like Stokely Carmichael and Rap Brown. He once told a friend that his uncle was one of the Scottsboro boys. In 1965, at the age of 22, he carried an American flag during the protest march in Selma, Ala. When Ali refused to be drafted in 1967 and was stripped of his heavyweight championship, Smith led an exhaustive campaign that reportedly amassed hundreds of thousands of signatures to statements protesting the move. After that, Smith and Ali became friends. Ali was Smith's idol, and for the use of the Ali name, the former heavyweight champion reportedly was paid 10% of the gross from all Smith's promotions.
Little else is known of Smith's past except that he was involved in minor league entertainment promotions when he moved from New York to California around 1976. In Los Angeles he formed a rock-concert promoting company with Lewis. One of the last promotions was a four-night series of Shirley Bassey shows for which, per usual, he overpaid.
Smith's association with sports started soon after his move to Southern California, when he read a newspaper story describing the desperate financial circumstances of Florida sprinter Houston McTear's family. Contacting McTear, Smith offered to sponsor him on the West Coast. In 1977 he moved McTear to California to train. It was Smith who talked Ali into giving McTear a check for $30,000, which Ali reportedly dispensed with the words, "Go buy the family a house."
Soon afterward, Smith formed Muhammad Ali Amateur Sports, and he emerged as a promoter of track and field meets. CBS televised Smith's first meet, in 1977. Barry Frank was then CBS' director of sports. Shortly after signing a contract with Smith, Frank flew to Los Angeles for a meeting of network affiliates. Waiting for him in the lobby of the Century Plaza Hotel was Smith.
"Barry, I've got to have $50,000 in advance or we can't hold the meet," said Smith.
Frank said he'd have a check drawn.
"Could you make $300 of it in cash?" Smith asked. "I don't have enough money to fly back to New York."
In less than three years, Smith, having apparently become very wealthy, was taking the boxing world by storm and blithely losing millions along the way. "The prices he paid were ridiculous," says rival promoter Bob Arum, who, along with the flamboyant Don King, took to the sidelines rather than do battle with Smith's flight bags full of cash.
In a matter of 19 months MAPS lost close to $10 million while putting on an extraordinary series of outstanding fights. The pot of gold seemed bottomless. "My wife and I put up $4 million," Smith explained, "and wealthy friends put up another $8 million." He never said where he and his wife, Lee, had acquired their wealth or who their rich friends were.
Whatever the source, the money was quickly shuffled into the bank accounts of happy fighters. The purses Smith offered were outrageous; he often paid four or five times more than the going market rate. And MAPS never offered less than two expensive bouts on any program. Frequently there were three or more such fights. There was no way the company could come close to getting back what it was paying out.
Consider MAPS' last three matches of 1980:
•On Nov. 28 in San Diego, Smith paid $250,000 each to Matthew Saad Muhammad and Lottie Mwale to fight for the WBC light-heavyweight championship. Only 2,197 fans saw that match. Gross gate receipts: $41,785. There were no television revenues.
•The following night in Los Angeles, MAPS gave Eddie Mustafa Muhammad $300,000 to defend his WBA light-heavyweight title against Rudi Koopmans, who got $50,000. Attendance: 2,749. Gate receipts: $37,000. No TV income.
•On Dec. 12 in Sacramento, Smith paid Wilfred Benitez, a leading welterweight, $250,000 to fight Pete Ranzani, who made at least $75,000. A total of 4,507 fans paid $89,992.50 to attend that bout. No TV revenues.
It was insanity. Or was it? If one wanted to embezzle substantial sums, a good way would be to set up a company or companies with large and frequent cash inflows and outflows, so that big deposits and withdrawals wouldn't raise a red flag. Fight promotions are ideal for this purpose, because of the publicity given the millions of dollars involved.
Some government sources are speculating that Smith may have been an unwitting front for Lewis, who could manipulate funds from his post within the bank. But all the money funneled into the MAPS accounts came in the form of cash deposits, and it was Smith who made such a show of dealing in cash. He used to carry a flight bag filled with greenbacks and reportedly bragged that, if necessary, he could stuff three-quarters of a million dollars into the bag.
Though lavish in his spending, Smith, a soft-spoken man of average build, kept a very low profile. He was reluctant to be photographed, which, considering the present circumstances, seems to have been wise. At boxing matches he would either take a seat far from the ring or would stand in a corridor.
He was moving in a world he claimed to despise. "I hate boxing," Smith told Jack Fiske of the San Francisco Chronicle. "I happened to get into it and I'm stuck, but I won't be involved by the end of 1981." Because he distrusted those with whom he did business, Smith taped all of his telephone calls, and he videotaped all meetings in his office. The revelation of that idiosyncrasy may shake up some of those who did business at Smith's headquarters in Suite 208, 3231 Ocean Park Boulevard, Santa Monica.
The offices are tastefully and expensively decorated. The decor reflects Smith's personal dress, which is stylish but subdued and tends toward Western-cut suits. He was rarely seen without his cowboy hat and sunglasses. Sometimes he also wore cowboy boots. In public, no matter the scene, he preferred to remain at a distance from the goings-on.
Smith has expensive personal habits. He owns several large houses and two condominiums in Marina del Rey; he drives a $40,000 black customized El Dorado convertible and a Seville, and his wife has a Mercedes 450 SL; he purchased an $84,000 powerboat and leased a Learjet. Along with his wife and one Michael Blake, he has a racehorse named Johnlee n' Harold, which won the California Breeders' Stakes on Dec. 27,1980. At Christmas time he passed out envelopes each containing a $1,000 bill to friends and employees.
Lee Smith and their 4-year-old son, John, have also disappeared. At first it was believed that they had left Los Angeles with Smith when he disappeared on Jan. 21. But a source close to the family believes that they may be hiding out in L.A.
Among those hardest hit by the alleged bank sting were the young and promising boxers Smith had recruited from around the country to fight for the Muhammad Ali Boxing Club. Last Saturday, after news of the investigation began to leak out, they gathered at Ali's palatial Los Angeles home to eat chocolate ice cream and to wonder how they would get home.
Ali told them not to worry. "I'm going to give them my money," he said. "All of them are boxers who relied on Harold Smith to pay their rent. And now that he has gone they don't have any place to go."
Ali's sole association with MAPS was the use of his name. Only a few weeks ago, at the urging of friends, he had started his own investigation into Smith's company.
Ali's attorneys asked Smith for his books so an audit could be done. "He said O.K.," says Ali with a sigh, "but he never seemed to find the time to give us the books."
It's possible that Ali's investigation spurred Smith's flight. The day before the scandal broke, Ali said he had already made up his mind to remove his name from the organization. "The money he was paying all those fighters. The office buildings. Everybody flying around in a private jet. The hotel rooms. Flying those card girls, the ones who carry cards between rounds, all over the place. All that money being spent and nobody saying where it was coming from. It was too much for me."
Marshall, who was once a loan officer at the Beverly Hills Wells Fargo Bank, said on Sunday that he and co-promoter Sam Glass of Tiffany Promotions, a Long Island attorney, had called a New York meeting to try to save the Feb. 23 fights at the Garden. On Monday they met with Garden officials and managers of the fighters involved to see if they could work out a financial compromise. No one can pay the purses promised by MAPS and remain solvent.
Mike Jones is a co-manager of Cooney, the WBC and WBA No. 1 heavyweight contender, who was going to be paid $1.25 million to fight Norton. "It was great for the boxers while it lasted," said Jones. "Now we'll have to go back to reality." The reality is that there's no one who will pay $4.1 million for a $600,000 or $700,000 fight. That is what the light-heavyweight champions, Muhammad No. 1 and Muhammad No. 1A, were supposed to get paid for their showdown at the Garden.
Still, not all is lost for the fighters. Cooney, for example, has already been paid $250,000. He was supposed to get another $500,000 on Dec. 15, and the final $500,000 a month later. Neither payment arrived.
John Condon, the president of Madison Square Garden boxing, insisted that he wasn't at all surprised by last week's turn of events: "The purses that Smith has been paying and the ones he promised for the February 23 fights were ludicrous. They've been way out of proportion."
"It's time we get back to basics," said Garden matchmaker Gil Clancy. "Managers are going to come in and be shocked at what we offer and at what Bob Arum and Don King offer, but the offers will be just exactly what the fighter is worth. A $300,000 fighter is going to get $300,000. If he wants $1 million, let him go find Smith."
Some of the fights on the Garden card are sure to be canceled. There were too many to begin with in the first place. That was the MAPS way. In addition to Cooney-Norton and Muhammad-Muhammad, the original program also included WBA welterweight champ Thomas Hearns fighting Benitez, WBC superbantam titleholder Wilfredo Gomez defending against Mike Ayala and WBA lightweight champion Hilmer Kenty taking on Alexis Arguello. This last bout was canceled in early January.
All the fighters received advance money from Smith. The two Muhammads each got $300,000, although Eddie Mustafa's had been placed in the Wells Fargo Bank, where it has now been frozen. Matthew Saad is supposed to get the balance of his purse on Feb. 8. "We're not holding our breath," said Saad's manager. Benitez was paid $100,000, while Hearns got between $100,000 and $150,000 for training expenses. Norton received $100,000.
"We aren't saying we won't take a cut, but first I want to take a look at the realistic projected earnings," said Jones. "I mean the solid money. Let's face it, the major interest is in Cooney-Norton. That fight could stand alone and make money. From Cooney's standpoint, I don't know that what we were getting was unrealistic. But I'm not going to say I won't take a cut."
Jack Cohen, Norton's adviser, seemed less flexible: "No cut. We won't take one dime less than the $1.1 million we agreed upon." Emanuel Steward, Hearns' manager, took a similar stance about his fighter's $1.2 million. "No cut," he said.
Jimmy Jacobs, the manager of Benitez, took a softer line about his fighter's $1 million guarantee. He had heard that all the managers would be asked to take cuts but hadn't heard any figures. "What do they mean about a cut?" asked Jacobs. "Are they talking $100,000 or $900,000? No one has mentioned any numbers to me. I'll go to the meeting at the Garden with an open mind. But one thing I'm sure of: a Hearns-Benitez fight will absolutely take place. The question is where and what are the numbers."
Last Monday they began sifting through the debris of Smith's shattered empire. By late afternoon Wells Fargo had filed suit against Smith, Lewis, their wives, Marshall and MAPS, seeking to recover $21.3 million. Meanwhile, back East, Marshall and MAPS attorney Edward Franklin were still trying to salvage the Feb. 23 Garden card.
Waiting in the wings were Arum, King, Detroit promoter John Yapp and the Garden's Condon and Clancy. "Legally, until MAPS dissolves and all their contracts are null and void, we can't do a thing," Condon said. "Should that happen we, like every other promoter in the world, would be interested in bidding on some of the bouts"—at prices that would put them in the black.
Boxing isn't dead. It's just taking another standing eight count.
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Smith was much in evidence when he promoted the Muhammad Ali track meet in 1979.
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Track stars like McTear trained alongside Smith's stable of young fighters in this Santa Monica gym.
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Smith and Lewis promoted sports events and rock concerts out of their plush Santa Monica offices.
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Clancy now expects more down-to-earth purses.
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Ali quickly disassociated himself from MAPS.
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Co-promoter Glass inherited the whole show.
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Condon says the Garden was only the landlord.
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Cooney-Norton figured as the big Feb. 23 draw.
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Marshall (right), seated next to Hearns in this 1980 photo, is still overseeing MAPS business.
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In November Smith turned up in Puerto Rico for a WBA convention and posed with Ali and Condon.
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In August Smith conferred on his jet with Steward, Hearns' manager.