BILL ANALYSIS
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|Hearing Date:June 26, 2000 | Bill No:AB 52|
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SENATE COMMITTEE ON BUSINESS AND PROFESSIONS
Senator Liz Figueroa, Chair
Bill No: AB 52 Author:Cedillo
As Amended:June 20, 2000 Fiscal: Yes
SUBJECT: Athletic events: fees
SUMMARY: Establishes $50,000 as the maximum fee on
admission receipts required to be paid to the California
State Athletic Commission (Commission) by promoters of a
boxing, kickboxing, martial arts, or wrestling contest or
exhibition.
Existing law:
1)Establishes the Commission within the Department of
Consumer Affairs with responsibility to develop
rules and regulations governing boxing and martial
arts.
2)Requires the promoter or other organization
conducting a boxing, kickboxing, martial arts, or
wrestling contest to pay to the Commission a fee of
5% of the amount actually paid for admission to a
contest, except that the fee may never be less than
$1,000 for a professional contest and $500 for an
amateur contest.
3)Requires the promoter or other organization
conducting a contest, within 72 hours after a
contest for which admission is charged and received,
to furnish a written report to the Commission
showing the number of tickets issued or sold for the
contest, the amount of the gross receipts or value
of the tickets, and the gross price charged directly
or indirectly, for the sale, lease, or other
broadcasting or television rights of the contest.
4)Requires the Commission to administer a pension plan
for boxers who engage in boxing contests in this
state.
This bill:
1)Provides that the 5% fee paid to the commission
shall not exceed $50,000.
2)Provides that if the admission for any single boxing
contest exceeds $50,000, 50% of the amount in excess
of $35,000 shall be deposited in the Boxer's Pension
Plan (Plan) and 50% of the amount in excess of
$35,000 shall be paid to the Commission.
3)Sunsets the provisions of this bill as of January 1,
2006.
4)Requires the Commission to report to the Legislature
on the impact and effect of the provisions of this
bill by December 31, 2004.
FISCAL EFFECT: Unknown.
COMMENTS:
1.Purpose. According to the author, establishment of
a $50,000 cap on the fee that the Commission charges
for boxing and wrestling events will enable
California to compete with other states in
attracting and retaining large boxing events. The
author claims that without a fee cap, California is
at a competitive disadvantage with other states that
have implemented a fee cap. The author notes that in
addition to the 5% fee required to be paid to the
state, a 3% tax is also authorized for boxing gate
receipts in the City of Los Angeles.
2.Background. Earlier this year, the author
introduced AB 2937 after several news articles
profiled the dissatisfaction of boxing promoters and
Staples Arena officials with the 5% fee on boxing
event admission receipts. The dissatisfied
promoters were in the process of negotiating a
championship boxing match at the Staples Arena in
Los Angeles. Since the initial news articles
appeared, the deal for the championship fight was
finalized and took place as scheduled on June 17,
2000. The fight was anticipated to generate $8
million in ticket revenue, which would result in a
$400,000 fee required to be paid to the state. If
the Legislature had passed AB 2937 it would have
reduced the fee from $400,000 to $50,000. AB 2927
was never heard by the Assembly Governmental
Organization Committee.
3.California State Athletic Commission. The
Commission is responsible for regulating
professional and amateur boxing and professional and
amateur full-contact martial arts. There are
approximately 100 professional boxing events, 150
amateur boxing events, and 70 professional/amateur
full-contact martial arts events held each year in
California. The regulatory process attempts to
maximize the health and safety of athletes and
ensures that events are fair and competitive.
California has more professional boxing events than any
other state. Commission staff must approve all bout
opponents from preliminary bouts to world title bouts.
All officials, ringside physicians and inspectors are
assigned to events by commission staff. To ensure
integrity, ability and knowledge, mandatory clinics are
held every six months for referees, judges, timekeepers,
ringside physicians and inspectors. All referees are
formally evaluated on a bout-by-bout basis and remedial
training is offered.
4.Professional Boxer's Pension Plan. The Plan is
defined as a "contribution" plan which is now based
on a per-ticket assessment of $.88 per ticket for
each event (boxing and otherwise) paid by the
promoter. The funds are now administered by First
Union Securities. There are currently 400 vested
boxers which means they are eligible for benefits at
age 55. To date the Commission has refunded
$404,542 to boxers who have had a break in service
and do not meet the vesting criteria. The amount of
$25,533 has been returned to boxers who are
permanently disabled.
The Staples Center (Sponsor) argues that the Plan is
woefully under funded. It appears that they have
introduced this bill to respond to that problem.
The Commission indicates that they doubt very
seriously that any increased contributions will be
made to the Plan based upon the relatively low
number of high profile bouts.
Is the Plan inadequate and does this bill propose a
reasonable solution?
5.Competitive Disadvantage. According to the Sponsor,
California has not hosted a major title-boxing event
in 26 years because of the competitive tax
advantages of states like Nevada, New York and New
Jersey. New York has a 3% tax with a $50,000 cap
while New Jersey has a $100,000 cap and Nevada
collects a 4% fee on boxing admissions.
Is California at a disadvantage? Is this bill the
solution or should local jurisdictions, who will
directly benefit from increased economic activity,
lower or cap the fees they assess on these events?
6.General Fund Reliance. Although the Athletic
Commission is a General Fund Agency it is a revenue
producing agency in which all collected revenues are
deposited back into the General Fund. The major
source of revenue is the 5% gate tax collected at
live professional boxing events and professional
wrestling exhibitions. License fees make up the
remainder of the revenue sources. Because
Commission revenues are deposited back into the
General Fund, the Commission relies on the General
Fund for approximately 3-4% of its budget. These
General Fund deposits help to offset the
Commission's expenditures.
The sponsor argues that if the enactment of this
bill attracts just one major title-boxing event per
year with one million or more in ticket sales it
will generate $42,000 for the Commission and
completely eliminate its reliance on the General
Fund. Additionally, it would generate the largest
single contribution ($7,500) to the Professional
Boxer's Pension Plan. On the other hand, the
sponsor argues that if the enactment of this bill
fails to attract a single boxing event, it will have
no negative fiscal effect on the Commission or the
Professional Boxer's Pension Plan.
In its letter of opposition, the Commission
indicates that it opposes AB 52 because it
undermines the existence of the Commission and
places their goal of financial self-sufficiency in
jeopardy. The Commission points out that the Joint
Legislative Sunset Review Committee recently
recommended that the Commission should reduce its
reliance on the General Fund. The Commission
indicates that it has an annual struggle with
revenue collection to avoid deficiency requests and
this bill will in no way eliminate that struggle.
Will the Commission encounter greater General Fund
reliance if this bill is passed and should
California tax payers have to foot the bill?
SUPPORT AND OPPOSITION:
Support: Staples Center (Sponsor)
Central City Association of Los Angeles
City of Los Angeles
Greater Los Angeles African-American Chamber of
Commerce
Great Western Forum
Los Angeles Area Chamber of Commerce
Los Angeles Convention & Visitors Bureau
Opposition:California Athletic Commission
Center for Public Interest Law (5/26/00
version)
Consultant:Kristin J. Triepke
AB 52
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