Existing law, the Boxing Act, also known as the State Athletic Commission Act, creates within the Department of Consumer Affairs the State Athletic Commission. Existing law establishes the Boxers Pension Fund, a retirement fund under the exclusive control of the commission, that is funded by an assessment on tickets that is transferred to the commission following a contest or wrestling exhibition, as prescribed, and by contributions by boxers, managers, promoters, or any one or more of these persons. Existing law requires all moneys in the Boxers Pension Fund to be continuously appropriated to be used exclusively for the purposes and administration of the pension fund. Existing law prohibits any moneys with the Boxers Pension Fund from being deposited or transferred to the General Fund.

Existing law requires every person who conducts a contest or wrestling exhibition, within 72 hours after the determination of every contest or wrestling exhibition for which admission is charged and received, to furnish to the commission, among other things, a written report executed under penalty of perjury by one of the officers, showing the amount of the gross receipts, not to exceed $2,000,000, and a fee of 5% of the amount paid for admission to the contest or wrestling exhibition, but prohibits the fee from exceeding $100,000. Existing law requires the commission to report to a specified legislative committee on the fiscal impact of that $100,000 limitation.

This bill would instead require a written report executed under penalty of perjury by one of the officers, showing the amount of the gross receipts, not to exceed $4,000,000, and prohibit the fee of 5% of the amount paid for admission to the contest or wrestling exhibition from exceeding $200,000.

Existing law, the Boxing Act, also known as the State Athletic Commission Act, creates within the Department of Consumer Affairs the State Athletic Commission. Existing law establishes the Boxers Pension Fund, a retirement fund under the exclusive control of the commission, that is funded by an assessment on tickets that is transferred to the commission following a contest or wrestling exhibition, as prescribed, and by contributions by boxers, managers, promoters, or any one or more of these persons. Existing law requires all moneys in the Boxers Pension Fund to be continuously appropriated to be used exclusively for the purposes and administration of the pension fund. Existing law prohibits any moneys with the Boxers Pension Fund from being deposited or transferred to the General Fund.

Existing law requires every person who conducts a contest or wrestling exhibition, within 72 hours after the determination of every contest or wrestling exhibition for which admission is charged and received, to furnish to the commission, among other things, a written report executed under penalty of perjury by one of the officers, showing the amount of the gross receipts, not to exceed $2,000,000, and a fee of 5% of the amount paid for admission to the contest or wrestling exhibition, but prohibits the fee from exceeding $100,000. Existing law requires the commission to report to a specified legislative committee on the fiscal impact of that $100,000 limitation.

This bill would instead require a written report executed under penalty of perjury by one of the officers, showing the amount of the gross receipts, not to exceed $4,000,000, and prohibit the fee of 5% of the amount paid for admission to the contest or wrestling exhibition from exceeding $200,000.

Existing law, the Boxing Act, also known as the State Athletic Commission Act, creates within the Department of Consumer Affairs the State Athletic Commission. Existing law establishes the Boxers Pension Fund, a retirement fund under the exclusive control of the commission, that is funded by an assessment on tickets that is transferred to the commission following a contest or wrestling exhibition, as prescribed, and by contributions by boxers, managers, promoters, or any one or more of these persons. Existing law requires all moneys in the Boxers Pension Fund to be continuously appropriated to be used exclusively for the purposes and administration of the pension fund. Existing law prohibits any moneys with the Boxers Pension Fund from being deposited or transferred to the General Fund.

Existing law requires every person who conducts a contest or wrestling exhibition, within 72 hours after the determination of every contest or wrestling exhibition for which admission is charged and received, to furnish to the commission, among other things, a written report executed under penalty of perjury by one of the officers, showing the amount of the gross receipts, not to exceed $2,000,000, and a fee of 5% of the amount paid for admission to the contest or wrestling exhibition, but prohibits the fee from exceeding $100,000. Existing law requires the commission to report to a specified legislative committee on the fiscal impact of that $100,000 limitation. If the fee for a boxing contest exceeds $70,000, existing law requires that ¹/₂ of the amount in excess of $70,000 be paid to the commission and ¹/₂ to the Boxers Pension Fund.

This bill would instead require a written report executed under penalty of perjury by one of the officers, showing the amount of the gross receipts, not to exceed $4,000,000, and prohibit the fee of 5% of the amount paid for admission to the contest or wrestling exhibition from exceeding $200,000. The bill would also instead require, if the fee for a boxing contest exceeds $140,000, that ¹/₂ of the amount in excess of $140,000 be paid to the commission and ¹/₂ to the Boxers Pension Fund.

Existing law vests the Department of Food and Agriculture with general supervision of weights and measures and weighing and measuring devices sold or used in the state. Existing law defines a weighmaster as any person, who, for hire or otherwise, weighs, measures, or counts any commodity and issues a statement or memorandum of the weight, measure, or count which is used as the basis for either the purchase or sale of that commodity or charge for service.

This bill would make nonsubstantive changes to the above provision.

 THIRD READING  

Bill No: AB 1703

Author: Wendy Carrillo (D), et al.

Amended: 4/12/23 in Assembly

Vote: 21

SENATE BUS., PROF. & ECON. DEV. COMMITTEE: 13-0, 6/26/23

AYES: Roth, Nguyen, Alvarado-Gil, Archuleta, Ashby, Becker, Dodd, Eggman, Glazer, Niello, Smallwood-Cuevas, Wahab, Wilk

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: 78-0, 5/31/23 - See last page for vote

SUBJECT: State Athletic Commission: boxing

SOURCE: California State Athletic Commission

DIGEST:

This bill increases the cap on the gate fee collected by the California State Athletic Commission (CSAC or Commission) for combat sporting events held in the state.

ANALYSIS:

Existing law:

1. Regulates and licenses combat sports under the Boxing Act, or State Athletic Commission Act, administered by the Commission. (Business and Professions Code (BPC) §§ 18600-18887)
2. Defines a professional or amateur boxer or martial arts fighter as one who engages in a boxing or martial arts contest and who possesses fundamental skills in their respective sport. (BPC § 18623)
3. Defines “contest” and “match” synonymously to mean professional and amateur boxing, kickboxing, and martial arts exhibitions, and mean a fight, prizefight, boxing contest, pugilistic contest, kickboxing contest, martial arts contest, or sparring match, between two or more persons, where full contact is used or intended that may result or is intended to result in physical harm to the opponent. (BPC § 18625(a))
4. Requires every promoter who conducts a boxing or martial arts contest or wrestling exhibition and charges admission to, within 72 hours after the determination of the contest or exhibition, give the commission the following:
   1. A written report showing the amount of the gross receipts, not to exceed $2,000,000, and the gross price for (1) the contest or exhibition charged directly or indirectly and (2) the price for the sale, lease, or other exploitation of broadcasting and television rights of the contest or wrestling exhibition without any deductions, except as specified. (BPC § 18824(a)(1))
   2. A fee of 5% of the amount paid for admission to the contest or wrestling exhibition, but no more than $100,000. The commission shall report to the Legislature on the fiscal impact of the $100,000 limit on fees collected by the commission for admissions revenues during its next sunset review. (BPC § 18824(a)(2))
   3. A fee of up to 5% of the gross price for the sale, lease, or other exploitation of broadcasting or television rights, but no less than $1,000 or more than $35,000.
5. Specifies that, if the fee on admissions for a boxing contest exceeds $70,000, the amount in excess of $70,000 shall be paid one-half to the commission and one-half to the Boxers’ Pension Fund. (BPC § 18824(a)(2)(B))

This bill:

1. Increases the cap on the amount of admissions revenue that promoters must report from $2,000,000 to $4,000,000.
2. Increases the cap on the admissions revenue fee from $100,000 to $200,000.

Background

The California State Athletic Commission (Commission) is responsible for protecting the health and safety of its licensees: boxers, kickboxers, and other martial arts athletes. Concerned with athlete injuries and death, the public established the Commission by initiative in 1924. The Commission is responsible for implementation and enforcement of the Federal Muhammad Ali Boxing Reform Act (Federal Boxing Act) and the California Boxing Act or State Athletic Commission Act (State Act). Federal Law, the Muhammad Ali Boxing Reform Act (Boxing Act) prohibits events from taking place in a state without a regulatory commission unless the fight is regulated either by another state’s commission or on sovereign tribal land. Regulated events can provide higher levels of protection for fighters than unauthorized or illegal events, and potentially provide revenue for the state and the local economy where events take place.

The Commission provides direction, management, and control for professional and amateur boxing, professional and amateur kickboxing, and all forms and combinations of full contact martial arts contests, including mixed martial arts (MMA) and matches or exhibitions conducted, held or given in California. The Commission has four main functions: licensing, enforcement, regulating events and administering the Professional Boxers’ Pension Fund (Pension Fund).

Specifically, the Commission establishes requirements for licensure, issues and renews licenses, approves and regulates events, assigns ringside officials, investigates complaints received, and enforces applicable laws by issuing fines and suspending or revoking licenses. The Commission licenses a number of individuals related to the participation in, oversight for, and management of events in California. The Commission does not require any formal education requirements for licensure of fighters, promoters, managers, seconds, matchmakers, referees, judges and timekeepers. However, licensees must possess a minimum level of skill to enable them to safely compete against one another and demonstrate their ability to perform. Licensees who do not fall into the combatant category such as referees, judges, timekeepers and ringside physicians (who are approved by the Commission) must have adequate knowledge of laws and rules so as not to jeopardize the health and safety of athletes. Many of the Commission’s licensees must also pass competency exams provided by the Commission unless they are licensed in other jurisdictions. Fighters must also pass medical examinations that determine whether his or her health or safety may be compromised by licensure and participation in an event.

The Commission’s enforcement activity differs greatly from the scope, methods and procedures used by other programs within the DCA. While other entities at the DCA are subject to the Administrative Procedures Act (APA), due to the nature of the Commission regulated sports and the profession of fighters within these sports, the Commission is not subject to APA. Instead, it has direct disciplinary authority to issue immediate suspensions and fines to ensure violations by Commission licensees are handled and reported quickly. The Commission also has the ability to issue cease and desist orders for unauthorized, illegal events in addition to the suspensions and license revocations for violations of the State Act and accompanying Commission regulations and rules. The Commission partners with the Office of the Attorney General when license revocations, suspension or application denials are appealed. The Commission also conducts arbitrations for its licensees when disputes arise within either the boxer-manager or boxer-promoter agreements and has sole authority over these arbitration proceedings. The Commission’s citation and fine option allows the Commission to penalize licensees rather than pursue formal discipline for less serious offenses, or offenses where probation or license revocation is not appropriate.

The most important work of the Commission happens on the ground level, managing and overseeing events and promoting the well-being of the competitors participating in combat sporting events in California.

As a special fund entity, the Commission does not receive General Fund support, relying solely on fees set in statute and collected from regulatory and license fees. For each event held in California that the Commission regulates, the Commission collects a “gate fee” from the event promoter, which is a 5% fee on gross ticket sales for that event, not to exceed $100,000. The Commission also collects a “TV fee” from the event promoter if the event is broadcast on television, which is a 5% fee on the revenue a promoter collects from broadcasting rights, not to exceed $35,000.

The Commission receives over 70% of its revenue from the fees above, however, unlike other program under DCA, the Commission cannot rely on a predictable funding source such as license fees, when forecasting its revenue and projecting its ability to fund expenditures far in the future, given the fluid nature of the Commission licensing revenues and fluctuations in the sports that dictate when events do or do not take place.

The “gate fee” and “TV fee” can fluctuate greatly from year to year and are significantly influenced by market conditions, as promoters may not opt to hold the same number of fights in California during an economic downturn, among other economic factors.

Commission Fiscal Situation. Due to the COVID-19 pandemic and issuance of a statewide directive to prohibit all major gatherings, all major sporting events were cancelled, which in turn impacted the Commission’s ability to generate revenue mid-way through fiscal year 2019-20 and throughout 2020-21. During this time, the Commission’s revenue dropped to approximately $1.8 million in 2019-20 and to only $894,000 in 2020-21. During this time, the Commission relied on its fund reserves and various cost saving measures to support its operations during the height of the pandemic. Between fiscal years 2019-20 and 2020-21, the Commission’s fund reserves sharply dropped from $1.6 million (12.1 months in reserve) in 2019-20 to $757,000 (4.0 months in reserve) by the end of 2020-21.

In 2021-22, major combat sporting events were allowed to resume in California and the Commission generated roughly $1.9 million in revenues, a significant improvement from the prior year. However, the Commission required additional spending authority of $340,000 to pay the Office of the Attorney General for unanticipated AG litigation costs for which further depleted the Commission’s fund reserves to $343,000 (1.7 months in reserve) by the end of the fiscal year. Based on expenditure and revenue projections, the Commission is anticipated to generate $1.9 million in revenues and expend approximately $2.4 million, which will cause a fund insolvency of $79,000.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

SUPPORT: (Verified 8/16/23)

California State Athletic Commission (source)

OPPOSITION: (Verified 8/16/23)

None received

ARGUMENTS IN SUPPORT: The California State Athletic Commission notes “AB 1703 would increase the cap from $100,000 to $200,000, which has not been increased since the year 2000. The increase in the cap will not impact Promoters of small events nor will AB 1703 impact athletes, managers, seconds, professional trainers, or any other licensee type the Commission has. The Commission believes AB 1703 will help to ensure that the California State Athletic Commission remains solvent as the majority of the Commission’s funding comes from the fees collected on ticket sales.”

ASSEMBLY FLOOR: 78-0, 5/31/23

AYES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Cervantes, Chen, Connolly, Megan Dahle, Davies, Dixon, Essayli, Flora, Mike Fong, Vince Fong, Friedman, Gabriel, Gallagher, Garcia, Gipson, Grayson, Haney, Hart, Holden, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lee, Low, Lowenthal, Maienschein, Mathis, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Rendon

NO VOTE RECORDED: Lackey, Ta

Prepared by: Sarah Mason / B., P. & E.D. /

8/16/23 16:08:18

**** END ****

SENATE COMMITTEE ON

BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT

Senator Richard Roth, Chair

2023 - 2024 Regular

Bill No: AB 1703 Hearing Date: June 26, 2023

Subject: State Athletic Commission: boxing

SUMMARY:

Increases the cap on the gate fee collected by the California State Athletic Commission (CSAC or Commission) for combat sporting events held in the state.

Existing law:

1. Regulates and licenses combat sports under the Boxing Act, or State Athletic Commission Act, administered by the Commission (Business and Professions Code (BPC) §§ 18600-18887)
2. Defines a professional or amateur boxer or martial arts fighter as one who engages in a boxing or martial arts contest and who possesses fundamental skills in their respective sport. (BPC § 18623)
3. Defines “contest” and “match” synonymously to mean professional and amateur boxing, kickboxing, and martial arts exhibitions, and mean a fight, prizefight, boxing contest, pugilistic contest, kickboxing contest, martial arts contest, or sparring match, between two or more persons, where full contact is used or intended that may result or is intended to result in physical harm to the opponent. (BPC § 18625(a))
4. Requires every promoter who conducts a boxing or martial arts contest or wrestling exhibition and charges admission to, within 72 hours after the determination of the contest or exhibition, give the commission the following:
   1. A written report showing the amount of the gross receipts, not to exceed $2,000,000, and the gross price for (1) the contest or exhibition charged directly or indirectly and (2) the price for the sale, lease, or other exploitation of broadcasting and television rights of the contest or wrestling exhibition without any deductions, except as specified. (BPC § 18824(a)(1))
   2. A fee of 5% of the amount paid for admission to the contest or wrestling exhibition, but no more than $100,000. The commission shall report to the Legislature on the fiscal impact of the $100,000 limit on fees collected by the commission for admissions revenues during its next sunset review. (BPC § 18824(a)(2))
   3. A fee of up to 5% of the gross price for the sale, lease, or other exploitation of broadcasting or television rights, but no less than $1,000 or more than $35,000.
5. Specifies that, if the fee on admissions for a boxing contest exceeds $70,000, the amount in excess of $70,000 shall be paid one-half to the commission and one-half to the Boxers’ Pension Fund. (BPC § 18824(a)(2)(B))

This bill:

1. Increases the cap on the amount of admissions revenue that promoters must report from $2,000,000 to $4,000,000.
2. Increases the cap on the admissions revenue fee from $100,000 to $200,000.

FISCAL EFFECT:

This bill is keyed fiscal by Legislative Counsel. According to the Assembly Committee on Appropriations, “By increasing the gate fee cap from $100,000 to $200,000, this bill will increase the Commission’s revenue on events that report more than $2 million in gross receipts on ticket sales. The Commission reports it holds on average three events per year that report more than $2 million in gross receipts. Accordingly, the Commission anticipates an increase of revenue of approximately $300,000 annually… The Commission is facing financial difficulties and projects it will become insolvent. Most of the commission's revenues derive from live TV and gate revenue fees assessed on broadcast or live-fighting sports, such as UFC, boxing, and WWE. The commission's revenue dropped sharply during the pandemic, and it has relied on its fund reserves and various cost-saving measures to support its operations. In 2021-22, the Commission generated roughly $1.9 million in revenues, returning to pre-pandemic levels. However, due to some projected one-time costs and depleted reserves, this is insufficient to stave off insolvency. The Commission can prevent insolvency without a General Fund intervention if it modestly increases the statutory cap for gate fee revenues on events under its jurisdiction. The gate fee has not increased in twenty-three years since 2000, and the cumulative inflation rate in that time has been close to 75 percent.”

COMMENTS:

1. Purpose. The Commission is the Sponsor of this bill. According to the Author, “AB 1703 would prevent the California State Athletic Commission (Commission) from becoming insolvent by modestly increasing the gate revenue fee paid by fight promoters for sporting events the commission regulates.”
2. Background. The California State Athletic Commission (Commission) is responsible for protecting the health and safety of its licensees: boxers, kickboxers, and other martial arts athletes. Concerned with athlete injuries and death, the public established the Commission by initiative in 1924. The Commission is responsible for implementation and enforcement of the Federal Muhammad Ali Boxing Reform Act (Federal Boxing Act) and the California Boxing Act or State Athletic Commission Act (State Act). Federal Law, the Muhammad Ali Boxing Reform Act (Boxing Act) prohibits events from taking place in a state without a regulatory commission unless the fight is regulated either by another state’s commission or on sovereign tribal land. Regulated events can provide higher levels of protection for fighters than unauthorized or illegal events, and potentially provide revenue for the state and the local economy where events take place.

The Commission provides direction, management, and control for professional and amateur boxing, professional and amateur kickboxing, and all forms and combinations of full contact martial arts contests, including mixed martial arts (MMA) and matches or exhibitions conducted, held or given in California. The Commission has four main functions: licensing, enforcement, regulating events and administering the Professional Boxers’ Pension Fund (Pension Fund).

Specifically, the Commission establishes requirements for licensure, issues and renews licenses, approves and regulates events, assigns ringside officials, investigates complaints received, and enforces applicable laws by issuing fines and suspending or revoking licenses. The Commission licenses a number of individuals related to the participation in, oversight for, and management of events in California. The Commission does not require any formal education requirements for licensure of fighters, promoters, managers, seconds, matchmakers, referees, judges and timekeepers. However, licensees must possess a minimum level of skill to enable them to safely compete against one another and demonstrate their ability to perform. Licensees who do not fall into the combatant category such as referees, judges, timekeepers and ringside physicians (who are approved by the Commission) must have adequate knowledge of laws and rules so as not to jeopardize the health and safety of athletes. Many of the Commission’s licensees must also pass competency exams provided by the Commission unless they are licensed in other jurisdictions. Fighters must also pass medical examinations that determine whether his or her health or safety may be compromised by licensure and participation in an event.

The Commission’s enforcement activity differs greatly from the scope, methods and procedures used by other programs within the DCA. While other entities at the DCA are subject to the Administrative Procedures Act (APA), due to the nature of the Commission regulated sports and the profession of fighters within these sports, the Commission is not subject to APA. Instead, it has direct disciplinary authority to issue immediate suspensions and fines to ensure violations by Commission licensees are handled and reported quickly. The Commission also has the ability to issue cease and desist orders for unauthorized, illegal events in addition to the suspensions and license revocations for violations of the State Act and accompanying Commission regulations and rules. The Commission partners with the Office of the Attorney General when license revocations, suspension or application denials are appealed. The Commission also conducts arbitrations for its licensees when disputes arise within either the boxer-manager or boxer-promoter agreements and has sole authority over these arbitration proceedings. The Commission’s citation and fine option allows the Commission to penalize licensees rather than pursue formal discipline for less serious offenses, or offenses where probation or license revocation is not appropriate.

The most important work of the Commission happens on the ground level, managing and overseeing events and promoting the well-being of the competitors participating in combat sporting events in California.

As a special fund entity, the Commission does not receive General Fund support, relying solely on fees set in statute and collected from regulatory and license fees. For each event held in California that the Commission regulates, the Commission collects a “gate fee” from the event promoter, which is a 5% fee on gross ticket sales for that event, not to exceed $100,000. The Commission also collects a “TV fee” from the event promoter if the event is broadcast on television, which is a 5% fee on the revenue a promoter collects from broadcasting rights, not to exceed $35,000.

The Commission receives over 70% of its revenue from the fees above, however, unlike other program under DCA, the Commission cannot rely on a predictable funding source such as license fees, when forecasting its revenue and projecting its ability to fund expenditures far in the future, given the fluid nature of the Commission licensing revenues and fluctuations in the sports that dictate when events do or do not take place.

The “gate fee” and “TV fee” can fluctuate greatly from year to year and are significantly influenced by market conditions, as promoters may not opt to hold the same number of fights in California during an economic downturn, among other economic factors.

Commission Fiscal Situation. Due to the COVID-19 pandemic and issuance of a statewide directive to prohibit all major gatherings, all major sporting events were cancelled, which in turn impacted the Commission’s ability to generate revenue mid-way through fiscal year 2019-20 and throughout 2020-21. During this time, the Commission’s revenue dropped to approximately $1.8 million in 2019-20 and to only $894,000 in 2020-21. During this time, the Commission relied on its fund reserves and various cost saving measures to support its operations during the height of the pandemic. Between fiscal years 2019-20 and 2020-21, the Commission’s fund reserves sharply dropped from $1.6 million (12.1 months in reserve) in 2019-20 to $757,000 (4.0 months in reserve) by the end of 2020-21.

In 2021-22, major combat sporting events were allowed to resume in California and the Commission generated roughly $1.9 million in revenues, a significant improvement from the prior year. However, the Commission required additional spending authority of $340,000 to pay the Office of the Attorney General for unanticipated AG litigation costs for which further depleted the Commission’s fund reserves to $343,000 (1.7 months in reserve) by the end of the fiscal year. Based on expenditure and revenue projections, the Commission is anticipated to generate $1.9 million in revenues and expend approximately $2.4 million, which will cause a fund insolvency of $79,000.

1. Arguments in Support. The Commission notes “AB 1703 would increase the cap from $100,000 to $200,000, which has not been increased since the year 2000. The increase in the cap will not impact Promoters of small events nor will AB 1703 impact athletes, managers, seconds, professional trainers, or any other licensee type the Commission has. The Commission believes AB 1703 will help to ensure that the California State Athletic Commission remains solvent as the majority of the Commission’s funding comes from the fees collected on ticket sales.”

SUPPORT AND OPPOSITION:

Support:

California State Athletic Commission

Opposition:

None received

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 1703

Author:(Wendy Carrillo)

As Amended Ver:April 12, 2023

Majority vote

SUMMARY

Increases the cap on the 5% fee on admissions that the California State Athletic Commission may collect from a combative sports promotion from $100,000 to $200,000.

Major Provisions

1. Increases the cap on the amount of admissions revenue that promoters must report from $2,000,000 to $4,000,000.
2. Increases the cap on the admissions revenue fee from $100,000 to $200,000.

COMMENTS

Background. California, through the California State Athletic Commission, regulates most forms of professional and amateur combative sporting events, such as boxing and martial arts events, including mixed martial arts (MMA) events. Specifically, the commission regulates events where the use of full contact may result in physical harm to an opponent, including amateur contests where full contact may be unintentionally used.

The need for regulation is the inherent risk of harm in combative sporting contests, particularly when held for the entertainment of viewers. Left unregulated, contests may lack safety equipment, mismatch contestants, or, in the case of professionals, fail to pay the contestants. To that end, the commission is tasked with ensuring that contestants who wish to participate in these sports may do so safely and fairly. This is done through the licensing of the fighters themselves, as well as the managers, corners, matchmakers, trainers, promoters, and officials.

This bill would increase the cap on the 5% fee that the commission can collect from a promoter of an approved combative sporting event from $100,000 to $200,000. The purpose of the increase is to help stabilize and rebuild the commission's fund. The question of whether the gate fees should be increased was raised during the commission's 2017 and 2019 Sunset Review.^[1]

Commission Funding. The commission, like other Department of Consumer Affairs (DCA) licensing boards, is a special fund entity and receives no support from the state general fund. It instead relies on revenues from licensing, administrative, and other regulatory fees to pay for its costs. However, the nature of the commission's licenses differs from other DCA licensing boards. Other DCA licensing boards focus on the competence of practitioners that deliver professional services to consumers, and the workload related to ensuring that competence is recouped through license renewal fees.

The commission only licenses fighters to ensure they have the skills to compete with other licensees safely. Instead, the bulk of the commission's workload is the regulation of the events that profit from the fighters' participation. As such, the commission primarily relies on fees on the revenues from the promoters of the events.

There are two types of event fees, a "gate" fee, and a "broadcasting or television" fee. The gate fee is 5% of an event's gross ticket sales, which is currently capped at $100,000. The "broadcasting or television" fee is 5% of the gross price for the sale, lease, or other capitalization of broadcasting or television rights. The broadcasting or television fee is capped at $35,000. More than 80% of the Commission's revenues come from its gate and broadcast fees.

Volatile Revenues. Because the bulk of the commission's revenue comes from the event fees, the commission's solvency is dependent on the number and size of fights held in California, which is impossible to predict. This bill seeks to increase the statutory caps, adding to the commission's overall revenue to potentially offset any low revenue years.

Since FY 2017-18, the commission's reserve has fluctuated between a high of 12.1 and a low of 3.8 months. The commission's current reserve level is $92,000, approximately half a month in reserve. While the commission has no mandated reserve level, the DCA Budget Office has typically recommended a contingency reserve fund of at least six months. This ensures that special fund entities have the fiscal resources to absorb unforeseen costs, such as drawn-out enforcement actions, salary increases, or litigation.

Gate Fee Caps. The current $100,000 fee cap was added under AB 52 (Cedillo), Chapter 436, Statutes of 2000. AB 52 was introduced 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.

Gate Fees in Other States. One concern has been that an increase in fees may hurt the attractiveness of California as a venue for holding events. However, many other states where large events are held assess a comparable fee but do not have caps, including:

1. Nevada: 8% gate fee and no cap (Nevada Revised Statutes Section 467.107).
2. Colorado: 8% gate fee and no cap (Colorado Revised Statutes Section 12-110-114; Colorado Combative Sports Commission Event/Promotion Surcharge Report, April 19 Update).
3. New York: 8.5% gate fee and no cap for MMA, although there is only a 3% fee and a cap of $50,000 for boxing and wrestling (New York Tax Law Section 452).
4. Florida: 5% gate fee with no cap (Florida Statutes Section 548.06(5)).
5. Ohio: 5% gate fee with no cap (Ohio Revised Code Section 3773.54).
6. Arizona: 4% gate fee with no cap (Arizona Revised Statutes Section 5-226(A.))
7. Texas: 3% gate fee and no cap (Texas Occupations Code Section 2052.151).

The highest gate in California was $5,290,213 for an MMA bout in FY 2021-22, and the commission collected $100,000 in gate fees. In the same FY, New York had an MMA bout with a gate of $11,562,807 and Nevada had an MMA bout with a gate of $10,409,553. On April 8, 2023, Florida held an MMA bout with a gate of over $11 million.

According to the Author

"[This bill] is a modest measure that will allow the operations of the California State Athletic Commission to continue without interruption or need for significant General Fund intervention. The Commission operates through fees collected on the contests in the Commission's jurisdiction. The Commission's revenues suffered significantly during the pandemic, and while revenues have since returned to normal, the Commission still faces insolvency in the coming months because of that loss. By raising the cap on fees that the Commission can collect from events for the first time since the year 2000, the Commission will be returned to a strong financial status."

Arguments in Support

The California State Athletic Commission (sponsor) writes in support, "Current regulation allows the Commission to collect a fee of 5 percent of the gross ticket sales for admission to contests or wrestling events with a cap of $100,000. AB 1703 would increase the cap from $100,000 to $200,000, which has not been increased since the year 2000. The increase in the cap will not impact Promoters of small events nor will [this bill] impact athletes, managers, seconds, professional trainers, or any other licensee type the Commission has. The Commission believes [this bill] will help to ensure that the California State Athletic Commission remains solvent as the majority of the Commission's funding comes from the fees collected on ticket sales."

Arguments in Opposition

None on file.

FISCAL COMMENTS

According to the Assembly Appropriations Committee, by increasing the gate fee cap from $100,000 to $200,000, this bill will increase the Commission's revenue on events that report more than $2 million in gross receipts on ticket sales. The Commission reports it holds on average three events per year that report more than $2 million in gross receipts. Accordingly, the Commission anticipates an increase of revenue of approximately $300,000 annually.

VOTES

ASM BUSINESS AND PROFESSIONS: 18-0-0

YES: Berman, Flora, Alanis, Alvarez, Bonta, Chen, Dixon, Gipson, Grayson, Irwin, Jackson, Lee, Lowenthal, McCarty, McKinnor, Stephanie Nguyen, Joe Patterson, Ting

ASM APPROPRIATIONS: 15-0-1

YES: Holden, Megan Dahle, Bryan, Calderon, Wendy Carrillo, Dixon, Mike Fong, Hart, Lowenthal, Mathis, Papan, Pellerin, Sanchez, Weber, Ortega

ABS, ABST OR NV: Robert Rivas

UPDATED

VERSION: April 12, 2023

CONSULTANT: Vincent Chee / B. & P. / (916) 319-3301 FN: 0000496

1. The sunset review process provides an opportunity for the DCA, the Legislature, the boards, and interested parties and stakeholders to discuss the performance of the boards, and make recommendations for improvements. Each year, the Assembly Business and Professions Committee and the Senate Business, Professions, and Economic Development Committee hold joint sunset review oversight hearings to review the boards and bureaus. For more information on volatile revenues, see the background papers for the 2019 Joint Sunset Review Oversight Hearings, accessible at: https://abp.assembly.ca.gov/jointsunsethearings. ↑

Date of Hearing: April 26, 2023

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Chris Holden, Chair

ABPCA Bill Id:AB 1703

Author:(Wendy Carrillo) – As Amended Ver:April 12, 2023

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill increases the cap on the dollar amount of the admissions revenue fee (gate fee) a combative sports promoter must transfer to the California State Athletic Commission (Commission), from $100,000 to $200,000. This bill correspondingly increases the cap on the amount of admissions revenue (gross receipts) a promoter must report to the Commission, from $2 million to $4 million.

FISCAL EFFECT:

By increasing the gate fee cap from $100,000 to $200,000, this bill will increase the Commission’s revenue on events that report more than $2 million in gross receipts on ticket sales. The Commission reports it holds on average three events per year that report more than $2 million in gross receipts. Accordingly, the Commission anticipates an increase of revenue of approximately $300,000 annually.

COMMENTS:

1. Purpose. This bill is sponsored by the Commission. According to the author:

[This bill] is a modest measure that will allow the operations of the Commission to continue without interruption or need for significant General Fund intervention. The Commission operates through fees collected on the contests in the Commission’s jurisdiction. The Commission’s revenues suffered significantly during the pandemic, and while revenues have since returned to normal, the Commission still faces insolvency in the coming months because of that loss. By raising the cap on fees that the Commission can collect from events for the first time since the year 2000, the Commission will be returned to a strong financial status.

1. Background. Existing law regulates and licenses combat sports under the Boxing Act, also known as the State Athletic Commission Act, and establishes the Commission within the Department of Consumer Affairs (DCA). Through the Commission, California regulates most forms of professional and amateur combative sporting events, such as boxing and martial arts events, including mixed martial arts (MMA) events. Specifically, the Commission regulates events where the use of full contact may result in physical harm to an opponent, including amateur contests where full contact may be unintentionally used.

The Commission, like other DCA licensing boards, is a special fund entity and receives no support from the state general fund. Unlike other DCA boards, the Commission primarily relies on event revenue fees collected from event promoters. Although the Commission licenses fighters, event managers, promoters, officials and others, more than 80% of the Commission’s revenues comes from its gate and broadcast fees. In California, the gate fee is 5% of an event’s gross ticket sales, which is currently capped at $100,000. The “broadcasting or television” fee is 5% of the gross price for the sale, lease, or other capitalization of broadcasting or television rights. The broadcasting or television fee is capped at $35,000.

Since fiscal year 2017-18, the Commission’s reserve has fluctuated between 3.8 months-worth and 12.1 months-worth of revenue. The Commission’s current reserve level is $92,000, approximately half a month in reserve. The commission has no mandated reserve level, but the DCA budget office typically recommends a contingency reserve fund of at least six months to ensure special fund entities have the fiscal resources to absorb unforeseen costs, such as drawn-out enforcement actions, salary increases, or litigation.

In order to stabilize and rebuild the Commission’s fund, this bill increases the cap on the fee the Commission can collect from a promoter of an approved combative sporting event, from $100,000 to $200,000.

1. Related Legislation. AB 1136 (Haney) requires the Commission to establish a pension plan for licensed martial artists who compete in MMA contests. AB 1136 is pending in this committee.

Analysis Prepared by: Jennifer Swenson / APPR. / (916) 319-2081

Date of Hearing: April 11, 2023

ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS

Marc Berman, Chair

ABPCA Bill Id:AB 1703

Author:(Wendy Carrillo) – As Amended Ver:March 16, 2023

SUBJECT: State Athletic Commission: boxing.

SUMMARY: Increases (1) the cap on the 5% fee on admissions that the California State Athletic Commission may collect from a combative sports promotion from $100,000 to $200,000 and (2) the threshold on the 5% fee on admissions that triggers the amount above the threshold to be split between the Boxers’ Pension Fund and the commission from $70,000 to $140,000.

EXISTING LAW:

1. Regulates and licenses combat sports under the Boxing Act, which is also called the State Athletic Commission Act. (Business and Professions Code (BPC) §§ 18600-18887)
2. Establishes the State Athletic Commission within the Department of Consumer Affairs (DCA) to administer and enforce the Boxing Act. (BPC § 18602)
3. Defines “club” and “promoter” synonymously to mean a corporation, partnership, association, individual, or other organization which conducts, holds, or gives a boxing or martial arts contest, match, or exhibition. (BPC § 18622)
4. Defines a professional or amateur boxer or martial arts fighter as one who engages in a boxing or martial arts contest and who possesses fundamental skills in their respective sport. (BPC § 18623)
5. Defines “contest” and “match” synonymously to mean professional and amateur boxing, kickboxing, and martial arts exhibitions, and mean a fight, prizefight, boxing contest, pugilistic contest, kickboxing contest, martial arts contest, or sparring match, between two or more persons, where full contact is used or intended that may result or is intended to result in physical harm to the opponent. (BPC § 18625(a))
6. Defines an amateur contest or match to include a contest or match where full contact is used, even if unintentionally. (BPC § 18625(b)(1))
7. Provides that an amateur contest or match does not include light contact karate, tae kwon do, judo, or any other light contact martial arts as approved by the commission and recognized by the International Olympic Committee as an Olympic sport. (BPC § 18625(b)(2))
8. Defines “martial arts” as any form of karate, kung fu, tae kwon do, kickboxing or any combination of full contact martial arts, including mixed martial arts, or self-defense conducted on a full contact basis where a weapon is not used. (BPC §18627(a))
9. Defines “kickboxing” as any form of boxing in which blows are delivered with the hand and any part of the leg below the hip, including the foot. (BPC § 18627(b))
10. Defines “full contact” as the use of physical force in a martial arts contest that may result or is intended to result in physical harm to the opponent, including any contact that does not meet the definition of light contact or noncontact. (BPC § 18627(c))
11. Requires every promoter who conducts a boxing or martial arts contest or wrestling exhibition and charges admission to, within 72 hours after the determination of the contest or exhibition, give the commission the following:
    1. A written report showing the amount of the gross receipts, not to exceed $2,000,000, and the gross price for (1) the contest or exhibition charged directly or indirectly and (2) the price for the sale, lease, or other exploitation of broadcasting and television rights of the contest or wrestling exhibition without any deductions, except as specified. (BPC § 18824(a)(1))
    2. A fee of 5% of the amount paid for admission to the contest or wrestling exhibition, but no more than $100,000. The commission shall report to the Legislature on the fiscal impact of the $100,000 limit on fees collected by the commission for admissions revenues during its next sunset review. (BPC § 18824(a)(2))
    3. A fee of up to 5% of the gross price for the sale, lease, or other exploitation of broadcasting or television rights, but no less than $1,000 or more than $35,000.
12. Specifies that, if the fee on admissions for a boxing contest exceeds $70,000, the amount in excess of $70,000 shall be paid one-half to the commission and one-half to the Boxers’ Pension Fund. (BPC § 18824(a)(2)(B))

THIS BILL:

1. Increases the cap on the amount of admissions revenue that promoters must report from $2,000,000 to $4,000,000.
2. Increases the cap on the admissions revenue fee from $100,000 to $200,000.
3. Increases the threshold on the collected admissions fee that triggers the excess amount to be split between the Boxers’ Pension Fund and the commission from $70,000 to $140,000.

FISCAL EFFECT: Unknown. This bill is keyed fiscal by the Legislative Counsel.

COMMENTS:

Purpose. This bill is sponsored by the California State Athletic Commission. According to the author, “[This bill] is a modest measure that will allow the operations of the California State Athletic Commission to continue without interruption or need for significant General Fund intervention. The Commission operates through fees collected on the contests in the Commission’s jurisdiction. The Commission’s revenues suffered significantly during the pandemic, and while revenues have since returned to normal, the Commission still faces insolvency in the coming months because of that loss. By raising the cap on fees that the Commission can collect from events for the first time since the year 2000, the Commission will be returned to a strong financial status.”

Background. California, through the California State Athletic Commission, regulates most forms of professional and amateur combative sporting events, such as boxing and martial arts events, including MMA events. Specifically, the commission regulates events where the use of full contact may result in physical harm to an opponent, including amateur contests where full contact may be unintentionally used.

The need for regulation is the inherent risk of harm in combative sporting contests, particularly when held for the entertainment of viewers. Left unregulated, contests may lack safety equipment, mismatch contestants, or, in the case of professionals, fail to pay the contestants. To that end, the commission is tasked with ensuring that contestants who wish to participate in these sports may do so safely and fairly. This is done through the licensing of the fighters themselves, as well as the managers, corners, matchmakers, trainers, promoters, and officials.

This bill would increase the cap on the 5% fee that the commission can collect from a promoter of an approved combative sporting event from $100,000 to $200,000. The purpose of the increase is to help stabilize and rebuild the commission’s fund. The question of whether the gate fees should be increased was raised during the commission’s 2017 and 2019 Sunset Review.^[1]

Commission Funding. The commission, like other DCA licensing boards, is a special fund entity and receives no support from the state general fund. It instead relies on revenues from licensing, administrative, and other regulatory fees to pay for its costs. However, the nature of the commission’s licenses differs from other DCA licensing boards. Other DCA licensing boards focus on the competence of practitioners that deliver professional services to consumers, and the workload related to ensuring that competence is recouped through license renewal fees.

The commission only licenses fighters to ensure they have the skills to compete with other licensees safely. Instead, the bulk of the commission’s workload is the regulation of the events that profit from the fighters’ participation. As such, the commission primarily relies on fees on the revenues from the promoters of the events.

There are two types of event fees, a “gate” fee, and a “broadcasting or television” fee. The gate fee is 5% of an event’s gross ticket sales, which is currently capped at $100,000. The “broadcasting or television” fee is 5% of the gross price for the sale, lease, or other capitalization of broadcasting or television rights. The broadcasting or television fee is capped at $35,000. More than 80% of the Commission’s revenues come from its gate and broadcast fees.

Volatile Revenues. Because the bulk of the commission's revenue comes from the event fees, the commission’s solvency is dependent on the number and size of fights held in California, which is impossible to predict. This bill seeks to increase the statutory caps, adding to the commission’s overall revenue to potentially offset any low revenue years.

Since FY 2017-18, the commission’s reserve has fluctuated between a high of 12.1 and a low of 3.8 months. The commission’s current reserve level is $92,000, approximately half a month in reserve. While the commission has no mandated reserve level, the DCA Budget Office has typically recommended a contingency reserve fund of at least six months. This ensures that special fund entities have the fiscal resources to absorb unforeseen costs, such as drawn-out enforcement actions, salary increases, or litigation.

Gate Fee Caps. The current $100,000 fee cap was added under AB 52 (Cedillo), Chapter 436, Statutes of 2000. AB 52 was introduced 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.

Gate Fees in Other States. One concern has been that an increase in fees may hurt the attractiveness of California as a venue for holding events. However, many other states where large events are held assess a comparable fee but do not have caps, including:

• Nevada: 8% gate fee and no cap (Nevada Revised Statutes § 467.107).
• Colorado: 8% gate fee and no cap (Colorado Revised Statutes § 12-110-114; Colorado Combative Sports Commission Event/Promotion Surcharge Report, April 19 Update)
• New York: 8.5% gate fee and no cap for MMA, although there is only a 3% fee and a cap of $50,000 for boxing and wrestling (New York Tax Law § 452).
• Florida: 5% gate fee with no cap (Florida Statutes § 548.06(5))
• Ohio: 5% gate fee with no cap (Ohio Revised Code § 3773.54).
• Arizona: 4% gate fee with no cap (Arizona Revised Statutes § 5-226(A.))
• Texas: 3% gate fee and no cap (Texas Occupations Code § 2052.151).

The highest gate in California was $5,290,213 for an MMA bout in FY 2021-22, and the commission collected $100,000 in gate fees. In the same FY, New York had an MMA bout with a gate of $11,562,807 and Nevada had an MMA bout with a gate of $10,409,553. On April 8, 2023, Florida held an MMA bout with a gate acticipated to be over $11 million.

Fund Condition with New Gate Fee. According to the DCA and the commission, the following tables show the projected differences before and after the increase in fee caps under this bill. However, the commission notes that the unpredictability of the number and size of events makes it difficult to provide accurate projections.

Current Related Legislation. AB 1136 (Haney), which is pending in the Assembly Committee on Arts, Entertainment, Sports, and Tourism, would require the commission to establish a pension plan for licensed martial artists who compete in MMA contests.

Prior Related Legislation. AB 1813 (Medina), Chapter 177, Statutes of 2022, clarified that the commission’s executive officer is not liable for discretionary acts, including the approval of contests and the assignment of officials for contests, taken while performing duties pursuant to the Boxing Act.

SB 309 (Lieu), Chapter 370, Statutes of 2013, which was the commission’s 2013 Sunset Review bill, required the gate fees to be furnished within 72 hours and required the commission to report to the Legislature on the fiscal impact of that $100,000 limitation during its next sunset review. It also increased the limit on the 5% fee for the sale, lease, or other exploitation of broadcasting or television rights to $35,000.

AB 52 (Cedillo), Chapter 436, Statutes of 2000, established the $100,000 cap on gate fees.

AB 2937 (Cedillo) of 2000, which died pending hearing in the Assembly Governmental Organization Committee, would have established a $50,000 cap on gate fees.

ARGUMENTS IN SUPPORT:

None on file

ARGUMENTS IN OPPOSITION:

None on file

IMPLEMENTATION ISSUES:

Decrease in Deposits to Boxing Pension Fund. This bill would increases the threshold on the collected 5% admissions fee that triggers the excess amount to be split between the Boxers’ Pension Fund and the commission from $70,000 to $140,000. However, very few boxing promotions in California gross over $1,400,000, and even fewer gross $2,800,000. Therefore the increase may serve no purpose and inadvertently cut off a revenue stream for the Boxers’ Pension Fund.

AMENDMENTS:

To ensure the Boxers’ Pension Fund is not inadvertently impacted, the bill should be amended as follows:

On page 3 of the bill, after line 21:

(B) If the fee for any one boxing contest exceeds one hundred forty thousand dollars ($140,000), seventy thousand dollars ($70,000), the amount in excess of one hundred forty thousand dollars ($140,000) seventy thousand dollars ($70,000) shall be paid one-half to the commission and one-half to the Boxers’ Pension Fund.

REGISTERED SUPPORT:

California State Athletic Commission (sponsor)

REGISTERED OPPOSITION:

None on file

Analysis Prepared by: Vincent Chee / B. & P. / (916) 319-3301

1. The sunset review process provides an opportunity for the DCA, the Legislature, the boards, and interested parties and stakeholders to discuss the performance of the boards, and make recommendations for improvements. Each year, the Assembly Business and Professions Committee and the Senate Business, Professions, and Economic Development Committee hold joint sunset review oversight hearings to review the boards and bureaus. For more information on volatile revenues, see the background papers for the 2019 Joint Sunset Review Oversight Hearings, accessible at: https://abp.assembly.ca.gov/jointsunsethearings. ↑