Promoters of boxing, mixed martial arts, and kickboxing fights typically need a Promoter Bond. The bond provides a guarantee that the promoter will pay all dues that arise in compliance with state legislation, whether that’s ticket refunds to customers for a cancelled match or the payment of taxes and fees to the obligee for the operation of such matches.
Think of Jet Insurance Company as a sort of referee between you, the promoter, and any claimants. Jet will provide compensation to the injured party if you’re involved in financial “roughhousing” or illegal activity, but Jet will also verify whether the claims filings are valid before paying out from the bond. It's best to promote your business in a legal way, as to avoid claims. Read how to do so in this article.
How to Avoid Promoter Bond Claims
The main purpose of the Promoter Bond is to make sure that the promoter’s actions will not cause financial harm. Examples of these actions include:
- Violation of legislation or license obligations
- Failure to provide a refund for cancelled events (some states, like Nevada, may require a refund for postponed events)
- Failure to pay taxes/fees to obligee
- Failure to abide by a contract
Who Can Be a Claimant on the Promoter Bond?
Action on the Promoter Bond can be taken by any financially injured purchaser or the obligee, depending on bond specifications. Recovery from the bond typically covers refunds for ticket purchasers or any indebtedness owed to the obligee.
When Claims Can Be Filed
Claims can come in at any point during the active period of the Promoter Bond. Some states will allow an extended period of time for claims to be filed—given that the offensive action occurred during the active period.
Boxing Promoter Bond Limit
When a claim on the Promoter Bond is filed, it has to be within certain parameters, one of which is the amount that is covered under the bond. This amount is aptly named the ‘bond limit’, limiting the coverage to the amount written on the bond.
Bond limits vary based on what state legislation or the obligee determines to be an acceptable amount to cover financial damages. Limits can be a set amount, like $20,000 in Arizona, or a custom limit that is determined by the obligee.
If a state determines that the bond’s limit is not sufficient at any point during the term, an additional bond may be prescribed by the obligee for additional coverage.
Fight Promoter Bond Claim Process:
Upon a fight promoter’s failure to fulfill a refund to a purchaser, the purchaser can file a complaint with the obligee. Formal complaints will be reviewed.
The obligee will investigate complaints made by purchasers as well as any indebtedness that the obligee suffers. All evidence will be taken into account during the investigation. If the obligee finds the promoter in violation of their license obligations, appropriate action will be taken. If such violations are covered under the terms of the Promoter Bond, a claim can be filed by the injured party, whether that is the purchaser or the obligee. The obligee may file a claim on the injured purchaser’s behalf, in certain states.
If the obligee has determined that the promoter has failed to provide a refund that is owed to the purchaser, the obligee will lay claim on the surety bond. Jet will verify the evidence to make sure that the claim is legitimate, but typically, when the obligee has already investigated, the claim is able to withstand scrutiny.
Recovery and Indemnification
Once Jet provides compensation for the promoter’s actions, the promoter must repay Jet for the claim payout. This is not unheard of in the surety industry: after a claim is paid, the party at fault must restore the bond. In many cases, restoring the bond is needed to maintain the surety bond requirement which is an essential part of licensing. Failure to have a Promoter Bond in the full amount can lead to license suspension or revocation.
Let’s take a look at how the claims process would work for Florida Promoter Bonds in a hypothetical situation. A promoter (we’ll call him John Queen) has been setting up an upcoming boxing fight. However, the day before the fight, one of the boxers is injured during training and backs out of the fight. John has to cancel the fight and owes a refund to ticket purchasers, but John paid for all aspects of the event on his own dime and can’t provide a refund.
So, ticket purchasers file a complaint with the Florida Boxing Commission for a lack of refund, the obligee for the Florida Promoter Bond. The Commission will take a look into the matter and see if the promoter is in violation of licensing obligations and owes a refund. If John is, in fact, in violation of Florida Statutes or contractual obligations, this would break the terms of the bond and will allow for recovery from the Promoter Bond.
John gets a claim on his bond and contacts Jet right away. Jet will go over the details of the claim to make sure it’s not a false allegation. Since a violation has already been determined by the Commission, the claim holds up. Jet will be obligated to provide compensation to the ticket purchasers for the cancelled event, up to the full $15,000 limit.
After the purchasers get a refund from the Promoter Bond, John will need to pay Jet back to keep his bond in compliance with license requirements so he can continue working as a fight promoter.