How Mike Tyson's Money Disappeared -- Promoter, Managers Take Half And Then Charge For Expenses
LAS VEGAS - Mike Tyson had been out of the Indiana Youth Center only a few hours and already he was a rich man. In his pocket, the former heavyweight champ had two checks, each made out to him for $10 million.
Most Indiana prisoners are given $75 in spending money to ease their transition back into society. Tyson needed no such help.
The three years he served for rape hardly did anything to diminish his appeal. If anything, he was bigger than ever, and multimillion-dollar deals had already been struck for his return to the ring.
In the next few weeks Tyson would get another $12 million for the rights to future fights and television. A few months later, he earned the most money ever given to a boxer - $25 million - to fight a stiff named Peter McNeeley.
It was the first of $140 million in purses Tyson earned during the next two years.
Today, much of that money is gone and Tyson is banned from boxing for biting Evander Holyfield's ears.
The fighter who once terrorized the heavyweight division and became its youngest champ in history at 20 frittered away millions on mansions, Bentleys, jewelry, and even Bengal tigers while buying extravagant gifts for his entourage. Don King also took a huge chunk.
Tyson not only has cash flow problems but reportedly owes the government millions in back taxes.
And for the second time in his career - in lawsuits nearly identical to the ones he filed against former managers a decade ago - Tyson claims promoters and managers ripped him off by taking advantage of his lack of business knowledge. This time, he says, King and his two co-managers took him for more than $100 million.
Stories of boxers earning and then blowing fortunes are nothing new. Neither are stories of others who profit from them.
But never has it happened on such a grand scale. And never has it happened to larger-than-life figures such as Tyson and King.
"Everyone in boxing makes out but the fighter," Tyson said last year, perhaps forgetting for a moment that he was the richest fighter ever.
As the biggest draw in boxing history, Tyson figured to get rich following his release from prison. And he did.
Casinos offered huge sums to be hosts for his fights and fans eagerly paid $50 to watch Tyson on television. Celebrities and high-rollers thought nothing of laying out $1,500 for a ringside seat.
Tyson fights generated enormous revenues, far beyond those of any other fighters. His second bout with Holyfield was the biggest grossing fight ever, and seven of his fights were among the top 10 pay-per-view events ever.
But Tyson wasn't the only one making millions.
For example, $22.5 million each was given to pals Rory Holloway and John Horne. The bombastic, spiky-haired King profited even more.
Court records show King had contracts that not only made him Tyson's promoter, but gave him 30 percent of his earnings - technically against Nevada law.
What Nevada boxing officials didn't know was the checks King gave them to give to Tyson for both Holyfield fights weren't entirely Tyson's to keep. The $30 million paydays would be cut in half by the time Tyson wrote checks for $9 million to King and $3 million each to Horne and Holloway.
"After we give him a check for $30 million, we don't know where the money goes," Nevada Athletic Commission executive director Marc Ratner said.
Recent attempts to reach Tyson and King for interviews were unsuccessful.
King made at least $65 million just from his cut of Tyson's purses and TV and casino deals, according to contracts signed by King, Tyson, Horne and Holloway. Tyson lawyers claim the promoter made millions more from foreign broadcast rights and expenses he charged to the boxer.
King was even selling Tyson's likeness. When the World Wrestling Federation needed Tyson's picture for its Wrestlemania ads, the rights were credited to Don King Productions.
Though Tyson signed the checks for Mike Tyson Productions, his financial records were handled in King's office by an accountant the promoter selected. Tyson seemed oblivious as to where the money was going.
"I think sometimes he signed blank checks," said Jeff Wald, a Hollywood agent who is Tyson's new adviser. "Mike was not told exactly what was going on. Yes, he signed checks and yes, he spent money. But he was entitled to that money."
And even after giving half of everything he made to King and his managers, there was plenty left over. Tyson's 50 percent of the purses and contracts with Showtime television and the MGM hotel-casino amounted to some $106 million.
For his six fights since getting out of prison, Tyson's smallest purse was $10 million to fight Buster Mathis Jr. In three of the fights he was paid $30 million for each one.
"The purses he got were reasonable, and maybe a little on the high side," rival promoter Bob Arum said. "But it wasn't reasonable taking 50 percent of his money. When you shave 50 percent off, the deal wasn't that good."
Tyson's spending habits were legendary even in his pre-prison days. He bought and wrecked cars, then bought some more. He lavished gifts on friends and acquaintances and owned three different homes.
With millions in his pocket on his release from prison, the spending escalated.
"I'm not tight with a dollar," Tyson acknowledged. "I'm very frivolous at times."
Then, with two bites, the money dried up. But the spending didn't stop.
Even while Nevada boxing regulators were meeting to revoke his license and fine him $3 million last July for biting Holyfield's ears in the ring, Tyson showed up at a car dealership just outside New York City to buy another car. He bought a Ferrari for $300,000, declining a test drive because he already had one just like it.
Tyson spent millions on baubles for his friends and himself, running up huge bills at his favorite jeweler, The Jewelers of Las Vegas. Store owner Mordechai Yerushalmi always extended credit, but finally sued after a bill for $805,350 went unpaid.
"He was a very good customer," said Yerushalmi, adding that Tyson preferred gold and diamonds. "I always advanced him credit and never had a problem before. To extend $800,000 in credit, you have to be a good customer."
Others also gladly advanced credit and treated Tyson like a casino high-roller. The doors were shut at the Versace store in the tony Caesars Palace mall one day so Tyson and his friends could go on a $250,000 spending spree.
"I spend that on a weekend for a good time," Tyson said.
On top of the $3.7 million Tyson spent for his Las Vegas home around the corner from singer Wayne Newton, millions more went into remodeling the 11,000 square feet to fit his lifestyle.
He spent $70,000 apiece for two white Bengal tigers, then tens of thousands more for a habitat for them and an African lion in his back yard. He hired animal trainer Carl Mitchell for another $125,000 a year to be on call whenever he flew into Las Vegas to be with the animals.
Mitchell recalled a "constant barrage of people" at Tyson's Las Vegas home, most of whom were paid and wanted his ear. Walking alone in the woods with Tyson and the tigers one day, Mitchell, who later sued Tyson for unpaid bills, said he told the fighter that the interruptions were interfering with the training.
"They don't give a (expletive) about me," Tyson responded. "They're just here for the money and to be with Mike Tyson."
Running his other homes in Ohio, Connecticut and Maryland was just as draining. Gardening bills alone mounted to $100,000. Tyson was more than generous to the cooks, bodyguards and chauffeurs on the payroll.
A camp aide named Crocodile - whose sole function was to dress in fatigues and repeatedly shout "guerrilla warfare" at Tyson news conferences - was paid $300,000 in 1996.
King could only smirk when talk swirled during Tyson's prison stay that the fighter he had lured away from Bill Cayton in 1988 would desert him for a new promoter.
What those supposedly in the know didn't know was that King had an inside track on getting his fighter back. He had Horne and Holloway, who were being paid $5,000 a week while Tyson was in prison to visit him weekly.
It wasn't long before the attention paid off.
On Aug. 16, 1994, Tyson signed a contract in a prison visiting room making Horne and Holloway his official managers.
"They have my complete trust and faith to represent my best interest with anything concerning my boxing interest," Tyson wrote. "They have the absolute right to negotiate on my behalf. No deal or commitment on my behalf will be completed without John K. Horne and Rory Holloway's consent and agreement."
The baby-faced Holloway was a buddy of Tyson's from his teen-age years in Albany, N.Y., where trainer Cus D'Amato molded him into a fierce fighter. The volatile Horne, a shoe salesman and failed standup comic, made his way into the Tyson inner circle through a friendship with Horne's brother.
Horne and Holloway had worked for Tyson since 1988, serving in his training camp and earning his loyalty. Now, they would be his managers, each rewarded with 10 percent of whatever Tyson earned from his purses and the TV and casino deals King put together.
It didn't take long for Horne and Holloway to deliver the fighter to King. In fact, they had already signed an agreement two months before formally becoming Tyson's managers giving King exclusive rights to promote Tyson through 1999.
Then, two weeks before Tyson was to be released from prison, he signed the definitive agreement to give King 30 percent of all his earnings and Horne and Holloway 10 percent each. In return, Tyson got signing bonuses worth about $35 million from contracts King had negotiated with Showtime and the MGM Grand.
Tyson, who boasted of reading the teachings of Mao and great philosophers while in prison, now claims that he never understood the contract. His new lawyers claim in court documents that Horne and Holloway were "puppets" who never performed any serious management services and existed as "little more than window dressing for King."
Not only was King getting 30 percent of everything, Tyson's new advisers claim the fighter was paying bills for the promoter's camp.
Even before Tyson went to prison, King's former chief financial officer, Joseph Maffia, claimed in court documents that King siphoned millions of dollars from Tyson's ring earnings.
Among his accusations were that King paid a $100,000-per-fight "consultant's fee" to his wife, Henrietta King, and similar $50,000-per-fight fees to his two sons, Carl and Eric King. In addition, Maffia contended, King was taking a third of Tyson's purses.
Tyson was also paying the president of the Mike Tyson Fan Club $1,000 a week, a generous salary set by King. The person getting the money? King's daughter, Debbie King Lee, according to court documents.
By the time Tyson went to prison in 1992, he was in financial trouble for the first time. He was forced to borrow $1 million from a $2.7 million annuity set up by former managers Bill Cayton and Jimmy Jacobs in 1988 to help pay his mounting legal bills, according to court documents.
Less than two years after he got out of prison, however, there was so much cash coming in that Holloway was able to put $1.6 million in a black satchel and take it to Tyson's next-door neighbor in Las Vegas in a failed attempt to buy the house for the fighter's expanding entourage.
It wasn't until months after Tyson's boxing license was revoked that the cash began to dry up. There weren't any multimillion-dollar paydays awaiting, only the WWF stint last Sunday.
When King demanded his cut of that event, Tyson revolted, turning to Wald and Irving Azoff, two Hollywood entertainment types who promoted George Foreman's last two fights.
Tyson sued King in New York and Horne and Holloway in California.
The suit against Horne and Holloway not only split up a friendship that had made the three inseparable for a decade, it also marked the end of Tyson as a cash cow for his friends.
Tyson likely will reapply for his license sometime after July 9, and many boxing observers think he will get it back if he personally apologizes to the Nevada commission.
His split with King and Horne and Holloway, though, may mean a messy contract battle that could keep Tyson out of the ring even longer.
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