STATE OF ARIZONA OFFICE OF THE AUDITOR GENERAL A PERFORMANCE AUDIT OF THE ATHLETIC COMMISSION DECEMBER 1981 A REPORT TO THE ARIZONA STATE LEGISLATURE REPORT 81 -20 STATE OF ARIZONA DOUGLAS R NORTON. CPA AUDITOR GENERAL OFFICE OF THE AUDITOR GENERAL December 23, 1981 Members of the Arizona Legislature The Honorable Bruce Babbitt, Governor Mr. Gerald Maltz, Chairman Athletic Commission Transmitted herewith is a report of the Auditor General, A Performance Audit of the Athletic Commission. This report is in response to a January 30, 1980, resolution of the Joint Legislative Oversight Committee. The performance audit was conducted as a part of the Sunset review set forth in A.R.S. §§41-2351 through 41-2379. The blue pages present a summary of the report; a response from the Chairman, Mr. Gerald Maltz is found on the yellow pages preceding the appendices. My staff and I will be pleased to discuss or clarify items in the report. Respectfully submitted, Ilougl$ R. Norton Auditor General Staff: Gerald A. Silva William Thomson Robert Back Richard Booth Samuel L. Harris William A. Wright Enclosure 1 1 1 WEST MONROE SUITE 600 PHOENIX. ARIZONA 85003 (602)255-4385 OFFICE OF THE AUDITOR GENERAL A PERFORMANCE AUDIT OF THE ATHLETIC COMMISSION A REPORT TO THE ARIZONA STATE LEGISLATURE REPORT 81-20 TABLE OF CONTENTS Page SUMMARY i INTRODUCTION AND BACKGROUND 1 SUNSET FACTORS 3 FINDINGS FINDING I The Athletic Commission has not fulfilled its responsibility to ensure that participants in professional boxing comply with statutory requirements. As a result, some unlicensed individuals have participated in professional boxing and promoters have not paid the two percent gate tax in compliance with the statutes. CONCLUSIONS RECOMMENDATIONS FINDING I1 Changes are needed to improve the regulation of boxing and better protect participants from physical harm. CONCLUSION RECOMMENDATIONS FINDING I11 The Athletic Commission has not complied with all statutory requirements dealing with professional wrestling. However, the results of these non-compliances do not threaten the health, safety and welfare of the public or participants. Further, deregulation of professional wrestling could occur without endangering the health and safety of the public or participants. CONCLUSION RECOMMENDATION -Page FINDING IV The Commission has not complied with A.R.S. $5-224.~ regarding the frequency of meetings. Commissioners and the Commission's executive secretary have not been paid all of the per diem and compensation to which they are entitled. CONCLUSION RECOMMENDATION WRITTEN RESPONSE TO THE AUDITOR GENERAL REPORT LIST OF TABLES -Page Table I 2 Summary of Commission expenditures for fiscal years 1977-78 through 1980-81 and the appropriation for fiscal year 1981-82. TABLE I1 Summary of each state's tax on receipts from professional boxing and wrestling. SUMMARY The Office of the Auditor General has conducted a performance audit of the Athletic Commission in response to a January-30, 1980, resolution of the Joint Legislative Oversight Committee. This performance audit was conducted as a part of the Sunset Review set forth in Arizona Revised Statutes (A.R.s. ) $541-2351 through 41-2379. The Athletic Commission was created in 1958 to regulate all professional boxing, sparring and wrestling matches and exhibitions conducted within counties with a population of one hundred twenty-five thousand or more and in smaller counties, if requested to do so, via a County Board of Supervisors' resolution. Today the Commission regulates all professional boxing and wrestling contests in the State. The three members of the Commission are appointed by the Governor to three-year terms. The Commission has no full-time support staff. However, the Commission does employ an executive secretary on a part-time basis . The Commission licenses referees, judges, matchmakers, promoters, trainers, ring announcers, timekeepers, ringside physicians, boxers, wrestlers, managers and seconds. Our review revealed that the Commission has not fulfilled its responsibility to ensure that participants in professional boxing comply with statutory requirements. As a result, some unlicensed individuals have participated in professional boxing and promoters have not paid the two percent gate tax in compliance with the statutes. (page 7) Our review also found that changes are needed to improve the regulation of boxing and better protect participants from harm. (page 15) Further, our review found that the Commission has not complied with all statutory requirements dealing with professional wrestling. However, the results of these noncompliances do not threaten the health, safety and welfare of the public or participants. Deregulation of professional wrestling could occur without endangering the health and safety of the public or participants. (page 25) Finally, the Commission has not complied with A.R.S. $5-224.~ regarding the requirement that it hold monthly meetings. However, given the amount of business the Commission must transact, and the state of the Commission's finances, this requirement appears unnecessary. Also, with reference to the Commission's finances, the commissioners and the Commission's executive secretary have not been paid all of the per diem and compensation to which they are entitled. (page 31) Consideration should be given to the following recommendations: 1. The Commission should require that all participants in professional boxing be licensed and pay all fees due to the State. 2. The Commission should require that ringside physicians and Commission staff file reports as specified in the statutes. 3. The Commission should require that promoters comply with the provisions of A .R. S. $5-233 and that promoters provide evidence of that compliance. 4. The Commission should collect all fees due to the State under the provisions of A.R.S. $5-235. 5. The Commission expand its pre-fight examination to encompass a review of a fighter's: hearing, vision, mouth, glands, respiratory system, blood pressure, heart, abdomen, reflexes, nervous system and hands. In addition, tests should be made for hernias and drug or alcohol usage - and urine tests should be performed . 6. The Legislature enact legislation requiring fighters to have annual physical examinations. 7. The Commission develop and maintain a comprehensive medical history on each fighter which should be periodically reviewed by a Commission physician for indications of cumulative physical damage. 8. The Commission obtain from the New York Boxing Commission its recorded seminar on boxing injuries and require all ringside physicians to view the recording. 9. The Legislature enact legislation to provide ring physicians with the authority to stop a fight and examine a fighter. 10. The Commission strengthen its licensing procedures by fingerprinting applicants and contacting other boxing commissions regarding suspensions, knockouts or other injuries and won/lost records. 11. The Commission consider developing a "passport" system of licensing similar to that used by the New York Boxing Commission. 12. The Legislature enact legislation increasing the gross receipts tax and revising the provisions governing the tax on television and radio royalties in order to help fund the above recommendations. 13. The Legislature should consider eliminating statutory provisions regulating professional wrestling. iii INTRODUCTION AND BACKGROUND The Office of the Auditor General has conducted a performance audit of the Athletic Commission in response to a January-30, 1980, resolution of the Joint Legislative Oversight Committee. This performance audit was conducted as a part of the Sunset Review set forth in Arizona Revised Statutes (A.R.s.) $$41-2351 through 41-2379. The Athletic Commission was created in 1958 to regulate all professional boxing, sparring and wrestling matches and exhibitions conducted within counties with a population of one hundred twenty-five thousand or more and in smaller counties, if requested to do so, via a County Board of Supervisors' resolution. Today the Commission regulates all professional boxing and wrestling contests in the State. The three members of the Commission are appointed by the Governor to three-year terms. The Commission has no full-time support staff. Support functions are handled by the Arizona State Boards Administrative Office (ASBAO), which was created in 1976. ASBAO serves as the support staff for the Commission and ten other State boards or commissions, providing secretarial and clerical services for each tenant board or commission. The Commission does employ an executive secretary on a part-time basis. The Commission licenses referees, judges, matchmakers, promoters, trainers, ring announcers, timekeepers, ringside physicians, boxers, wrestlers, managers and seconds. The Commission is funded through fees charged for licenses and the collection of a two percent tax on adjusted gross receipts for professional boxing or wrestling matches or exhibitions. Ninety percent of the fees collected are deposited in the State Athletic Commission Fund. The remaining ten percent is deposited in the State General Fund. Table I illustrates the expenditures of the Commission for fiscal years 1977-78 through 1980-81 and the appropriation for fiscal year 1981-82. TABLE I SUMMARY OF COMMISSION EXPENDITURES FOR FISCAL YEARS 1977-78 THROUGH 1980-81 AND THE APPROPRIATION FOR FISCAL YEAR 1981-82 Appropriation 1979-80 1980-81 1981-82 Personal services $1,900 $2,400 Employee related 83 400 Professional and outside services 1,522 2,400 Travel in