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Dawson wanted to fight the best and the best wanted him to move down a whole weight class or else there would be no fight.
Ward is a mini-superstar and Dawson was hoping he could propel himself by pulling off the upset as you indicated. It was in my view, a mistake to say he would fight Ward at 168 lbs when the prospect of the fight was first mentioned, but Dawson didn't have to say or agree to that, and he probably would have fought Ward down the line at 175 lbs(and still lost clearly though probably wouldn't get stopped). He took a chance though, and it didn't pay off for him. His Light Heavyweight belt wasn't up for grabs however, so he still has plenty of good options available for him at Light Heavy without trouble despite the loss.
After that horrid and non violent display by Dawson,who in their right mind will pay Dawson big bucks from here on in?
He has a belt and has never been noted as a crowd-pleasing fighter beforehand anyway. And sadly, HBO certainly has no shortage of capability for overpaying certain fighters dramatically(see: Berto, Andre). Dawson can probably get decent money for a rematch with Pascal, a fight with Kessler, or a fight with Cloud.
For glory. Which is all well and good, but, very poorly advised. As you said, he could have got his fight with Ward when Ward eventually moved up in year's time.
It was Dawson who called out Ward and said that he would move to 168 for the fight so yes it was necessary. Now that he lost - he is still champ at 175 with plenty of options available to him not to mention the inevitable rematch somewhere down the road when Andre Ward decides to move up to lightheavy.
I am one who thinks this fight shouldnt have happened. I dont know why they chose to make Ward vs Dawson. Ward should stick to 168 and Dawson to 175.
He had to for Ward. Ward's team refused a catch weight, and Dawson signed it. IMO it was a bad move, Dawson looked like his legs were weak, and rumours of him training to lose weight than box, and also doing very bad in sparring could be a result of that.