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The song was inspired by the film of the same name, directed by Sidney Lumet and starring Paul Newman. The film was released in the US on 8 December 1982.
Internet Movie Database entry for "The Verdict"
"Baile Cha cha loco"
Spanish: Dance the crazy cha cha!
"Enjoy the dance, they don't shoot horses"
Probably a reference to the 1969 film "They Shoot Horses, Don't They?" about a month-long marathon dance contest in the early 1930s, based on the novel by Horace McCoy. The film was directed by Sydney Pollack and starred Gig Young and Jane Fonda.
Internet Movie Database entry for "They Shoot Horses, Don't They?"
"Think of Babe Ruth and you think of hot dogs and beer ...""Think of Ray Charles and you think of sunglasses at night ..."
Babe Ruth (1895-1948), US baseball player, regarded by many as the greatest of all time.
While hot dogs and beer are traditional baseball fare, the line
"But if he could hit a home run, so can you, and your weight is just nowhere near"
points to the fact that Babe Ruth was quite chubby for a baseball player and was probably quite fond of hotdogs and beer himself.
Ray Charles (1930-2004), US singer, songwriter and pianist who had been blind since suffering from glaucoma at the age of seven.
Loisaida is the Spanish transliteration of New York City's Lower East Side.
"Each movie so far this year ends up with someone crying or even someone dying ..."
This probably refers to the film "Terms of Endearment", released 23 Nov 1983 in the US, in which the main character dies at the end of the film.
Internet Movie Database entry for "Terms of Endearment"