It was stupid, pointless, and not really even fun, but my good friend and I started a kind of Fight Club in his garage one night... we had gloves and headgear, and just tore each other up as much as you can with gloves and headgear. Then this one kid showed up, high on god only knows what, and wouldn't stop - he claimed he couldn't feel pain. He kept trying to pick fights with everyone there... so each of us, in turn, had to step in and stop the inevitable fight.
So I've been both willing spectator and the guy who breaks it up in the same night...

In general, though, I break them up. Watching them is always fun, but I wouldn't want to be responsible if someone got messed up badly in a fight that I was passively watching - I couldn't live with that.