Business of Boxing: Pacquiao-Mayweather – Introducing…The Easiest Way to Kill a Fight
by Charles Jay
Elsewhere on this site, Floyd Mayweather has been taken to task for insinuating that it is actually Bob Arum who is dragging his feet on negotiations for a fight with Manny Pacquiao. In other words, that’s just a cover story for Mayweather being too “afraid” to come to the terms that will ultimately make this fight.
Well, both sides of that argument are correct, to a certain extent.
As I have tried to explain before, Arum’s posture is one that any promoter of his position and experience would normally have; one that certainly advocates for his own fighter, but at the same time is rather dispassionate. Sure, he would like to make the fight – that is, if there is a deal in place that would allow him to make a lot of money. If that deal isn’t in place, he would just as soon do exactly as he is doing, which is to take other opportunities to use Pacquiao. Such an opportunity stares him in the face, as he’s trying to make yet another rematch with Juan Manuel Marquez.
But can you blame him? Off 1.4 million pay-per-view buys and an $11.9 million live gate, it will probably do better next time, especially with the latest questions about whether Pacquiao should have gotten the winning call from the judges.
Arum is a businessman. If something makes good business, he’ll do it. If it doesn’t, it won’t. Right now it’s better business for him to seek the fights that can be made, rather than the fights that aren’t.
And the Mayweather-Pacquiao fight, in his opinion, probably can’t be made.
Mayweather, however, would like to create the impression that he is now the aggressor in this “fight,” as Pacquiao, figuratively speaking, dances about the ring in retreat.
That certainly serves a PR purpose, I guess, but when it comes down to it, maybe the best thing to do is look at the numbers.
And when I say the “numbers,” I mean the numbers Mayweather is asking for.
You see, in this industry, nobody needs to dance around the question of whether a guy is too tough to fight, or whether someone is going to submit to drug tests or agree to fight in a certain venue. If you want to kill a fight, the safest, surest way to do it is to ask for a purse that is so outrageous that there is no way any negotiation will ever be completed.
In recent weeks an investor from Singapore has emerged; someone who has real money. He was in a position to make the fight happen, and what I heard is that there might be some government money to sponsor it, as much as $35 million, if you can believe it. Arum would be seeking something in the neighborhood of a 50-50 split on the revenues between the two fighters, and he has expressed that he would be agreeable to a $65 million package, which I am assuming would include sufficient compensation for his own troubles.
I’m trying not to sound like too much of an Arum fan, but I imagine that if he was willing to commit at that figure, it was relatively realistic.
But that’s not enough for Mayweather. He will not come off the $100 million figure, and the truth is, he never has, whenever the subject has come up. At the number he insists upon, this fight cannot be made, and he has to know that. There is only so far you can push a guaranteed figure. While $65 million for each fighter, which amounts to a total of $130 million, might provide a way for some backers not to take a bath, while giving them a little better chance of making a profit.
At $100 million for Mayweather, which would surely bring more of a demand from Pacquiao, it’s simply not going to stand up.
So that’s the way to kill the fight. Easy.
Don’t believe me? Just go through the numbers. And I’ll even lowball it. Let’s say that Pacquiao’s side, in the interests of making the fight, agreed to “settle” for $75 million. Even with $20 million at the gate, either from monstrous ticket sales or a casino site fee (and casinos are moving away from this kind of thing), or BETTER YET, with that bloated figure of $35 million from a crazy government, you still have the matter of a lot of pay-per-view subscribers that have to be sold.
Let’s say that you were going to charge $100 (they have really only been talking about $75), which is considerably higher than most people have become accustomed to paying for a top-of-the-line PPV show, and in fact, double what many people have been charged in the not-so-distant past. Recognizing that only about 45% of the revenues are actually retained by the promotion (there is a 10% fee off the top that would go to, say, HBO PPV, and a split with cable carriers after that), you would have to have about $325 million in gross pay-per-view revenues to arrive at the remaining $145 million “nut.” And you know the final expense number is going to be higher than that. Quite a bit higher. So let’s say at least $350 million in pay-per-view would be needed, which is 3.5 million subscribers at $100.
Forget about a big dent being made by foreign revenues. They don’t really exist in any kind of meaningful way, beyond, say $10-$15 million for a fight like this. Remember that a lot of countries aren’t even set up for pay-per-view.
So what you’re looking for here is a price that greatly exceeds anything that has ever been charged, at a buy rate that is 40-45% higher, in terms of sheer numbers, than any fight has ever drawn…..just to get to a break-even point.
I’m told that Mayweather doesn’t really understand how unrealistic his numbers are, in both pay-per-view and foreign dollars. I don’t know if I believe that, because he has someone like Al Haymon “advising” him, and that’s a guy who should know better.
So what it may amount to is that all other controversies aside, he may be taking the one sure-fire way to stop this thing dead in its tracks. And Arum, I think, has pretty much resigned himself to that.