Listen Now:
by Charles Jay
How happy will Showtime be on Tuesday morning? That is generally when the people who have access to all the numbers that come out of a pay-per-view get an estimate of how they did, within about 50,000 buys. Stephen Espinoza, the head of Showtime Sports, has from time to time teased fans that Saturday night’s Floyd Mayweather-Canelo Alvarez fight might make for a record-setting evening, but didn’t want to dwell on it. What he may not want to tell people is that he is crossing his fingers so that his network does not experience what it did – at least according to some stories – in Mayweather’s first fight under its banner.
In that one, the bout against Robert Guerrero in May, Showtime did announce, well after the fight was over and all the speculation had begun, that they drew a little over a million pay-per-view subscribers, and that “the event was a success in all respects,” in Espinoza’s words. That meant a financial success as well, but there were many insiders in the boxing industry who doubted that.
Perhaps some of that may have been jealousy, and there is no question that jealousy is a very big part of this business. But there was a consensus that the fight had done only about 850,000 buys. One we talked to came up with a figure that was much more precise – 877,000. If numbers like that were actually done, using an estimated $30.13 per subscription, that would have brought approximately $26.4 million in revenue, which may have ultimately worked itself out to a substantial loss. Some had estimated it at anywhere between $12 million-$15 million, although against, we must stress that most of their information came second-hand at best.
We’re just saying that there has to be a “grain of salt” clause when looking at any of the hyperbole that is thrown out there by those who are interested parties.
Richard Schaefer, the Golden Boy Promotions CEO who wants you to believe he negotiated the Showtime deal but actually didn’t, has let it fly that while he doesn’t know whether the record for actual buys will fall, he sees this fight breaking all records for gross revenue, and that he is “confident” it will go over the two million mark. Unlike Espinoza, he is willing to dwell on it, and dwell on it, and dwell on it. And why not? His money, or his company’s, isn’t at stake, because Golden Boy is a “promoter for hire,” taking a fee for organizing things, minus Oscar De La Hoya, who has checked himself into a rehabilitation facility for drug and alcohol addiction. He can afford to talk fast and loose. Maybe it’s all about deflecting the story away from Oscar’s problems, which apparently couldn’t wait until Monday before being addressed.
One promoter who has been involved in numerous PPV shows, and who allowed himself to be quoted on the condition of anonymity, thinks this is not going to be as easy as Schaefer seems to think it is. “No matter how popular Alvarez is in the Latin community, there is tremendous risk with a first-time pay-per-view fighter in a promotion where the numbers are so stratospheric,” he said. “Mayweather has an obvious appeal, but the ‘B’ side here is not so well known. Just go around to people on the street, outside of Latins, and you’ll find out he is not a household word. that will be the case no matter what Richard Schaefer wants you to believe.”
Does the higher price that has been assigned to this PPV subscription guarantee, in and of itself, that more revenue is going to be generated?
Not necessarily, according to our source.
“The pay-per-view business has plateaued somewhat, not just in boxing but mixed martial arts as well,” he says. “What you have happening now is that people are congregating in homes, looking to beat the high price. The average number in these homes has increased as well. There are people who go in groups to bars. So you have many more people watching it than have actually paid for it, and when you raise the price they’re just going to have more of a tendency to do that.”
That makes sense, because the buying decision is a little harder than it was when fights were, say, $39.95. This has become a somewhat difficult problem to get past, even though alternatives are still being tried. Theaters – generally multi-plexes – will carry this fight on a limited basis, but the average ticket price doesn’t bring a lot of money. The same can be said for closed circuit sales. It is indeed a source of revenue, but the per-person rate is not high, and thus, for fights as big as this one, it is not really a game-changer.
We may talk a lot about PPV buys and guarantees, but there is really no guarantee that we will hear the correct pay-per-view numbers in the end. Generally any information the public gets about PPV figures is limited to what the network itself (HBO, Showtime, etc.) has been willing to disclose. And there is a certain motivation to make oneself look good.
That’s why, as we mentioned, there was something of a disparity between what Showtime says it drew on the Mayweather-Robert Guerrero fight and the consensus opinion we got from some boxing people “in the know.”
“Look, there are three things you can do with pay-per-view numbers,” said our promoter source. “You can reveal them, you can lie about them, and you can say nothing. That’s probably the best thing to do. But with all the hype that surround these pay-per-view numbers these days, what you hear from the networks is often bullshit.”
Even statements about what is being spent on the promotion are sometimes designed for effect. At one point it was reported in a story on Multichannel News, a prominent television industry website, that “Showtime and Golden Boy will support the fight with an $80 million promotion and marketing campaign that will feature heavy promotion on CBS.”
Well, $80 million on promotion didn’t happen. An $80 million expenditure on anything would require 2.5 million buys for Showtime to overcome. Maybe Showtime got something of promotional value from another Viacom property (CBS) that they didn’t have to pay for, but the amount of that value is something that is imprecise at best.
So don’t believe everything you hear.
