The Business of Mayweather-McGregor

By Mike Coppinger

HOW A FIGHT THAT MOST PEOPLE BELIEVE IS FARCICAL COULD BREAK ALL REVENUE RECORDS

(This story appears in the November 2017 issue of THE RING Magazine.)

Dollar bills fell from the sky as Conor McGregor sat in a chair and soaked it all in. The green-and-white currency, emblazoned with the face of George Washington, showered the UFC star during a chaotic scene on the third stop of the Floyd Mayweather-Conor McGregor world tour.

“They’re all ones!” McGregor exclaimed in mockery.

Well, soon enough they won’t be counting one by one. They won’t be counting the cash by the thousands or even millions. No, in the end, they’ll be sifting through hundreds of millions of dollars.

Indeed, the junior middleweight matchup isn’t really about boxing – or competition – at all. This is a spectacle, an event in which global fascination could allow it to surpass Mayweather-Manny Pacquiao and become the richest fight in history.

Mayweather-McGregor has taken over social media and dominated water-cooler chatter from the moment the August 26 event was officially announced on June 14, peaking during the wild press tour that made stops in four cities in three different countries.

It was at the Brooklyn stop, at Barclays Center, where Mayweather “made it rain” on McGregor. More than 13,000 people packed the arena – fans at each stop had to obtain free tickets – as the fighters hurled bombastic insults at one another. There were even more people in attendance in Los Angeles, Toronto and London.

Photo by Esther Lin / Vox Media

News conferences are usually closed to the public. And if they happen to allow fans in, you might see a handful. The Mayweather-McGregor promotional events drew legions mesmerized by what they seem to see as the ultimate showdown.

And, according to estimates, tens of millions watched the news conferences live on various platforms.

There’s no question: No matter what you think of it, this event is truly larger than life.

Mayweather-McGregor has captured the imagination of just about everyone. A large number of boxing fans will tune in to watch their man. The event will have the distinction of doing the same from a second sport, mixed martial arts, in which McGregor made his name. And one can assume that even those unfamiliar with combat sports will be intrigued enough to fork over the money to watch.

Remember: Mayweather and McGregor are both the most recognizable figures in their sports and worldwide personalities. And, on top of that, they’re two of the best trash-talkers in any sport.

All this adds up to a money-making bonanza.

But just how much cash does everyone involved – from Showtime Sports, which will broadcast the fight on pay-per-view, to the UFC, to the fighters themselves – stand to make?

Making such projections for an event of this magnitude is an inexact science, particularly because McGregor is coming from another sport. This is unprecedented.

Former HBO Sports pay-per-view czar Mark Taffet, who worked at the network for 30 years and oversaw the promotion of 190 PPV shows, told THE RING he was shocked when Mayweather-Pacquiao shattered the previous record of 2.8 million buys of Mayweather-Oscar De La Hoya by generating an unfathomable number: 4.6 million.

Two years later, it appears “Money” Mayweather is poised to top himself yet again.

“There are pay-per-view boxing matches and then there are pay-per-view megafights. The megafights take on a characteristic all their own,” Taffet said. “You can do a million buys with a great pay-per-view boxing match. But when you start doing … 2 million or more buys, you transcend the sport and get into bigger and bigger circles, from sports fans to every fan.

“The more an event is a news item, the more the event is a spectacle, the bigger the buys go. It tends to grow astronomically when you get beyond the boxing circle.”

The bulk of the revenue will come from U.S. pay-per-view – Taffet estimates 75 percent of worldwide income – with site revenue the second-largest moneymaker. After that, it’s a toss-up between foreign revenue, closed circuit, merchandise and sponsorships.

Showtime Sports is charging what it did for Mayweather-Pacquiao: $99.95 for high definition, $89.95 for standard definition. That bout generated $455 million in American pay-per-view revenue, a staggering figure but one many people believe Mayweather-McGregor will exceed.


PAY-PER-VIEW STRATOSPHERE

The highest pay-per-view buyrates.

4.6 million – Floyd Mayweather Jr. vs. Manny Pacquiao, May 2, 2015

2.4 million – Mayweather vs. Oscar De La Hoya, May 5, 2007

2.2 million – Mayweather vs. Canelo Alvarez, Sept. 14, 2013

1.99 million – Evander Holyfield vs. Mike Tyson II, June 28, 1997

1.97 million – Lennox Lewis vs. Tyson, June 8, 2002

1.59 million – Holyfield vs. Tyson I, Nov. 9, 1996

1.55 million – Tyson vs. Peter McNeeley, Aug. 19, 1995

1.5 million – Mayweather vs. Miguel Cotto, May 5, 2012

1.4 million – Felix Trinidad vs. De La Hoya, Sept. 18, 1999

1.4 million – Holyfield vs. George Foreman, April 19, 1991

1.4 million – Mayweather vs. Shane Mosley, May 1, 2010

1.4 million – Pacquiao vs. Juan Manuel Marquez III, Nov. 12, 2011


Mayweather-Pacquiao built momentum for five-plus years. Mayweather-McGregor rocketed into the ozone immediately and continues to rise. And we presume MMA fans didn’t buy into Mayweather-Pacquiao to the same extent they will for this one.

“The level of excitement and energy coming from the UFC fan base has been a bit surprising,” said Courtney Brunious, associate director at the USC Sports Business Institute. “Not only do they believe McGregor has the opportunity to win the fight, but they’ve also shown up en masse to support him.

“I think that underscores the success UFC has had in developing the sport and why this fight has generated so much interest and potential revenue. Traditional boxing fans may be interested enough to watch the fight, but they aren’t the ones generating the momentum toward fight day.”

Indeed, McGregor is a massive underdog in the minds of everyone but MMA fans, who feverishly believe in the Irishman. McGregor clearly had more support at every stop on the tour, especially in Canada and England, where he led expletive-laden chants deriding the Mayweather family.

Mayweather is known as the king of pay-per-view but, to be clear, McGregor has also done well as the “A side” in such events. His last four bouts all have sold at least 1.2 million pay-per-views stateside. And his star has only grown brighter since the announcement he’d fight Mayweather.

Taffet suggested that “adding a completely new sport to the mix with a completely complementary demographic not just to Mayweather, but to boxing” could lend itself to unprecedented business.

How high could the pay-per-view numbers go? Six million buys? Seven million? Nothing seems out of reach.

Photo by Esther Lin

“I’m a student and I use models to predict, but this event is outside the norm of any model,” Taffet said. “It’s a cultural phenomenon that stands to set records. … Just like Mayweather-Pacquiao exceeded De La Hoya by unfathomable amounts, Mayweather-McGregor could set a completely new high bar because of its totally unique character, unlike anything before or anything after.

“There’s no pay-per-view figure that would surprise me because I think of it more in terms of television viewership numbers than pay-per-view buys. It leads me to believe it has the potential to reach unforeseen levels.”

There’s plenty more money where that came from, too.

Tickets went on sale on July 24. And to buy a seat or two (but no more) at T-Mobile Arena, you needed a Ticketmaster code. Those special passwords alone were fetching up to $100 on the secondary market.

And, of course, tickets weren’t cheap. You could sit in the rafters for $500 (face value). Then, as you move closer, tickets would cost $1,500, $2,500, $3,500, $5,000 and $7,500. The best ringside seats were sold for $10,000.

Photo by Rosie Cohe / Showtime

Mayweather-McGregor is sure to top Mayweather-Pacquiao in terms of site revenue for one simple reason: T-Mobile Arena holds more seats than the MGM Grand Garden Arena, where the earlier fight took place.

MGM’s new flagship venue, which opened in April 2016, has a capacity of 20,000 for boxing. MGM Grand holds between 16,000 and 17,000.

Mayweather-Pacquiao reeled in $79.1 million in ticket sales (16,219 sold), another record. Of course, there will be comps, but Mayweather-McGregor will surely sell more seats at similar face-value prices.

Yes, a lot of people will have paid a lot of money to witness the event in person. And not all of them will be experts in combat sports.

“We’re not only drawing fans from the universe of boxing and MMA, we’ve tapped into the audience that really doesn’t follow either sport,” said Stephen Espinoza, executive vice president and general manager of Showtime Sports.

“This is such an unprecedented event, such a spectacle, that suddenly people who have never really been interested in either MMA or boxing are interested in this event due to the nature of the competition and the nature of these two personalities. That’s an untapped part of the market that not even Mayweather-Pacquiao touched.”

Then there’s the foreign money. Mayweather-McGregor should win that battle as well. Consider that McGregor hails from Ireland and is massively popular throughout the United Kingdom, while Pacquiao had the Philippines – where fans could watch his fight with Mayweather on free TV – and some parts of Asia.

Boxing-crazed fans in the U.K. have demonstrated repeatedly that they’ll pay to watch the biggest fights. British heavyweight Anthony Joshua is already drawing PPV numbers there that rival those of American shows.

Merchandising could be where this fight really crushes Mayweather-Pacquiao even though it will be a fraction of total profits.

Mayweather was mocked by McGregor for not wearing a suit at their various press conference stops, but Mayweather laughed. “I made a strategic decision to wear my brand on this tour,” he said.

Photo by Rosie Cohe / Showtime

And sure enough, TMT (The Money Team) merchandise could be found at various stands at Barclays Center. So, too, could McGregor merchandise and other UFC apparel. The massive appeal of the UFC alone could push merchandise revenue past the $1 million in sales for Mayweather-Pacquiao.

Closed-circuit sales are much more difficult to project. It constitutes any restaurant, bar or establishment that pays a premium fee to televise the fight.

Promoters typically determine a price for the establishment to acquire the rights based on the size of the location. Larger venues dole out larger fees.

Then, of course, there are designated closed-circuit locations in Las Vegas that will host large parties for fans who travel to Sin City but are frozen out from seeing the fight in person because they acted too slowly or couldn’t afford the exorbitant prices.

“During my tenure, we found that closed circuit was complementary, not competitive, to pay-per-view,” Taffet said. “People who wanted to stay home and have family and friends over with large-screen TVs and great sound made their Super Bowl-like parties. People who wanted larger crowds and wanted a different experience chose closed circuit.”

How will piracy be combated? It’s easier than ever to watch a marquee fight without paying a dollar. It’s illegal, naturally, but platforms like Facebook Live and a plethora of black-market websites offer grainy streams of every pay-per-view event, no matter the country of origin. Sometimes those streams are pretty good quality.

Taffet doesn’t foresee piracy being a major issue here, though.

“Those who choose to go that way are not real buyers anyway,” he said. “And for an event like this people could be talking about for many, many years, to know you’ll have the best high-definition signal, the best sound, a superior TV environment – those factors will rule the day.”

Sponsorship should be yet another area where Mayweather-McGregor breaks new ground.

According to ESPN.com, five sponsors paid $13.2 million for Mayweather-Pacquiao, led by Tecate at $5.6 million. Other sponsors included films “Terminator Genisys,” “Mission: Impossible – Rogue Nation” and “Southpaw.”

The same website reported that talent agency WME-IMG, which owns the UFC, sent a proposal to potential suitors seeking $10 million to be the title sponsor for Mayweather-McGregor.

The top sponsor would see its logo at center ring, its branding on two of the ropes, on ring girls and in the two corners of the ring not occupied by the fighters. The deal also calls for the sponsor to be featured on graphics during the first minute of every round.

There are also individual endorsements for the fighters. Mayweather pulled in $1 million from Hublot and FanDuel for sponsorship on his trunks for the Pacquiao fight and also $1 million for the Burger King mascot to escort him during the ring walk. The patches on the Filipino Senator’s trunks pulled in $2.25 million.

Photo by Esther Lin / Vox Media

“Being able to target both UFC and boxing fan bases in one fight is a unique opportunity that could prove to be incredibly attractive for companies wanting to reach a wider pool of consumers,” Brunious said. “The general attention the fight will likely bring should prove to be incredibly valuable.

“One thing that could hold the sponsorship dollars back is the penchant for each fighter to make controversial statements that could reflect badly on companies associated with the fight. However, that’s a trade-off that many of those involved with these types of sports are likely already accustomed to.”

Both fighters have already uttered both racist and homophobic epithets, in addition to an incredible amount of profanity. And it doesn’t seem to matter. Neither has the fact that most experts believe the matchup is not competitive, at least not on paper.

Fans and the otherwise curious are buying into the spectacle in spite of any criticism one can muster.

“This move I made right here, it’s unbelievable,” Mayweather said with tremendous pride. “They’re gonna talk about this business move at Harvard. So I want you guys (the fans) to keep believing what they say. They call me every name in the book. ‘He can’t write, he can’t spell, he can’t read.’ Keep believing in all of that. Obviously I’m doing something right if I made $800 million with no endorsement deal.”

After August 26, it’s going to be a whole lot more than $800 million.

STREAMS OF REVENUE

Where the money generated by the Floyd Mayweather Jr.-Conor McGregor fight will come from (in order of possible dollar amount).

U.S. PAY PER VIEW

$500 million? – The Mayweather-Manny Pacquiao fight drew a record-smashing 4.6 million buys (at $99.95 and $89.95 per buy) and generated a reported $455 million. Mayweather-McGregor is expected by many to exceed that.

LIVE GATE

$90 million? – Mayweather-Pacquiao did $79.1 million in ticket sales alone, which should be eclipsed by Mayweather-McGregor in part because T-Mobile Arena, the site of this fight, is much bigger than the site of the earlier fight.

FOREIGN TV

$50 million? – Foreign TV revenue is difficult to estimate because of different deals with every country, but experts suggested the total could range from $40 million to $50 million.

SPONSORSHIPS

$12 million? – Mayweather-Pacquiao had $13.2 million in sponsorships, according to ESPN.com. The Mayweather-McGregor total could be less than Mayweather-Pacquiao because of the relatively short period between the date the fight was announced and the fight itself.

CLOSED CIRCUIT

$10 million? – One expert suggested closed-circuit revenues could approach $8 million to $10 million. Fans can watch the fight on closed-circuit TV at some bars and restaurants, as well as various locations in Las Vegas.

MERCHANDISE

$2 million? – Merchandise – T-shirts, sweatshirts, hats, etc. – will have been sold throughout the promotion, at the MGM Grand in Las Vegas, at the arena on fight night and in other locations. The combination of boxing and UFC fans could push this revenue total to new heights.

TOTAL

$664 million? – The figures in this chart are only estimates – educated projections based on past fights and the comments of experts – but they give you an idea of the immense earning power of Mayweather-McGregor.

Note: Of course, the revenues are gross profits. Many people must be paid from that income. For example, the companies that distribute the telecast generally take half of the pay-per-view total. Also, the fighters get their share of the profits or a flat fee. And everyone else involved in the promotion must receive their share. Those numbers are very difficult to estimate because they are determined by individual contracts.


This story appears in the November issue of THE RING Magazine. You can subscribe to the print or digital edition HERE, or check out our comprehensive Ringside Ticket experience, which includes the digital edition and much more.

The post The Business of Mayweather-McGregor appeared first on The Ring.

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