Mayweather v Pacquiao: Breaking down the economics of the boxing mega fight

April 30, 2015

On May 2 (May 3 in some parts of the world including most of Africa) the biggest economic event in the history of boxing will take centre stage as Floyd Mayweather and Manny Pacquiao step into the ring at to fight at MGM Grand Garden Arena. The fight is widely anticipated across the world as many regard it as potentially one of the biggest bouts in the history of the game. With both fighters agreeing to the fight in February, marketing and advertising activities have gone into overdrive as such this super-fight is on course to rewrite the economic history of boxing.

Here is a break-down of the numbers that matter, how revenue will be generated, potential broadcast income and much more.

 

The fighters

Floyd Mayweather and Manny Pacquiao are two of boxing biggest names. Mayweather, 38, is the highest-grossing boxer of all time and is currently one of sport’s most lucrative figures. Pacquiao, 36, is a Filipino congressman who has played a key role in developing sports in Phillipines. Mayweather’s biggest payday, a fight against Saul Alvarez saw him pocket about $75 million while Pacquiao’s biggest payday was in the third fight against Juan Manuel Marquez which saw him bank $30 million.

Pacquaio’s record reads 57 wins- 38 via knockout, 5 losses and 2 draws from 64 fights while Mayweather remains undefeated with 47 wins with 26 knockouts.  A measure of how big the Mayweather and Pacquiao fight is seen in the fact that the two boxers have grossed Pay Per View revenues of $1.6 billion in their fights. Mayweather and Pacquaio are signed on exclusive deals toShowtime and HBO respectively. Floyd Maywether will earn $120 million from the fight while Manny Pacquaio will pocket $80 million.

How is revenue generated?

 

Pay Per View sales

The bulk of revenue from the super-fight will be generated from pay per view (PPV) television sales. Forecasts indicate that pay-per-view buys in the United States could reach 3.5 million with a minimum of three million buys projected. This number is rather impressive given that the current record for most PPV buys, set during the 2007 Mayweather v Oscar De La Hoya fight, is 2.4 million PPV buys. Showtime and HBO, two major stakeholders in the fight, will jointly sell PPV with prices pegged at $89.95- also a boxing record. (High Definition viewing costs $10 extra). Given projected numbers for PPV buys and set prices, the fight will most certainly also break the record for PPV revenue which stands at $150 million and was set during the 2013 Mayweather v Saul Alvarez fight. A simple projection of 3.5 million PPV buys at $89.95 will see the fight bank over $300 million.

 

Broadcast rights

International interest in the fight is intense as various broadcasters have picked up rights to transmit the fight in different territories. Sky Sports has picked up the rights in the UK after edging out BT Sport. In sub-Saharan Africa, SuperSport will screen the fight while OSN and Etisalat will transmit it in the Middle East. Televisa and Azteca will screen the fight in Mexico while Solar Sports have snapped up the broadcast rights in Pacquaio’s native Phillipines. In total, international rights sales are projected to generate a minimum of $35 million in revenues.

 

Live Gates

Asides PPVs, another way to witness the grand event is by being there in person. The MGM Grand Garden Arena- the biggest venue in Las Vegas- will hold over 16,000 people at what will likely be a sold-out event. In line with the other projections, gate revenues are also expected to break the all time record of $20 million, set during Mayweather’s fight against Saul Alvarez in 2013.  Ticket prices range from regular ($1,500) to ridiculous with reports online suggesting that some are selling for as high as $100,000. Demand for the fight is also reflected in ticket prices as 500 tickets made available to the public were reportedly sold out in a minute. MGM will also get in on the action as with the pay-per-view service unavailable in Las Vegas hotels, anyone who wants to watch the bout but does not have tickets to attend can watch a closed-circuit broadcast of the fight for $150 at an MGM resort.

Sponsorship

Like every sporting event, the Mayweather v Pacquaio fight will look to make money from sponsorship. Sponsorship contracts with five title sponsors will bring in $13.2 million. Beer brand Tecate earned a piece of the pie with a fee of $5.6 million. Other sponsors include the Mexican Tourism Board and a Filipino telecommunications company, Smart Communications. Paramount Pictures and Skydance Productions will also feature prominently to promote Terminator Genisys, out on June 25 2015 and Mission Impossible: Rogue Nation, out on July 31 2015.  Weinstein Company will also promote its upcoming sports drama and boxing movie, Southpaw, out July 24 2015.

In exchange for sponsorship dollars, all three films will run trailers on the pay-per-view broadcast which provides exposure to millions of prospective theater-goers.

Manny Pacquiao is also set to make a few extra million from selling advertisement space to brands like Motolite, Nike, Cafe Puro, and Air Asia on his gear.

With sponsorship bids set at a minimum of a million dollars, Tecate’s $5.6 million bid to become the Official Beer of the event is also breaking a boxing record. Living up to its billing as the biggest boxing match in recent times, the fight has pulled three times more sponsorship revenue than has been generated by any other event in boxing history.

The Mayweather v Pacquaio, regardless of what happens in the ring, will be remembered for a long time as one which redefined the economics of boxing.

Source: Ventures Africa

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