Business of Sport
The era of smart phones, tablets and video on demand has made live sport a more lucrative form of entertainment than ever before.
You can watch soap operas, movies and talk shows at your leisure on a plethora of devices but there is still no substitute for watching a football match, a cricket game or a prize fight live at the venue.
Spectacular sums of money have flowed into the industry courtesy of international broadcast deals. The rights to the English Premier League were recently sold to distributors and television platforms all around the globe for £10.4 billion (Dh50.19bn), a sum so staggering it’s difficult for the average football fan to contextualise.
However, the EPL is shackled by very strict parameters. The format consists of 20 teams playing each other home and away over the course of a single season with the eventual winner crowned as champion and in excess of £2bn in prize money allocated according to the final positions.
When it comes to professional boxing promoters are free to make absolutely any match, a point which was conclusively proven with the announcement that Floyd Mayweather would be facing Conor McGregor in a pair up this month. In one corner will be an undeaten 49-0 professional regarded by many as the best in the world, in the other will be a complete novice making his debut.
It is the sporting equivalent of the reigning European champions Real Madrid playing a Sunday league side. Yet hundreds of thousands of fans will purchase the pay per view (PPV) offering and the event on August 26 will generate hundreds of millions of dollars in revenue to line the pockets of the promoters, TV companies and, of course, the fighters themselves.
The T-Mobile Arena in Las Vegas will be filled to its 20,000 capacity and the promoters will make back the US$400m and $127m that Mayweather and McGregor (respectively) are reported to be earning many times over. The event is guaranteed to be a smash-hit success at the box office and even the pre-fight press tour was a complete sell out.
But the implications this fight may have for the future for sport are likely to linger on long after Mayweather and McGregor have banked their 10-figure cheques. Fans want celebrity, they want spectacle and an astute promoter who can shackle the two and make it into a match stands to make hundreds of millions of dollars.
It is a format Word Wrestling Entertainment (WWE) has been utilising successfully for years. Its live events will not be covered in the sports sections because the "fights" are scripted and will often involve multiple combatants weaponising chairs, tables and any other fixtures or fitting that fit the narrative.
WWE is a publicly traded company so its accounts are in the public domain. In the first quarter of this year its revenue increased 10 per cent to $188.4m. Last year Wrestle Mania 32 was attended by more than 100,000 people while the organisation’s subscription-based video streaming service had in excess of 1.8 million subscribers.
In 2016 the WWE generated $729.2m in revenue. The company’s most obvious global competitor is the Ultimate Fighting Championship (UFC). It is the wildly successful mixed martial arts (MMA) promotion that McGregor is currently contracted to and was acquired by a group led by WME-IMG for $4 billion last year from the UFC co-owners Lorenzo and Frank Fertitta.
The UFC is not a publicly listed company but a former chief executive went on record as saying the promotion generated "about $600m" in revenue in 2015. Meanwhile, Golden Boy, which competes with Top Rank for the mantle of world’s biggest boxing promotion organisation, had revenue of $140m in 2014, according to estimates revelealed in an anti-competition court case this year
In a sign that boxing promoters are happy to spread the net when it comes to making matches, after the case was dismissed, the Golden Boy spokesman Stefan Friedman said: "We are obviously disappointed with the judge's ruling. However, our top priority at Golden Boy is putting on the best fights for the fans and promoting the best shows in the business.
"We will continue to focus our energies on working with anyone and everyone to make the best fights happen."
The WWE’s intraday market cap currently stands at $1.58bn although in the aftermath of last year’s UFC sale one analyst suggested ta more realistic valuation of the wrestling promotion would be in the $2.7bn to 3.4bn range. Wrestling might not meet most people’s definition of sport but it is certainly big business.
While few would doubt that the WWE roster is filled with skilled performers this company has several competitive advantages over promoters such as the UFC, Golden Boy and Top Rank. In sport, the quest to find and develop elite talent is exhaustive and never ending whereas in the world of professional wrestling things are somewhat simpler.
For instance, the WWE chairman and chief executive Vince McMahon was able to give both his children roles as wrestlers. Few such shortcuts are available to promoters working within the confines of a competitive sport and the competition to get the top boxers and mixed martial artists under contract can be intense.
Mayweather vs McGregor will be a sporting event in the traditional sense. Both men will wear 10oz gloves and compete under the Queensbury rules in a bout that is sanctioned by the Nevada State Athletic Commission and will be judged and adjudicated by qualified, experienced officials in Las Vegas.
ut there is nothing traditional about the concept behind the fight, which seems a better fit for the WWE stage than the boxing ring. It is reminiscent of the 1976 mixed rules bout between then heavyweight boxing champion Muhammad Ali and the Japanese wrestling star Antonio Inoki that was broadcast to 34 different countries but turned out to be a deeply disappointing spectacle.
Josh Gross is the author of a book entitled Ali vs Inoki and he currently covers the sport of MMA for the UK's The Guardian. He sees obvious parallels between that bout and the upcoming match between Mayweather and McGregor,
“The two bouts feature major personalities on both sides of the poster who felt some measure of worldwide fame. Many members of the boxing media despised the prospect of Ali fighting Inoki, and begrudgingly covered it only because of Ali's stature at the time. Similarly, the current day boxing press have been lukewarm at best to the Mayweather McGregor contest.”
The match between Ali and Inoki demonstrated the enormous gulf between fantasy matchmaking and fantastic fights. The wrestler refused to engage the boxer for fear of being knocked out while Ali threw a grand total of six punches during the 15 round fight, which ended in an anticlimactic draw.
While there are several similarities between the two bouts, Mr Gross notes that at least one key distinction can be made,
“In some ways the contests and circumstances are very different. Mayweather vs McGregor is pure boxing so there won't be any public confusion about rules or tactics, which plagued Ali's mixed fight in Japan.”
MMA did not exist in 1976 but today it is well established and has already surpassed the popularity of boxing by many metrics. Mr Gross thinks this is one factor that guarantees McGregor vs Mayweather will do better at the box office than Ali vs Inoki,
“Ali vs Inoki was not a commercial success. The event underperformed on closed-circuit in North America, and the promoters didn't make the return they thought they would. Bob Arum said it was one of his worst mistakes as a promoter [but] in 1976 the general public knew little about mixed rules fights, in 2017 MMA is flourishing as a spectator sport.”
The sale of the UFC in 2015 demonstrated that MMA has grown to become a multibillion-dollar industry. In terms of popularity, McGregor and Mayweather are probably on a par with each other, both rank as the highest-grossing PPV stars in the history of their respective sports.
But, there are signs that the bout is not generating as much interest as predicted - at least, not yet. According to the Associated Press' Tim Dahlberg, "a check online Saturday revealed hundreds - even thousands - of seats still available" first-hand on Ticketmaster after they were initially made available to the public the prior Monday.
But based on the cost to get into the T-Mobile Arena for the Las Vegas spectacle, that is perhaps not a major surprise. The cheapest face-value ticket is $3,500, and that is not counting approximately $300 worth of fees associated with the purchase. Prices soar as high as $10,000 for ringside seats, with VIP "platinum" tickets coming in at just under $15,000.
"There's fairly little sales going on in general," says the SeatGeek.com content analyst Chris Leyden. "I think a lot of it has to do with where prices are now. I think people are a little uncomfortable paying this much or maybe even more."
But, if fans are prepared to cough up the cash for a ticket, what are they likely to see in the ring? Mayweather is a defensive master who is seldom in either a close or competitive bout. He specialises in making opponents miss. Given McGregor’s complete lack of competitive experience in the ring the consensus in the boxing industry is that the MMA star might struggle to land a single significant punch.
The question is whether or not the paying public will buy into this match-up. Ali vs Inoki was not a commercial success but current projections suggest that Mayweather vs McGregor will be. The PPV is priced at $89.99 in North America and bookmakers believe it could generate close to 5 million buys.
Mayweather’s 2015 fight with Manny Pacquiao brought in nearly half a billion dollars in revenue. If next month's bout comes anywhere close to achieving that level of financial success then the formula of matching stars from different combat sport genres is likely to become increasingly popular among promoters.