Pacquiao vs. Morales: "The PPV Controversy"

By Ronnie Nathanielsz

The swirling controversy over the non-payment of Manny Pacquiao’s alleged 40 percent share of pay-per-view rights for the showdown against Erik “El Terrible” Morales has been stirred by some sectors who don’t know the facts or haven’t a clue about how PPV deals work and others who merely ride on what is fashionable in the Philippines in an effort to win friends and hopefully influence people.

The facts of the PPV issue are very simple. When Pacquiao signed an addendum to his mother contract of March 2004 with promoter Murad Muhammad and business manager Rod Nazario on December 23, 2004 the addendum clearly stated he would be paid $900,000 for a February 26 rematch with WBA/IBF champion Juan Manuel Marquez “or an opponent acceptable to HBO” and $1.75 million for a fight against Erik Morales or “an opponent acceptable to HBO.”  This was because HBO, as in the past, would put up the money for the fight which the promoters would then handle and HBO would telecast. At that time there was absolutely no inkling that the Morales fight would be a pay-per-view event.

The reasons for this were:

1. The  Pacquiao fight against Marquez in May 2004 failed to reach 4.0 percent in terms of ratings which was below the benchmark of 5.0 percent set by HBO for its fights. Anything less means the fights are downgraded to HBO’s Boxing After Dark” show where fighters normally earn between $150,000 to $300,000 maximum. 2. Pacquiao would have had to first beat Marquez before setting his sights on Morales that is why there was no fixed date and only the month of July was mentioned. And considering the fact that Pacquiao, despite decking Marquez three times in the first round couldn’t put him away and had to settle for a draw meant there was no guarantee he would beat Marquez in a rematch before facing Morales who was bigger, stronger and a three-time world champion whose own future at 130 pounds was uncertain.

Marquez strongly believed that as a champion of two sanctioning bodies and having fought back courageously to salvage a draw against Pacquiao, he deserved more than the Filipino and demanded $1.5, pricing himself out. Bob Arum of Top Rank who handles Marquez as well as Morales then agreed with Murad Muhammad to match Morales against Pacquiao on July 19 and after negotiations with HBO senior vice president Mark Taffet decided to make it a pay-per-view event banking primarily on Morales having been quite successful on ten previous PPV fights, the last being against Marco Antonio Barrera on November 27, 2004 where they eventually had around 325,000 buys.

Arum later told Manila Standard Today that he was banking on the huge Hispanic block with whom Morales was a firm favorite and he was gambling on the more than two million Filipinos living in the US to also come aboard. Clearly, the eventual estimates of
350,000 buys was generated by the tremendous promotional and marketing effort which cost substantial money.  Those of us who were in the US appreciated the fact that this was indeed a tremendous effort which included a press conference in Mexico
City with the fighters as well as the promoters and WBC president Jose Sulaiman present, following an earlier news conference at the Beverly Hills Hotel in Los Angeles.

Jeff Fried, president of a well-known Washington D.C. based law firm that represents a wide variety of sports and entertainment interests points out in a an article on the PPV business that “the promoter either assumes financial risk in staging a pay-per-view event or secures guaranteed sources of revenue to cover the projected expenses, including purses of the main event participants.”

Taffet , recognized as a guru of the PPV industry made it crystal clear that HBO’s deal was with Bob Arum and Top Rank “not Murad Muhammad” and that he did not know whether there was any agreement which entitled Pacquiao who was making his  first PPV appearance and Morales who was making his eleventh such appearance a percentage of the upside (meaning profits after deduction of all expenses including the $4.25 guaranteed both fighters whether the PPV gamble made money or not).

Claims by some individuals including trainer Freddie Roach that he had negotiated a deal with Arum for Pacquiao to get 40 percent with Morales getting another 40 percent and Arum taking 20 percent was regarded as ridiculous. Arum and Murad put up the guaranteed purses and Arum would get only 20 percent of the upside and Murad not one centavo? And would Morales’ handlers settle for parity with Pacquiao when Morales had done ten previous successful PPV fights and Pacquiao none? And Morales, even in terms of the purse, got $2.5 to Pacquiao’s $1.75. Besides, the Hispanics were known PPV supporters of Morales and the Filipinos in the US were an unknown quantity. The bitching by Pacquiao himself who regrettably is being fed all sorts of fairy tales by some of the people around him doesn’t make any sense at all. Worse still, a great warrior is being made to look like a poor loser and a cry baby who doesn’t know what he’s talking about.