Mayweather vs Canelo Purse: How Golden Boy Can Afford to Pay Floyd $41.5 Million
A million dollars in cash is manageable. Weighing 22 pounds in $100 bills, according to the U.S. Treasury, it can fit in a large grocery bag with room to spare.
The $41.5 million Golden Boy Promotions is paying Floyd Mayweather Jr. to fight Saul "Canelo" Alvarez Saturday night in Las Vegas?
That's a different story.
At a weight of 913 pounds, Mayweather might need to add a few guys to his entourage if he wants to collect it in crisp $100s. And he might consider bringing the Bentley and not the Ferrari. It's a better fit.
Put into perspective, Mayweather will make, in a single night, nearly half of what the Oakland Raiders will pay their entire NFL roster over the course of the 2013 season. And while Mayweather's record-breaking payday is certainly not typical, it's not unusual for top boxing stars like Manny Pacquiao to clear eight figures a fight.
They're staggering numbers, digits that beg a simple question: how? How can promoters, like Golden Boy's Richard Schaefer and Oscar De La Hoya, possibly afford such an astronomical payoff?
"We have kind of revolutionized the pay-per-view industry, which is amazing, because we are a relatively young company—unlike others who have been in the business for 40 or 50 years," Schaefer told Bleacher Report in an exclusive interview, taking a less-than-subtle shot at rival Bob Arum of Top Rank. "It's something I take a lot of pride in, and it's something that has its roots in my banking days."
To Schaefer, once an executive at one of Europe's biggest banks, UBS, the key to making these mega-events possible starts with six simple income streams, each one carefully scrutinized by a team of experts, then combined to maximize revenue. The total, when it is all said and done, is bigger than the sum of its parts.
"The night of the fight is really the culmination of three solid months of work by, really, hundreds of people," Showtime executive VP Stephen Espinoza said. "This is a three-month-plus endeavor. And even three full months feels really rushed. There are just so many parties that we pull together. It's a very complex puzzle with more than a dozen en****** coming together. It's a pretty amazing accomplishment."
It's an undertaking no one could handle on their own. It takes a talented promoter, a committed team of distributors, Fortune 100 partners and bucketloads of cash just to get the event off the ground. And it all starts and ends with pay-per-view.
The Most Comfortable Seat of All
Two million, five hundred and fifty-two thousand, five hundred and sixty-six.
It's a number Schaefer knows by heart—the record-breaking pay-per-view sales from De La Hoya's 2007 fight with Mayweather. It's the gold standard in combat sports, and a mark Schaefer and Golden Boy have firmly in their sights for Saturday.
At an average cost of $70 (about 60 percent of viewers will choose the $74.95 high-def broadcast), if things go perfectly and they approach the all-time record, the bout will gross about $180 million on pay-per-view sales. But before Schaefer and De La Hoya celebrate too hard, they first have to split the take with their distributors in the world of satellite and cable television. And because they own the mechanism of delivery, the distributors' price is steep.
"It's potentially a $90 million windfall for the pay-per-view industry. And I am stuck paying the fighters! I basically carry the full risk," Schaefer said. "About half of it goes to the carrier from whom you buy it...they don't take up any of the expenses, and they don't have to pay the fighters."
But the pay-per-view industry, with en****** like In Demand, Dish and DirecTV, does contribute in other ways. Their percentage doesn't just start at an even 50 percent—they have to earn it with a commitment to market the event.
"The more they do in terms of marketing, the better their split is," Espinoza explained. "Everybody who's a part of this event is contributing to the marketing and promotion. The distributors contribute, not just on their airwaves, but for an event like this, the majority of the distributors are actually putting cash contributions into co-op advertising with us.
"There's a range, but for an event like this, most of our distributors choose to take the full marketing option which will get them to about a 50/50 split. The other 50 percent comes over to our side of the ledger."
The bulk of the remaining PPV money goes directly to Golden Boy to be divvied out to partners, most prominently Showtime.
As the exclusive television partner of Mayweather, and the event's distributor, Schaefer said the pay cable network will collect about five percent of the proceeds (a number that varies from show to show). It's a fee that takes into account production costs, advertising and another critical component: cash up front.
"We negotiate with them a fight-night advance," Schaefer said, explaining the initial costs would be too much for him to bear otherwise. "When you're at home and you order the pay-per-view, you're not going to pay Saturday night. But I have to pay Monday morning! You're going to pay your provider when you get your next bill, which might be a month from now. By that time, most fighters have spent the money already."
The Nevada Athletic Commission, by law, requires the promoter to deposit every penny of the fighters' salaries into an account, to be distributed by state officials on the night of the bout. For "The One," including Mayweather's record haul, that cost will be in the $60 million range.
"Monday morning, bright and early, these fighters are going to go to the bank and they're going to cash their check," Schaefer said. "I have to make sure come Monday morning that I have $60 million in my bank account. Otherwise, checks are going to bounce, and my reputation is ruined."
"If you add in all of the various marketing expenses, production expenses, travel, you easily add another $10-15 million on top of that," Espinoza said. "There is a big and immediate cash outlay."
The problem, he says, is the long delay in any significant return on that investment.
"The money from our cable and satellite partners can take as long as six to nine months and sometimes even longer to be collected,” he said. “The bulk of it will come in in three to six months, but there's a meaningful amount of money that won't come for up to a year later."
In addition to providing part of the bank roll to fund the event, Showtime is also in charge of television production. For a show of this magnitude, they'll be pulling out all the stops.
Instead of 10 cameras (standard for a big boxing match on Showtime), there will be 15, including special slow-motion and reverse-angle rigs. The total cost of getting the signal to air, Espinoza said, will approach seven figures.
"It's an enhanced production,” he said. “Sort of comparable to what a free TV network would do for the Super Bowl compared to a regular-season game."
In the end, no one knows if all the work will pay off.
"You never know. Is it going to be a home run? Or is it going to be a flop? I don't know if 1.5 million or two million or three million people are going to buy the event," Schaefer said. "I hate to lose money, but that goes with the territory. If you don't take any risks, you aren't going to gain anything either. And by the way, that does happen sometimes."
"It can happen," Espinoza concedes, admitting it is indeed possible to lose money, even on a mega-event. "Obviously everyone does their best to avoid it. It's not all fun and games—there's a lot at stake. One of the somewhat unnerving parts of the pay-per-view process is the fact that 95 percent of the buys will come in the last couple of hours before the pay-per-view starts. There's very little from which you can project performance up until the last minute.
"We have some very preliminary numbers now, but it's really not until a week after the event that you really start getting some reliable estimations of what the number will be. We're still projecting, even a week after the event.
"'Terrifying' is a good word for it. We are, to a large extent, flying blind. There's a lot that will happen in the hours, and even minutes, before the pay-per-view starts that will determine whether you have a massive success or not."
But worst-case scenarios aside, Espinoza believes that "The One" has been set up to succeed.
"It's hard sometimes for us to know because we are sort of inside the bubble...but I can't think of another event that's anywhere near this level of visibility," he said. "And I was involved in Oscar De La Hoya's career and the last six or seven years of Mike Tyson's career. None of the Tyson fights, none of the De La Hoya fights garnered this kind of attention."
....CONTINUE BELOW...
A million dollars in cash is manageable. Weighing 22 pounds in $100 bills, according to the U.S. Treasury, it can fit in a large grocery bag with room to spare.
The $41.5 million Golden Boy Promotions is paying Floyd Mayweather Jr. to fight Saul "Canelo" Alvarez Saturday night in Las Vegas?
That's a different story.
At a weight of 913 pounds, Mayweather might need to add a few guys to his entourage if he wants to collect it in crisp $100s. And he might consider bringing the Bentley and not the Ferrari. It's a better fit.
Put into perspective, Mayweather will make, in a single night, nearly half of what the Oakland Raiders will pay their entire NFL roster over the course of the 2013 season. And while Mayweather's record-breaking payday is certainly not typical, it's not unusual for top boxing stars like Manny Pacquiao to clear eight figures a fight.
They're staggering numbers, digits that beg a simple question: how? How can promoters, like Golden Boy's Richard Schaefer and Oscar De La Hoya, possibly afford such an astronomical payoff?
"We have kind of revolutionized the pay-per-view industry, which is amazing, because we are a relatively young company—unlike others who have been in the business for 40 or 50 years," Schaefer told Bleacher Report in an exclusive interview, taking a less-than-subtle shot at rival Bob Arum of Top Rank. "It's something I take a lot of pride in, and it's something that has its roots in my banking days."
To Schaefer, once an executive at one of Europe's biggest banks, UBS, the key to making these mega-events possible starts with six simple income streams, each one carefully scrutinized by a team of experts, then combined to maximize revenue. The total, when it is all said and done, is bigger than the sum of its parts.
"The night of the fight is really the culmination of three solid months of work by, really, hundreds of people," Showtime executive VP Stephen Espinoza said. "This is a three-month-plus endeavor. And even three full months feels really rushed. There are just so many parties that we pull together. It's a very complex puzzle with more than a dozen en****** coming together. It's a pretty amazing accomplishment."
It's an undertaking no one could handle on their own. It takes a talented promoter, a committed team of distributors, Fortune 100 partners and bucketloads of cash just to get the event off the ground. And it all starts and ends with pay-per-view.
The Most Comfortable Seat of All
Two million, five hundred and fifty-two thousand, five hundred and sixty-six.
It's a number Schaefer knows by heart—the record-breaking pay-per-view sales from De La Hoya's 2007 fight with Mayweather. It's the gold standard in combat sports, and a mark Schaefer and Golden Boy have firmly in their sights for Saturday.
At an average cost of $70 (about 60 percent of viewers will choose the $74.95 high-def broadcast), if things go perfectly and they approach the all-time record, the bout will gross about $180 million on pay-per-view sales. But before Schaefer and De La Hoya celebrate too hard, they first have to split the take with their distributors in the world of satellite and cable television. And because they own the mechanism of delivery, the distributors' price is steep.
"It's potentially a $90 million windfall for the pay-per-view industry. And I am stuck paying the fighters! I basically carry the full risk," Schaefer said. "About half of it goes to the carrier from whom you buy it...they don't take up any of the expenses, and they don't have to pay the fighters."
Top PPVs in Boxing History
Mayweather vs. De La Hoya May 2007 2.4 million
Holyfield vs. Tyson II June 1997 1.99 million
Lewis vs. Tyson June 2002 1.97 million
Holyfield vs. Tyson November 1996 1.59 million
Via BoxingScene.com
Mayweather vs. De La Hoya May 2007 2.4 million
Holyfield vs. Tyson II June 1997 1.99 million
Lewis vs. Tyson June 2002 1.97 million
Holyfield vs. Tyson November 1996 1.59 million
Via BoxingScene.com
"The more they do in terms of marketing, the better their split is," Espinoza explained. "Everybody who's a part of this event is contributing to the marketing and promotion. The distributors contribute, not just on their airwaves, but for an event like this, the majority of the distributors are actually putting cash contributions into co-op advertising with us.
"There's a range, but for an event like this, most of our distributors choose to take the full marketing option which will get them to about a 50/50 split. The other 50 percent comes over to our side of the ledger."
The bulk of the remaining PPV money goes directly to Golden Boy to be divvied out to partners, most prominently Showtime.
As the exclusive television partner of Mayweather, and the event's distributor, Schaefer said the pay cable network will collect about five percent of the proceeds (a number that varies from show to show). It's a fee that takes into account production costs, advertising and another critical component: cash up front.
"We negotiate with them a fight-night advance," Schaefer said, explaining the initial costs would be too much for him to bear otherwise. "When you're at home and you order the pay-per-view, you're not going to pay Saturday night. But I have to pay Monday morning! You're going to pay your provider when you get your next bill, which might be a month from now. By that time, most fighters have spent the money already."
The Nevada Athletic Commission, by law, requires the promoter to deposit every penny of the fighters' salaries into an account, to be distributed by state officials on the night of the bout. For "The One," including Mayweather's record haul, that cost will be in the $60 million range.
"Monday morning, bright and early, these fighters are going to go to the bank and they're going to cash their check," Schaefer said. "I have to make sure come Monday morning that I have $60 million in my bank account. Otherwise, checks are going to bounce, and my reputation is ruined."
"If you add in all of the various marketing expenses, production expenses, travel, you easily add another $10-15 million on top of that," Espinoza said. "There is a big and immediate cash outlay."
The problem, he says, is the long delay in any significant return on that investment.
"The money from our cable and satellite partners can take as long as six to nine months and sometimes even longer to be collected,” he said. “The bulk of it will come in in three to six months, but there's a meaningful amount of money that won't come for up to a year later."
In addition to providing part of the bank roll to fund the event, Showtime is also in charge of television production. For a show of this magnitude, they'll be pulling out all the stops.
Instead of 10 cameras (standard for a big boxing match on Showtime), there will be 15, including special slow-motion and reverse-angle rigs. The total cost of getting the signal to air, Espinoza said, will approach seven figures.
"It's an enhanced production,” he said. “Sort of comparable to what a free TV network would do for the Super Bowl compared to a regular-season game."
In the end, no one knows if all the work will pay off.
"You never know. Is it going to be a home run? Or is it going to be a flop? I don't know if 1.5 million or two million or three million people are going to buy the event," Schaefer said. "I hate to lose money, but that goes with the territory. If you don't take any risks, you aren't going to gain anything either. And by the way, that does happen sometimes."
"It can happen," Espinoza concedes, admitting it is indeed possible to lose money, even on a mega-event. "Obviously everyone does their best to avoid it. It's not all fun and games—there's a lot at stake. One of the somewhat unnerving parts of the pay-per-view process is the fact that 95 percent of the buys will come in the last couple of hours before the pay-per-view starts. There's very little from which you can project performance up until the last minute.
"We have some very preliminary numbers now, but it's really not until a week after the event that you really start getting some reliable estimations of what the number will be. We're still projecting, even a week after the event.
"'Terrifying' is a good word for it. We are, to a large extent, flying blind. There's a lot that will happen in the hours, and even minutes, before the pay-per-view starts that will determine whether you have a massive success or not."
But worst-case scenarios aside, Espinoza believes that "The One" has been set up to succeed.
"It's hard sometimes for us to know because we are sort of inside the bubble...but I can't think of another event that's anywhere near this level of visibility," he said. "And I was involved in Oscar De La Hoya's career and the last six or seven years of Mike Tyson's career. None of the Tyson fights, none of the De La Hoya fights garnered this kind of attention."
....CONTINUE BELOW...
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