What's Happening With DAZN? - Part One

On May 10, 2018, Eddie Hearn (managing director of Matchroom Boxing) and Simon Denyer (CEO of what was then Perform Group) announced a joint venture at a press conference in New York. Former ESPN president John Skipper, who had joined Perform Group as its executive chairman three days earlier, was also in attendance.

Speaking about what was touted as a one-billion-dollar, eight-year joint licensing agreement to provide content for DAZN, Hearn proclaimed, "We're here to change the game and elevate boxing to a new level for fight fans in America. We can televise the fights on the days we want at the time we want. We don’t have to come on at ten o’clock after a movie. We have the dates, the money, and the platform. We were dangerous without this. But with this money and this platform, omigod!”

Two months later, on July 17, Hearn met again with the media. This time, there were questions regarding what appeared to be a thin roster of American fighters who would be appearing on DAZN. Addressing the issue, Hearn declared, “We live in a world where people say, ‘Ah, he didn’t get Charlo or Spence.’ Calm down. We’ve just had seven or eight weeks. We’re getting so much resistance from advisers and networks which is really good news because it means they’re concerned. We’re out there actively talking to Mikey Garcia, talking to the Charlos. We can pay them more money than other promoters. There are contracts out with another dozen fighters. We’ve signed three world champions [Maurice Hooker, Daniel Roman, and Jesse Vargas]. We’ve signed a number one middleweight in Demetrius Andrade. We’ve signed a load of really good amateurs. We’re going to cause nightmares. We are resilient. We are absolutely ruthless. We won’t stop. And we’ve got a team of people behind us who have a bottomless pit of money who will back us to the heavens. We’ve got eight years to make it work.”

A lot has happened in boxing in recent years. Al Haymon launched Premier Boxing Champions. HBO left the sport while ESPN, FOX, and DAZN came in.  Streaming video is now seen by many as the wave of the future, and its foremost proponent insofar as boxing is concerned is DAZN.

DAZN launched in Germany, Japan, Austria, and Switzerland in 2016 and has since added Canada, Italy, Spain, Brazil, and the United States to its roster. It began streaming in the U.S. on September 10, 2018, and distributed its first boxing card here on September 22 when Anthony Joshua defended his WBA, IBF, and WBO belts against Alexander Povetkin.

Initially, DAZN was priced in the United States at $9.99 a month for up to three devices. But the cost of its monthly offering soon increased to $19.99. Alternatively, subscribers can buy an annual subscription for $99.99, which averages out to $8.33 per month.

DAZN's ultimate goal is to become the dominant player worldwide in digital sports media.

“The world we’re heading into," John Skipper said in an interview posted on SportsProMedia on October 7, 2019, "is going to be overwhelmingly about streamed content as opposed to linear networked content. I think sport will continue to be the most valuable video content in the world because of the level of passion people have for it."

DAZN has rights to National Football League games in Germany, Austria, Switzerland, Japan, Canada, and Italy. It streams Major League Baseball in four countries overseas and National Basketball Association games in three. But in the United States, DAZN is still a start-up streaming service. It has money to spend on rights fees. But only a limited number of important properties are available for it to buy since all of the major sports are contractually bound to other networks.

Thus, DAZN is seeking to penetrate the U.S. market and build a following through boxing. It offers other sports content to subscribers, including an MLB "wrap-around" show, which Skipper says is "a clear declaration of intent that we're going to expand." But boxing is a sport that DAZN thinks - or at least, thought - it can can become preeminent in now.

"Boxing is an excellent entry point for us into the United States," Skipper explains, "because it's not tied up by the major media companies. We will be, relative to live events, overwhelmingly a fight channel throughout most of 2020 because there aren’t a lot of other available rights that come up. The major sports rights begin to come up in 2021, and we’ll be a player in trying to acquire some of those packages.”

But DAZN's entry into boxing has been bumpy.

The powers that be at DAZN were impressed by the spectacle of Anthony Joshua's conquest of Wladimir Klitschko in London on April 23, 2017. It fired their imagination. Thereafter, Hearn convinced them that, with DAZN's money and his expertise, they could duplicate this success and become a dominant force in boxing in the United States. Their interests were further unified by an agreement that gives DAZN what multiple sources say is a 40 percent equity interest in Matchroom USA (Hearn's American promotional company).

Skipper is smart. But he rarely dealt with boxing when he was at ESPN. And there's a long, steep, arduous learning curve when it comes to understanding the business of boxing.

Hearn's interests are unified in some respects with DAZN's. But his first loyalty is to Matchroom. And one can question whether anyone currently at DAZN has the expertise to properly oversee the network's boxing program.

Skipper is comfortable with the team that he has in place. "It has been a learning process," he said in a recent interview with BoxingScene.com. "But working with Eddie Hearn has been cordial and seamless. Between Eddie, Joe Markowski [DAZN executive vice president for North America], and myself, I don't see the need for what some people are calling another 'boxing guy.'"

But there have been times when DAZN's deal-making has been clumsy. The fact that the network signed Canelo Alvarez and Gennady Golovkin for close to $500 million and has been unable to get them in the ring with each other for a third fight suggests a lack of expertise. And a familiar refrain heard from boxing insiders is, "The people who run DAZN are very naive when it comes to the business of boxing . . . DAZN needs an experienced boxing guy whose only loyalty is to DAZN . . . People who know next-to-nothing about boxing are making high-level deals for DAZN, and the numbers aren't adding up for them on any rational basis."

More than a few individuals and corporate entities have sought to control boxing over the decades. No one has succeeded since Frankie Carbo and his friends seventy years ago. DAZN, like Premier Boxing Champions, mistakenly thought that it could control a majority of elite fighters in the United States with its checkbook. Indeed, Hearn's May 10, 2018, announcement seemed based on the premise that elite fighters would line up en masse to sign with Matchroom USA and that the entire boxing community (with the possible exception of Bob Arum, Al Haymon, and Stephen Espinoza) would dance the hora in joyful celebration of DAZN's bold, innovative, well-financed approach to boxing.

"We came in with a load of money and I expected loads of people to just sign for us," Hearn told British journalist Ron Lewis this past October. "It has been harder than I thought it would have been. ESPN and PBC have dug their heels in and we’ve had to overpay fighters to come to us or stay with us.”

To fill out its boxing programming, DAZN has moved beyond Matchroom in pursuit of content.

On July 2, 2018, it announced that it would televise all seven fights in each of the three weight divisions in season two of the World Boxing Super Series and would also showcase mixed martial arts bouts promoted by Bellator and Combate Americas.

On October 17, 2018, it announced an agreement with Canelo Alvarez and Golden Boy (Alvarez's promoter) to stream Canelo's next eleven fights on DAZN platforms throughout the world with DAZN paying a minimum of $365 million for the honor. DAZN also agreed to stream an unspecified number of less prominent Golden Boy fight cards during the five-year contract term.

In early-2019, Gennady Golovkin came into the fold.

These signings coupled with Matchroom's offerings (including the fact that Hearn has brought Anthony Joshua into the DAZN orbit for three fights on a fight-by-fight basis) enabled DAZN to deliver better boxing to fans in the United States in 2019 than any other network. But DAZN's business model was predicated on the belief that it could sign the best fighters and match them against each other. And DAZN's content hasn't maintained the consistently high level that was expected when it began operation in the United States.

"We underestimated the difficulties we'd face and the time we'd need to pull together enough boxing to form a stable subscription base," Skipper admits.

In part, that's because PBC and ESPN fought back hard when DAZN was launched and adopted what some observers have called a "kill the baby in the crib" mentality. If DAZN was disrupting and distorting boxing economics by paying unusually large license fees, they would respond in kind.

The primary beneficiaries of this largesse have been a handful of promoters, managers, and fighters.

Canelo Alvarez and his team are being paid a minimum of $365 million for eleven fights. Another $100 million in cash and DAZN stock has been committed to Gennady Golovkin. The amount paid for Sergey Kovalev's participation in a November 2 light-heavyweight title defense against Canelo has been reported as being in the neighborhood of $12 million. That was multiples more than Kovalev's previous high purse, which was for his 2016 outing against Andre Ward.

Sergiy Derevyanchenko (a largely unknown fighter with thirteen victories on his ring ledger) received a $5.2 million purse to fight Golovkin on October 5. Devin Haney was paid $1,000,000 for a September 23, 2019, bout against Zaur Abdulliaev.

Joe Markowski took note of this distortion in the marketplace and, looking ahead to 2020, told writer Sean Nam, “If you don’t move the needle and you demand X amount of money, we’re going to tell you no thanks. We’re not a money tree that needs to be plucked out by fighters and their representatives.”

But can DAZN stand by this pledge? If it does, ESPN and FOX (with huge corporate empires, multiple platforms, and access to pay-per-view revenue) might cut off the flow of talent to DAZN.

Fight fans were ecstatic when DAZN, Matchroom, ESPN, Top Rank, Showtime, FOX, and Premier Boxing Champions entered into their various alliances. The assumption was that the networks' commitment to boxing guaranteed that there would be a lot of high-quality "free" boxing on television. But as Ferdie Pacheco once noted, "There is nothing so misplaced as optimism in boxing."

DAZN, ESPN, FOX, and Showtime are now paying Tiffany prices for boxing. But they're getting Kay Jewelers diamonds.

"Programming boxing is messy and painful," Showtime Sports president Stephen Espinoza said recently to this writer.

John Skipper concurs, noting,"Boxing is not a sport that lends itself to being organized.”

Thus, in addition to paying extraordinarily large, cost-ineffective purses to fighters, the networks are now often being pushed into matching name fighters against vastly inferior opponents.

Boxing owes its place in sports lore to fights between great fighters. Confrontations like Dempsey-Tunney, Louis-Schmeling, and Ali-Frazier have linked their participants forever in history's eye. Promoters used to make their money by putting together fights that the public wanted to see. One reason Ray Leonard, Thomas Hearns, Marvin Hagler, and Roberto Duran fought each other so often was, that's where the big money was.

Now fighters get seven and eight-figure paydays for going in soft. Why should Tyson Fury go in tough more than once every few years when he can make millions of dollars for fighting Tom Schwarz and Otto Wallin?

There's more boxing available in the United States on television and streaming video today than ever before. One might expect this to lead to competition to put on the best fights possible. But instead, networks and promoters are building their own empires, and fighters are going in soft in a quest for belts that are increasingly meaningless except as marketing tools. Fight fans see developmental fights, stay-busy fights, and sanctioning-body mandatory fights. But too few good fights.

All of the networks are rewriting boxing history to fit their narrative. As Carlos Acevedo observed, "When Tyson Fury signed a contract with ESPN, it sparked a company-wide effort to brand him as some sort of heavyweight supernova ready to dominate the American sporting scene. Except Fury is now a man known for having free tickets to his last fight outnumber those he actually sold."

in a remarkable sitdown with reporters on November 2, Stephen Espinoza declared, "There is no sport that exists that lies as regularly to its fans as boxing. The announcers lie. You know the promoters lie. And it’s not healthy. College football doesn’t sell every single game as Alabama-LSU. Not every NFL game is the Super Bowl. Sometimes it’s just a game. And I think we do a disservice when we try to sell something as one thing when it’s not. The goal here is building the sport and doing it in a way that rewards the fans. And one thing we have to do with fans is be honest.”

But the beat goes on. 

For the most part, boxing fans are now seeing generic boxing on television. Often, the fighters are fungible. And generic boxing - unlike generic football, - doesn't attract a broad fan base. Fans won't watch a fight simply because it's on ESPN, FOX, Showtime, or DAZN.

Moreover, after all the talk about "free" boxing coming to network television, there's a disturbing trend toward putting what would have once been an HBO Championship Boxing or Showtime Championship Boxing fight on pay-per-view.

The November 23 bout between Deontay Wilder and Luis Ortiz was FOX's fourth pay-per-view fight of the year. FOX Sports executive vice president of programming Bill Wanger has already stated his network's intention to distribute "four to five" PPV bouts in each of the next three years. ESPN (which televised two pay-per-view boxing cards in 2019) is expected to follow suit in kind if not in number.

Fans of college football are rewarded because the game gives them the match-ups they want. On December 28, LSU beat Oklahoma and Clemson defeated Ohio State. On January 13, 2020, the winners will play each other. If the powers that be who run boxing ran NCAA football, LSU would play Baylor on January 13 and it would be on pay-per-view.

DAZN is fighting the pay-per-view trend. But there's a question as to how long it can sustain its current business model.

For ESPN and FOX, boxing is relatively inexpensive sports programming that can fill scheduling gaps. DAZN is in a different situation. Boxing dominates its budget and is at the core of what the network is supposed to be about.

DAZN delivered better fights to boxing fans in the United States in 2019 than any other network. It showcased Canelo Avarez vs. Danny Jacobs and Sergey Kovalev in addition to streaming Golovkin-Derevyanchenko and the second year of the World Boxing Super Series (highlighted by Josh Taylor vs. Regis Prograis). It got lucky with Anthony Joshua vs Andy Ruiz, which gave viewers an entertaining upset followed by a much-anticipated rematch. Srisket Sor Rungvisai vs. Juan Francisco Estrada, Maurice Hooker vs. Jose Ramirez, and the continuing development of Devin Haney, Ryan Garcia, and Vergil Ortiz were solid programming content. KSI vs. Logan Paul was a bonus.

But to put matters in perspective; pick a year from the HBO Boxing calendar "when HBO was HBO" and compare it with what DAZN offered in 2019. Think back forty years to September 28, 1979, when Don King promoted a show at Caesars Palace headlined by Larry Holmes vs. Earnie Shavers with Ray Leonard, Roberto Duran, and Wilfredo Gomez all on the undercard.

And there were times last year when DAZN stumbled.

DAZN hoped that a string of high-profile fights in the last three months of 2019 would encourage viewers to renew their subscriptions on a regular basis or sign up for its one-year plan.

The "fall season" (as DAZN called it) started nicely with Golovkin-Derevyanchenko on October 5 and Taylor-Prograis on October 26. Then DAZN dropped the ball.

Canelo Alvarez is DAZN's flagship fighter. The $365 million in license fees that DAZN has committed to him (a number that doesn't even include the purses for his opponents) speaks to his importance.

On November 2, Canelo challenged Sergey Kovalev for the WBO light-heavyweight crown. That same night, UFC promoted a pay-per-view fight card in New York. Hoping to attract a few extra subscribers, DAZN made the unfortunate decision to delay the start of Canelo-Kovalev until UFC's main event ended. That meant Canelo and Kovalev had to sit in their respective dressing rooms fully gloved for well over an hour. DAZN's paying subscribers were subjected to what seemed like interminable filler. And the bell for round one didn't ring until 1:18 AM east coast time.

Think about that for a minute! Canelo-Kovalev was one of the most important fights of the year - for boxing and for DAZN.

NFL payoff games don't start at 1:18 AM eastern time. World Series games don't start more than an hour after midnight. Imagine NBA commissioner Adam Silver announcing, "The seventh game of the NBA Championship series between the Los Angeles Lakers and Milwaukee Bucks will begin sometime after 1:00 AM eastern time. We want to make sure that fans who are watching the Los Angeles Dodgers baseball game that night have the opportunity to watch both games in their entirety."

Think back to DAZN's May 10, 2018, kick-off press conference in New York when Eddie Hearn took a jab at HBO and proclaimed "We don’t have to come on at ten o’clock after a movie." This was worse.

One can understand DAZN's motivation for delaying the start of Canelo-Kovalev until the wee small hours of the morning. As will be explored more fully in Part Two of this series, the network has had more trouble than anticipated in building a robust subscriber base. But it was the wrong call.

Imagine five friends sitting in front of a television on the east coast, falling asleep before the sound of the opening bell. The impression DAZN left them with was, "You don't care about us." The network alienated its core demographic, the very subscribers who have supported it up until now.

John Skipper gets it. "It was well-intentioned on our part," he says. "But we regret the way it played out. I don't think we'd do it again."

DAZN's next big fight - the December 7 rematch between Andy Ruiz and Anthony Joshua - was also problematic.

Eddie Hearn promotes Joshua and has licensed the right to stream AJ's fights in the United States to DAZN on a fight-by-fight basis. DAZN had hoped that Ruiz-Joshua 2 would take place in New York because the timing of the bell for round one would have fit nicely with its subscribers' viewing habits and a wave of publicity for the network would have emanated from The Big Apple. Instead, Hearn took the fight to Saudi Arabia.

Holding Ruiz-Joshua 2 in Saudi Arabia made financial sense from Hearn's point of view. The Saudis paid a substantial site fee and Matchroom was able to open a new market for itself. But it was a prime example of Hearn and DAZN sometimes having divergent interests.

The decision deprived DAZN of the media attention it would have received had Ruiz-Joshua 2 been in New York. The timing of the fight placed it directly opposite the SEC championship game between LSU and Georgia. And there were obvious moral issues inherent in DAZN becoming a tool for use by the Saudi Kingdom in its effort to "sportswash" its image after the brutal murder of journalist Jamal Khashoggi and other outrages.

Skipper declines to say whether he had moral qualms about Ruiz-Joshua 2 taking place in Saudi Arabia. He's forthright in saying that, from the perspective of DAZN's economic self-interest, he would have much prefered that the fight be contested in New York.

That said; the $4,000,000 license fee that DAZN paid to stream Ruiz-Joshua 2 in the United States and the other countries in which it has platforms was a good investment. Owing to Ruiz's popularity in the Mexican-American community and the shocking nature of his earlier upset, Ruiz-Joshua 2 had more viewers in the United States than any other DAZN stream to date. And the $4,000,000 license fee was fraction of what DAZN has paid for other, less attractive boxing content.

The final highlighted boxing match on the schedule for DAZN's autumn 2019 season was the December 20 contest between Danny Jacobs and Julio Cesar Chavez Jr.

There was a farcical quality to the proceedings. First, Chavez refused to give a urine sample for a PED test ordered by the Nevada State Athletic Commission and the fight was forced to relocate from Las Vegas to Phoenix.

Next, the contest had been slated for 168 pounds. But Chavez came in 4.7 pounds over the contract weight and forfeited $1,000,000 to Jacobs in order to change the contract weight to 173 pounds.

Then there was the fight itself. Chavez, a 12-to-1 underdog, came into the ring with his dark hair dyed whitish-blond with electric-blue highlights. That was the only thing electric about his performance. By round four, he was tiring. By round five, his nose was broken and he was bleeding from a cut by the corner of his left eye. At the end of round five, he quit. The crowd was not happy and seized on the moment to litter the ring with whatever projectiles could be thrown into it. Noting their reaction, DAZN blow-by-blow commentator Brian Kenny observed, "They can't be stunned given [Chavez's] track record."

DAZN shouldn't have been stunned either. But a source says that it paid close to ten million dollars for the bout and might be locked into paying Chavez a seven-figure license fee for another fight.

So where does that leave us?

Let's start with the fact that DAZN has given subscribers their money's worth in 2019. A one-year subscription for what has been the best boxing content available on any one network in 2019 cost less than what viewers were asked to pay for Errol Spence's two fights against Mikey Garcia and Shawn Porter.

Skipper exudes optimism when talking about DAZN. "Our first fight was fifteen months ago," he says. "I think we've done pretty well since then."

But while DAZN has been a good deal for subscribers, it might not be a good deal for investors. Everyone understood going in that there would be red ink at the start. But not as much red ink as there has been. Revenue has been low and shows little sign of increasing to a viable level. DAZN's business model might be unsustainable.

More on that tomorrow.

Part Two of "What's Happening with DAZN?" will be posted on BoxingScene.com tomorrow.

Thomas Hauser's email address is thomashauserwriter@gmail.com. His most recent book – A Dangerous Journey: Another Year Inside Boxing  – was published by the University of Arkansas Press. In 2004, the Boxing Writers Association of America honored Hauser with the Nat Fleischer Award for career excellence in boxing journalism. On June 14, 2020, he will be inducted into the International Boxing Hall of Fame.