Mayweather vs Canelo Purse: How Golden Boy Can Afford to Pay Floyd $41.5 Million

I thought this article was interesting for the business side of things...


Mayweather vs Canelo Purse: How Golden Boy Can Afford to Pay Floyd $41.5 Million

By Jonathan Snowden , Lead Writer
Sep 11, 2013

http://bleacherreport.com/articles/...olden-boy-can-afford-to-pay-floyd-415-million


... "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 entities 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.

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 entities 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." ...