We know the date: Aug. 26. We know the location: Las Vegas. We know the broadcaster: Showtime. That’s the extent of the details that have been made public about this summer’s blockbuster fight between boxer Floyd Mayweather Jr. and mixed martial arts fighter Conor McGregor.
“The deal is done, and now all the business will be handled,” Dana White, president of the Ultimate Fighting Championship, said Wednesday. “But we haven’t really gotten there.”
Each fight is different, and while various regulatory bodies govern what happens inside the ring, everything outside of it is up for negotiation, and must be agreed upon anew.
“Anything of this magnitude, there are three buckets of issues,” said Ken Hershman, former president of HBO Sports. Hershman did not work on this fight, but he did negotiate the May 2015 meeting between Mayweather and Manny Pacquiao and many other fights. “There are the commercial terms, the logistical terms and then what I call the vanity terms.”
The logistics — the broadcast team, where everybody will stay and the location of news conferences — are relatively easy to negotiate. “The harder part are the commercial terms and the vanity terms,” Hershman said.
“I don’t use vanity in any sort of pejorative way,” he added, but rather to describe negotiations over issues like who will enter the arena first, how big the entourages will be and who will appear on the left and right sides of promotional posters. “There are conventional norms to that if titles are at stake. But if there are not, or it is a unique event, you have to negotiate all of that.”
But for a fight of this magnitude, which will generate a huge amount of money, the commercial and financial terms are what matter. So how much money are we talking about here?
“If I had to guess, I think this fight could generate somewhere in the neighborhood of $400 million,” said Kery Davis, a former senior vice president at HBO Sports. “I do believe there is a huge segment of the populace who are combat fans or who are just sports fans, who are going to be interested in seeing this spectacle.”
“There is some element who look to see if McGregor could land that miracle punch and knock out Floyd Mayweather,” he added. “But most people will know what they’re buying when they buy it. They will tune in for the entertainment factor. The walkouts, the music, the outfits, the celebrities in the crowd.”
If Davis is right, and the fight grosses $400 million, it will be one of the most lucrative fights ever. The current top spot is held by the Mayweather-Pacquiao fight in 2015, which brought in nearly $600 million, according to ESPN. Mayweather alone made more than $220 million from it.
This will be the biggest money fight of the year, and likely one of the biggest ever. Here’s how all that money will be made, in order of importance.
The largest share of the revenue, perhaps 75 percent, will be generated by pay-per-view buys. The Mayweather-Pacquiao fight cost $90 to $100, the highest pay-per-view price ever. The price for Mayweather-McGregor has not been set, but White said this was a “superfight” and hinted that the price would be close to that high-water mark.
Such a high price won’t turn off fans, Hershman said. “The price point threshold, or resistance, doesn’t really appear there for this level of event,” he said. Rather, he said, people would group together, throw in $5, $10 or $20 each, then “throw a big party and enjoy the fight.”
The money generated from pay-per-view is split a number of ways. The cable companies and satellite providers that distribute the fight get their share, typically 30 to 40 percent. Showtime will also take its cut, perhaps 10 to 15 percent.
The remaining 50 percent of the pay-per-view revenue will go to the fighters, subject to the split they agreed upon. None of the parties have disclosed what that split is, but you can be sure that Mayweather is receiving a larger share — perhaps as much as two-thirds of the pay-per-view revenue reserved for the fighters.
Mayweather has a long-standing relationship with the MGM Grand hotel and casino in Las Vegas. His last 12 fights have been held at the MGM Grand Garden Arena, and the Mayweather-Pacquiao bout there brought in about $72 million in gate receipts. But this fight will be held at the nearby T-Mobile Arena, which is owned jointly by Anschutz Entertainment Group and MGM Resorts, and is larger than the Garden Arena.
Agreements to distribute ticket revenue can be constructed several ways, but the important thing to know is that most of the revenue goes to promoters, in this case either Mayweather Promotions alone, or in concert with the UFC. The T-Mobile Arena can guarantee the promoters a certain amount of money, or give them a percentage of ticket sales revenue, as high as 100 percent.
Hosting a marquee fight yields another revenue stream, from the high rollers who come to town. The MGM Grand figures to capitalize on this by making money from the sale of hotel suites, gambling, expensive dinners and packed clubs.
INTERNATIONAL BROADCAST REVENUE
While the biggest — and highest paying — broadcast audience is found domestically, there is still a sizable international audience. Britain is generally considered to be a strong market for boxing, and is expected to be especially strong for this fight because McGregor hails from Ireland.
Agreements have to be reached with broadcasters in every country, an arduous task that leads to considerable variation.
Showtime could use the connections it has through its international arms. Some promoters have the ability to do this work themselves. It can also be bid out to agencies that specialize in selling international rights to certain geographic regions or individual countries.
Hershman said he thought the UFC could step in here. “They have a large international operation already, and they distribute their rights globally,” he said, “so they’re well positioned to go to their partners and exploit those rights.”
Bars, nightclubs and other commercial establishments cannot simply purchase the fight on pay-per-view and broadcast it to their patrons. At least, not if they want to avoid a lawsuit. Instead, they pay a flat fee that is usually based on their capacity, and recoup their money through food and drink sales, and typically by charging a high cover on fight night.
As with international broadcast sales, this work is often bid out to agencies, which act as intermediaries between the promoter and the bar owners.
Every surface in T-Mobile Arena that might be captured by cameras will have a logo slapped on it — the ring mat, the side posts, the news conference backdrops and anything else you can think of. There could be an official beer for the fight, or more novel sponsorships like a pizza chain giving customers a coupon for $5 off the pay-per-view buy if they order a large pizza.
Someone somewhere is making a Mayweather-McGregor romper.