The future of pay-per-view
There was a belief that with the departure of HBO from the business of boxing and nascent streaming platforms investing hundreds of millions into the sport, that the pay-per-view business, as we’ve known it, was dead.
It turns out that it’s not going anywhere, and it’s here to stay.
“Not only is it alive and well,” said Richard Schaefer, the head of Ringstar Sports. “It’s going to be bigger than ever. These pay-per-view records will fall.”
“The more things change, the more they stay the same,” said Stephen Espinoza, the president of Showtime Sports and Event Programming, who understands the frustration of fans who for years have been forced to shell out money for the sports biggest events.
“Look, I understand the grumbling with pay-per-view, and I think most of the dissatisfaction comes when you’re trying to sell someone something that’s not premium, but with a premium pay-per-view price,” Espinoza said. “The true premium fights, those events don’t generate a whole lot of negativity.”
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The problem in the past is that the standard for what is a “premium” event had been diluted. Too many pay-per-view cards were made because of the financial expectations of the boxers, instead of actual public demand for a particular fight. And while some of these promotions can actually turn a small profit, the downside is that they are viewed by a relatively small audience of die-hard fans.
“I understand it is not healthy for the sport to have pay-per-views which do a 100,000 buys or less,” Espinoza said back in November, before Showtime’s Dec. 1 pay-per-view event, which showcased the heavyweight battle between Deontay Wilder and Tyson Fury. “Those are fights that should’ve been on a non-pay-per-view platform. But I don’t think that there’s a lot of negativity about a Wilder-Fury [fight] If there’s an occasional true premium event, than I think pay-per-view can facilitate it, so be it.”
The head of Showtime pointed out that prior to this promotion that they had done one pay-per-view event in the previous three years, which was the 2017 spectacle between Floyd Mayweather and Conor McGregor, which did a reported 4.3 million buys.
Wilder-Fury, which ended in a draw, reportedly did 325,000 buys.
On Jan. 19, Showtime distributed another pay-per-view event featuring Manny Pacquiao and Adrien Broner. On March 16, there is the battle between welterweight world titlist Errol Spence Jr. and Mikey Garcia. April 20 sees another welterweight titleholder, Terence Crawford, take on Amir Khan.
With Fury signing a new co-promotional agreement with Top Rank that will see him perform on ESPN platforms, the status of the rematch with Wilder — which was earmarked as a pay-per-view card in the spring — is now unclear moving forward.
So that’s at least three pay-per-view events in the first half of 2019, with more sure to follow in the upcoming months. Over the past few years — with the retirement of Mayweather and with Pacquiao’s career winding down — there hadn’t been a real regular schedule of pay-per-views as their had been in the past, save for the biannual appearance of Canelo Alvarez (and more on him later).
But it’s clear that the pay-per-view platform will once again be a major component of the boxing industry.
From 1984 to 2015, Mark Taffet was at HBO Sports, and for much of this time the network was the 800-pound gorilla when it came to televising the sport and distributing pay-per-views, generating hundreds of millions of dollars for the likes of Oscar De La Hoya, Mayweather, Pacquiao, Alvarez and Miguel Cotto, among others. For years, Taffet was the head of HBO PPV. He sees a vibrant and new landscape emerging for the sport.
“I think it’s great for boxing that there’s so many new players and so much money coming into the sport, it’s allowing opportunities for young fighters to be seen and developed, and it’s going to, over the long run, make for more frequent and bigger, better fights,” he told ESPN.com. “It’s a very different marketplace with these new streaming services, these monthly subscription services, and I think as a result of it, will redefine pay-per-view and probably make pay-per-view a better business.”
Taffet, though, points out a key difference between the past and the present.
“In the old days it was $30, $40, $50 a fight, and now it’s $70, $80, $90 or $100,” Taffet said.
So at those prices, a certain bar in terms of quality must be set.
“I believe if you define pay-per-view as a ‘super’ fight and a Super Bowl-type experience, where eight to 10 people are willing to get together and share a night together and share the cost of a pay-per-view together, then it makes a lot of sense,” Taffet said.
So in other words — less is more. This has to be quality over quantity.
It will be interesting to see how the two upcoming events will perform, given that Spence and Garcia have never headlined a pay-per-view, and Crawford has only fought once on this platform. It takes more than being an elite performer — which all three are — to become a pay-per-view franchise. But what’s interesting is that these respective bouts are being distributed by Fox, which has never been involved in major pay-per-view boxing event, and ESPN, which has been involved in one, a card headlined by Antonio Margarito against Kermit Cintron in April, 2005. (That’s if you don’t count the joint pay-per-view venture between ABC Video Enterprises and ESPN in 1983 headlined by a heavyweight title fight between Larry Holmes and Tim Witherspoon.)
This is new territory for both entities, but they come with some built-in advantages that HBO and Showtime simply don’t possess — which is the ability to market their events to a much broader audience. While these premium cable outlets are in 20-30 million homes, Fox and ESPN are in four and five times more homes in the United States.
“You look at HBO, which started with the ’24/7′ series with the De La Hoya-Mayweather fight, it was fantastic and they got great ratings and so on, but they only have a certain audience, and they can’t break through that,” said Schaefer, who is one of the co-promoters for the March 16 showdown at AT&T Stadium in Arlington, Texas. “Here, you have an audience which is the sports fan, you have the boxing fans and most importantly, you have the general market.
On the afternoon of Feb. 16, Fox and Premier Boxing Champions, organized a media get together involving Spence and Garcia at the Microsoft Theater in Los Angeles, which culminated with a news conference between the two that was televised nationally on Fox.
“You can see how passionate they are in the way they present their content to the audience,” Schaefer said. “And this is a perfect example to have a press conference on free over-the-air network television. I mean, it’s unheard of, and I believe with Fox entering the pay-per-view business that that’s going to change pay-per-view. Those records will fall, these pay-per-view records.”
Much like HBO and Showtime, Fox will produce shoulder programming to publicize Spence-Garcia, the only — and big — difference is that these shows will be broadcast on Fox and on its sister sports network, FS1. FS1 will be broadcasting a preview show and a portion of the undercard leading into the main card.
The same type of synergy will exist at ESPN, which has a full slate of daily programs that the boxers can appear on, leading up to their hook-up at the Madison Square Garden. Expect both Khan and Crawford to be featured on SportsCenter, Max on Boxing and First Take, and to do the traditional “car wash” in Bristol, Connecticut, New York or Los Angeles, where they will do hits on other ESPN properties.
“I think that there’s a world of difference between ESPN and Fox. Fox is mostly in entertainment, local news and game shows and does a reasonable, occasional amount of sports, whether it’s the NFL or something like that,” said Bob Arum, the chairman of Top Rank. “But it’s not anywhere near primarily a sports network. ESPN, is all-sports, 24 hours a day, and therefore its megaphone is more significant as far as attracting different customers.
“That’s why were so bullish on how we expect to do with Crawford and Khan, I really believe that whatever number we would have done, say, under the old plan with HBO as the distributor, we’ll double it in the new era with ESPN distributing, and with the ESPN megaphone pumping it. That’s your target audience,” the veteran promoter said.
In the past it was just HBO and Showtime producing pay-per-view fights, now you have three networks and a wild card in DAZN, which eschews the pay-per-view model and gives its subscribers a package of boxing events for a monthly fee. Its big catch was Canelo, whose two bouts against Gennady Golovkin (in 2017 and 2018) procured over a million buys and his outings versus Miguel Cotto (2015) and Julio Cesar Chavez Jr. (2017) did substantial numbers. He is now in the midst of a reported 11-fight, $365 million dollar deal with DAZN. You could argue that he was boxing’s last pay-per-view titan.
And now he’s being streamed.
“Canelo has a tremendous audience, and he was able to generate significant pay-per-view business for his best fights, but even for Canelo Alvarez, where the fights weren’t the biggest fights, which were recognized by the fans, those did mediocre business,” Taffet said. “So I think there’s a lot of Canelo Alvarez fights that on a subscription service are perfect and will help with other subscriptions and provide great value for the fans.”
Oscar De La Hoya and Eddie Hearn, who are both tied at the hip to DAZN, aren’t shy about telling anyone that pay-per-view is a dying model, gone the way of the VCR and phone booths.
“They’ve got to stay with the corporate message,” Schaefer said. “But do they really believe that pay-per-view is dead? No, because if they weren’t at DAZN, guess what they would be doing? They would be doing pay-per-view. How can Eddie Hearn do a pay-per-view almost every month in the U.K., and it’s perfectly OK. In the U.K., pay-per-view is not dead, but in the U.S. it’s dead?
“I mean, what a ridiculous message.”
Canelo kicked off his association with DAZN in early December by taking care of the overmatched Rocky Fielding in three rounds at Madison Square Garden. Doing simple math will tell you that the Mexican superstar will be guaranteed an average of over $30 millions a fight under this agreement, much the same way Mayweather was when he went over to Showtime in 2012.
“It will be interesting to see the way the Canelo fights break out because when we look back at the Mayweather deal, Mayweather was incentivized to take risks, because with risks came the bigger upside,” said Espinoza, who helped formulate that landmark agreement.
And he has a point: While his bouts with Robert Guerrero and Andre Berto didn’t do huge numbers, Mayweather’s bouts with Canelo in 2013 and Pacquiao in 2015 more than made up for it.
“Without financial incentives there, does Canelo still have the motivation to take tough opponents or find opponents that aren’t cheap? It remains to be seen,” Espinoza said.
Well, to the credit of Canelo and Golden Boy Promotions, he is facing the respected Danny Jacobs on May 4 in Las Vegas.
DAZN has also acquired a strong roster of assets, such as unified heavyweight champion Anthony Joshua (who will not be exclusively under contract to them, but kicked off their boxing program back in September as he stopped Alexander Povetkin in seven rounds, and will face Jarrell Miller on June 1 on DAZN), undisputed cruiserweight king Oleksandr Usyk and other world titleholders like Danny Roman, Srisaket Sor Rungvisai, Jaime Munguia and Demetrius Andrade, through their alliances with various promoters.
Sources indicate that fighters such as Canelo are given bonuses for the number of subscriptions they help attain. So there is an impetus for them to take on tough challenges on a consistent basis.
ESPN also has a streaming platform, ESPN+, that broadcasts a regular slate of fight cards from around the world. Right now, there is no shortage of live programming available to boxing fans.
“The streaming services are doing a great job of putting more product out there, of really catering to boxing fans in a way that they haven’t been catered to in awhile. It’s causing more competition among existing suppliers and platforms,” Taffet said. “In the end, if only the biggest and best fights are the ones that define pay-per-view, then I think that’s where the medium serves the fans best.”
This era has so many more entertainment options available to the consumer, but those who have a stake in this business don’t believe that robust pay-per-view results are a thing of the past.
“The glory days on pay-per-view was always based on the attraction,” Arum said. “Without the attraction there’s no glory. So in my opinion, when we present real attractions to the public and we use the ESPN megaphone to talk about the event, we’re going to do very, very well on ESPN. The idea that pay-per-view is not as robust as in the past is only a reflection of the fact that we lost, in effect, so many marquee matchups and stars.
“We had [Mike] Tyson, who was a huge pay-per-view draw, then [Julio Cesar] Chavez, and then Oscar, then Mayweather became a big pay-per-view star and the numbers were accordingly big, and then Canelo was a good pay-per-view attraction. So that’s what you have to have, an attraction.”
“There’s always a ‘next’ in boxing,” said Taffet, who still has a keen interest in the game as he handles the career of two-time Olympic gold medalist and current unified middleweight champion Claressa Shields. “Wilder and Fury put on a great show, the kind of event that if they did it again will probably be two to three times bigger, if not more than the first was. There are fights and fighters that will develop and work on a pay-per-view platform.”
While fans aren’t necessarily thrilled about having to shell out their hard-earned money every few months for pay-per-view bouts on top of their regular cable, there is this realization: As fractured as the boxing business is currently, it might be a necessary evil in bringing the various promotional rivals together and to bridge the divide between networks.
In the past, fights such as Lennox Lewis-Tyson and more recently, Mayweather-Pacquiao were made as there was cooperation between both HBO and Showtime (which had long-term exclusive rights to these boxers), and they, in essence, shared the broadcasts as those bouts finally occurred.
Perhaps, the likes of Showtime, Fox, ESPN and DAZN would be willing to break bread together, if they could all do some profit-sharing. Pay-per-view could be considered the neutral ground for those involved.
“I think that’s true,” said Taffet, who had a hand in both those aforementioned bouts. “If you use it in a discriminating manner, the fans will, in fact, respect and admire the fighters, the promoters, manager and networks that get together to bring the public the biggest fights they deserve. And at the end of the day, the fans know what’s worth the money; they vote every time they buy — or don’t buy — a pay-per-view fight.
“The revenues are great for the biggest fights,” he said. “This medium plays a great role in providing those paydays for those fighters that are truly beyond the pocketbooks of the networks.”
Which is another key component of this issue: Successful pay-per-views often provide boxers with their largest paydays. For example, if a certain matchup does a half-million buys at say, $80 dollars a clip, that means that the promotion will have $20 million to put into the financial pot. (The general formula for pay-per-view deals call for approximately a 50-50 split of the pay-per-view revenue between the promotion and the cable industry).
Most license fees from the networks generally fall well short of that number, although DAZN has been putting up eight-figure guarantees to some of their boxers.
“For those fighters [on pay-per-view] it’s important because you’re not capped [financially]. You can basically make as much as the market allows you to make,” Schaefer, a former Swiss banker, said.
It will be interesting to see if a highly anticipated bout between Crawford and Spence, who are aligned with the PBC/Fox and Top Rank/ESPN. respectively, can be consummated while both boxers are at the top of their games and welterweight champions.
Will the pay-per-view results on March 16 and April 20 serve as a baseline to begin negotiations?
“Not necessarily so,” Arum said. “In other words, it takes two to tango, and even with numbers that, let’s say worst-case scenario, aren’t particularly robust, I would think that would be a fight that Terence would want and we would want. It would do the best numbers of any welterweight fight out there, even though they may not be wild numbers. But again, it’s a fight that should be made, and it’s a fight that that public wants to see.”
And yes, this would have to be a collaborative effort on pay-per-view.
“Absolutely,” said Arum, who noted that the higher-ups and ESPN understand this dynamic. “When a network other than our own invests time and effort in a particular fighter, then it would be wrong to say, ‘Lets do it on ESPN’ and good-bye to the network that he’s attached to. So while I would, if that fight happens, love to have ESPN as the sole distributor, I’m a realist and I know that it may very well have to be a deal between the two networks, which could be a plus-plus.”
“I think we’ll fight one day, just like with Manny Pacquiao and Floyd, it gets to a point where there’s so much money that’s in the post, it’s unavoidable, and the fans want the fight, too. So I definitely think one day that fight’s going to happen,” said Spence, who still has business to take care off in March.
To be clear, nobody in this scenario believe that a Spence-Crawford showdown will be anywhere near the financial stratosphere of Mayweather-Pacquiao, but its a bout that can potentially bring both combatants career-high purses, and it’s a matchup that boxing fans yearn for. It’s one that should take place, regardless.
At a certain point, the powers that be have to work together, at least periodically, for the greater good of the sport. And maybe it’s on pay-per-view where they can do this — while making millions of dollars off the fans.
One way or the other, pay-per-view is here to stay. And it could have more impact than ever before.
“Is there going to be another Floyd Mayweather? Absolutely,” Schaefer said. “Are those records going to be broken again? Absolutely. People didn’t believe it when Mike Tyson disappeared from the pay-per-view business — were those records were going to be broken? Then Oscar did. Then when Oscar left the pay-per-view business, they saw that as the end of the pay-per-view business, then Floyd Mayweather came along.
“Then Canelo came, and Canelo walked away from the pay-per-view business. Why? I don’t know. But pay-per-view is here to stay, and I think it’s a great form of entertainment.”