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Pay-Per-Canelo

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By Steve Kim


The bill being offered up at the MGM Grand in Las Vegas this weekend has IBF junior middleweight titlist Carlos Molina facing Jermall Charlo, WBC junior featherweight beltholder Leo Santa Cruz taking on the accomplished Cristian Mijares and the talented-yet-fragile Jorge Linares versus the insanely tough Nihito Arakawa (replacing Omar Figueroa-Jorge Alvarez, which was scratched over the weekend with Figueroa coming up lame). The headliner of this card features Saul “Canelo” Alvarez battling Alfredo Angulo in a junior middleweight bout.
 
It’s a pretty good looking pay-per-view lineup, one that should provide a solid night of action and entertainment. But really, it would’ve been a helluva Showtime card.
 
And the head of Showtime Sports, Stephen Espinoza doesn’t disagree with that statement.

“Absolutely,” he told Maxboxing late last week. “If it were up to us, every show would be on the network and that’s not to point fingers because there are financial realities and revenue opportunities that drive the business elsewhere. So as we feel like we’re providing a good mix - a good balance between pay-per-view and Showtime events - then I think we’ve done our job. I think over the last year and looking forward, there are more than a fair share of top-tier fighters on the network, enough that where it’s defensible to go to pay-per-view when necessary.”
 
Late in 2013, it was originally planned that the mid-December fight between Marcos Maidana and Adrien Broner would be on pay-per-view before it was decided that going to Showtime was the more prudent choice.

“We were looking at a lot of different configurations for the end-of-the-year shows and time got short and we went with a configuration that we thought was the best opportunity at the time, which included a pay-per-view for Broner-Maidana on December 14th. It was one of those situations in which we slept on it and then woke up the next day or two later and just didn’t quite feel like we had done the best configuration possible,” explained Espinoza. “So we took another shot and it just organically felt much better to come up with a configuration where we whittle it down to two shows, saved a little bit of money and were able to put everything on the Showtime network.”
 
With much fanfare, Golden Boy Promotions announced that in 2014, “Canelo” would have three pay-per-events (and that’s before a single opponent was announced). However, Golden Boy CEO Richard Schaefer stated, “Well, after all, it’s boxing, so nothing is set in stone but sometimes you need to adjust plans and ‘Canelo’ is young. So let’s just see how everything goes. I believe to just be on pay-per-view is maybe not the best way to go, especially for a young fighter. It’s different in the case of [Floyd] Mayweather but even with Oscar [De la Hoya] later in his career, he took a substantial pay cut when he fought on HBO and even though Oscar always planned to be on pay-per-view, sometimes you just need to adjust plans and so we’ll have to see. The fact is ‘Canelo’ is going to fight three times and the plan is for three fights to be on pay-per-view - so let’s see.”
 
Schaefer added, “I think it depends a little bit on the opponents as well and I think this year with ‘Canelo’ and with Alfredo Angulo, this is without question one of the most exciting match-ups we have. So I think that’s definitely pay-per-view-worthy.”
 
Alvarez-Angulo figures to be a fun fight but it’s also a match-up in which both fighters are coming off losses. Alvarez was blanked last September by Mayweather (no matter what “Can’t Judge” Ross says) and Angulo was stopped by Erislandy Lara last June. But at the same time, Alvarez has shown he is a bona fide attraction and brings a huge Mexican fan-base. That said, are they willing to shell out 50-to-60 dollars for this particular fight? And this card begins a run of pay-per-view events that will stretch many budgets.

“I think what you do is if you have a fighter go on pay-per-view, you sort of have established a base as it relates to how much a fighter makes. You establish a market value and for us, who are not fighters, it’s easy to say, ‘Well, y’ know, it shouldn’t be on pay-per-view’ and things like that but at the end of the day, ‘Canelo’ has a family to feed and responsibilities and so on and has a limited window of opportunity to make the kind of money he should make. I mean, I can be a promoter till I’m a hundred like you see with [Top Rank founder Bob] Arum or you can be a writer for the rest of your life. But with ‘Canelo,’ these fighters have a limited time span and I take it very seriously to try to maximize during that time, span the earning potential.”
 
There is also a bottom line here, one Alvarez might be able to fulfill on pay-per-view that wouldn’t be available if he fought on a premium cable network.
 
Schaefer points out, “If you license fees like HBO and Showtime at the highest levels, I don’t know, $3.5 million for a fight and you have a fighter who generates...I’m just saying 300,000 homes on pay-per-view at $25 a piece - that’s $7.5 million. Even if you take away the cost of marketing and things like that, that’s double what the license fees are on premium subscription cable networks. So now, is it fair for fight fans to say, ‘Well, that guy shouldn’t be on pay-per-view’? I mean, this is like if you would tell them, ‘Y’ know, you need to take a 50 percent pay cut,’- how would you feel?”
 
There is a very simple principle of supply-and-demand as it relates to pay-per-view and unlike network license fees, which can be arbitrary in determining the value of a fight or fighter, pay-per-view results speak for themselves. Alvarez is going on pay-per-view because those involved believe they can be successful (enough) to do so and turn a profit. But was it Golden Boy who pushed for this card to be on pay-per-view or Alvarez who insisted on it?
 
“‘Canelo’ wanted to have a pay-per-view for a long time and he wanted to establish where he stands from the pay-per-view point of view and I can’t blame him for that. I was supportive of it and I think if he wants to be on pay-per-view, he should be on pay-per-view,” said Schaefer, who recalled that Alvarez’s 2012 bout against Josesito Lopez was slated for pay-per-view but those plans were scrapped when the bout between Sergio Martinez and Julio Cesar Chavez Jr. was scheduled for that same weekend and took precedence.
 
So would 300,000 buys constitute a success this weekend and would that then mean ‘Canelo’ fights will automatically come with a $50-to-60 price tag moving forward?
 
“Well, again, you have to put it in the perspective of what the alternative is and the alternative is to get a license fee from Showtime or an HBO for $3.5 million and you can generate $7.5 million on pay-per-view and you generate the closed-circuit business as well. So yes,” said Schaefer, who added, “When you say it’s going to be a success I think you need to differentiate a little bit too about financial success and commercial success. But again, when you are a 23-year-old fighter who will be exposed, for example, to 300,000 homes, is that better than being live on Showtime or an HBO where you have a larger audience? That’s the question. But you have to balance these things. The truth is if it were up to me and I would have the final say or choice that some fights should be on pay-per-view and some should be on Showtime, HBO, so I think a combination is probably the right solution.”
 
For as lucrative as pay-per-view can be (even with the relatively small amount of buys as Schaefer used as an example), it has to be said that it is usually the smallest platform in which to perform on. Historically, Alvarez has regularly played to over a million homes on both HBO and Showtime. This weekend, he might play to just a fraction of that. Also, the last three great pay-per-view franchises this sport has seen, Mayweather, De la Hoya and Manny Pacquiao didn’t become full-fledged pay-per-view entities till their late-20s or early-30s after years of constant exposure on the major networks. Alvarez is still just 23 and this particular card caters to the West Coast and the Latino/Mexican market. While the last pay-per-view event he participated in set records back in September, the reality is he was the clear B-side.
 
Can you continue to build his brand effectively by being exclusively pay-per-view this early on? For every De la Hoya pay-per-view event he had versus the likes of Felix Trinidad and Shane Mosley, the “Golden Boy” had highly rated HBO appearances against Oba Carr, Darrell Coley and Arturo Gatti.
 
“We see these massive pay-per-views like Mayweather has done, pay-per-view looks very attractive and very alluring to every fighter but the reality is it took a long time to establish those numbers and it’s easy to forget that when you see eye-opening numbers like with what we did last September with Mayweather and ‘Canelo’,” said Espinoza, who, for his own sake, wants to see Alvarez on Showtime once in awhile to placate his subscriber base.
 
“I think that’s true and there’s still an open question as to sort of where his career has matured to, meaning, is he at the point where he will be pay-per-view for the rest of his career?” asked Espinoza. “We don’t know that yet. Once Oscar went pay-per-view, he was off a sufficient stature that really with one or two exceptions, never came back to premium television. Same for Floyd. Once he really went to pay-per-view, he was established enough that it didn’t make sense financially for him to come back to premium television.

“There have been other models, for example, Chavez Jr., that there’s been a mix off and on [pay-per-view]. Same for Miguel Cotto. So which category [Alvarez] falls into still remains to be seen. I mean, we know he’s a huge star and immensely popular. Whether he has established himself as a pay-per-view main event yet is something that we’ll find out pretty shortly.”
 
MAY-PER-VIEW
 
Mayweather makes his next appearance inside the ring on May 3rd versus Marcos Maidana (the venue, however, is still to be determined) and even though we are now well into March, there still has not been one press conference or press tour for this fight. But that doesn’t seem to concern Espinoza all that much. To him, this is a chance to show that the common thought process as it relates to selling pay-per-view events is outdated or simply illogical.
 
He says, “I was getting antsy but probably not for the reason people thought. I was antsy because his events are truly that - they’re truly huge events and we were all chomping at the bit to get started. I don’t think the delay hurts us in terms of the pay-per-view. I know that’s not the conventional wisdom on pay-per-view promotion but I truly believe that what happens in late January, early February ultimately has zero effect on how many buys you get the first week of May. The fight is not available for purchase in late January or early February - or even in March or even most of April.
 
“So pay-per-view is one of the few businesses which there’s sort of been a tradition established of advertising your product when you can’t even purchase it yet. And there are reasons for that but every once in awhile, you need to reevaluate and I’m not convinced until someone convinces me otherwise that having a press tour in late January really makes that much of a difference to the number of buys that you get in May.”
 
MATH
 
Going back to what Schaefer said earlier, the division of pay-per-view revenue works like this: if a pay-per-view card has a retail price of 50 dollars, that means approximately 25 dollars of every buy goes to the promotion while the other half goes to the cable and satellite operators.
 
TNR
 
Here’s this week’s episode of “The Next Round” with Gabe Montoya and Yours Truly:
 
 
TOE-TO-TOE FLURRIES
 
 
The Chavez-Bryan Vera fight this past weekend on HBO had 1.39 million viewers, peaking at 1.53 million...Luis Collazo has signed a deal with Al Haymon. Hey, if you can’t beat ‘em...So the rematch between Carl Froch and George Groves is going to Wembley Stadium? That should be an electric atmosphere on May 31st. That should be a busy day of boxing on HBO given there is that card in Macao, China that day featuring Nonito Donaire as well as talk of doing a card on HBO Latino...The Tim Bradley/Pacquiao “24/7” on HBO premieres on March 29th...“Nashville” is off to a good start this season...The Miami Heat look like they are poised for another title run...Sorry, I could just never get into “True Detective” on HBO for some reason…Ican be reached at k9kim@yahoo.com and I tweet at www.twitter.com/stevemaxboxing. We also have a Facebook fan page at www.facebook.com/MaxBoxing, where you can discuss our content with Maxboxing readers as well as chime in via our fully interactive article comments sections.


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