The economics of pay-per-view

Queena Kim Sep 16, 2013
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The economics of pay-per-view

Queena Kim Sep 16, 2013
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Boxer Floyd Mayweather Jr. trounced Saul “Canelo” Alvarez this weekend and walked away with a purse of about $42 million. When the entire take is factored in, the fight just might break the record as the richest event in boxing history. And it didn’t air anywhere but on pay-per-view.

Now, I don’t know much about sports but there’s one piece of sports history I do know: “I’m gonna float like butterfly, sting like a bee!”

Of course that’s the famous refrain of Muhammad Ali, and the fact that he’s one of the only boxers I can name is telling, said Patrick Rishe, a professor of sports economics at Webster University.

“You’ve really have seen a decline in guys that you would categorize as real characters that capture the public attention,” Rishe said.

As the public’s interest declined, network TV dropped the sport. 

Today, boxing caters to a niche market on pay-per-view. But that niche brings in the money. This year, Mayweather Jr. is expected to be the highest earning athlete in America beating out Kobe Bryant and Tiger Woods, said Bill King, who covers boxing for the Sports Business Journal.

“It happens because of pay-per-view,” King said. He adds, right now, it looks like the fight got at least 2 million buys.

“We’re talking about $140-150 million. I mean, that’s a season of revenue for some teams,” King said.  

But the pay-per-view niche might not always be enough, said Brad Adgate, a TV analyst at Horizon Media.

“What’s become very popular is Ultimate Fighting Championship,” Adgate said.

That’s a mix of boxing and martial arts. Adgate says the sport is more popular than boxing especially among 18-to-35-year-old men. Adgate says if boxing doesn’t capture that audience, then even pay-per-view may not be able to keep it afloat in the far future.

 


Forbes compiled a list this June of the highest-paying sporting events in the world, based off of the prize money given to the winner/winning team. This list doesn’t include boxing matches, but it’s notable that Mayweather’s guaranteed payout this past weekend of $41.5 million would easily land him second on this list.

1. UEFA Champions League: $65 million
2. FIFA World Cup: $31 million
3. UEFA EURO: $29 million
4. World Series: $19 million (divided up $377,000 per player in 2012)
5. UEFA Europa League: $12 million
6. Super Bowl: $11 million ($172,000/player in 2013)
7. FedEx Cup: $10 million
8. World Series of Poker: $8.5 million
9. Dubai World Cup: $6 million
10: FIFA Club World Cup: $5 million

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