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SBJ/April 18-24, 2011/Leagues and Governing Bodies
World Series of Boxing’s first season limps to finish line after struggle to sell tickets in U.S.
Published April 18, 2011, Page 6
As it entered its postseason last week, with the Los Angeles franchise hosting a semifinal match against a team from Kazakhstan at a 1,000-seat Hollywood music hall, only the TV deal remained intact.
The WSB ended up being far less than it set out to be, at least in the U.S., where it failed to make a dent on the sporting landscape. Still, it made it to the finish line. Now, its chief operating officer says it hopes to expand beyond its initial eight franchises in Europe and Asia and return next year with four teams in the Americas — if it finds investors to fund the teams. The WSB sold franchise licenses elsewhere in the world, but after failing to find buyers in the Americas it elected to fund those four teams itself for the first year.
“There was skepticism about us being able to pull this off, but we did it,” said Ivan Khodabakhsh, COO of the Switzerland-based WSB, owned by the international governing body of boxing, the AIBA. “The boxing is there. We have met all the goals we wanted to from a sporting perspective. We hope … we can sell the franchise licenses (in North and/or Central America).”
The business metrics from the first season were ugly.
The Los Angeles franchise sold 175 tickets for its debut at Nokia Theatre on Nov. 28, according to documents filed with the California State Athletic Commission. Bumped to the adjacent Club Nokia for its second show, it sold 27 tickets. Back at Nokia Theatre for its third match it sold 149 tickets. Ticket revenue from those three dates — $8,215, $551 and $3,804, respectively — wasn’t even enough to cover fees and taxes assessed by the commission, never mind rent and other expenses.
The Miami franchise fared even worse, at least on the revenue side. It sold 20 tickets to its opener at AmericanAirlines Arena on Nov. 23, according to documents filed with the state boxing commission. It sold 18 for its second outing on Dec. 9. For its third appearance, on Jan. 5, it sold 62. Ticket revenue from the three events at the same arena that is home to the Miami Heat: $3,671. Concessions totaled $8,295.
In Memphis and Mexico City, the WSB’s other America’s markets, the struggles were similar, league and team executives said.
As the season neared its close, all three teams pulled the plug on their larger venues. The Los Angeles team moved to the Avalon, a nightclub in Hollywood. Miami put on a show at a 6,000-seat arena at Florida International University, then settled in for its final two events at a music venue, the Fillmore Miami Beach. Memphis moved its final match of the season from its regular home at DeSoto Civic Center to a nightclub on Beale Street.
While the shift to theaters didn’t boost attendance or revenue, it did cut expenses. The Miami franchise dropped its event costs to about one-third of what it was paying at AmericanAirlines Arena, plus it saved about $10,000 on TV lighting, said general manager Mike Sophia, who ran the team as a contractor on behalf of the Miami Dade Sports Commission, where he is executive director.
“Cash flow became an issue,” Sophia said. “At no point were we able to promote or market the events in the way that it needed to be done.”
The television deal also turned out to be a financial drain. While Versus delivered a national platform and some credibility, the broadcasts never led to any sponsorship revenue. The network paid about $150,000 for the rights, a team source said. The WSB paid production costs of about $900,000.
Between the overhead of the large buildings and television production costs, the bills mounted far higher than the paltry revenue from events. In January, Khodabakhsh fired the two men he said he held responsible: Eric Parthen, executive director of WSB Americas, and Jeff Benz, general manager of the Los Angeles franchise. Both came to the league with strong pedigrees in the U.S. Olympic community. Parthen headed USA Boxing; Benz was general counsel at the USOC.
When the league launched, executives in the Americas said each team had a budget of about $3 million for the first year. Khodabakhsh says that was only an expense number, and that he expected the franchises to offset that with far more revenue than they delivered.
“Yes, we had calculated around $3 million, but not to spend,” he said. “We did not expect a profit in the first year. But nobody said, ‘I will give you $3 million; throw it out of the window.’ It’s never an investment if you put the investors’ money in and it’s completely gone at the end of the season. How do you go into the second season? That’s not investment. That’s charity.”
Benz said Khodabakhsh approved every expense and was aware of the bleak revenue picture. “I sat with the guy in the lobby of the JW Marriott [in Los Angeles] and we went line by line,” Benz said. “He approved the budget.” Khodabakhsh disputed that.
Embarking on a second season in the Americas likely would require an altered business model with lower event expenses, more money to spend on marketing and a better relationship with the state commissions that govern boxing, Parthen and Sophia said. Khodabakhsh said he remains optimistic all that can happen, given more time.
“You have to have some serious cash backing to absorb the losses you took this year and take it into a second year,” Sophia said. “They want to be back in the Americas and see what we all see: a good product. Is there a market for it? We don’t know.”