First Look podcast: World Congress 2017 PBC plots path to maximize distribution NBA Turnstile Tracker Baseball returns to Kinston, N.C. David Stern investing in tech startups NBA regular season sees ratings drop Faces and Places at World Congress Are sponsors wary of outspoken athletes? On Deck With: Mike Unger, USA Swimming Labor & Agents: Rosenthal takes charge
Two hours before Livestrong Sporting Park opened for its first Major League Soccer game June 9, fans approaching the front door stopped to engage in a simple, emotional piece of sponsor activation.
The president of boxing promoter Top Rank grew up in Las Vegas. He remembers the thrills that came when the likes of Sugar Ray Leonard, Marvin Hagler and Thomas Hearns squared off in a makeshift arena that rose from the parking lot at Caesars Palace.
“When I was a kid, Las Vegas was fighting for recognition and desperate to be known for something more than gaming,” said Todd DuBoef, who went to work at Top Rank shortly after his mother married famed promoter Bob Arum in 1991. “When they started bringing prize fights in, it was a way for us to shine. It was fantastic. The whole town supported it. It lifted us up.”
The president of the UFC, Dana White, also grew up in Vegas. He, too, remembers the thrills that came from a big fight. At times last year, he wondered how long it would be before that sort of thrill returned, and whether it would be boxing that provided it.
“I’d walk in any of the casinos I’d normally go to and it was literally empty,” White said. “It was like somebody dropped a bomb and nobody was left. When all the craziness was going on with the mortgage industry, you had valet parkers in Las Vegas who owned three houses, plus you had people from other places throwing money around. Then — nothing.
“Vegas is a big event town and it’s definitely a fight town. But lately, it’s been tough.”
The Las Vegas fight calendar is stocked more heavily as casinos on the famous strip look for new business.
In the last nine months, that tough economy has begun to turn in the fight game’s favor. Opinions on the reasons behind it vary. Assessments are murky. What is clear is that boxing in Vegas is percolating as it hasn’t in the last three years.
It’s not that tickets are flying out the window. In fact, ticket sales have been spotty for all but the mother of fights, last month’s bout pitting Manny Pacquiao against Shane Mosley (see chart, page 16). But the fight calendar is stocked more heavily, with the city’s two big casino arenas slated to host at least seven major fights and more likely to emerge. If the casinos end up hosting nine, it will be the busiest year for big-event boxing at the two venues since 2004, when they brought in 13.
The MGM Grand, home to the largest venue on the strip, with a capacity of 16,800, hosted two fights in November and one each in March, April and May. Its sister arena, 12,000-seat Mandalay Bay, held a fight in February. Five of those six aired on HBO or Showtime. The sixth was the Pacquiao pay-per-view.
Boxing at the gate
Following is a look at the ticket revenue from recent boxing matches in Las Vegas.
DATE EVENT VENUE ATTENDANCE # OF TICKETS SOLD GROSS REVENUE Feb. 19 Donaire-Montiel Mandalay Bay 4,539 3,813 $347,375 March 12 Cotto-Mayorga MGM Grand 7,336 6,486 $1,027,800 April 9 Maidana-Morales MGM Grand 7,120 5,686 $672,106 May 7 Pacquiao-Mosley MGM Grand 16,288 15,422 $8,882,600
Source: Nevada State Athletic Commission
Amir Khan will fight Zab Judah at Mandalay Bay on July 23. Pacquiao will fight Juan Manuel Marquez at the MGM Grand on Nov. 12. Many in boxing believe Floyd Mayweather’s return against Victor Ortiz on Sept. 17 also will land in Vegas. In addition to those boxing matches, each year the UFC typically puts four of its pay-per-views in Vegas, which is its headquarters, and plans to do that again this year.
The strip also is attracting more second- and third-tier cards than it has in several years. ESPN went all of 2010 without taking any of its “Friday Night Fights” cards to Vegas. This year, driven by requests from its affiliate and sales group, it will be there five times, including at least three times at the new Cosmopolitan hotel, which is hosting fights in its 1,500-seat ballroom and at a 2,500-seat setup around its pools. Showtime will air midlevel cards from Vegas casinos Treasure Island and Texas Station this summer.
“The numbers still are not where they were years ago, but they’re getting better,” said Keith Kizer, executive director of the Nevada State Athletic Commission, which sanctions boxing, mixed martial arts and kickboxing throughout the state. “We’re seeing all the TV networks come through. It’s still a tough economy, but spring and fall are our best times, so maybe that will help. We’re definitely seeing more activity.”
In what has been a brutal economic slide, no U.S. city has been stung more severely than Las Vegas.
Hotel occupancy rates fell steadily from 90.4 percent in 2007 to 80.4 percent in 2010. Average daily room rates fell from a peak of $132 a night in 2007 to $92 in 2009 before rebounding slightly to $95 a night last year.
Not surprisingly, those who visited spent and gambled considerably less than they did during the boom days. The casino gaming take fell from $277 per visitor in 2007 to $243 in 2009 and $238 last year.
Through April, most indicators pointed to a slight uptick. The average daily room rate was back to $106, which was about $10 ahead of the first third of last year. Occupancy rates were up to 83.6 percent. Gambling revenue was flat at $238 per visitor.
“The last two years were very difficult,” said Richard Sturm, who as president of sports and entertainment for MGM Resorts International books events for both the MGM Grand and Mandalay Bay. “A lot of the promoters didn’t want to come out because the economy was bad. That held true for concerts as well. This year, we are going to be doing a lot of fights. We already have done a lot of fights. … Things have picked up and I think it is the economy that has helped.”
Most of the promoters say they believe it was actually the depth of the economic decline that has driven the activity, rather than the rebound.
“Everybody knows that the biggest [handle] a casino has are on fight nights,” said promoter Gary Shaw. “That is historic. If the casinos are hurting and looking to gain revenue in gaming, then they turn back to boxing all the time.”
UFC typically holds four bouts a year in Vegas.
Two years ago, UFC parent company Zuffa commissioned an economic impact study to determine the value of its events to the local economy. That study credited UFC’s six major Vegas events from Feb. 2, 2008, to Jan. 31, 2009, with $86.2 million in nongaming revenue, or $14.4 million per event. It found that fans gambled about twice as much as other visitors — $931 each — and spent twice as much as other visitors on hotels, food and beverage.
Headquartered in Las Vegas, UFC long has made the town a staple of its schedule. It held six events there in 2006, but since then has settled on four a year as the right mix.
UFC at the gate
For all its global expansion, the core of the UFC's event business remains in Las Vegas, which has hosted half of the last 16 U.S. pay-per-view cards. Following is a look at the ticket revenue from those events compared with the last three held in California.
Las Vegas DATE EVENT VENUE MAIN FIGHT ATTENDANCE # OF TICKETS SOLD GROSS REVENUE Feb. 5, 2011 UFC 126 Mandalay Bay Silva-Belfort 10,893 9,667 $3,605,725 Jan. 1, 2011 UFC 125 MGM Grand Edgar-Maynard 12,874 6,978 $2,174,780 July 3, 2010 UFC 116 MGM Grand Lesnar-Carwin 12,740 9,218 $4,053,990 May 29, 2010 UFC 114 MGM Grand Rampage-Evans 14,996 13,294 $3,895,125 Feb. 6, 2010 UFC 109 Mandalay Bay Couture-Coleman 10,756 7,432 $2,273,000 Jan. 2, 2010 UFC 108 MGM Grand Evans-Silva 13,318 8,004 $1,969,670 Nov. 21. 2009 UFC 106 Mandalay Bay Ortiz-Griffin 10,529 6,631 $3,003,250 California DATE EVENT VENUE (CITY) MAIN FIGHT ATTENDANCE # OF TICKETS SOLD GROSS REVENUE Feb. 19 UFC 121 Honda Center (Anaheim) Lesnar-Velasquez 14,856 10,351 $2,237,071 March 12 UFC 117 Oracle Arena (Oakland) Silva-Sonnen 14,510 10,525 $1,556,364 April 9 UFC 104 Staples Center (Los Angeles) Machida-Shogun 13,651 9,111 $1,855,315
Source: Nevada State Athletic Commission, California State Athletic Commission
“You want to come back to Vegas every couple or three months,” White said. “More than that is asking a lot [from] people. Not only do you have people coming in from all over the world, but we’re also very strong in the Southern California market, where people can drive here. You want to keep them coming back for more.”
Sturm and the boxing promoters say they find each other to be more accommodating than they had been previously, likely as the result of their respective economic pressures. When projected revenue from ticket sales dove last year, Golden Boy asked Sturm to reduce some of its venue costs. He agreed. Similarly, promoters who once demanded that MGM and Mandalay Bay buy large parcels of seats for a fight have reduced those expectations.
“I hate to be the one to say this, but maybe a part of it has to do with the fact that our expectations have been lowered in the last couple of years,” said promoter Lou DiBella. “We’re all more willing to allow a casino to do a deal without taking an ungodly risk. … With that situation comes opportunity. Vegas is benefiting from that opportunity.
“They’re not hanging their asses out over the strip on these things like they used to. They’re not taking an inordinate risk. We’ve become more affordable.”
DuBoef believes the economic chill has sent hotel operators looking for ways to lure visitors back, and that boxing and concerts are more efficient than some of the tools that they used in better times, such as lavish stage productions and glitzy new hotels.
“When we had a boom going on in the town, I don’t believe the properties, or the casinos as a whole, felt the need to have big prize fights to bring people here,” said DuBoef, whose company is the only major promoter based in Vegas.
“They felt people were coming every weekend with conventions and for other entertainment and they didn’t need the prize fights. When we saw a hiccup in the economy, the hundreds of millions of dollars they were investing in something like a [Cirque du Soleil] show became a terrible risk.
“They came back to the allure of boxing, and the fundamentals of a business that, relatively, isn’t so expensive and still brings people here. We’ve seen this thing pick back up.”
Competition for bouts
The CEO of Golden Boy Promotions, Richard Schaefer, long has contended that the megafights always will land in Vegas, because the presence of high rollers allows promoters to price seats higher than they could anywhere else. For last year’s Floyd Mayweather vs. Shane Mosley fight, the best 5,828 seats were priced at $1,200 each. Many of those are purchased by the hotels and casinos, which use them as perks for high rollers, who often see the high price tag as verification that they’ve made the property’s A-list.
MGM International can make use of large swaths of tickets throughout the arena because it owns so much of the strip, including the MGM Grand, Mandalay Bay, Bellagio, Aria and the Mirage.
“Nowhere else does the venue purchase up to one third or even more of the tickets,” Sturm said. “It just doesn’t happen. So that is another asset.”
Another attraction is the cost structure. Typically, promoters get the MGM Grand and Mandalay Bay rent free, Schaefer said, covering most of the event expenses, such as staffing, security and cleanup. The hotels make their money in the casinos and on concessions.
“A lot of people think we’re going to Vegas because we’re getting a big guarantee,” Schaefer said. “That time is over. Las Vegas casinos don’t give a penny for a guarantee. We’re taking the risk. But if it hits, we collect the rewards.”
Another factor that is reinvigorating Vegas is the increased dominance of fighters from outside the U.S., promoters said. Of the 13 fighters at the top of the last seven cards at the large Vegas arenas, only Mosley was American. Because there is no state income tax in Nevada, fighters from outside the U.S. can avoid withholding, which amounts to a significant bump for fighters collecting seven-figure paydays.
“It’s an issue for foreign fighters, and there are a lot of them,” DuBoef said. “Manny [Pacquiao] is one.”
After losing two earlier bouts featuring Manny Pacquiao to Cowboys Stadium, Vegas was glad to welcome the fighter back in May for a fight against Shane Mosley.
UFC owner Lorenzo Fertitta is another of the fight game’s major players who was raised in Las Vegas. Before he bought the mixed martial arts promotion, he served on the Nevada State Athletic Commission. He pointed to Top Rank’s decision to take Pacquiao’s fights against Joshua Clottey and Antonio Margarito to Cowboys Stadium as a driving factor for Vegas to make sure it doesn’t lose any more marquee bouts.
“I think it was a bit of a wake-up call,” said Fertitta, who sat on the commission from 1996 to 2000. “There was a super run for a long time where it was a foregone conclusion that if you had a big fight it was going to Las Vegas. And then Jerry Jones became a real live competitor. He has a great building and a great market, and he’s also one of the best promoters in America. He can compete with Vegas. There’s no question about it.
“It was no longer automatic that Vegas gets every big fight.”
For the purposes of this discussion, each of the two Pacquiao bouts should come with an asterisk. The Clottey fight ended up in Dallas because Top Rank and MGM failed to come to terms after negotiations for a Pacquiao-Mayweather bout fell apart. The Margarito fight ended up there because the Nevada commission honored a California suspension and wouldn’t let him fight there.
Regardless of why either fight moved, the resulting perception that a city other than Vegas might be the regular host to boxing’s largest drawing cards shook the town.
“It wasn’t good for Las Vegas,” Sturm said. “That’s an understatement. We certainly didn’t want to see Pacquiao go to Texas. We’re glad he’s back.”
Fox has held informal discussions with NASCAR about a new TV rights agreement that would allow the network to put some of its Sprint Cup races on Speed.
David Hill, Fox Sports chairman, said Fox would like to see some of the 13 regular-season races it televises on Speed. A Fox source said the company could ask for as many as six races for the network.
Fox is five years into an eight-year, $1.76 billion contract with NASCAR that mandates Fox televise all of its Sprint Cup races on its broadcast channel except for two non-points, specialty events — the Sprint All-Star Race and the Gatorade Duel from Daytona, which air on Speed. If it wants to move regular-season Cup races to Speed before its contract expires in 2014, it would have to amend its agreement. Fox sources were skeptical such a move would be made before the contract ends.
KRISTINA PAUMEN / LIMELIGHT PHOTOGRAPHY
Hill: “Speed is the default NASCAR network, and it might be logical to assume they might have certain aspirations to a channel.”
Steve Herbst, NASCAR vice president of broadcasting, said in a statement that NASCAR is in constant discussions with its partners but he declined to address the specifics of the Fox conversations.
The talks come a year after NASCAR agreed to let ESPN shift the majority of its Chase to the Sprint Cup Championship coverage from ABC to ESPN. Ratings on ESPN, which showed 14 races, and ABC, which showed three races, dropped 14 percent following that move. A similar viewership decline likely would follow if races moved from Fox to Speed, which is distributed in 78 million homes. The Sprint All-Star Race on Speed this year averaged a 3.3 final Nielsen rating and 4 million viewers, which more than quadrupled the network’s average prime-time audience. By comparison, Fox averaged a 5.0 final Nielsen rating and 8.6 million viewers for its 13 regular-season Sprint Cup telecasts.
Hill said that Fox always intended to carry Sprint Cup races on Speed, which Fox launched in 2002 after acquiring the channel, then named Speedvision, from Comcast and Cox. The company carried some Cup races on its cable channel FX during its initial 2001-05 rights agreement with NASCAR.
The move would allow Speed to use live NASCAR broadcasts to increase the license fee that cable and satellite operators pay each month, which is currently around 30 cents, according to sources. The move would amplify Speed’s on-air promotion of NASCAR races during the week and allow it to keep an audience of NASCAR enthusiasts tuning in for everything from news programs to the wrapup of that weekend’s race.
The move also makes sense for Fox, which would be able to spread highly rated sports content across two channels: one broadcast and one cable.
In addition to talking about putting Sprint Cup races on Speed, Fox has raised the possibility of making NASCAR a stakeholder in Speed and turning it into a joint-venture project. Sources familiar with those conversations said that they have been ongoing for several years.
By partnering with NASCAR on Speed, Fox could avoid competing with the property if it decided to launch its own channel. NASCAR Media Group opened a $43 million facility in downtown Charlotte in 2010. The facility has four floors of studio and production space and an extensive digital archive that would allow NASCAR to start its own network if it chose to do so. The assumption is that it wouldn’t make that decision until after its current broadcast agreements end in 2014.
“Speed is the default NASCAR network, and it might be logical to assume they might have certain aspirations to a channel,” Hill said. He added that the NFL, NBA and Major League Baseball have their own networks, and NASCAR is in the same class as those leagues.
Hill stressed that the joint venture talks were casual. He said that he and NASCAR President Mike Helton discuss a variety of opportunities when they get together to shoot skeet at Helton’s ranch in the Southeast.
“The great thing about this business is it’s always fluid,” Hill said. “There’s any given number of possibilities.”
Three years after selling a stake in the Dew Tour to MTV, NBCUniversal has bought it back in a deal that values the property and its assets at $40 million to $60 million.
The deal puts the Dew Tour back exclusively in the hands of the NBC Sports Group, which partnered with Live Nation to create the five-stop action sports series in 2004. NBC first approached Viacom, MTV’s parent company, about buying out MTV’s stake in Alli Sports in February. The parties came to terms on a deal earlier this month.
The Dew Tour expanded considerably during the three-year partnership between NBC and MTV.
“We thought with the impending Comcast merger it made more sense to have these assets under the same umbrella,” said Kevin Monaghan, senior vice president, NBC Sports Group. “Dick [Ebersol] believed very strongly we needed another partner. We didn’t have the cable platforms. They were focused on the lifestyle. We’d seen ‘The Life of Ryan’ and how it supercharged our crowds. But [Ebersol] thought post-merger we’d have the assets to leverage and grow this business. [Comcast executives] were very open to this, and they agreed it made sense to own 100 percent of this.”
Alex Ferrari, chief operating officer of MTV Networks Music Group, said the network acquired its stake in the Dew Tour at a time when it was looking to get into action sports. Its priorities have subsequently changed, and it has become more interested in developing scripted programs, which left it open to selling its stake back to NBC. The value of the company has increased since then from a reported $15 million to $30 million valuation in 2008 to a $40 million to $60 million valuation today. The size of MTV’s stake in Alli Sports remains unknown.
“It was opportunistic [when we bought it] in ’08 and it’s opportunistic now,” Ferrari said.
The Dew Tour will still air on MTV2 this summer, as well as NBC and USA Network. After that, NBC will look to shift the programming to Versus and Comcast regional sports networks, Monaghan said.
Ferrari said that MTV2, which is where most Dew Tour programming aired, will still show sports but the company has no specific plans in action sports.
During the three-year partnership between NBC and MTV, the Dew Tour expanded considerably. Its operators adopted the name Alli Sports, launched a new website, built an e-commerce business and added the Winter Dew Tour, AMA Motocross series and Gatorade Free Flow Tour to its portfolio of properties. Many of those initiatives were driven by Jeff Yapp, the former executive vice president of MTV Networks Music Group who left the network in 2009.
The efforts expanded the revenue of Alli Sports enough to double the value of the company in three years and increase its staff from 25 to 45 employees, but it required the company to grow fast during the height of the recession.
“Our core business is really healthy,” said Alli Sports President Wade Martin. “We’ve invested a lot in new businesses and some are moving along well, and some we’ll need to make decisions on. We knew those were new investments that would take time to mature.”
The Summer Dew Tour, which remains Alli Sports’ premier asset, reduced its size from a five-stop to a four-stop series for 2011. The move will yield a 20 percent cost savings for the tour, but it also will reduce its viewership and attendance total. It averaged 203,625 spectators for five events and 722,455 viewers on NBC in 2010.
The tour is in the middle of negotiating renewals with all of its title partners: Mountain Dew for the summer and winter tours; Gatorade for the Free Flow Tour; and Lucas Oil for the AMA Motocross Series.
In the wake of NBC’s acquisition, Allisports.com will move from an MTV-supported Web platform to an NBC-supported one. Monaghan and Martin said NBC is more equipped to provide that support today than it was in 2008. Since then, it has built a more robust NBCSports.com site. They added that doing so also gives Alli Sports access to NBC’s established digital sales and distribution teams, which they anticipate will help the site monetize its digital assets more effectively.
“That’s a layup and two years ago we couldn’t do it,” Monaghan said. “Now we have the resources to really, really help them.”
Monaghan said that he’s held discussions with NBC Sports Chairman Mark Lazarus about developing an Alli board that includes both internal and external executives. Martin would report to the board the same way he reported to the NBC- and MTV-led board featuring Monaghan, Ebersol, Ferrari, MTV President Van Toffler and Amy Singer, former MTV vice president of business development.
Monaghan said that NBC will be focused on developing new revenue streams for Alli Sports. He pointed to Comcast’s GolfNow.com platform, which sells tee times at golf courses nationwide, as an example of the type of new business he’d like to see Alli Sports develop.
“That’s our challenge moving forward,” Monaghan said. “The Dew Tour’s really good programming. It’s programming that works as well on the Web mobile tablets. It’s got a great target demo. We love the appeal and global interest. But what’s next?”
CAA Sports co-heads Michael Levine and Howard Nuchow quietly in the last few months signed new five-year employment contracts to continue to guide and build Creative Artists Agency’s sports division, sources said.
CAA Sports was launched in April 2006; Nuchow and Levine were two of the principals hired to run the group in early 2007. Sources said their original employment agreements were four-year deals.
Other than the length of the new deals, terms of their contracts were not known. CAA declined to comment.
SHANA WITTENWYLER (2)
Under Nuchow (above) and Levine, CAA Sports has built a national sales team.
Nuchow and Levine manage sports agents who represent superstar athletes across sports, including LeBron James (contract only), Carmelo Anthony, Peyton and Eli Manning (contract only), Tony Romo, Roy Halladay, Sidney Crosby, Jimmie Johnson, Shaun White, and Novak Djokovic.
But in overseeing CAA’s sports division, Nuchow and Levine’s jobs go beyond talent representation. At the time Nuchow and Levine were hired, CAA said in a statement that they would help to expand the agency’s sports business into other areas such as broadcast rights, corporate marketing initiatives, and sports properties for sales/sponsorships opportunities.
Under Levine and Nuchow’s leadership, CAA Sports has built a national sales team that has, in the last 18 months, negotiated more than $750 million in new sponsorship business for property clients such as Madison Square Garden and the New York Yankees. The group was recently hired by the San Francisco 49ers to sell naming rights for the team’s new stadium. Additionally, CAA, over the last few years has established a sports consulting division and counts RBS, the PGA Tour and the University of Colorado as consulting clients.
Long viewed as the most influential Hollywood talent representation firm, CAA got into the sports business in 2006 when it hired former IMG agents Tom Condon (NFL), Casey Close (MLB), and Pat Brisson and J.P. Barry (NHL), as well as former SFX Sports NFL agent Ben Dogra. Since then, CAA Sports has made its foray into the representation of soccer, tennis, golf, and basketball players, further expanding the agency’s global reach.
Nuchow and Levine were hired just ahead of CAA hiring Leon Rose, agent for NBA star James. CAA later hired NBA player agent Henry Thomas, who represents Chris Bosh and Dwyane Wade, making CAA the power broker during the last year’s NBA free agency period that saw all three players come together with the Miami Heat.
Nuchow, formerly the president of Mandalay Sports Entertainment, and Levine, formerly the president of Van Wagner Sports Group, were originally hired along with television executive David Rone to oversee CAA Sports. Rone recently was hired by Time Warner Cable as president of its newly created division TWC Sports.