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
SBJ/June 20-26, 2011/In DepthPrint All
ESPN continues to expand the live content being funneled to its 3-D network with a slate of five “Friday Night Fights” telecasts this summer, starting Friday.
The telecasts will build on the network’s first foray into 3-D boxing, a Feb. 18 installment of “Friday Night Fights” that also marked the first time boxing was shown in 3-D on U.S. television. A successful run of telecasts could help not only promote and validate the 3-D network, but also increase interest in ESPN’s coverage of the sport of boxing.
As with the Feb. 18 card, the 3-D and 2-D feeds of the upcoming fights will be produced as a single telecast with the same announcers, Joe Tessitore and Teddy Atlas. Many 3-D events are still produced alongside a 2-D feed, using two production teams and two sets of announcers. Phil Orlins, ESPN 3D coordinating producer, said the approach for the boxing matches makes the coverage “relatively cost effective.”
BEN SOLOMON / ESPN
The network’s production team says the sport is ideal for 3-D broadcasts.
This approach is possible in part because, unlike for most team sports, boxing coverage does not require the frequent switching of different camera angles that is always problematic for 3-D. Orlins noted that during a round, the camera is “not leaving that ring unless somebody gets knocked out, so you can cut at the pace that feels right for both 3-D and 2-D.”
There are several other logistical reasons that ESPN executives believe boxing is an ideal sport for 3-D coverage. Orlins said 3-D is “at its best when it’s working at relatively close proximity,” and when the area being filmed is “controlled or predictable.”
Matt Sundulli, “Friday Night Fights” senior coordinating producer, said that while the 3-D cameras used are a bit larger than traditional rigs, they require “no physical changes to the setup of the ring itself.” So the production equipment does not require venues to give up seats or make any other on-site changes.
ESPN'S UPCOMING 3-D BOUTS
DATE TIME (ET) FIGHT LOCATION June 24 9 p.m. John Molina vs. Robert Frankel Pechanga Resort Casino, Temecula, Calif. July 1 11 p.m. Mark Jason Melligen vs. Roberto Garcia Freeman Coliseum, San Antonio July 8 9 p.m. Henry Buchanan vs. Jesus Gonzales Jobing.com Arena, Phoenix July 22 9 p.m. TBD TBD Aug. 12 9 p.m. TBD TBD
The bout in February was a positive and instructive first crack at 3-D boxing for ESPN, although Sandulli acknowledged, “Not a ton of people were able to see it the first time around.” Internally, however, he said colleagues are bullish on 3-D’s ability to help the sport.
Orlins, who did his own monitoring of viewer feedback during the first 3-D fight via Twitter, said, “Even though boxing may not have been the most marquee event we’ve put on our schedule, still the fact that we were digging into a different sport that seemed to be a natural for 3-D, I thought actually did create quite a bit of buzz.”
In addition to airing on ESPN 3D, the “Friday Night Fights” bouts will also be shown on ESPN2, ESPN.com and ESPN Deportes.
While there are no firm plans in place for 3-D boxing after the end of the “Friday Night Fights” season this summer, ESPN is bullish on the possibilities of continuing to cover the sport in this format. “The fact that we’re back to do five more after doing one in February will tell you that we thought it has a lot of upside,” Orlins said.
To date, ESPN 3D is the sole occupant of the 3-D boxing space in the U.S. DirecTV has had discussions with Golden Boy Promotions about producing 3-D fights, but no formal deal has been finalized. Internationally, U.K. broadcaster BSkyB has produced and screened some fights in 3-D for its Sky 3D channel.
Preston Bounds is a staff writer for sister publication SportsBusiness Daily.
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.”
When Brooklyn-born boxing promoter Lou DiBella looks to put on a card in his backyard, the financials can be daunting. The overhead for a fight at Madison Square Garden is about $500,000, he said. The adjacent 5,600-seat theater, a better fit for most fights because of its lower capacity, costs at least $100,000. Most of the New York City venues that are less expensive aren’t good fits for fights.
DiBella has found a suitable home for a standing series of club fights — featuring up-and-comers and never-will-be’s with local followings — at B.B. King’s blues club in Times Square, which can seat about 1,000.
“The room is perfect and the rent is fair, so I don’t get killed,” DiBella said. “But I can’t make money there. If I lose a few thousand dollars and keep my fighters busy, develop them in my way at my pace and develop a library where I own the content, that’s OK. But I wish I had someplace to go that had 2,000 seats. It’s hard to do shows in New York.”
It has been a quiet year for boxing in New York, despite the city’s fabled history as host to big fights. The theater at MSG has been closed for renovations since last summer. The big building has been closed since the Knicks and Rangers ended their seasons.
“I truly believe boxing is going to be one of our biggest differentiators and will help to brand our building nationally and internationally,” said Brett Yormark, president and CEO of Brooklyn Sports & Entertainment, the sales and marketing arm of the Barclays Center. “There has been a void in this market. We’re going to have boxing and we’re going to have it consistently.”
The plan is for two to three fights a year that will play to the full arena, with others scaled down for crowds of 3,000 to 6,000, said Richard Schaefer, CEO of Golden Boy. Three to four of those likely would be HBO or Showtime level cards, with the rest on the level of ESPN’s “Friday Night Fights,” Telefutura’s “Solo Boxeo” or a regional sports network card. Golden Boy also will use the series to expose its current roster of East Coast fighters, such as Paulie Malignaggi and Danny Jacobs, and to recruit new ones.
“The Garden is always going to be the Garden and fighters are going to want to fight there,” Schaefer said. “But the building is booked 300 nights a year. They really don’t need boxing. They can get it. But they can approach a fight with a certain amount of arrogance. They’re not going to lose sleep over it. I’m not critical of that. But if you have that attitude, it’s difficult to develop a local program. And the local program is where you develop fighters and also develop fans.”
One of the chips Brooklyn likely will play, especially early on, will be a lower cost structure than that which is typical at MSG. While that remains uncertain because the arena still is negotiating its labor contracts, a source said rent for the full Barclays Center likely will be comparable to the cost of MSG’s theater.
“I love New York fights,” said Todd DuBoef, president of Top Rank. “I think it’s a great place for fights. The only issue I see is that you have an expensive town to deal in. Labor costs. Hotel costs. The energy at a Madison Square Garden fight is fantastic. The right fight makes sense there. But you have to understand what the expenses are.”
When Golden Boy Promotions CEO Richard Schaefer attracts a large crowd for a big fight at Staples Center, he considers it a payoff on an investment.
“The regularity of bringing boxing content to the fight fan in a region is very important,” said Schaefer, who has operated a monthly boxing series at the 1,500-seat Club Nokia at L.A. Live since 2008. “We do that in Southern California. When you have a monthly or semi-monthly card, drawing up to 2,000 people, you are building a following. So when you bring the big fight to the Staples Center, there are now fans of boxing who are buying the tickets.
“The key there is the continuity. It’s a great market for boxing. But you need the continuity to really make it work.”
Promoters frequently point to Southern California as boxing’s core. It starts with the demographics. Los Angeles County is home to 4.7 million Hispanics, according to 2010 census figures. In the most recent ESPN Deportes Sports Poll, 54 percent of U.S. Hispanics said they were boxing fans and 19 percent described themselves as avid fans of the sport.
“Southern California has always been a very good base for the sport of boxing largely because of its huge Hispanic influence,” said Todd DuBoef, president of Top Rank. “When I look at demographics and people coming to fights in Vegas, where the fight fans are, it’s a hotbed. It always will be a hotbed. It’s where the boxing brand fits with the culture.”
The UFC also considers Southern California to be its strongest market, though, as many sports properties have found, the economy has been a drag on ticket sales. The last three UFC events in California, held at Honda Center in Anaheim, Oracle Arena in Oakland and Staples Center, all hovered around 10,000 tickets sold (see chart, page 21).
“Las Vegas is where we host a lot of events, but very few of the fans at our events are local,” said UFC Chairman Lorenzo Fertitta, who put the percentage at about 5 percent. “The majority come from California in general and particularly Southern California. That area is big for us.”
World Wrestling Entertainment is stepping up its international expansion initiatives, aiming to increase TV broadcasts, live shows, DVDs, merchandise sales and other revenue streams in nations that have some of the world’s largest economies.
And why not? International business generates about 25 percent of WWE’s revenue annually, and reached 28.3 percent in 2010, with $135.3 million.
“WWE has been in some markets for many, many years that are starting to mature,” said Andrew Whitaker, executive vice president of international for WWE. “In some markets, WWE is delivering only one line of business — say, TV distribution — but none of the other businesses, such as merchandising.
“The international expansion of WWE has been under way for over a decade. … Every division of WWE — live pay-per-view, TV distribution, live events — is delivered in markets across Europe, the Middle East, many markets in Asia and some markets in Latin America. But there are some parts of the world where countries are not fully developed across all lines of business.”
The high flying Sin Cara has a huge following in Mexico.
WWE, Vince McMahon’s professional wrestling behemoth based in Stamford, Conn., has taken such steps as:
■ Opening an office in Mumbai, India, on June 1. The exploits of Indian 7-footer The Great Khali, a star in WWE, has increased awareness of WWE in that country in the past couple of years, and has helped create demand for more product. The company named Rukn Kizilbash as general manager of the Mumbai office, charged with expanding all lines of WWE’s business.
■ Began a two-year television programming deal in February in Russia, reaching 24 million homes in Moscow and St. Petersburg.
■ Held its first live event in China, on Aug. 22, 2010, at the World Expo, selling out an arena that holds 8,000 spectators. China has run WWE television programming since 2007. WWE even has a Mandarin-language website there.
■ Mexico is WWE’s third-largest international market — behind the United Kingdom and France — and WWE plans to televise “Monday Night Raw” and “Smackdown” Oct. 15-16 from the Palacio de Los Deportes in Mexico City. Rey Mysterio Jr. and the newly arrived Sin Cara are two WWE performers with wide popularity in Mexico.
■ Placing “WWE Raw,” starting March 2, on Esporte Interativo, which is Brazil’s biggest sports channel, reaching more than 33 million TV households.
“It is very much an expansion across all of the businesses,” Whitaker said.
“For example, until fairly recently in Brazil, we did not have national TV coverage. Now we do. We have a very good partner there. The next step is to roll out the other lines of businesses.”
Same for India, where WWE has broadcast programming for about 20 years. WWE is negotiating a licensing deal with an Indian company, part of the company’s longer-term goal to roll out its ancillary lines of business, such as more live events, pay-per-views broadcasts, DVDs and merchandise.
Bruce Goldberg writes for the Denver Business Journal, an affiliated publication.