SBJ/June 20-26, 2011/In Depth

Las Vegas: Fight Town

Tough economy has Las Vegas on the defensive as it battles to remain the center of the fight business

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.”

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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.”

Economic slide

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.”

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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.”

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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.”

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