NBA ready to discuss rights deal Scouting reports an online phenom Is TV Everywhere going nowhere? Sports TV columnist leaving USA Today ACC moves ahead on network Mayweather Penguins among top-rated teams since ’97 Will ESPN leave some Nationwide rights? Golf Channel streams it all Predictions: Draft ratings will drop
Upcoming Conferences and Events
SBJ/February 25-March 3, 2013/Media
Showtime dips, moves to steal Floyd
Published February 25, 2013, Page 3
Barely a month into his new job, Stephen Espinoza presented Floyd Mayweather Jr. and his representatives with an offer that would wrest his May 2012 pay-per-view bout against Miguel Cotto from HBO, the network that has aired his fights for the last 15 years.
Mayweather declined. But Espinoza came away convinced of an opportunity.
“There were certain assumptions about which side traditionally pays what costs and what rights are given where, which didn’t bear any necessary relationship to logic,” Espinoza said last week in the wake of signing Mayweather to an exclusive deal that could yield as many as six fights in 30 months, kicking off with a May 4 pay-per-view against Robert Guerrero.
“They were remnants of some structure that someone came up with long ago. Marketing has been completely redefined in the last eight to 10 years. Delivery of content is changing on a monthly basis. So rethinking the model on everything from allocation of costs to methods of marketing and distribution to grants of rights was long overdue.”
The most surprising aspect of Mayweather’s jump lies in the fact that his previous deals with HBO seemingly left Showtime with little to improve on. Mayweather received a guarantee for each fight from promoter Golden Boy — a record $32 million from the Cotto fight — based largely on conservative expectations of HBO pay-per-view sales, plus an upside on all sales above the guarantee. That delivered Mayweather “very close to 100 percent” of the promoter’s proceeds from the pay-per-view, Golden Boy CEO Richard Schaefer said.
Pay-per-views are structured so distributors get about half of the revenue. The producer — HBO or Showtime — takes 5 to 10 percent. Mayweather got almost all that remained after expenses were paid, according to Schaefer and other sources familiar with the deal.
“The only way to get Floyd more than he had in that model was to rethink the model,” Schaefer said. “Showtime and CBS were willing to put everything on the table. The result was such that what came out at the end was a totally different model, one which gives a tremendous additional financial benefit and potential to the fighter.”
Espinoza, Schaefer and Mayweather Promotions CEO Leonard Ellerbe all have declined to discuss financials, citing confidentiality. But Espinoza and Schaefer said the shifts that mattered most came in three areas:
■ Additional promotional assets from across CBS Corp., including on the flagship network during high-profile sporting events such as the Final Four and in prime time, as well as support from CBS’s radio, outdoor advertising, interactive and consumer product divisions.
■ Greater guaranteed payments, or a higher revenue share, for Mayweather from ancillary streams from the fight, including the rebroadcast on Showtime.
■ A shift in the way some promotional expenses were handled, leaving more money for Mayweather.
“When you’re talking about having a $150 million night, if you add 10 percent between these three things, that’s $15 million,” Schaefer said. “Do that six times and you’re talking about a difference of almost $100 million.”
Schaefer’s expectation of $150 million as a benchmark is optimistic, and perhaps unrealistic. Mayweather’s fight against Cotto brought in about $92 million in domestic pay-per-view revenue and a $12 million gate. Only his record-shattering performance against Oscar De La Hoya in 2007, which sold about 2.5 million pay-per-views, eclipsed $150 million. No other Mayweather fight has generated more than $100 million.
Still, Mayweather unquestionably delivers more than any fighter on the planet. He also will raise Showtime’s boxing profile, as Mike Tyson did when he jumped there from HBO in 1990.
“We know the pie is almost entirely Floyd’s,” Espinoza said. “The pitch to them was … how we can make that pie bigger so we all share in the success.”