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Volume 21 No. 48

In Depth

The battle over Ryota Murata’s trunks served as the undercard to his bout against Rob Brant last month and indicated the size of the stakes involved.
Photo: Getty Images

Top Rank Boxing President Todd DuBoef was having lunch at a Las Vegas hotel last month, discussing the sport’s recent bloom of broadcast options, when he stopped mid-sentence and hustled to the door, where a representative from the camp of Japanese middleweight star Ryota Murata stood, scanning the restaurant.

 

The two exchanged greetings, then found a place off to the side to talk.

 

When DuBoef returned he tapped his phone, pulling up a photo.

 

“You wouldn’t believe it,” he said, shaking his head.

 

That morning, Murata’s management had submitted artwork of trunks that the fighter planned to wear the following night for a bout against Rob Brant at the Park MGM that would air on ESPN+, the direct-to-consumer (DTC) service that is at the forefront of a sea change in combat sports distribution.

 

Prominently displayed across the front of Murata’s trunks was the logo of DAZN (marketed as “Da-Zone”), the $9.99-a-month over-the-top sports network that launched in the U.S. in September and one of ESPN’s new competitors that has placed a large bet on boxing and MMA.

 

By all accounts, this was not an attempt by DAZN to use guerrilla tactics to reach the screens of ESPN’s paying customers. Its target market was Japan, where it has built a subscriber base of about 1 million, spearheaded by the popularity of 2012 Olympic gold medalist Murata. DAZN, which had rights to air the fight live in Japan, wanted to remind the millions of Japanese viewers who watched replays that the only way to see him live was to sign up.

 

First Look podcast, with The Fight Game discussion at the 10:20 mark:

Still, DuBoef recognized the conflict. By the time he phoned Burke Magnus, ESPN EVP of programming and scheduling, about the matter later that day, he’d gotten Murata’s camp to agree to a fix: The fighter would honor his promotional contract with DAZN by wearing its logo, but it would be written in Japanese.

 

The conundrum around Murata’s trunks — at a fight streamed separately by new, competing services in both the U.S. and Japan, on a night that ESPN’s linear channels were papered wall-to-wall with college football and the Los Angeles debut of LeBron James — offers an intriguing window into what awaits boxing and MMA.

 

The last six months have brought a flurry of disruption to combat sports, driven largely by the new DTC platforms. In May, ESPN wrested UFC rights from Fox in a five-year, $1.5 billion deal and in August it locked up Top Rank through 2025 in an extension that took its annual count of ESPN+ cards from two to 36. DAZN committed to boxing promoters Matchroom and Golden Boy, the latter of which came with reigning pay-per-view king Saul “Canelo” Alvarez, whom it will pay a guarantee of $365 million for 11 fights. DAZN also added rights to Bellator, the Viacom-owned MMA promoter.

 

Incumbents Showtime and Fox locked in their bets with Al Haymon’s Premier Boxing Champions, which finally landed a long-awaited four-year deal reportedly worth $240 million that guarantees it 10 dates on Fox and 12 on FS1. With the most desirable boxing rights off the table, HBO announced that this will be the last of its 45 years broadcasting the sport.

 

It is no coincidence that both ESPN and DAZN reached for combat properties as they flipped the switch on their services — ESPN with Top Rank and the UFC; DAZN with Golden Boy, Matchroom and Bellator. Boxing is the closest thing to an a la carte item on the U.S. rights market, with fights and promoters readily available, often on short notice. It offers the quickest way to add immediate, proven content.

 

Combat also is the only sector of U.S. sports that long has conditioned fans to pay extra for its biggest events, beginning with closed-circuit fights in theaters in the 1950s and then evolving onto premium cable and pay-per-view. The UFC lived on pay-per-view for 12 years before airing its first show on cable in 2005.

 

Ask any promoter or network executive about the connection between direct-to-consumer and combat and they all point to that unique history.

 

“It’s behavioral,” DuBoef said. “It’s in their DNA. They’re used to paying for content.”

 

■ ■ ■ ■

 

Top Rank Boxing President Todd DuBoef got his wish of being on ESPN, but it came with a price.
Photo: Getty Images

ESPN was largely out of the fight game when DuBoef approached it in 2017 with a package unlike any previously offered. After decades or putting its biggest fights on pay-per-view and premium cable and leaving only remnants for anyone else, Top Rank was offering all of its fights and fighters, plus an exhaustive boxing library that included many of the sport’s all-time greats, in one tidy package.

 

In the market for tonnage for its then in-development DTC channel, ESPN bit. In August of last year, it announced a four-year deal that would make Top Rank exclusive to ESPN, with 18 cards on the linear network. ESPN’s DTC channel would get the rights to the undercard fights leading into the network shows, as well as the library and a couple of live fights.

 

ESPN+ launched in April, and its first major fight two months later featured Top Rank’s biggest star, Terence Crawford, in a ninth-round TKO of Jeff Horn. It followed that in July with Manny Pacquiao’s knockout of Lucas Matthysse. Seeing the sign-ups and the audiences that those fights drove to ESPN+ to watch the undercards, Magnus approached Top Rank about redoing the contract.

  

“We pretty quickly decided that we should double down,” Magnus said, “getting more content that could be placed exclusively on ESPN+.”

 

DuBoef’s instinct was to say no. The whole point of bundling all of his company’s content into one batch had been to get it onto a more broadly distributed platform than HBO or Showtime. DuBoef thought back to the meetings he’d had with Top Rank’s agents at CAA when they were shopping the consolidated rights package. The agents were bullish on the non-traditional DTC channels, such as Hulu and Amazon. DuBoef agreed to present to them, but he did so reluctantly.

 

“The truth was, after every meeting, in every parking lot and elevator that I walked out of, I had this same, gnawing feeling,” DuBoef said. “I kept hitting CAA and saying, ‘Guys, I’ll take less money to be on ESPN.’ I wanted to take the shackles off my content. And now it felt like they wanted me to lock it back up.”

 

Though ESPN’s push to move more fights to DTC troubled him, DuBoef couldn’t turn down the commitment that came with it, guaranteeing him 54 TV dates a year. A show like the one that featured Murata, who was due to fight in the fall, never would have made it to ESPN under the constraints of linear television.

 

“For us, there’s just a real-world limitation to how much we can do on linear,” Magnus said. “If I had a genie come out of the bottle and grant me three wishes, the first one would be for 104 Saturday nights.”

  

When DuBoef told Crawford that he’d be moving to ESPN+ for the Horn bout after drawing an audience of 1.2 million on ESPN in his previous fight, Crawford didn’t take it well. He wanted to remain on linear or go to pay-per-view.

 

“That would have been easier than this for him, psychologically, because the biggest fights happen on pay-per-view,” DuBoef said. “For years, it’s been every fighter’s goal to be a pay-per-view star.”

 

After one fight on ESPN+, Crawford was back on ESPN when he defeated Jose Benavidez Jr. in October. Because it now is deeply invested in the sport, the network has favored boxing with desirable programming windows in the last year. It aired Vasiliy Lomachenko from the theater at Madison Square Garden after the Heisman Trophy presentation last December and plans to do it again this year. Crawford got a rare slot coming out of a prime-time Alabama football game.

 

That show delivered an average audience of 2.2 million, making it the most watched fight of the year. DuBoef points to it as evidence that fighters can move back and forth between the larger and smaller platforms without losing fans, which had been his chief concern when he agreed to the move.

 

Two months after launching, ESPN+ got a big boost in visibility when it aired its first bout, Terence Crawford’s ninth-round TKO of Jeff Horn in Las Vegas.
Photo: ESPN Images

“It’s a real conflict you deal with,” DuBoef said. “How do you deal with smaller platforms paying this incredible fee that is disproportionate to what the marketplace is? What do you do? This is the modern-day version of where boxing was 45 years ago when HBO came in. They saw a relevant product and overpaid and put it onto a 2 million-home platform to grow subs. Their objective is to grow subs. My objective is to grow the sport to get it back to where these guys are household names.”

 

■ ■ ■ ■

 

One of the more intriguing, under-the-radar impacts of ESPN’s DTC combat play is its re-visitation of pay-per-view, which it briefly explored, and then exited, back in 2005. That was long before the emergence of digital distribution.

 

Cable and satellite providers command splits of as much as 50 percent of revenue on pay-per-views because they traditionally provide the most valuable tool to drive sales: The commercials that air across their systems in the days leading up to a big fight. When a promoter can sell the pay-per-view directly to consumers, it keeps almost all the revenue from the sale.

 

ESPN will distribute live pay-per-views at full cost for both UFC and Top Rank through its ESPN+ app. In its UFC deal, it will take a similar revenue share as digital distributors such as Amazon and PlayStation, which typically get less than the 30 percent taken by cable providers. Top Rank and ESPN would not say how their revenue split would be on a boxing pay-per-view purchased through ESPN+, but DuBoef did confirm that the economics for his company with ESPN+ are better than those for pay-per-views sold through cable and satellite.

 

“There will be a traditional [cable and satellite] component to pay-per-view distribution,” Magnus said. “But I think that becomes less and less important over time. We can do it straight through the ESPN app, and that’s what we intend to do. That’s going to flip that whole business upside down.”

  

A stake in pay-per-view sales will vest ESPN in promoting that important part of the UFC business in ways that were absent from UFC’s deals with Fox, and before that Spike.

 

That continued acceptance of pay-per-view, long seen as the jackpot for which fighters and promoters strive, makes ESPN similar to its predecessors. Its DTC competitor, DAZN, plans to disrupt that model by offering all of Alvarez’s fights as part of its $9.99 monthly subscription package rather than charging $85 for each pay-per-view. That’s the same tactic the WWE used four years ago, when it converted buyers of WrestleMania into a DTC subscriber base of more than 2 million.

 

“I admire the way the WWE was able to flip its model,” DuBoef said. “I just don’t think it’s a right move for my product right now.

 

“And timing is everything.”

Beats by Dre gets a lot of love on social media from the heavyweight champ.

Anthony Joshua holds the belt atop boxing’s social media rankings, according to data from MVPindex measured from Nov. 2, 2017, through Nov. 1, 2018. MVPindex is a social media valuation that offers real-time analytics on more than 90,000 athletes, entertainers, teams, leagues and brands across Twitter, Facebook, Instagram, Google+ and YouTube. 



The global rise in popularity of UFC, fueled in part by stars like Conor McGregor, has given CEO Dana White the chance to be aggressive with its streaming strategy.
Photo: Getty Images

Leaning over a conference table in his office at UFC’s Las Vegas headquarters, CEO Dana White unfurled a blueprint of a 90,000-square-foot, $12 million campus expansion that will add a state-of-the-art television production facility, the centerpiece of which will be a 500- to 1,500-seat mini-arena that will host fights.

Scheduled for completion in July, this is where the UFC will stage bouts for its “Ultimate Fighter” and “Tuesday Night Contenders” series, which will reside on ESPN+. It’s also where White hopes to put on a slew of events from across combat sports — boxing, kickboxing, jiu-jitsu and more — to stream on the UFC’s direct-to-consumer Fight Pass.

Through 17 years heading the UFC, White has pushed hard to broaden the sport’s TV reach, going from pay-per-view to cable to Fox and now to ESPN. He also has upped the UFC’s share of revenue from its pay-per-views, negotiating the portion taken by distributors from the industry standard of 50 percent down to closer to 30 percent. And when viewers stream the show directly from the UFC’s website or Fight Pass, he cuts the distributors out entirely.

“This is the day that I have been dreaming of,” White said, slapping both palms on the blueprint. “We don’t need a television network anymore. I don’t need these guys that want to take 50 percent of our business. The world is changing really quick. I can do live fights all day and all night.”

While the UFC is certainly the most experienced U.S. sports property when it comes to DTC distribution, even White concedes the unrivaled ability of ESPN to drive U.S. sports fans to a subscription channel and to pay-per-view.

UFC’s five-year, $1.5 billion deal with ESPN puts 20 of its “Fight Night” shows, its developmental series and its library on ESPN+, a play designed to make it a must-have for avid fans. But it also keeps all of the UFC’s pay-per-view prelims and 10 of its “Fight Night” shows on linear TV.

“They wanted most of the stuff to go to Plus,” White said. “But I fought for more dates on ESPN. I love being part of the ESPN+ platform. It’s the future. It’s the way everything is going. When we finally got to a place where the deal was done, I felt great about it. I can’t wait. I’m beyond excited.”

Another benefit that UFC gets from both ESPN+ and its own Fight Pass offering is the unrivaled window both provide into the audience.

“Yes, you have their information with their credit card, but you also see what they consume,” said Lawrence Epstein, the UFC’s chief operating officer. “You see the fighters they like. You see the content they’re watching. You see how often they watch that content. You see what triggers them to get back in. You know where they live. So you have all this information that you can use to be an efficient marketer.”