Showtime $ Losses: Fact or Fiction?

[koolkc107]

Now that it is clear the contract Showtime offered will most likely pay exactly the dividends they were contemplating when they signed Mayweather, the question remains...

Without the mega-fight, would Showtime have wound up losing money?

We know Money-Canelo was a huge success, but was that bonanza tempered by financial losses in the other 3 fights?

Or are reports of losses an exaggeration?

The only thing concrete I can find is a Forbes article dated 5/29/13 which speculates a loss then immediately refutes it in the same article.

http://www.forbes.com/sites/kurtbadenha ... yday-ever/

Feel free to post any articles here you know about that support or rebut either side

[Chepppaaa]

i think it is top secret and nobody realy knows, unless those involved.

my logic tells me.

floyd against

marquez
ortiz
mosley
cotto

all well over 1 million, between 1 mil and 1,5.

so i think showtimes thought "if we take floyd and let him fight 6 times, with 6 times, between 1 and 1,5 million, than we good"

so, than came the disaster

875.000 guerrero
850.000 maidana
925.000 maidana II

without canelo and pacquiao it would have been a big letdown financielly for showtime.

[Chepppaaa]

now that would be the mega bomb

canelo 2,2
pacquiao 3
pacquiao II 3

that would be big. than maybe he would even be underpaid in his contract, than he surely would have made more without contract, than with. because he wont get the full money of the pacquiao fight, only the contract money i guess.

[ReggieDiggs]

I think if you are just looking at the fight revenues & the Showtime boxing contract you aren't looking at all the info is the biggest problem with this sorta talk. Part of why you sign any guy on this sorta level is the overall impact it has with your company. I believe Showtime has increased their subscribers by a couple million since signing Floyd. Obviously Floyd isn't responsible for all of them, but he surely has impacted some percentage of those current Showtime subscribers to get Showtime & that obviously holds value to Showtime the company. That sorta stuff is tough to determine a value for on the outside looking in, but it clearly is part of the profit made by Showtime for signing Floyd.

[uptconnect]

With most likely 2 out of 6 fights being the 1st and 2nd largest grossing pugilistic events in history?
(3 of 6 if the rematch is following a great fight.)
People sincerely have to ask if Showtime lost money? That's just anti-Floyd wishful thinking on most parts.
Even this time with the A and B both demanding the largest minimums in the sport, and SHO splitting revenue this time with HBO, the pie is so extremely large that there's probably 55% of the revenue (Rather than the typical 80-90%) to divide after paying fighters.
If Floyd finishes out these 2 fights against Pac, and considering Haymon's takeover plan, Showtime will probably try and re-sign Floyd after this. He's not quitting quite yet, despite all the talk of doing so.

Depending on what Al's finished business model looks like, he might not be interested in re-signing with them and just jump completely into what Al's got going, and cut out the Showtime exclusivity.

[koolkc107]

What I would like to see is documentation that the other 3 fights (2 Maidana fights and the Guerrero fight) lost or made money.

I can't seem to find anything supporting either claim.

Depending on how you crunch the numbers, you can come up with losses, Showtime barely breaking even, or even a small profit.

What I am looking for in this thread is credible sources that illustrate any argument about the financial outcome, not just blanket statements with nothing to back it up.

[ReggieDiggs]

What I am looking for in this thread is credible sources that illustrate any argument about the financial outcome, not just blanket statements with nothing to back it up.

Get a job with Showtime accounting. Thats about the only credible source there is. Everything else is a bunch of boxing nerds acting like they know whats up with all the expenses & profit streams involved in modern day fight promotion.

[KBB]

How can an entire cable network lose money on one PPV fight? Sure Mayweather may not have done 1 million everytime out but I'm sure that the networks do not allow on PPVs to carry them, they rely on those who subscribe and pay their regular bills monthly.

It is stupid to assume that SHO lost money without anything concrete to confirm it.

[caldo2025]

That's a great question, KC. I didn't even think of that but I bet that was yet another factor pushing Floyd's hand to make the fight happen. You have think that SHO's Espinoza has been counting his chips at the table since they signed the contract with Floyd.

Back when FMJ was with HBO, he generated $543m and 9.6m buys in 9 PPV events. Aside from the Canelo fight, the other three fights were mediocre in terms of PPV buys. I'm thinking that FMJ needed the last two fights on the deal to be large to make up the delta. I have to respect that about him even though I'm praying Manny knocks his head off. It's admirable that he wants to make SHO money and prove he was worth it. Today's athletes are all about the cash grab but FMJ makes his investors money. I'll give the prick that much.

Great Post.

[KBB]

That's a great question, KC. I didn't even think of that but I bet that was yet another factor pushing Floyd's hand to make the fight happen. You have think that SHO's Espinoza has been counting his chips at the table since they signed the contract with Floyd.

Back when FMJ was with HBO, he generated $543m and 9.6m buys in 9 PPV events. Aside from the Canelo fight, the other three fights were mediocre in terms of PPV buys. I'm thinking that FMJ needed the last two fights on the deal to be large to make up the delta. I have to respect that about him even though I'm praying Manny knocks his head off. It's admirable that he wants to make SHO money and prove he was worth it. Today's athletes are all about the cash grab but FMJ makes his investors money. I'll give the prick that much.

Great Post.

850-900K PPV buys is mediocre for Mayweather but for everyone else that would be a blockbuster, lol. Outside of the ring he is a prick though but in it he's the best.

[Badhusker]

Its funny that with half of the PPV (some of Manny's) that a Floyd fight generates it is never a disaster.

People that want to think most Floyd fights are financial disasters will say they are. You have to be a mental midget to think they actually lose money when getting the kind of numbers they get with Floyd fights. Its not like it is the only source of revenue for the fights.

[koolkc107]

Its funny that with half of the PPV (some of Manny's) that a Floyd fight generates it is never a disaster.

People that want to think most Floyd fights are financial disasters will say they are. You have to be a mental midget to think they actually lose money when getting the kind of numbers they get with Floyd fights. Its not like it is the only source of revenue for the fights.

Well, that is exactly one of the reasons I asked the questions I have here.

If you say Floyd's guarantee is what is generating losses on a fight that gets almost a million buys, how are other guaranteed purses NOT generating losses when they get under half of that total of buys?

The difference in site fees?

The fact that one guy foots the bill for all promotion and purses while the other doesn't?

Something else?

Here is where I want all the boxing financial wizards with inside knowledge of the inner workings of every PPV to come and break it all down and let the chips fall where they may as long as it can be documented or the logic is so flawless as to be unassailable.

[Badhusker]

Its funny that with half of the PPV (some of Manny's) that a Floyd fight generates it is never a disaster.

People that want to think most Floyd fights are financial disasters will say they are. You have to be a mental midget to think they actually lose money when getting the kind of numbers they get with Floyd fights. Its not like it is the only source of revenue for the fights.

Well, that is exactly one of the reasons I asked the questions I have here.

If you say Floyd's guarantee is what is generating losses on a fight that gets almost a million buys, how are other guaranteed purses NOT generating losses when they get under half of that total of buys?

The difference in site fees?

The fact that one guy foots the bill for all promotion and purses while the other doesn't?

Something else?

Here is where I want all the boxing financial wizards with inside knowledge of the inner workings of every PPV to come and break it all down and let the chips fall where they may as long as it can be documented or the logic is so flawless as to be unassailable.

Well, I don't know of any boxing financial wizards here or anywhere else, but there are plenty of guys that think they are positive that Floyd's fights lose money for Showtime.

According to Forbes, (in 2013) Mayweather racked up 9.6 million buys in his last nine pay-per-view events, generating $543 million in television revenue. If Floyd gets his guaranteed 32 million, it still leaves enough to pay the other fighters, etc. The gate receipts are not counted in that either.

Floyd has delivered such big pay-per-view buys in the past that Showtime lured him away from HBO with a deal so lucrative, all the pressure is off him to promote his own fights. I am guessing Showtime looked at his average PPV buys by someone that had at least some basic knowledge with finances before they gave him such a big offer. Floyd gets 4X the number of viewers compared to others in the 24/7 episodes too, not to mention the replays of the fights for people signing up for showtime instead of paying for the ppv's.

If you take his average buys, 1,000,000 at $70 = $70,000,000. ($65 for reg. $75 for High def) Up to 2013 Mayweather averaged $40 million take home pay in his last 3 fights (taken before the Canelo bout). Take that from the 70 million generated (not counting gate receipts) and it leaves plenty left. The Canelo fight ppv was about 150 million, and Floyd ended up with about 80 total from that. Divide out the remaining 70 million, which is a lot of money. When Floyd left HBO, it was called a huge loss for HBO, but now some say it is a huge loss for Showtime? Have to scratch my head on that thought.

Let's consider if Floyd vs Manny generates 3 million buys, and they have already guaranteed Floyd and Manny $120 mil and $80 mil. 3 mil x lets say $90 a pop = $270,000,000. Minus the 200 for Floyd and Manny, and there is 70 mil left. I don't think any of us totally understand how they make all their money, but just remember they wouldn't do it if they didn't make money. The articles that claim Showtime is losing never provide any facts or number to prove it.

That's how I see it, but I could be way off...being the mental midget I am.


By the way, if Floyd's fights are losing money for Showtime, it kind of makes you wonder how Haymon can make money putting fights on regular networks with no PPV revenue? He wouldn't do it if he lost money doing it. Sponsors are another thing people don't think about.

[ReggieDiggs]

Thats not how PPV works. You gotta chop it up with the cable people & everyone else. Its not just going to the fighters. There are too many revenue streams & money going to people boxing fans don't even understand why they get paid or how much they get paid to discuss this seriously. Leave this sorta discussions to guys like El Raincoat & others who have likely looked into all these figures & all the involved parties to some degree (I'd assume anyway) well beyond the average boxing would want to be involved. Needless to say this is more complicated than anyone is giving it credit for being.

[KBB]

The bottom line is this; the Networks (SHO & HBO) do not lose anything because they get their money right off the top/upfront, the rest is divvied up between the rest of the arms they owe it out to:

http://www.boxinginsider.com/columns/bu ... deal-work/

Where does the money go when a fan plunks down $49.95 to see a pay-per-view fight on television? Does it go directly to the fighters? Does it go into the hands of promoters? What role do the networks play? Maybe this piece will, in a basic sort of way, shine some light on it for you.

As the apparatus of pay-per-view has matured, it has evolved into a process that customarily works like this: the promoter will make a fight between two combatants, along with an undercard to support it. He approaches the pay-per-view distributor, like HBO PPV or Showtime PPV (or the new entrant, Epix) with that fight, and the distributor makes the decision as to whether to carry it or not. If the fight gets the green light, the distributor goes to work clearing the fight with the MSO’s (multiple system operators) who control virtually the entire cable universe. These include companies like Time Warner, Cablevision, Comcast. Cox and Charter.

The cable systems are in on the deal; that’s their price tag for carrying a certain amount of weight on the local and regional level. They are going to run commercials for the event, and sometimes the promotional materials can be provided by the promoter, although often the cable people will put together their own, because they may have certain special promotions they will do in association with the event.

The standard breakdown as far as money is concerned is a 10% fee off the top for the distributor, with 45% each for the cable system and the promoter. So when you see a price tag on a fight, you know that the promoter will get about 45% of that.

Let’s say a fight is priced at $49.95, which for the sake of simplicity we are going to round up to $50. If it’s HBO PPV that is being used, HBO is not a party that is at risk as far as the fight itself is concerned but will take the 10% fee off the top ($5). The promoter and the cable companies both wind up with $22.50 per “sub” (or subscriber).

If a fight sells a million pay-per-view subscribers, HBO’s pay-per-view arm will get $5 million and the promoters will pocket $22,500,000. If that level of revenue, along with the other revenue streams (live gate or casino site fee, merchandising, international rights, etc.) did not meet what the promoter guaranteed the fighters, well, let’s just say that would be an unfortunate occurrence.

Some semantics might be in order at this time. The term “pay-per-view,” as it applies to fights that are transmitted into the home in exchange for a fee, is kind of a misnomer, as promoters have discovered. When fights go into a movie theater or another venue that gets it via closed circuit, it is much closer to the actual concept of “pay-per-view,” because it gets much closer to the ideal that everyone who views it has to pay for it. When it goes into homes, it may turn out to be, in fact, pay per MANY views, as buyers often invite multiple friends over. As we mentioned in a story last week, that’s why promoters are interested in experimenting with going the theater route.

That method does not necessarily involve HBO PPV, but don’t get the impression that they are just going along for a free ride when they engineer the pay-per-view distribution. The strength of a company like that is that it not only can instantly make an event happen and effectively coordinate it over the television platform (not to mention produce it as well), it can also apply some marketing muscle on a national level. You have seen that with the “24/7″ series that HBO airs, which doubles as an entertainment piece and a de facto infomercial for the pay-per-view telecast.

Now Time Warner is expanding that promotional vehicle to other outlets like CNN, which they control. Showtime Pay-Per-View has done the same through its “Fight Camp 360,” which was used in four parts to promote the Manny Pacquiao-Shane Mosley fight, and aired not on Showtime’s premium channel but to a wider audience on CBS, which is also owned by Viacom. This kind of programming might be the most effective in selling an upcoming fight to the more casual audience, because it shows the fighters in a more human “reality” setting.

In this atmosphere where media conglomerates own many properties across the spectrum of broadcast, cable, premium and even satellite programming, they are starting to expand their horizons and operate more creatively for a potential constituency that has many more choices on their remote than they had when pay-per-view first became a prominent part of the boxing culture. You can expect that activity on the part of HBO, Showtime and even ESPN (which has a pay-per-view apparatus), all of which are owned by a different conglomerate, will reflect that into the future


So anyone who thinks that Showtime has lost money on Floyd Mayweather fights is either a HATER or an Idiot who knows nothing about how this works.