In order to make the really big money in the world of professional fight promotion, you need to follow the Floyd Mayweather model. The reason Floyd Mayweather is able to take home as much as $40 million from a single night’s work is because he owns 360 degrees of his fight. When Mayweather fights someone, he puts up all the money himself. He pays for the venue, the insurance, the vendors and even his opponent’s purse, out of his own pocket. When Mayweather fought Victor Ortiz he spent $10-12 million of his own money before a single punch was thrown. He also put aside $25 million for himself as an appearance fee. The major risk he is taking is that all these expenses occur before the fight happens. If there was a natural disaster like a hurricane, the fight would be canceled and Floyd would be out of luck. On the other hand, when the Ortiz fight did go through as planned, 1.25 million households ordered it on Pay Per View for $60 which generated $75 million worth of revenue. After 60% is taken out for the distributors and another 60% is subtracted for costs, Floyd is left with $12 million. And unlike Georges St-Pierre who shares a small percentage with the UFC, Floyd has no partners, so that money goes 100% into his bank account (after taxes). When you add Mayweather’s $25 million appearance fee and his $12 million PPV bonus, you can start to understand why he makes $85 million a year.
Floyd’s brilliant business model is also partially to blame for why we have not and likely will not ever see him fight Manny Pacquiao. Pacquiao is like Georges St-Pierre in that he fights for a boxing promotion company, namely Bob Arum’s Top Rank Promotions. Pacman commands high appearance fees but at the end of the day he still splits the PPV revenues with Top Rank. Mayweather is not willing to risk his perfect 43-0 record unless he is the sole promoter. That puts Floyd in the driver seat and so far the two sides have not been able to reach a middle ground. Mayweather has offered a flat $50 million fee with no PPV upside. But Pacquiao and Bob Arum are very aware that this fight would be the biggest Pay Per View event in history and could generate as much as $180 million in revenue. If those numbers were accurate, under his own model Floyd would take home $130 million! Arum’s team countered with an offer that would pay Floyd $100 million and Pacman $80 million (55% vs 45%). Mayweather turned it down. Who knows if there will ever be a compromise, but you have to think that at some point Mayweather can’t keep turning down $100 million! How much is a perfect record (and pride) worth? How much would you give up to go out on top without any losses?
