Tuesday, June 19, 2018

Cooper's Corner Podcast

If you have any interest in how the Ring Magazine Ratings Panel or Transnational Boxing Rankings Board works, you'll enjoy this week Cooper's Corner podcast. I joined Aaron Cooper of Intu Boxing this week to talk a little bit about how the sausage gets made and what role the rankings boards play in the boxing landscape. We also discussed the welterweight division. When will Spence-Crawford happen and if so, who wins that fight? And will we ever see Keith Thurman back in the ring? I think you'll find a lot of interesting stuff in this discussion. To listen to the podcast click here.

Adam Abramowitz is the founder and head writer of saturdaynightboxing.com
He's a member of Ring Magazine's Ring Ratings Panel and a Board Member for the Transnational Boxing Rankings Board. 
snboxing on twitter. SN Boxing on Facebook.

Sunday, June 10, 2018

Boxing Esq. Podcast

I joined Kurt Emhoff's Boxing Esq. Podcast this week to talk about how the Matchroom-DAZN and Top Rank-ESPN deals will affect the American Boxing TV landscape. We examined the state of the four main boxing players in America (Showtime, ESPN, HBO, DAZN) and if there a way for them to work together to grow boxing's footprint. We also explored the possibility of additional boxing tournaments to help build the buzz in the sport. To listen to the podcast, click here.

Adam Abramowitz is the founder and head writer of saturdaynightboxing.com
He's a member of Ring Magazine's Ring Ratings Panel and a Board Member for the Transnational Boxing Rankings Board. 
snboxing on twitter. SN Boxing on Facebook.

Thursday, June 7, 2018

Punch 2 the Face Podcast

This week's Punch 2 the Face Podcast looked ahead to a jam-packed fight weekend. Brandon and I previewed Crawford-Horn, Santa Cruz-Mares II, Flanagan-Hooker and the return of Tyson Fury. We also discussed the IBF stripping Gennady Golovkin of his title and what this means for the middleweight division. Joe DeGuardia from Star Boxing also joined us to talk about what's next for Demetrius Andrade and Joe Smith Jr.

Click on the links below to listen:
Blog Talk Radio link:
iTunes link:
Stitcher link:   

Adam Abramowitz is the founder and head writer of saturdaynightboxing.com

He's a member of Ring Magazine's Ring Ratings Panel and a Board Member for the Transnational Boxing Rankings Board. 
snboxing on twitter. SN Boxing on Facebook.

Monday, June 4, 2018

Hearn, Top Rank and the New American Boxing Paradigm

I. Eddie Hearn and DAZN

Eddie Hearn, Managing Director of Matchroom Sport LTD, the leading boxing promoter in the U.K., announced on May 10 that he had signed a deal with The Perform Group to promote 16 American-based boxing shows a year on DAZN, a streaming service that currently provides content such as American football, soccer and other sports in Canada, Japan, Germany, Switzerland and Austria.

The deal is estimated at $1 billion dollars over an eight-year period (the agreement was announced in British pounds, so there may be some slight currency fluctuations over the term of the deal). The initial arrangement guarantees two years for approximately $250 million dollars with Hearn having options for the subsequent six years. In reading the Perform Group's prospectus, there is, of course, fine print whereby if certain measures aren't met then it's possible that the deal could be terminated earlier. But let's say that the initial two-year deal proves to be a success and it continues for the announced duration of eight years. With his new war chest, Hearn will have the opportunity to reshape the American boxing landscape.

Through simple arithmetic of 16 cards a year and $125 million in year one (one-eighth of the $1 billion dollars), it's clear that Hearn will have a per-show budget that far exceeds the existing American competition. It's unlikely that each fight card will have a rights fee of $7.8 million, which would be the $125 million divided by 16. After all, there are startup costs with Hearn hiring new employees for his American office, buying or leasing office space, investing in technology and marketing.

But even if 20% of the total was used for SG&A (sales, general and administrative expenses) that still leaves a $6.25 million rights fee per show. By contrast, HBO has an annual boxing budget estimated at $25-30 million dollars. Showtime's per-show rights fees for even its highest-profile broadcasts rarely break $4M. Top Rank has guarded its financial deal points with ESPN as tight as Ft. Knox, but from the purse information that has been released publicly, it's unlikely that the company has approached $6.25M per card.  

Courtesy of Ed Mullholland/Matchroom Sports USA

In the immediate aftermath of the DAZN announcement, Hearn started to pitch prospective fighters, publicly stating that he would be targeting top boxers who didn't have a promotional contract. That was a shot across the bow of the PBC fighters who are either managed or advised by power broker Al Haymon. After the winding down of the PBC experiment, whereby Haymon Boxing established time buys on all of the major American networks (CBS, NBC, FOX and ABC [via ESPN]), the PBC's major fighters now appear almost exclusively on Showtime. With few exceptions, PBC fighters don't have promotional contracts. Due to the Muhammad Ali Act of 2000, in America boxers cannot be managed and promoted by the same entity; Haymon chose the managerial route in establishing his boxing empire instead of the promotional one. 

Since the DAZN announcement, Hearn has made overtures to several PBC fighters, including Adrien Broner, Deontay Wilder, Jermell and Jermall Charlo and Keith Thurman (these names have either been confirmed publicly by the fighters themselves or widely rumored in the industry). To this point, no major American boxer has officially made the jump to Hearn and DAZN. Hearn claims that he has six signed contracts with American fighters, but their names have not been publicly announced and it's not known if these boxers are high-profile signees. It should also be noted that Hearn has an existing contract with American middleweight Daniel Jacobs, who has at least one more fight on his HBO contract. Hearn has announced his intention to start his new series in September, 2018. The official monthly or yearly subscription fee for DAZN in the United States has yet to be confirmed. 

II. Top Rank and ESPN

Top Rank announced a significant deal with ESPN in August of 2017, whereby the company would broadcast up to 18 shows a year on the network and the ESPN mobile app (now rebranded as ESPN+). The deal contained the option of specific shows appearing via ESPN pay per view. The duration of the agreement was for a minimum of four years. In 2018, the deal was amended to include up to 24 fight cards a year, with some shows available on both the linear ESPN channel and app while others only available via the app. As a result of this partnership, Top Rank removed its fighters from HBO, where the promotional company had been a content provider for over 30 years.  

According to a few sources in the industry, the structure of this deal is a hybrid of the PBC time buy model and the traditional rights fee broadcast. Some aspects of the agreement have been made public: Top Rank has made many of its classic fights available via ESPN+. ESPN has agreed to a marketing spend. There will be the creation of shoulder programming for the series. ESPN will integrate its boxing content with other assets such as SportsCenter. The network retains some say in the talent hired to broadcast the series. Blow-by-blow man Joe Tessitore and ringside reporter Bernardo Osuna were ESPN employees prior to the Top Rank deal and remain on the ESPN/Top Rank broadcasts. While it's likely that ESPN is paying some money for production costs and guarantees certain premium dates for broadcasts, it's unclear what (if any) the network is paying for the rights for each fight card. 

Top Rank has been perhaps the most successful American boxing promoter over the last 40 years; the company didn't agree to this deal because of a sense of charity – there is a financial upside for them, and a potentially significant one. But it's one that is closely guarded. Perhaps the company receives a minimum rights fee per broadcast, but maybe the main financial windfall manifests according to the growth of the ESPN+ app. Certainly there could be bonuses and incentives tied to TV ratings and app users.

Since the deal commenced, Top Rank has brought a number of major boxing events to ESPN, including Pacquiao-Horn and Lomachenko-Linares. Several successful smaller shows such as Valdez-Quigg, Beltran-Moses and Magdaleno-Dogboe have also been televised by the network. In addition, Top Rank has been aggressive in bringing international fights to U.S. boxing fans via the ESPN+ app, which retails for $4.99 a month. 

III. Challenges with Streaming

Ironically, one of the stated reasons why Top Rank head Bob Arum switched from HBO to ESPN is that the latter had far more eyeballs. HBO is available in roughly 30 million homes while ESPN is available in an estimated 85-87 million (this number continues to shrink, more on this later). Yet, many of Top Rank's broadcasts as part of the new deal will appear only via ESPN+, which has only a fraction of the number of users/viewers that HBO does. On June 9th, one of Top Rank's signature boxers, Terence Crawford, will fight Jeff Horn and the bout will be broadcasted exclusively via the ESPN+ app. Certainly this is the type of matchup that Top Rank and ESPN think will drive new users to the app.

However, it seems unlikely that the winner of Crawford-Horn will see his profile rise significantly in the sport, because he won't be fighting in front of many viewers. According to a number of recent surveys that I've read, the average TV age for boxing in America is estimated between 47 and 50 years old. You can bet that many of HBO's core 0.9-1.2 million boxing subscribers will not be registered on ESPN+ by June 9th. So even if Crawford or Horn should look great, who will be watching and how does fighting in front of fewer people increase the demand for their services?

Photo courtesy of Mikey Williams/Top Rank

One initial challenge with the switch to streaming services, also called OTT (over-the-top) platforms, is the disruption of routine for boxing fans. Generations of boxing enthusiasts have become accustomed to watching fights on their TV. Find the channel, find the time and voila! Now there are extra steps involved to watch OTT content on a television. A user needs high speed internet access, a fire stick or a Roku player, a TV with an HDMI input (which most have), some wires, which function as adapters, and the technical knowhow to synch everything up properly. For many conversant with newer technologies and OTT, this process may not sound onerous or cumbersome, but there certainly will be some who determine that it's not worth the hassle, or at least not yet. 

For many, boxing is a communal event, to be enjoyed with family and friends. Watching a fight on a phone or via tablet just doesn't have the same convivial spirit. Boxing is often passed down from father to son or from grandfather to grandson; it would be a shame if there's a breach in that lineage because of technology and how the sport ultimately gets consumed.

Another issue with the switch to OTT is the inability of casual sports fans to find premium boxing content on their TV. We all have flipped through channels and stumbled upon a good fight, and kept watching. These moments created positive associations with the sport. For non-boxing fans, these positive associations can help lead to a more consistent following of the sport – the creation of new boxing enthusiasts. Although there will still be boxing content on TV in the existing media landscape, more higher-profile fights – the types of matchups that create new fans – won’t be as readily accessible as it was before. This is a negative consequence of OTT, an increased difficulty in attracting new boxing supporters.

But at least ESPN has the scroll on the bottom of the screen and many platforms to announce upcoming boxing programming. ESPN is a trusted entity in sports and the goodwill that the network has built up over the previous generations will at least confer some legitimacy upon the ESPN+ app. 

DAZN enters the market with zero brand awareness in the U.S. No one in the country has the service. Hearn will need to unfurl a massive ad spend to raise awareness of DAZN and his boxing content. This would be a significant undertaking for any boxing promoter, but consider that Hearn is a relative novice in the American media market; in publicizing his fights and the DAZN steaming service, he will make missteps, which is natural for any startup venture. There's no blueprint for how this could work so there will be a lot of trial-and-error, which will lead to millions in capital that will be poorly allocated.  

IV. Cord Cutting and Chasing the Next Generation

In 2011, the flagship ESPN network was in 100 million homes. The number is now somewhere between 85-87 million. With the steady rise of cable bills and the changing consumption habits of younger generations, more and more people have opted to forego cable. In the industry, these consumers are called cord cutters. Many cord cutters pay for streaming services like Hulu, HBO Go or Amazon Prime and the total that they spend works out to a significant monthly savings. 

For decades, cable companies have resisted the notion of skinny bundles of channels or a la carte cable, whereby consumers have more choice in which stations they receive. The fear for the more expensive basic channels like ESPN is that consumers would reject the station's per-month fee if they knew how much of their cable bill went towards the network. For smaller channels, they believe that they would never gain exposure if they weren't part of a larger cable bundle.

Thus, a consensus emerged in the cable industry to keep the standard package at hundreds of channels. Everyone made out well – networks, advertisers, cable companies – everyone except the consumers, whose monthly bills to the cable company zoomed past $100 dollars and even beyond $200 once high speed internet and premium channels were included. Eventually something had to give.

Courtesy of Mikey Williams/Top Rank

If ESPN, one of the most popular channels in the U.S., can lose 15% of its subscriber base in a few short years, then no channel is safe from the realities of cord cutting. Stations have been partnering with OTT services or creating their own to ensure that their programming remains available for cord cutters. In short, it's easy to see why there's so much fear in the industry. Unfortunately for the industry's sake, cord cutters are able to buy homes and reproduce. In time, more and more homes will reject cable. At a certain point, the existing model that has sustained the cable TV industry will collapse. There won't be enough subscribers paying full retail prices to maintain the existing cable paradigm made up of large bundles of channels with healthy per-subscriber fees and ad revenue for the major networks.

With all of that said, it seems odd that ESPN has the tail wagging the dog here. By forcing hardcore boxing fans to its OTT service to (legally) watch specific high-profile fights, it's directing eyeballs away from its linear network. Business Insider estimated in 2017 that $7.31 of every cable monthly cable bill went to ESPN (estimates now put this number for all the ESPN channels at closer to $9 per month). As of now there will be a number of ESPN+ subscribers who will pay for both the ESPN linear channels and the app. But eventually there will also be millions more who will cord cut. Of course ESPN could eventually raise its monthly rate for the app, but this smacks of an incentive structure that is designed to tread water at best. By encouraging more people to leave its linear network, ESPN hopes that it can somehow retain them as future users of their app, for less money than they are making off their consumers now. It's a strange business case. 

There are still 85 million ESPN viewers and a fraction of them have ESPN+, yet why is the network in such a hurry to ditch the power of its linear channel programming base? 

V. Challenges Attracting Fighters

Fighters want get paid, but they also want to be seen. Certainly there will be a few high-profile boxers who will join with Hearn for big paydays on DAZN. I'm sure that there are PBC fighters who are unhappy with the trajectories of their careers, how much they are making per fight and their activity level. Hearn is promising at least three bouts a year for name fighters; that and hefty purses are attractive plums.

But there are significant risks for those considering the jump. 1. Who will be watching their fights? 2. What type of opponents will they face? 3. Will they be frozen out against fighters who regularly appear on Showtime, HBO or ESPN?

At first there won't be a critical mass of users for DAZN. Fighters taking the leap to DAZN will face a similar problem that Crawford does with the Horn bout. It's all well and good to make real money but if top boxers are fighting in front of far fewer eyeballs, then their career momentum will stall. Yes, Hearn's money will provide a level of security but if the goal is to become the best, and to fight the best, will Hearn and DAZN allow those eventualities to happen? Is Hearn tied more to his fighters or his streaming deal?

Can Hearn guarantee top opponents? I'm sure that he will work the rankings organizations to get title opportunities. He'll find fighters within the Top-15 of a ranking organization to maintain a title run for one of his boxers. But can he provide the right opponents so his fighters can see their careers progress? If the best opponent he can find is the #14 guy in the WBA, who toils in the relative obscurity of Hungary or Ghana, then is he really moving his boxers forward? No one wants to see top fighters against soft opposition, a scenario that doesn't benefit the sport, and one that certainly could happen, especially over the first few years of the DAZN deal. 

In addition, will Hearn's fighters be contractually bound to DAZN? Will they be allowed to appear on other networks for unification or other major bouts? 

VI. Hearn and Building an American Brand

Top Rank enjoys several advantages over Matchroom in the American market. The company has a proud tradition of building fighters in the U.S. With boxing executives like Bruce Trampler, Brad Goodman and Carl Moretti, the company has decades of experience in signing and developing American boxing talent. And while Top Rank faces significant challenges in attracting fight fans to the ESPN app, at least it has a track record of putting butts in the seats and a successful blueprint for turning talented boxers into stars.

Despite the announced eight-year time horizon of the DAZN deal, Hearn seems primarily concerned with the initial two guaranteed years. According to a source in the industry who has viewed four Hearn/DAZN fighter contracts, each contract has terms for three bouts over an 18-month duration. It's surprising that Hearn isn't dangling longer-term deals at this moment, especially when he's going to require a leap of faith for his initial batch of DAZN boxers. Certainly he faces pressure to build an attractive stable of recognizable American fighters in order to drive subscriptions, but is he also planning for success? What is his blueprint for years three, four and five? 

At a minimum, if Hearn only broadcasts two significant bouts per show as part of his 16-fight deal, he will have 64 fighter slots over a calendar year. He will need to sign 12-15 American or American-based fighters to help fill that inventory.  Sure he'll poach a few from Haymon or others and integrate a few of his British boxers into his American shows, but for Hearn to have a successful eight-year run, he's going to have to introduce new talent, and he can't count on the low-hanging fruit of disgruntled fighters from other stables; Hearn will need to develop from within to maintain a viable series.

Although Hearn is a familiar figure in America to hardcore boxing fans, he isn't a known commodity to the fighters, trainers, managers and gym owners that populate the U.S. boxing scene – those who help to create talent pipelines within a given market. Everyone in the industry is familiar with Top Rank. Golden Boy has significant visibility and name recognition in America. Hearn doesn't have any of those brand advantages. For Matchroom to build and develop an American stable, the company will need to be present in many regions of the country, stage fights throughout America, sign fighters out of the bustling gyms of Southern California and Texas, and attract top U.S. amateur talent. 

In order to attract top American fighters, Hearn will have to build out his executive roster, and he has already started by adding a former RocNation and Banner Promotions executive, Josh Roy, as Director of U.S. Operations. For the DAZN deal to work Hearn needs to acquire more expertise in the American market, specifically for staging and promoting successful events, marketing and media relations, matchmaking, building shoulder programming, and gaining access to key stakeholders. 

Hearn could conceivably go in a number of directions to add to Matchroom's presence and reach in America. Perhaps he makes a deal to buy Main Events' stable outright, offering Kathy Duva a piece of the action. Maybe Hearn breaks bread with Lou DiBella, who certainly knowns the boxing business as well as anyone in the U.S. It would be wise for Hearn to contact international talent scouts/managers such as Sean Gibbons and Samson Lewkowicz to see if they can somehow be brought into the fold. Certainly there are disgruntled employees at HBO that he could poach. In addition to acquiring attractive boxing talent for his launch, Hearn is going to have to make bold moves behind the scenes as well.

VII. Will OTT be a Good Move for American Boxing? 

What I'm most interested in is whether the ESPN+ and DAZN platforms will be additive for American boxing. That is, will these new platforms help grow the sport? Sixteen shows a year from DAZN, 24 from Top Rank and a bustling Showtime Boxing program means that there is the potential for more high-quality fights in America than there have been in recent years. But that's not a certainly. This scenario could also be a mere rearranging of the deck chairs, whereby some fighters change their promoters but the sport as a whole remains at its current level. 

Hearn has been successful in growing boxing in the U.K. Anthony Joshua has sold well over 200,000 tickets in his last three fights. Hearn has wisely brought boxing to areas throughout the U.K, from London to Manchester to Hull to Birmingham to Sheffield to Cardiff to Glasgow. He has adapted savvy production elements in the staging of his big fights. The atmospheres he builds at his U.K. live shows are terrific. He has helped to cultivate a new generation of boxing fans. 

For Hearn's DAZN deal to succeed, he needs to present memorable matches with fighters that boxing fans care about. He's must create shoulder programming that builds up his fighters and major boxing events. He's going to have to brand his programming with the U.S. boxing public, so that his fights will be able to stand out in the crowded boxing marketplace. As he did in Britain, he must take his show on the road. He needs to hit up cities in the U.S. that have lots of boxing fans but have been underserved with live events, in places like Chicago, Boston, Atlanta, Orlando, New Orleans, Kansas City and San Francisco, to name a few. 

Ultimately, it's important to remember that a good deal for Top Rank or Hearn doesn't guarantee that their respective deals will be beneficial for American boxing as a whole. Top Rank found a home for its fighters as HBO continued to slash its boxing budget and commitment to the sport. I wouldn't say that the ESPN deal was a life preserver for the company – Top Rank would have eventually found another deal – but ESPN certainly provided the company with a safe harbor. 

One former boxing television executive told me that the Top Rank-ESPN deal is great for Bob Arum's grandkids. Meaning, that there won't be an immediate financial windfall for the company, but over time, as more consumers turn to streaming for content, Top Rank could potentially do very well. ESPN has the brand awareness and corporate commitment to become the number-one sports streaming site. Disney (ESPN's corporate parent) can afford to write off app-associated losses and survive lost revenue during the transition to content streaming. The company is viewing the rise of OTT through a long-term time horizon and Top Rank, perhaps the most stable U.S. boxing promotional company, is following suit. 

Win or lose, Hearn still has a strong base of support in the U.K. and the backing of Sky (his U.K. broadcasting partner). He will continue to promote 16 shows a year in Britain, irrespective of the success of the DAZN deal. But will Hearn remain committed to growing the sport in the U.S. if the first few years of the DAZN deal aren't successful, or will he merely cut his losses and return to England? Is he committed to the American market for good? I'm sure that's a question that many fighters will be asking him over the next few months. 

I'm happy that the DAZN deal will lead to several fighters getting paid far better than they currently are. Boxers have short windows to earn money. Making $3 million a fight instead of $1 million is life changing money for almost all. In addition, it was clear from the previous attempts of RocNation to sign PBC fighters that many of Haymon's top boxers were underpaid relative to what the market would bear. I hope that Hearn's entrance into the U.S. will force competing entities to increase their fighters' purses. 

Ultimately, the success of the Top Rank-ESPN and Hearn-DAZN deals will be predicated upon meaningful fights between top talents. The television product must be strong. Fans have to want to buy tickets to these events or commit to viewing the content via OTT platforms. On paper, there doesn't seem to be enough stars in the U.S. boxing market for all of the big players (Hearn, Top Rank, Haymon and HBO) to succeed. New talent must be identified, supported and built for the sport to grow.

Significant capital has been put into play to bet on the future of American boxing. Certainly this is a positive for the sport as several outside groups believe that boxing is worthy of investment. One wouldn't expect all of these boxing models to work; there will be winners and losers. 

American boxing needs one of these big bets to pay off. Over $500M was spent in PBC's attempt to grow boxing in the American market and that model did not succeed. Streaming presents a new frontier for the sport. Will American boxing be successful in attracting new fans via OTT, or are these ventures another link in the nearly unbroken chain of the sport's decline from mainstream to niche? It will be fascinating to watch the machinations of the key players over the next several years, but ultimately, it's most important that one of them succeeds.  

Adam Abramowitz is the founder and head writer of saturdaynightboxing.com
He's a member of Ring Magazine's Ring Ratings Panel and a Board Member for the Transnational Boxing Rankings Board. 
Email: saturdaynightboxing@hotmail.com.
snboxing on twitter. SN Boxing on Facebook.