Mayweather-McGregor: Economics of the fight

LAS VEGAS – A week before his first UFC bout, Conor McGregor cashed a social welfare check in Ireland for 180 euros.

On Aug. 26 at T-Mobile Arena – four years, four months and 21 days since his UFC debut against Marcus Brimage on April 6, 2013, in Stockholm, Sweden – McGregor will fight once again.

And this time, the checks he’ll be cashing will have many zeroes at the end. When the UFC lightweight champion boxes the undefeated Floyd Mayweather in what will be one of the three biggest one-night financial hauls in sports history, he’ll make more money in one night than he’s made in his entire professional career.

“It’s the biggest event ever in combat sports,” UFC president Dana White said. “[There is] crazy, record-breaking [expletive] going on already.”

The fight is expected to surpass the pay-per-view record of 4.6 million sales set in 2015 when Mayweather fought Filipino superstar Manny Pacquiao, a fight that had first been discussed in late 2009.

At $100 per unit, the pay-per-view could generate more than $500 million in pay-per-view revenue. Ticket sales figure to top out just under $90 million, surpassing the record of $72.2 million set in 2015 by Mayweather-Pacquiao. The largest gate McGregor has been involved with was $17.7 million, set on Nov. 5 at UFC 205 in New York, when McGregor knocked out Eddie Alvarez to win the lightweight belt.

McGregor already owns six of the eight largest gates in mixed martial arts history, but the combined total of those five events (No. 1: UFC 205; No. 4: UFC 194; No. 5: UFC 196; No. 6: UFC 202; and No. 7: UFC 189) is $50.9 million.

International broadcast rights could reach as much as $100 million, though that may be a bit optimistic. Sponsorships for the fight – which, bizarrely, have yet to be announced and thus hasn’t allowed the kind of branding seen on other major sporting events – could hit $20 million.

It all combined to mean that Mayweather and McGregor are going to make a lot of money, in excess of $100 million each. McGregor’s manager, Audie Attar, said $100 million “is a good number” to use when trying to estimate McGregor’s final purse.

Like Mayweather, McGregor will earn from every dollar spent on the fight. A portion of every ticket or pay-per-view purchased, every hot dog consumed or beer drunk, every T-shirt sold, will wind up in the pockets of the two fighters.

McGregor said he is “winning the promotion” of the event and that it will all lead to significant money down the line.

“Who’s winning the promotion? If it ain’t me, what’s going on?” McGregor said. “If it ain’t for me scheduling full-on fights in the gym for you all to talk about and debate or my skill set or my approach, it’s just Floyd at a roller disco. Or it’s just Floyd at the Gucci store. You know what I mean? I’m the one bringing this all the way home. I’m the one on that world tour who went viral. I went viral multiple times on that world tour: The [expletive]-you suit, the mink coat, the money … even he tried to throw the money and I went viral because it was like it was raining money above me. It’s been all me.

“And I will collect every single dollar of this. I am in on everything: The food and beverage, the gate, the pay-per-view, the whole lot. When this fight is done, I will sit back and I will collect my show money and then I’ll go start counting everything else.”

Mayweather collected a guarantee of $100 million after the Pacquiao fight. When the news conference after that fight ended, Mayweather yelled to me to approach him. He then opened an envelope to show a $100 million check drawn on a Bank of America account. He expects to collect a larger guarantee for this fight.

Neither Mayweather nor McGregor’s guarantee is publicly known. Leonard Ellerbe, the CEO of Mayweather Promotions, said the figure won’t be revealed until Aug. 25 at the weigh-in. Attar told Yahoo Sports that he could not reveal the guarantee but said it would be “extraordinary.” A source said McGregor’s guarantee would be in the $50 million range.

Understanding how much the fighters will walk away with when the accounting is finished is difficult for several reasons, including that much of their income is on the come. The more tickets that are sold, the more the fighters will make; the more pay-per-view buys that are purchased, the better their bottom line will be.

There are three deals that are key to understanding in order to accurately determine the amount the fighters could make, and none of them are public knowledge.

The first is how the overall revenue will be split by Mayweather, his company Mayweather Promotions and his adviser, Al Haymon, on one side and McGregor and the UFC on the other.

A source told Yahoo Sports that a 60-40 split on the revenue made after expenses in Mayweather’s favor “is a good guess,” but there is no way to know that precisely without seeing the contract.

The second deal is the terms the UFC and McGregor made on how to split their share of the net revenues. McGregor’s UFC contract forbids him from doing other sports, but he negotiated a deal with the UFC to allow him to box Mayweather.

All sides in the deal – Mayweather, McGregor, Haymon and the UFC – stand to make upside from the fight, meaning income from the pay-per-view sales.

The third deal is the one negotiated between the promotion itself and the cable and satellite distributors. In a normal boxing model, out of every $100 generated from pay-per-view, $50 would go to the cable and satellite companies and $50 to the promotion.

Then, out of the promotion’s $50, it would have to pay another $7.50 to the television network producing the pay-per-view, usually Showtime, as in this case, or HBO. That means that in a normal situation, the promotion would net $42.50 out of every $100 in PPV sales. Out of that $42.50, on a 60-40 split, the Mayweather side would get $25.50 for every $100 sold and the McGregor side would get $17.

Given the significance of the event, there is a chance that better terms were negotiated with the cable and satellite companies and with Showtime, though that is not known.

But under the standard terms, five million pay-per-view sales would result in $500 million gross revenue. The Mayweather side would under the formula above net $127.5 million, while the McGregor side would get $85 million.

But there will be several hundred million more in additional revenues for them to divvy up, after expenses. If we assume that the fight does $100 million from international broadcast rights, $20 million from sponsors, $85 million from the paid gate and $5 million from merchandising, that’s another $210 million. The only other major revenue source would be concessions on fight night.

If the fight attracts 20,000 fans to T-Mobile and each fan spends an average of $50 on the night of the fight, that accounts for another $1 million.

If we take off $25 million for expenses, that would cut that figure to $186 million. The Mayweather side’s 60 percent of that would be $111.6 million, while the McGregor side’s 40 percent comes out to be $74.4 million.

For the Mayweather side, adding the $127.5 million in U.S. pay-per-view money to the $111.6 million from other sources, and his side is divvying up $239.1 million. McGregor’s side would add the $85 million in pay-per-view to the $74.4 million in other revenues, meaning it would make $159.4 million.

That accounts to $398.5 million in profit for the two sides.

Those numbers, of course, can fluctuate depending upon the deals that were struck between the sides as well as how well the fight performs.

One boxing person familiar with the mechanics of a pay-per-view show told Yahoo Sports he expects a massive sale PPV buy but isn’t, for example, as certain that the paid gate will be as high as projected.

Tickets are priced as high as $10,000.

“The people you are talking about who would get a $10,000 ticket to this thing, most of them are going to be on a yacht in the south of France on fight night,” he said.

Talk, though, that ticket sales were slow irritated Ellerbe. He noted that a Sept. 16 pay-per-view bout between Canelo Alvarez and Gennady Golovkin would, at best, have less than a third of the total ticket revenue for Mayweather-McGregor.

He alleged that promoter Oscar De La Hoya of Golden Boy Promotions pulled back thousands of tickets in order to announce that Alvarez-Golovkin had sold out before Mayweather-McGregor when, he insisted, that isn’t true.

“I’m actual tired of hearing that question [about ticket sales] because right now, we have over $60 million in the box office,” Ellerbe said last week at Mayweather’s media day workout in Las Vegas. “You tell me what part of that makes you think ticket sales are slow. This isn’t a damn Rolling Stones concert. That’s the only thing that sells out in seconds. And when you’re talking about tickets going for $5,000 or $10,000, that’s an expensive ticket. You have every CEO from every major company, but it takes time for them to plan and get it together. The fact of the matter is, we have $60 million, over $60 million, in the box office right now.

“That is more than double any other live gate [for a combat sports event] that has ever been done [except for Mayweather-Pacquiao]. The fight they have on Sept. 16, we’ve got more in the box office now, more than double what they’ll have in total.”

It seems safe to say both fighters will walk away with more than $100 million, and if the fight does even better than expected, the numbers could zoom up exponentially.

“Nobody is going to be standing down on the street corner looking for a hand-out,” Ellerbe said.

It’s almost certainly going to be Mayweather’s last fight, but Attar said McGregor will fight on. And though it’s a fair question to ask how the UFC will be able to pay him in the future after he walks away from his bout with Mayweather with more than $100 million, Attar doesn’t see a problem.

He said everyone has concentrated on making the Mayweather-McGregor bout a success and they aren’t necessarily focused on what is next.

“I don’t have that answer because we haven’t given it much thought as of this point, but I have faith that we’ll figure it out,” he said. “The UFC’s position in the past was that this fight wouldn’t ever happen. I think Dana said once that he’d be the starting quarterback for the Patriots before a fight with Mayweather ever happened, but here we are, less than two weeks away from the fight. It’s happening and I believe that like he said, Conor will fight again after this.

“Dana is a smart person, the other people at the UFC are smart and when the time is right, we’ll all get together and sit down and chat about it and put our brains together and figure out the best way forward. But, as it should be, all of the focus is on making this fight as big a success as possible.”

Podcast: Mayweather Promotions’ Leonard Ellerbe predicts a Floyd KO; Yahoo’s Dan Wetzel on hype

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