Could The DAZN-Canelo Deal Lead To The Demise of PPV?

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https://www.boxingscene.com/dazn-canelo ... pv--132933
By Michael Rosenthal

Pay-per-view is the perfect business model for those involved but bad for boxing in general.

It allows the likes of Floyd Mayweather Jr., Manny Pacquiao and Canelo Alvarez to earn in one fight what the vast majority of us make in multiple lifetimes but, because of the exorbitant cost, the audience for their fights is limited.

Those fighters entice hardcore fans to lay out as much as $100 for their events but many would-be viewers won’t or can’t pay that kind of money, which locks out potential fans needed to grow the sport.

That’s why something promoter Eddie Hearn of Matchroom Boxing said in the wake of Alvarez’s monstrous deal with the subscription str3aming service DAZN caught my attention.

“I believe today, with this announcement, you will see the end of pay-per-view boxing in the U.S. over a period – not today,” Hearn said on Wednesday.

Will we?

As Hearn said, not today. Mayweather is talking about coming out of “retirement” again, possibly against UFC star Khabib Nurmagomedov. And Pacquiao reportedly will fight Adrien Broner in January, with an eye on a pay-per-view rematch with Mayweather.

Mayweather and Pacquiao are too old to sign a long term agreement like Alvarez’s – reportedly 11 fights for a minimum of $365 million, which is at least one of the richest deals in sports history. They are determined to make as much money as possible now, meaning pay-per-view is the best option for them.

Alvarez could’ve stayed with the business model that has worked well for him and continued to build obscene wealth but opted for DAZN because of obvious benefits:

1 - He’s guaranteed an average of more than $33 million per fight and he could earn more if subscription goals are met, which is at least comparable to what he has averaged the past several years.

2 - The length of the agreement had to be a strong incentive for the 28-year-old to sign on the dotted line, as it will guarantee him huge paydays well into his 30s even if he begins to decline for whatever reason unless the contract stipulates otherwise.

3 - And, as he and his team pointed out, he becomes part of the future of sports viewing – str3aming, as opposed to traditional television. HBO recently announced it would end its boxing programming.

For the fans, the deal provides access to Alvarez’s fights – and other combat sports events – for the DAZN subscription rate of $9 per month, considerably less than it costs to subscribe to HBO and Showtime.

Alvarez’s first fight for DAZN, against Rocky Fielding at super middleweight on December 15, will be free. That will give fans a taste of what they can expect from the service and, if Hearn and Co. have their way, get them to subscribe.

“That’s an early Christmas present for fight fans that on HBO … would’ve had to pay $84.99 for that Canelo pay-per-view fight,” said Hearn, who signed a lucrative deal with DAZN in May. “So (the) aim is to take boxing away from pay-per-view. Pay-per-view is a very important model in the U.K., where we’re from. But it’s $25 for a major fight. Eight-five dollars, a hundred dollars is so much money, and I think fight fans will embrace this move and embrace DAZN.”

Of course, there are risks and question marks for DAZN, Alvarez and fans.

DAZN, owned by London-based Perform Group, only recently entered the U.S. market and is just starting to build its subscriber base. Hearn is optimistic but there is no telling whether fans will “embrace DAZN” or how quickly. Alvarez will fight before relatively small audiences in the U.S. for a while, which isn’t exactly growing the sport in the short term.
And while DAZN has the financial backing to sign the likes of Alvarez and its other star, Anthony Joshua, the service will have to catch on in a big way domestically to fulfill its obligations to those fighters, sign other stars and remain viable long term.

Some knowledgeable observers are already questioning whether DAZN can maintain such lavish spending, which seems reasonable.

Of course, DAZN’s success or failure will depend in good part on the quality of the product. One pitfall of long term contracts with premium cable outlets has been a lack of motivation on the part of the fighter to face the best possible opponents. Why take the risk when paydays are guaranteed?

Alvarez has never shied away from tough fights but we’ll see how he operates under this deal. One thing is certain: Fans will let him know if he faces many more marginal foes like Fielding.

And where will the opponents come from? DAZN has just begun to build its stable of fighters, meaning most of the best fighters are aligned with other promotional outlets. That could make it difficult to put together compelling matchups, although you can bet Hearn is working long hours to make that happen.

This is obviously a work in progress. Other major players in boxing – including Premier Boxing Champions and Top Rank, who are aligned with television networks – are watching closely as DAZN and Hearn attempt to change the nature of viewing boxing. That might also be the case for other str3aming services that might be open to boxing programming.

If DAZN’s foray into boxing in the U.S. works, it seems reasonable to think that others will move the same direction. Top Rank already has on a smaller scale, showcasing some of its fighters on the subscription-based ESPN+.

For now, Mayweather (if he actually fights again) and Pacquiao will rely on pay-per-view. The same goes for other fighters who believe the established model will earn them the most money possible. Fights like Terence Crawford vs. Errol Spence and Mikey Garcia vs. Vasyl Lomachenko certainly would be pay-per-view events.

Hearn even admitted that Joshua vs. Deontay Wilder would likely end up as a joint pay-per-view event with Showtime because of the magnitude of the potential event. And don’t be shocked if DAZN also tweaks its business model – perhaps charging extra – the next time Alvarez is in a superfight.

Another potential problem not many are talking about relates to data usage. Some users could exceed their limit by str3aming regularly on DAZN, which could cost them extra money.

All that said, I think DAZN and Hearn have a chance to succeed in time, as they seem to be at the forefront of sports str3aming , they’re beginning to gain a foothold in the most important market in the world and they now have the two biggest moneymakers in the fold. That provides hope that pay-per-view will become a thing of the past one day.