Macau’s “Clash in Cotai” might be a great fight, but a financial disappointment

November 22, 2013
November 22, 2013

Last year, the Chinese city of Macau earned $38 billion in gambling revenues, six times that of Las Vegas, thanks a massive and growing pool of avid Chinese gamblers. So it was only natural that Macau test out one of Las Vegas’ few remaining claims to fame: Big-ticket boxing.

On Sunday morning Macau time, Filipino welterweight Manny “Pacman” Pacquiao and American former world champion Brandon “Bam Bam” Rios will face off in what’s being billed as the “The Biggest Fight Ever in Asia” by the Macau Venetian, which is hosting the fight. The under-ticket features Chinese Olympic medalist Zou Shiming, who is expected to lure Chinese viewers to a sport once banned under Mao Zedong for its aggressive Western influence.

Publicity for the event has been steadily building for months, and this summer boxing enthusiasts estimated the match could generate as much as $500 million in revenue, thanks in part to pay-per-view sales to tens or hundreds of millions of homes in China that fight promoters predicted in April could bring in $3 to $5 a pop. Those figures are starting to look wildly optimistic. Less than 48 hours before the much-publicized match, tickets at the 15,000 seat Cotai Arena are still available, particularly in the $1,300-a-piece range. Hoped-for pay-per-view revenues from China have not materialized.

Promoter Bob Arum told the Wall Street Journal this week he still expects 200 million homes in China to tune in on Sunday. But they won’t be paying to see the match. Setting up pay-per-view in China, where state-run free-to-air channels predominate, was “more difficult than I thought,” Arum said. Top Rank hopes to sell $300,000 worth of ads during the fight broadcast instead.

The fight’s total costs have not been made public, but Pacquiao will pocket “a guaranteed $18 million with an upside closer to $30 million,” The New York Times reported today, and Arum’s firm Top Rank will take home a seven figure guarantee “believed to be $8 million.” Macau, despite its huge revenues from gambling, doesn’t have a history of betting big on sporting events, outside of the horse and greyhound races so its unclear what might be made in Macau’s casinos on the fights.

Despite the focus on a Chinese audience and Macau’s pull during the buildup, whether the fight is declared a success, financially, could hinge instead on how many viewers it gets in the US. It’s scheduled for the morning in Macau, so it will be broadcast live during prime time Saturday night in the US. Right now even the promoters have no idea how it will do.

“Conventional wisdom is that if you do a fight outside the U.S., you will adversely impact the number of pay-per-view buys,” Arum told ESPN recently. “But balancing that is that there is tremendous curiosity about an event in China,” he said. Will that curiosity help sales? “The answer is we’re not really sure,” Arum said.

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