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McGregor’s payday just one part of sport’s cash-fuelled hype bubble

Amazon and other tech companies starting to buy up rights to major events

Given the hype and the excitement across Ireland last weekend, it would be astonishing if Sunday morning's big fight between Conor McGregor and Floyd Mayweather was not the most lucrative pay-per-view broadcast this country has ever seen. In fact, it will almost certainly break the world record for pay-per-view revenue. But will McGregor make as much money from the bout as some are predicting? And is this a once-in-a-career windfall or can we expect to see more such extravaganzas in the future?

Bigger paydays may await in other arenas – the US version of Dancing With the Stars has been mentioned – but the general view in the fight business is that McGregor will now return to UFC for a while with his status greatly enhanced, leading to bigger and better purses. However, that prize money would need to be multiplied by a factor of 10 or more to get anywhere near the sums he is estimated to have made this weekend.

What that exact figure will be depends on a number of variables, primarily pay-per-view sales, but also pricing structures in different countries, ticket sales in Las Vegas, sponsorship deals and merchandising.

Nevada State Athletic Commission confirmed on Friday night that the minimum each fighter would earn was $100 million for Mayweather and $30 million for McGregor. Mayweather's fight against Manny Pacquiao in 2015 got more than four million buyers, making it the number one grossing pay-per-view in history. Adding McGregor's mixed martial arts fan base, some believe, could have pushed that number to five million.


Fight purse

If the pay-per-view revenue just stayed in line with the Mayweather-Pacquiao bout, total revenues would exceed $500 million, with the fight purse worth around $300 million. If the higher projections are correct, the purse could be up to $390 million. A confidentiality agreement means the exact split between the two fighters will not be revealed. However, reports suggest the difference is either 70 to 30, or 75 to 25, in Mayweather’s favour.

Based on those numbers, a minimum payout of $230 million for Mayweather and $70 million for McGregor looks assured. Higher pay-per-view sales could push those figures a good deal higher.

Like Donald Trump in politics, mixed martial arts (MMA) itself is a classic example of an upstart product which would never have existed were it not for the technological disruption of the last decade. A recurring feature of that revolution has been the ever-increasing value of live events to a range of businesses which previously would have had no interest in buying sports rights.

A generation ago, major sports events were the preserve of a small number of terrestrial broadcasters in each territory, who would occasionally outbid each other in an attempt to gain market share. That still happens – witness TV3's successful wrenching of rugby's Six Nations away from its traditional home on RTÉ – but the arrival of satellite and cable services in the 1990s ushered in the subscription era, with much smaller audiences delivering much higher revenues.

Enticing customers

More recently, companies such as BT in the UK and Eir in Ireland have entered the sports rights market with the express purpose of enticing customers to purchase their bundled phone, broadband and cable TV services. And looming on the horizon are the tech giants, with their vast reserves of cash. In April, Amazon signed an agreement with the National Football League in the US to stream 10 Thursday-night American football games this season. It has also outbid Sky for the rights to the ATP professional tennis tour.

Head of Amazon Studios Roy Price told the Edinburgh international television festival last week that sport was a good opportunity for the company's video streaming service, leading some observers to predict Amazon could compete to win Premier League rights when the next auction launches next year.

“People love sports – it’s big, it’s engaging, it really motivates people, so I think that’s a good opportunity,” Price said. “I think it’s definitely an opportunity we’ll explore.”

Like BT and Eir, Amazon's strategy is not to make money directly from sports events but to use them to hook consumers into its main business – online retail. It seems inevitable that the likes of Google, Facebook and Apple will follow.

What does all this mean for the average viewer? With all these new entrants and so much money into the market, the picture is likely to become even more splintered and confusing. Consumers will surely balk at the prospect of paying separate subscription fees to four or five different sport services (alongside payments to the likes of Netflix and Sky Atlantic). Preliminary numbers from social media monitoring company VFT Solutions show there were more than 7,000 partial or full live streams of the Mayweather-McGregor fight via social media platforms, with roughly 100 million viewers.Unless some form of consolidation takes place, it will become even more attractive for people to stream illegally than to pay. In the meantime, though, the sports rights bubble will keep inflating, and the hype merchants will continue cashing in.