*This article was originally written around 10 years ago and was published on Undisputed Champions Network. While much has changed in the business of boxing since then, so much has remained the same.
The Pitfalls Of Being A Promoter
By: John Lepak
I walked away from the world of boxing several years ago on my own terms. After around 20 years riding the roller coaster, two pieces of advice stick with me to this very day. The first came from the late trainer Emanuel Steward, as he put it “You might as well go on and have you one pro fight and get it out of your system so you can hang a nice picture on your wall.” By that time I had already spent several years under Steward’s wing handling various tasks from his managing his office to assisting him in training camps for legends like Hearns, Chavez & Lewis, but he was right… that photo hangs on my office wall to this very day.
The second came at a weigh in before a USA Tuesday Night Fight. When the time came for me to take flight on my own and venture into the boxing business, it was promoter Bill Kozerski (Fight Night Inc.) who showed me the ins and outs of how the boxing business truly worked. While I shall be forever grateful to Bill, I sometimes wish I had listened to his long time matchmaker Tom Vacca at that weigh in when said; “If you want to get in the boxing business, you would be better off just buying a plane ticket and a ringside seat to any fight you ever want to go see. That way you will come out ahead.”
Revenues being reported in boxing being reported these days are at all time high. From $100 million dollar plus PPV blockbusters to enormous live gates and $32+ million dollar purses for Floyd “Money” Mayweather, it sure seems like a Bull Market. For many active in the boxing business in what was once the “middle class” and especially those in the lower ranks it might be more like a Bull S#%! market. One of the most common misconceptions in the business of boxing today is that people believe that being a Promoter is a road to quick riches.
You have to go back 20 years ago to a time when being a Promoter gave you a great deal of flexibility in boxing, and the potential was there for great financial rewards. It was an era when the business of TV boxing was still booming and you could develop boxers at a minimal risk (because TV cards where very common and fighters purses were supported by the monies being paid for TV friendly fighters). Back then a Promoter commonly developed marginally talented boxers to a “20-0 sensation”- and they could count on getting a payoff in the boxer’s first big test fight. If he lost, the Promoter made decent money – if he won it was all gravy moving forward.
It was a time when managers then did all the day to day “work” of developing a fighter. They shouldered all the responsibility for coordinating training, they shelled out regular money to keep a fighter moving on a daily basis, provided any signing bonuses required and they were very active going to boxing conventions and taking part in all the other things necessary to get boxers rated.
Much has changed since the days of the Network TV boxing boom and being a boxing promoter is a very expensive and risky venture. Long gone are the glory days when fights were broadcast weekly on USA network, ABC and CBS. ESPN is still active with its coverage, but it pays a fraction of what USA did. The boxing programming on FOX while much needed for the sport, is hardly producing the next “Ray Mancini”. NBC laced up the gloves again in recent years and began broadcasting a select number of fights, but the financial package and promotional power that was featured on the network in the 1980’s and 90’s is no where near comparable. I am not active in the boxing business these days and not sure what ShoBox is paying, but from what I read from time to time, it sure does seem a lot less than what ESPN paid during the boom years.
In today’s market a Promoter who is trying to build a prospect into a star can expect to be in the “red” during the time frame it takes for the fighter to develop into a quality fighter – and after he wins a few big fights, in most cases, even after he wins a world title (and let’s not forget the fighter must pass tough tests in the ring and remain loyal to the Promoter during this time). If the fighter can gain the interest of a cable television giant, win and then defend a world championship, finally the Promoter can make their first ROI.
While the market for club fights has shrunken drastically (part because of the new popularity of MMA promotions across the country), a key to success for today’s Promoter is they must work in volume, if they hope to get enough quality boxers to get regular business from the major TV entities – while not losing too much money on shows that develop those quality boxers. This means keeping boxers active so they grow as prospects, not having matchmakers feeding them cannon fodder to only end up serving them up as 20-0 “opponents”.
Back in the 1990’s when there was still a thriving middle class among boxing Promoters, I am reminded of Cedric Kushner Promotions and America Presents (the one time creation of late Dan Goossen) that worked perhaps harder than any other promotional company at creating the next “stars” of boxing. CKP during that time was pushed into practical “insolvency” by promoting two boxing series they created to manufactor “quality” boxers. The CKP series Heavyweight Explosion, depending on who your sources were, lost between $10,000 and $50,000 a show for years. The series Thunderbox was said to have lost over $1,000,000. On top of this, the changing nature of TV boxing discussed above, did not let them recover any of these losses in the bigger bouts they put their boxers in.
It is almost forgotten that it was CKP that promoted “Sugar” Shane Mosley early in his career and brought him to the point where he was a budding television star. Around that time I remember the boxing grapevine was talking about how Mosley made $2M on a television bout and CKP was lucky to have made $200K because Mosley threatened that he would leave Kushner if he didn’t give him practically all the money regardless of what their contract said. At the end of the day, Mosley ended up leaving CKP and Kushner was lucky to be left at “break-even” for all the time and money CKP had invested. While CKP was left with broken dreams of promoting the next boxing superstar, Mosley and his management went on to make millions of dollars and deal directly with HBO, Top Rank and Golden Boy Promotions. After years of being a powerful player in the boxing business, CKP was hearing the ref giving the 10 count.
America Presents burst on the scene and made a huge splash into the promotional business when they signed 1996 Olympian David Reid and launched a long-term boxing program with FOX SPORTS. Several years later despite building a stable that consisted of several contenders and world champions – all they had to show was an estimated $13-18,000,000 in losses according to sources. Despite having a TV deal with FOX, multiple promotions on major networks like HBO and PPV, America Presents never turned profits and eventually closed up shop.
Once upon a time the Los Angeles Forum had an in-house promotional company formed by multimillionaire Laker owner Jerry Buss and New York’s Madison Square Garden also had a successful in-house boxing department, both of which were also shut down.
Don King’s flamboyant personality and well documented story of rags to riches made many people believe they too could become a player in the boxing business just like the “Only In America” man had done. The reality is King and his rival Bob Arum had established their control of the top of the business with Muhammad Ali in the 70’s, which led to their dominance of the TV Networks and “Big Fights” of the 80’s and the 90’s. Don King was all but counted out until he recently ended up with a part of the WBC heavyweight championship back in his stable but it is clear to all, King is no longer a player in the business of boxing. Bob Arum’s Top Rank has been able to remain one of the most powerful forces in the boxing business but even they may occasionally lose money in the risky business of boxing. The big difference between a powerhouse like Top Rank and an up-and-coming Promoter is they are able to sustain these losses because of their overall strength and the new-comers are left trying to figure out why the “walk up” did not do as well as they had planned.
Even starting out a small promotional outfit requires a tremendous investment. It is very common today that Promoters are often left in the “Red” at the end of the night after promoting a show. The term Co-Promotion is commonly used in boxing, but it has many meanings. For the up and coming Promoter who dreams of being a player in world of boxing often ends up making an investment in the form of a “site fee” to become a Co-Promoter and they end up bringing in a televised card that had no place to go in the first place. To the small time Promoter it is going to be their ticket to the bright lights and big money, but sadly many realize on Sunday morning that the circus has packed up and left town and the circus will only return if they are willing to shell out another site fee. Being a successful Promoter takes a lot more than just “putting on shows”.
If you have been blinded by the bright lights of boxing and are considering being a Promoter, you might want to reconsider and think about becoming a Manager. As a Manager you have the freedom to pick and choose which Promoter you wish to do business with and you also have the luxury of dealing direct with such networks as HBO and Showtime.
The below is an example is what a Promoter would invest to develop a solid “C to B” level boxer. This could be a boxer who was not an Olympian but rather a Golden Gloves Champion.
Purse Money Paid by Promoter to Boxer:
Bout #1-6 4 Rounds $1,000 each = $6,000
Bout #7-9 6 Rounds $2,000 each = $9,000
Bout #10-11 8 Rounds $3,000 each = $6,000
Bout #12-13 10 Rounds $5,000 each = $10,000
Bout #14-15 10 Rounds $7,500 each = $15,000
Paid to Boxer: $46,000
At this point, boxer should be ready for “top 20” World Ranking, and featured spot on a TV card, at which point he would face his first true test. This “test” would ideally be the type of fight that could be a main or co-main event on Fox Sports1, ESPN2 or ShoBox. If the fighter loses this test, his value is reduced dramatically, and the cost of bringing him back to the same point becomes the responsibility of the Promoter. This is why it very important for up and coming promoters to understand the importance of quality matchmaking to build a contender and not a pretender.
Now lets revenue financial distributions to date:
Promoter: Most likely a loss because of the requirement to guarantee the above activity.
Manager: Management share of the boxer purse money is 33 1/3% (maximum by law), less training equipment and other miscellaneous costs – approximately $13,000.
Now based on the scenario above, if a boxer is exposed as not being “Contender” material, the Promoter has lost money (and has to decide based on the loss if he wants to continue the investment), and on the other hand, the Manager has been “paid” $13,000 by the Promoter’s financial distributions. The Manager can look forward now to managing a real prospect and with that comes real pay days while the Promoter must continue to invest as the stakes are higher and most likely enter into a Co-Promotional deal lets say with one of those people they did a “site fee” deal with earlier on.
By the time the boxers big PPV fight happens, the Promoter’s share is usually capped at 20% of gross revenue (still less than Managers 33 1/3% of the net) – but often lowered to as little as 10% (During the height of former Heavyweight Champion Lennox Lewis’ reign his promoter Main Events, made in the area of 7.5%, while his Manager [until he to was sued by Lewis] was taking 1/3. Even trainer Emanuel Steward was on a small single digit percentage and not the traditional 10% paid in the earlier years.
Example:
Gross Purse $10,000,000
Promoter 20% (this would most Likely be reduced by now) $ 2,000,000
__________
Net Purse $ 8,000,000
MANAGER’S SHARE: $ 2,400,000
This assumes the ideal situation. In the “real world” likelihood that the original Promoter will be forced out long before the fighter reaches this level and would not even be involved in a Co-Promotional partnership.
To bring this story back full circle, it reminds me of when Cedric Kushner Promotions lost control of Hasim Rahman immediately after he won the most lucrative title in all of boxing at the time, the Heavyweight Championship of The World when he upset Lennox Lewis. If memory serves me correctly, at the time CKP was in the “red” over $200,000 with Rahman when the “luck” of getting a shot against Lewis occurred. CKP was reported to be making around $300,000 on the Lewis/Rahman bout while Rahman and his manager would make $1,200,000. After many years of effort, CKP would net approximately $100,000 coming out of the Lewis fight. CKP’s “payoff” was to come if he beat Lewis. Rahman pulled off one of the biggest upsets in modern heavyweight boxing history and CKP’s “payoff” came in the form of a lawsuit from Rahman and what was said to be around $500,000 in legal fees – AND he lost the case. Meanwhile both Rahman and his Management Team went on to make millions in his rematch with Lewis, and bouts versus Evander Holyfield among others for several more to come for years after.