When Floyd Mayweather appeared on the fifth season of ABC’s Dancing with the Stars in 2007, he was not only getting lessons from his professional dance partner. During breaks, he would often spend time with a fellow contestant, billionaire entrepreneur Mark Cuban,learning business strategies from one of the best in the game.
“He has always wanted to pick the brains of the billionaires,” recalls Leonard Ellerbe, CEO of Mayweather Promotions. “We would get lunch every day [with Cuban]. Everybody else spent their time going to various places to eat. [Mayweather] and I sat in the next trailer with Mark Cuban every day. That was just always his mindset.”
That same year, Mayweather, along with behind-the-scenes boxing powerbroker Al Haymon and business adviser Ellerbe, formed Mayweather Promotions. Since then, the company has generated more than $1 billion in pay-per-view revenues. Mayweather himself has netted more than $350 million; the five-division, undefeated world champion has become perhaps the most influential boxer of all time. According to Ellerbe, the company generated $110 million in revenues for 2013.
Mayweather never went to business school and may not know his way around an income statement or balance sheet. But what he lacks in nuts-and-bolts business fundamentals, he makes up for in team building.
“There’s a lot of smart businessmen around me. You can’t do it by yourself,” Mayweather says. “Bill Gates didn’t do it by himself. Donald Trump didn’t do it by himself. Trump, he got to a point where he just uses his name now. Hopefully, someday I can get to that point too, which I believe I can.”
So Mayweather brought together a winning management team. But he is the one who envisioned a business model that would allow him to be independent of promoters and gain the lion’s share for his fights.
“He wanted to make sure that he became the banker. He wanted to be his own boss,” says Ellerbe. Mayweather also wanted to have a diversified group of businesses and find different ways to market his brand to bring boxing into the mainstream. Ellerbe says there is no decision made without Mayweather’s approval.
With an understanding of the power of his brand, Mayweather Promotions and its 11-member staff have helped rewrite the blueprint for success in combat sports. Mayweather has nearly 7 million Twitter and Instagram followers, more than 4.1 million likes on Facebook, and a social networking team so that he is in constant contact with his fans. “It was created from a marketing perspective. Like All Access on Showtime, it’s another way to share what he is doing. He is in tune with his fans,” says Ellerbe. “He’s the face of everything we do.” And it is no secret, he’s making a lot of money in the process.
Mayweather headlines Black Enterprise’s look into the Most Influential African Americans in Sports with a list that includes front-office executives, league officials, and other game-changing athletes who have grown beyond the sport that made them famous.
The Mayweather Money Machine
Mayweather Promotions negotiates all deals for its promoted fighters (there are about a dozen in the company’s stable). This includes fees from the casino or arena hosting the fight and broadcasting rights with television networks. Mayweather Promotions, which is owned 100% by Mayweather, receives all revenues generated by these agreements and then subsequently pays fighters, other promoters (if it is a co-promotion), and additional expenses (operating costs toward the promotion) out of the monies generated. Ellerbe handles the operations, which include oversight of finance and accounting as well as day-to-day details of the company’s different portfolios (sports, entertainment, personal appearances, apparel, etc.), while Haymon has an advisory role but is involved in every business negotiation for fights as well as divisions of the company. The company often has six revenue streams per event: • Pay-per-view •Foreign sales (depending on how many other countries buy the fight) • Closed-circuit revenues (restaurants, bars nationwide, theaters) •Site revenue (ticket sales) •Merchandising •Sponsorships for fighters that fight under the Mayweather banner and Mayweather’s opponents, Mayweather Promotions pays a set purse. Mayweather’s opponents are also offered a possible upside based on the success of the pay-per-view event. These are the models that are making the most money, asserts Joe Favorito, director of industry relations for Columbia University’s Sports Management Program.
“Those are the global brands that you want to aspire to because they’ve been successful both as businesses and as properties, as individuals, but there are very few people that can get to that level.” Mayweather’s team, along with boxers such as Manuel Pacquiao and Oscar De La Hoya, has created a new model in which elite boxers (those with the power to drive ticket and pay-per-view sales) are taking the power (and money) from promoters by becoming promoters themselves. “I changed the model to where I’m now teaching fighters to have a mind of an employer instead of an employee,” says Mayweather. “I believe in the long run the fighters should win.” Case in point: Mayweather’s last fight, against Saul “Canelo” Alvarez, broke the all-time record for a pay-per-view event with 2.2 million buys and generated $150 million. Mayweather’s earnings for the September 2013 fight exceeded $80 million and are expected to reach more than $100 million when all monies are counted. Also for this fight Mayweather received a guaranteed purse of $41.5 million, the largest in boxing history.
“Before I got to this level, I think it was all about the heavyweights. Now, you very rarely see heavyweights fight on TV, or even if heavyweights are fighting on TV, they are no longer the main event,” says Mayweather. “Any weight class that I go to or that I’m around are the main weight classes in boxing.”
Mayweather Promotions has also been involved in live events unrelated to boxing.
“With our partner who has been the top concert promoter in the last 35 years, Al Haymon, we have promoted a number of concerts,” says Ellerbe. “A-listers from Beyoncé to Mary J. Blige to Chris Brown, Drake, and Lil Wayne.”
The Business of Boxing
In a landmark deal, Mayweather Promotions last year agreed to have its eponymous boxer fight for Showtime Networks six times over 30 months. The deal, with an estimated value of $200 million to $250 million, includes promotional tie-ins to CBS (Showtime’s parent company) entities including the NCAA Tournament and the Final Four. Mayweather also receives executive producer control of his own All Access show and a number of other incentives tied to the deal. So far, Mayweather has fought and won two of those six fights and racked up more than 3.3 million pay-per-view buys and more than $120 million in earnings.
“I’m extremely proud of my team,” Mayweather says. “As far as Mayweather Promotions, we are the past, the present, and the future of sports and entertainment.”
Story Courtesy of http://www.BLACKENTERPRISE.com