A Sure Winner Is Bob Arum, Who Bet Big on Technology

At New York’s Tavern on the Green, you can watch Monday night’s fight between Marvelous Marvin Hagler and Sugar Ray Leonard for $125. Sounds high.

“But I think you get two drinks and hors d’oeuvres,” reports Bob Arum, the fight’s promoter.

At other venues, though, it is possible to watch it for much less. At New York’s Radio City Music Hall, where there is room for 6,000, you can watch it for as little as $60.

Sound low?

“No hors d’oeuvres,” Arum believes.

Determined to avoid New York, and especially Las Vegas, where the $100 as well as the $700 seats at Caesars Palace sold out within 16 days, you can watch this fight at any number of arenas and clubs, at any number of ticket prices.

In Southern California, where pay per view is more readily available than in other parts of the country, you can even watch it in your living room via cable TV or SelecTV. That costs between $30 and $40. Hors d’oeuvres are up to you.

Enough of you will watch it somewhere to contribute to the record purses of the fighters, at least $23 million between them.

Arum has already collected a record $27 million, putting his promotion in the black and assuring the purses and other costs.

Enough of you will watch it somewhere, in fact, to make this the richest fight of all time, with a gross figure of $100 million--cherished for its roundness if not reality--being tossed about.

Now nobody, not even Arum, really expects this fight to reach the magic figure of $100 million. “It is not physically possible,” argues Leonard’s attorney and negotiator, Mike Trainer.

Nevertheless, this fight for the middleweight championship, between one dominant champion and one charismatic, if highly inactive contender, is going to produce more money than any fight in history and possibly heralds a new era of high-end promotions.

“A hundred million is possible,” argues Arum. “But what if we make just $80 (million)?”

He seems to suggest he’d still be happy, nearly doubling the previous record take of $46 million for the Larry Holmes-Gerry Cooney fight.

That this escalation is possible may have more to do with technical advances in the telecommunication industry than the special appeal of a Hagler-Leonard bout.

Amazingly, the most elemental of sports, following the lead of entrepreneurs such as Arum, has kept somewhat in step with the rest of the 20th Century.

Certainly boxing has come a long way since it depended on the live gate of Boyles Acres to assure the first $1-million fight.

The wireless may have contributed some money to those first fights and, in time, television as well ponied up cash to broaden the audience and deepen revenues.

And then closed-circuit TV, an awkward system that essentially multiplied live gates by turning arenas into vast living rooms, made mega-million fights possible.

But now satellite links have pushed boxing to another level of available audiences and, of course, riches. Boxing may look the same as it ever did, but really it’s a whole new ball game.

“It’s a tremendous technical revolution,” says Arum. “Prior to 1983, the TV signal was distributed by telephone long lines.”

Microwave links, those towers with the little dishes, were necessary to pass the signal along. This was fine except that it was costly. The closed-circuit exhibitor might have to pay $18,000 just to make the connection.

And, one more problem. The signal was not always available. Mountains and even buildings could rule out entire geographical areas.

“It was a bad system,” Arum says. “But the only system.”

Then, beginning in 1983, it became possible to use domestic satellites to beam a scrambled signal down to the earthly venues.

All an exhibitor needed was a decoder. That made every location under the sky a possible venue. And not just the huge halls that historically hosted the fight shows.

“When we used telephone lines some 450 locations could be serviced,” Arum says. “For this event, we have 1,600 locations. Everything from Madison Square Garden, which seats more than 18,000, to the Friars Club, which seats 300, to a ballroom for Goldman Sachs customers.”

Now your neighborhood tavern, as long as its not in Southern California, which is prevented from interfering with a possible rush of gamblers to Las Vegas in the contract negotiated by Caesars Palace, is suddenly a possible site.

The locations, now more comfortable and attractive than the normal auditorium, have multiplied. So, presumably, has attendance and resulting revenues.

All the promoter has to do is calculate the worth of that neighborhood tavern to his promotion--say the Downtown Athletic Club in New York, which was assessed a charge of $25,000--and hand out decoders. Now everybody’s an exhibitor.

Presumably this widens the potential audience. If everybody’s a potential exhibitor, everybody also is now a potential ticket buyer.

This phenomenon certainly has more impact where pay-per-view cable systems--the ability to “address” a signal to a ticket-buying homeowner--are less available.

Southern California, which represents about 30% of the nation’s pay-per-view audience, is the front line for the next technological advance. Never mind the neighborhood tavern. How about the neighbor?

In Southern California, where there may be nearly 800,000 pay-per-view homes, Arum is getting a record penetration of 22%.

At $30-$40 a buy, that’s about $3.4 million, according to Rick Kulis, president of Choice Channel, the co-promoter with Prime Ticket of the Southern California pay-per-view telecast.

Because of pay per view, the importance of closed-circuit locations in Southern California declines. Arum says the area is limited to about 25,000 seats. Why have more? Everybody’s crowding into the neighbor’s home, anyway.

As Arum bridges the two technological revolutions, he is careful to allot a mix of closed-circuit locations with pay-per-view. Locations where pay-per-view is not available are obviously allotted more closed-circuit venues. And vice versa.

Using these figures, Arum was able to come up with a $100-million gross, although in truth he is the only one to come up with it.

And to do so, he has relied mainly on the closed-circuit exhibitors to come up with fabulous guarantees.

Arum, dealing with between 40 and 45 exhibitors, each controlling an area the size of, say, Florida or Northern California, has argued that this fight will do better than any fight in history and thus will cost more than any fight in history.

Say, he insisted, you once brought in $800,000 for Hagler-Duran. You’ll do better, much better this time. And the location will now cost you $1 million.

“The guarantees obviously exceed what the areas have ever done,” Arum admits.

The New England area, for instance, was auctioned off for $1.4 million. Its previous price had been $700,000.

Of the previously mentioned and hypothetical $1 million, the exhibitor must set aside 55% for the promoter up front. Then it is up to him to sell enough seats in enough arenas in his location to make more than the $550,000 he has already sent Arum. In this example, he would probably have to sell $800,000 to break even.

Arum has already collected the guarantees--that’s where much of the $27 million figure comes from; $7 million comes from the site rites paid by Caesars Palace--to assure the success of the promotion.

The fighters will be paid their flat guarantees, $12 million for Hagler, $11 million for Leonard. On this level, the promotion is a success.

However, for the exhibitors, who have yet to earn anything until the actual tickets are sold, it could be another story.

There is a possibility that the exhibitors, over-anxious, have committed more than they can make back.

“It’s already the highest-netting fight of all time,” says Trainer. “But that doesn’t mean it’s the highest-grossing fight.”

In other words, the exhibitors could eat a lot of tickets whose sale they guaranteed.

There is good reason for disagreement over what kind of money this fight will generate.

The Hagler camp is in for a percentage. Leonard is not.

Hagler will earn 50% of each dollar put into the promotion between a net of $24-30 million, and 70% of each dollar thereafter.

“If we did $100 million gross, take in $55 (million), Hagler will make more than $30 (million),” Arum says.

Leonard, meanwhile, is standing on the same $11 million plus the promotional rites to closed-circuit in the Baltimore-D.C area.

“Now, don’t get me wrong, $11 million is a hell of a payday,” Arum says.

But the lingering impression is that Leonard and Trainer have been taken for suckers.

Trainer, meanwhile, doubts that the promotion will see another dollar. The guarantees have been collected and he feels that will be about it.

Some exhibitors may not meet the fantastic figure Arum has sold them on.

But the exhibitor who has agreed to Arum’s $1-million figure may never exceed it, or certainly not by much. He may not return the 55% above that if, quite simply, there is no money above it.

Trainer says that the first Leonard-Roberto Duran fight played to nearly 1 million seats.

“And remember, average price for this is supposed to be $30,” he says.

But Arum is counting on more seats in 1986 than there were in 1980 for the Leonard-Duran fight.

Arithmetic says he’d need 3.3 million seats to get his $100 million gross.

Arum says 500 million people around the world can see this fight, compared to the 200 million who could be accommodated in 1980, when Larry Holmes fought Muhammad Ali.

Presumably, he is counting more on the technological revolution than the Tavern on the Green.