The Golden Rules

The deal, involving all those millions of dollars, began with a sheet of paper. Or something like that.

Shortly after his last fight in May -- a victory over Yory Boy Campas -- Oscar De La Hoya wrote down the boxers he wanted to fight next, as he always does. Only this time, his wish list stopped after one name: Shane Mosley.

As usual, his suggestion was forwarded to his promoter, Bob Arum, who agreed the matchup could be profitable. Arum also knew that Mosley would hold out for more money if he knew how badly De La Hoya wanted the fight.

Never mind punch stats and judges’ scorecards, the numbers that matter to a promoter are written on a spreadsheet. Mention a fight to Arum and he thinks revenue versus expenses, running the numbers through his head, computing profits.

So he began putting this fight together with a bit of trickery, contacting managers about other matchups, getting De La Hoya to talk up other opponents.

Then he got down to work.

Predicating gate receipts and domestic broadcast buys on a De La Hoya-Mosley rematch. Calculating the guarantees. Closing a site deal.

After months of guessing and haggling, the veteran promoter sat in his Top Rank office just off the Strip, feeling content. Everything has come together, he said, waving early reports on closed-circuit sales.

“Most of the business is tedious and aggravating,” he added. “What I love is running the big promotions.”

He means all the little pieces that add up to a multimillion-dollar fight, the business of creating Saturday’s super-welterweight championship at the MGM Grand in Las Vegas.

Guessing Game

As with many sports, television is boxing’s 800-pound gorilla, the single largest revenue stream.

Television is the engine that could push De La Hoya’s profit Saturday night to $25 million, according to Arum. Mosley could make $9 million. Arum himself stands to walk away with as much as $8 million.

So, with De La Hoya contractually bound to HBO, Arum’s first step in arranging this fight was obvious.

“[Arum] comes to us for a projection of the pay-per-view buys and how much revenue the fight might generate,” said Mark Taffet, an HBO senior vice president. “He wants to get a feel for the amount of money HBO might advance to Top Rank to help fund the event.”

The first De La Hoya-Mosley fight -- Mosley won by split decision at Staples Center in 2000 -- resulted in 590,000 buys and $29.5 million in revenue, HBO said.

At this point it should be noted that, like a split decision in the ring, boxing finances are often disputed. HBO and its rival, Showtime, rarely agree on how much business a particular fight has done. Arum concedes: “Any time you’re selling something, there is a credibility gap. Do I embellish and hype? The answer to that is, obviously, yes.”

Whatever the actual numbers for De La Hoya-Mosley I, Arum guessed that a rematch could draw at least 550,000 buys at $50 each for a gross revenue of $27.5 million. Subtracting approximately half for cable operators and HBO’s 7.5% fee, that left roughly $12.5 million. Arum got to work on the rest of the puzzle.

His people in New York predicted at least $1.5 million in foreign television rights. Joseph Gagliardi, who handles his closed-circuit telecasts in the United States, guaranteed $1 million. Sponsorships and merchandising were estimated at $500,000.

Finally, Arum “sniffed” to see how much a casino or arena might pay for the bout.

“See, I don’t have my site deal till I make the fight,” he said. “But I talked around. I knew the site fee wouldn’t be less than $6 million.”

Adding it all up, Arum figured he could afford to offer a combined $21.5 million in guaranteed purses to De La Hoya and Mosley.

“I try to be as conservative as possible so as not to get hurt,” he said.

There was still a chance he could lose millions. But if the fight did even moderately well, there was money to be made.

All he had to do was convince the fighters.

Persuasion

The dynamic works like this: Boxers want big guarantees up front. Promoters try to persuade them to take less in exchange for “upside” -- a share of profits -- down the road.

Mosley had earned $4.5 million in the first fight and now wanted $5 million. But he had lost twice to Vernon Forrest in the interim and Arum talked him down to $4.25 million.

At least that’s what everyone thought. Then Mosley backed out.

“Mosley was ...” Arum stopped himself. “I don’t mean to fault him. Guys should try to get as much as possible. But we had a deal.”

In a story frequently recounted, De La Hoya offered to shift $500,000 of his guarantee into a winner-take-all pot.

Even that wasn’t enough. Finally, attorney Judd Burstein stepped in on Mosley’s behalf. The guarantee was raised to $4.5 million and, more important, Mosley won provisions that could earn him $12.5 million in future fights.

Arum now had $17 million of his original $21.5 million estimate to offer De La Hoya, who commands more money because of his marquee value. The promoter went to Richard Schaefer, De La Hoya’s business advisor.

“Oscar is asking for $30 million guaranteed, $40 million guaranteed,” Arum said. “Richard is the one who brings him down to reality.”

Schaefer said, “My job is to give him the different choices ... it’s up to him to make the decisions.”

When De La Hoya fought Felix Trinidad in 1999, he demanded a $21-million guarantee. The fight grossed $71 million on pay-per-view -- $62 million if you go by Showtime’s numbers -- the most ever by a non-heavyweight bout. But De La Hoya’s large guarantee left him with little upside and he topped out at $23 million.

This time, he took the $17 million against greater potential profits in the future, and the deal was consummated in less than an hour.

Next, Arum looked for a site. Staples Center offered a $7-million guarantee. He took $6.8 million from the MGM Grand, guessing the casino would ultimately sell more seats ranging from $100 to $1,200.

There was one more mathematical problem to solve. Mosley wanted his entire purse on fight night. De La Hoya agreed to take $10 million on Saturday, $2 million soon after and the remaining $5 million within 90 days.

So Arum needed $16.5 million in cash.

The site money and closed-circuit guarantee totaled almost $8 million. HBO agreed to advance him $9 million. Arum could cover that amount with his cut of pay-per-view if HBO drew only 400,000 buys, and the network had done almost that well in the less-heralded Campas fight.

Still, Arum knew, “If this fight tanks and it does $8 million, [HBO] will come after me the next day for $1 million.”

The Franchise

It was 1993 and Taffet, the HBO executive, was on a whistle-stop tour to promote George Foreman versus Tommy Morrison. As the train rumbled from Philadelphia to Washington, he found himself sitting beside Foreman, talking about the pay-per-view business.

“I’m 10 years too late,” Foreman complained. Then he pointed a couple of rows ahead to a young fighter on the undercard.

“That’s one of the stars of the future who is going to benefit from this,” he told Taffet. “Watch that kid.”

The kid was De La Hoya.

No one attracts viewers like heavyweights. Mike Tyson and Evander Holyfield account for nine of the top 10 pay-per-view telecasts of all time. But sitting at No. 5, with 1.4 million buys, is De La Hoya-Trinidad.

With Tyson and Holyfield near the ends of their careers, and Lennox Lewis unable to catch the public’s fancy, Taffet calls De La Hoya “the single best franchise in the pay-per-view business.”

As soon as De La Hoya signed to fight Mosley, HBO and Arum set out to milk the fight for all it was worth. Network executives engineered co-promotions with cable operators. Arum launched a $1-million campaign, using everything from posters to commercials.

Media interest helped.

“The last fight, the Campas fight, was killed by the press,” he said. “They felt Campas wasn’t a worthy opponent. It had an impact. But now you come with Mosley and suddenly they’re all raving like he’s Superman.

“I really benefited from that.”

He cooperated on this story because, again, it keeps his fight in the news. Anything to goose the pay-per-view total by a few more buys.

At the same time, he called Gagliardi who, besides handling closed circuit, is an insurance broker. For $100,000, Arum bought a night’s worth of policies against various misfortunes.

If one of the fighters breaks an ankle, Arum recoups his expenses. Same thing if lightning knocks out cable in Ohio and pay-per-view customers need refunds.

“On a fight like this, a lot of money is outlaid beforehand,” Gagliardi said. “The promoters ... they want to cover themselves.”

The Upside

Rain and lightning streaked the Las Vegas skyline on a recent afternoon, but as far as Arum could see, the forecast was sunny. Driving his Mercedes coupe to lunch with hotel executives at the MGM Grand, he talked about profits far exceeding his initial, conservative estimate.

He spotted the first promising sign a few weeks ago, when the MGM Grand sold out its 16,228-seat Garden Arena. The live gate will bring Arum $2 million, on top of his $6.8-million guarantee.

Moreover, with the arena filled, he can offer closed-circuit telecasts at casinos citywide. The early reports he was waving around in his office suggested he might sell 20,000 or more tickets at $50 each.

Add that money to a healthy gate and, as Arum said, “that’s three

But pay-per-view could produce the real payday. The buzz around this fight has Arum making bold statements, predicting more than 1 million buys.

At HBO, Taffet is hesitant.

“Those are the types of things only a promoter would say,” he warned. “To generate that level of buys, you have to have a set of circumstances that is equivalent to the stars and planets aligning.”

However, HBO expects the fight to easily surpass Arum’s initial 550,000 estimate. If it does 600,000, that’s $2.5 million more in gross revenue. If it does 700,000, that’s $7.5 million more.

Any revenues exceeding the $21.5 million guaranteed the boxers would be divided this way:

* Arum would take his fee, set at about 20% of De La Hoya’s guaranteed purse, or $3.4 million.

* Mosley would receive a bonus based on pay-per-view. He gets $2.50 for every buy over 600,000. He gets $5 for every buy over 700,000.

* The rest would be split 80-20 by De La Hoya and Arum.

When all is said and done, the fighters and the promoter could slice a $40-million pie. And there are millions more for HBO, cable operators and others.

“If I had known how hot this fight would be, I would have saved myself a lot of grief in the negotiations,” Arum said. “I held the line with Shane because I had to protect myself. I didn’t have the confidence this would be a hot fight.”

Of course, Arum knows that nothing succeeds like success, so he has a financial interest in making the fight sound attractive, maybe persuading a few more fans to buy the telecast.

But even rivals suspect he has a winner on his hands. Dan Goossen, a promoter who once worked for Arum, said, “Give me another example and I might tell you he’s acting like a promoter. But in this particular case, you don’t really need the promoter hype because the event is hyped by the participants, by De La Hoya and Mosley. In this case, Bob would probably be correct.”

Even Mosley’s promoter, Gary Shaw, said, “It has been a textbook example of how to operate, a masterful job.”

An example of all the pieces coming together.

“That’s how you do the deal,” Arum said. “It sounds easier than it is.”