By: Greg Bishop
NY Times, 9/16/2011

LAS VEGAS — On Saturday night, Floyd Mayweather Jr. will make tens of millions of dollars for an hour’s worth of work, if that. He will be paid for what happens inside the ring and outside it, paid far more than any other boxer fighting today, for far more than just his performance in a welterweight title fight against Victor Ortiz.

On fight nights, if it were not for the din of the crowd and the sounds of fists striking chins, Mayweather could hear the ringing of cash registers. He earns a percentage of every ticket purchased, every pretzel consumed, every poster sold. He will earn from the foreign countries that paid for broadcasting rights and the movie theaters where the fight is shown.

All told, he is expected to make about $40 million, and the checks will come for years, determined by the results of many things beyond the fight itself, like gate and pay-per-view TV numbers. This makes Mayweather, regarded as one of the best boxers in history, a regular among athletes on Forbes magazine’s list of most powerful celebrities, even though the bulk of his annual income is usually generated in one night.

All the usual Mayweather descriptions — divisive, arrogant, sensitive, outspoken, controversial — tend to overshadow his business savvy, or the business savvy of those around him. In fact, he fights under a highly unusual financial structure, exchanging upfront risk for back-end profit and retaining total control. Mayweather is even responsible for paying his opponent, in this case a business expense of at least $2 million.

Roger Federer does not make money off the sales of strawberries and cream at Wimbledon, nor does Derek Jeter’s contract include the Yankees’ TV contract in Asia. Mayweather has devised an altogether different model for marquee athletes.

In his previous four fights, he earned $115 million. How novel is his approach? Just ask him.

“It’s never been done,” said Mayweather, who is 41-0. “Not in entertainment history. Not in sports history. You see that arena Saturday? It’s all Mayweather money. Want a hot dog? Mayweather money. Want a T-shirt? Mayweather money. I need all that.”

Mayweather, 34, said this after a workout this week at the family boxing gym here. Sweat dripped down his face as he sat on the ring apron in business attire (shorts, hand tape), growing more animated over his favorite subject, money. Money earned. Money wagered. Money spent. Money flashed. Money lost.

On that topic, Mayweather said he collected $100,000 the previous night betting on N.F.L. games. He mentioned his 29 cars and charitable donations in the same sentence. He even compared his spending habits to a stimulus package: “If I’m making it rain, I’m throwing it to American citizens. In a recession!”

For most of the first 10 years of his career, Mayweather fought for the promotional company Top Rank Boxing, under a more typical model, with most of his money guaranteed upfront. Their split, in 2006, was far from amenable, marked by lawsuits.

Once freed, Mayweather met with Leonard Ellerbe and Al Haymon, his most trusted advisers, to develop a new plan. They wanted to control every aspect of the promotion, including the promoters, whom Mayweather hires on a contract basis for each fight. He also changed his nickname, from Pretty Boy Floyd to Money Mayweather, part of a philosophical shift.

For his last four fights, Mayweather has hired Golden Boy Promotions, a company started by Oscar De La Hoya but run by Richard Schaefer, a former Swiss banker with no previous boxing background.

To explain the business model, Schaeffer starts with a pie. A little more than half the pie goes to the distributors (Time Warner, DirecTV, etc.). The balance goes to the network, HBO or Showtime, which takes its distribution fees and hands the rest to the promoters.

In this case, Golden Boy has one contract with HBO and another with Mayweather Promotions. But the money, less what distributors and networks take, is under Mayweather’s control; normally the promoter would control it.

That pie is only part of the total revenue, the pay-per-view TV part. To illustrate the other revenue streams, Schaefer pulled a piece of paper from his pocket, a spreadsheet written in 6-point typeface. Drawn out, Schaefer said it would take up two chalkboards, but on the sheet in his pocket, it was boiled down to a formula for how much Mayweather would earn, based on how many people bought the fight and what the other revenue streams brought in.

Those streams include: foreign sales for a fight broadcast in 168 territories; closed-circuit revenues (in 2,000 or so bars and restaurants nationwide, in movie theaters and in rooms at Las Vegas casinos); site revenue (ticket sales, merchandise); and sponsorships. Most boxers would see little, if any, of that money, whereas, Schaefer said: “All revenues here are Mayweather revenues. He gets part of everything.”

This means the expenses are Mayweather expenses, too, including advertising (billboards, radio spots, print ads, commercial production), publicity (press tours, news conferences), sanctioning fees, legal contracts and insurance. For a fight of this magnitude, Schaefer estimated the expenses would run about $10 million.

First, Mayweather will write himself a check this week in the neighborhood of $20 million. This is similar, in concept, to the guaranteed money that other fighters receive from their promoters, but the check is much larger. Besides Mayweather, only Manny Pacquiao would command that much. What Mayweather earns in addition depends on the success of the event.

If 1.4 million or 1.5 million fans buy the fight — which is expected — Mayweather will make about $40 million, Schaefer said. In addition, Mayweather still receives checks from pay-per-view revenue for previous fights, the results of which sometimes take years to come in.

“That’s the difference,” Ellerbe said. “Floyd gets a cut of everything even on the back end. He’s controlling every revenue source. He beat Shane Mosley, and he paid him, too.”

For comparison, consider Pacquiao. For his coming November fight, Top Rank has guaranteed $22 million and a percentage of other revenue for a total of $30 million, said Bob Arum, chairman of Top Rank. If the fight is canceled because of a natural disaster or cable blackout, for example, Pacquiao will still make $22 million, whereas Mayweather would stand to lose much of his total earnings.

Because Mayweather has averaged about 1.5 million pay-per-view buys in his last four fights, and because no natural disaster has wiped out any boxing event in recent memory, he considers his risk quite low. Even Arum, Mayweather’s stated nemesis, concedes “there’s no loss, only profit.” He added: “In the end, it may be less than the guarantee, but it’s all profit.”

Another major difference is that Mayweather retains creative control, too. For a commercial before his 2010 fight against Mosley, Mayweather wrote the theme. He is also known for calling Golden Boy employees about tasks large (potential sponsors) and small (where to hand out fliers). He is a micromanager and proud of it.

Arum and others, however, believe that there is value in promotion and that Mayweather would make even more if he ceded total control. Mayweather disagrees, and even says the formula can be duplicated by other fighters — for a fee, of course.

“That’s going to cost you!” he said.

(Editor’s note: Still ducking Pacquiao though. Never forget.)