By Robbie Butler,

Following on from recent publication successes in the Scottish Journal of Political Economy and European Journal of Operational Research, we were delighted to be accepted recently in European Sports Management Quarterly (ESMQ).  

The paper "New Insights on the Louis-Schmeling Paradox: Determinants of Demand for Subscription and Pay-Per-View Boxing" is co-authored with blog contributor David Butler and Head of Department, and Professor of Economics at Drexel University, Joel Maxcy. 

Despite its longevity and historical importance, boxing is a sport almost devoid of attention in the sports economics literature. To remedy this we created two new datasets and asked what are the determinants of main event broadcasting viewership and pay-per-views buys? In addressing this question we offer new insights on the uncertainty of outcome hypothesis [UOH] and extend research on direct demand for an individual sport.

For main events, we find conflicting evidence to the UOH. Fans show a preference for rematches, domestic boxers and heavier divisions. NFL broadcasts and earlier scheduling negatively impact viewership. For pay-per-views, we find a positive price effect - largely thanks to Floyd Mayweather Jr. Both types of broadcasts exhibit a negative trend with viewership and PPV buys declining over the period of time we examine.

The paper is currently in press and will be available shortly from ESMQ.

By Robbie Butler

Anyone that has ever taken an introductory course in economics will probably have studied competitive markets. Economics textbooks argue that consumers are best served when competition exists amongst sellers. In theory, perfect competition is the best outcome from the consumer, as prices are driven to the point where suppliers are able to cover their average costs and no more.

One way for producers to increase prices is to restricted supply. This is not always possible, but in some markets conditions exists to allow producers to do this. The most extreme example is a monopoly. 

The Forbes List of world's highest-paid athletes provides a really nice example of restriction of supply. Various familiar names appear on the list over the past five years such as LeBron James, Tiger Woods, Lionel Messi and Roger Federer. Each moves places over the period. There is one constant throughout - if Floyd Mayweather fights he will be top of the list. 

Mayweather has been top in 2012, 2014 and 2015. His absence in 2013 and 2016 was down to inactivity in the ring from May 2012 to May 2013, and retirement. Not only does the boxer top the list, his earnings far exceed the next highest sports star, with the Grand Rapids native earning an estimated $300 last year.

One of the ways the boxer is cashing in is by deliberately restricting the supply of fights to the market. Since Christmas 2007 (almost a decade), Mayweather has fought just ten times. The hype that his infrequent reappearance in the ring generates, results in huge box office and pay-per-view broadcasting demand and generates revenues far above more frequently viewed sports stars.

As David touched on recently, uncertainty of outcome is largely irrelevant in boxing, yet the undefeated Mayweather finds this no impediment to generating interest in his ​fights. 

By David Butler

In the last post on this website Robbie discussed how uncertainty of outcome is often what drives interest in sport. As he said “contests where the outcome is predictable are often criticised for being boring”. He also notes that “some might argue that watching a dominant champion can increase interest in a sport”. At times people enjoy watching a champion or a well-known star as much as a close contest.

Looking at the betting for this weekend’s big boxing fight made me think about this a little more. The betting on the Anthony Joshua v Eric Molina fight currently stands at Joshua 1/50 to win. Molina is 14/1 to succeed and a draw is 50/1. Why would customers pay £16.95/€21.95 for what the markets suggest is a foregone conclusion?

When it comes to major boxing matches, uncertainty of outcome rarely seems to influence promoters or those buying the product. The list below shows the average odds for HBO fights in 2016. HBO serves as a distributor of major boxing events for pay-per-view. A clear favorite has existed in almost all of the bouts with the exception of the Sergey Kovalev vs. Andre Ward and Manny Pacquiao vs. Timothy Bradley fights. In all cases the favourite has won (marked in blue below).

While the data for subscribers by fight is a little patchier, the relationship between uncertain outcomes and demand seems spurious.  From this list, the fight the market priced as the closest contest , Sergey Kovalev vs. Andre Ward, had a reported 160,000 buyers. The fights such as Canelo Alvarez vs. Liam Smith and Canelo Alvarez vs. Amir Khan had 300,000 and 600,000 subscribers respectively.

Naturally, this raises the question of why people shell out cash to view outcomes that are hardly uncertain. Many reasons might exist. Maybe viewers enjoy seeing a dominant champion succeed? Many of the headlines after these bouts use the words 'demolish' or 'crush' to describe the fight. Maybe nationalism is a factor? The Mexicans tune in to see Alvarez and the British follow Khan. Maybe viewers rarely get to see certain fighters or it could be close to the end for one star? Maybe the major broadcasting firms and promoters just do a great marketing job?  Maybe fans are risk averse and just don't want to miss what could be a major upset in boxing history?  Maybe viewers just don't want to feel out of the loop in the coffee room on Monday morning. The list could go on...

By Robbie Butler

It's hard not to notice the increasing frequency of boxing on pay-per-view channels. What's more noticeable is the amount of times this has included one or more British fighters. In the two and a half years alone Carl Froch, George Groves, Anthony Joshua, Karl Frampton, Scott Quigg and Amir Khan have all appeared on pay-per-view television on one or more occasion.

Much of increased coverage is surely down the Eddie Hearn's Matchroom Boxing. The promoter has a stable of more than forty fighters and more than half of Britain's current eleven world champions, across eight different weight classes. 

Despite less than one in ten subscribers to sports channels classifying boxing as the reason they subscribe, its survival on pay-per-view television is fascinating and demonstrates boxing's power in attracting paying customers. Other sports, including football, previously attempted the pay-per-view route unsuccessfully. Outside of boxing only WWE and UFC have reported any success in charging customers per event.   

The trend for boxing looks good. The first pay-per-view screened in the Unites States by HBO/Showtime was the 1988 heavyweight clash of Mike Tyson and Michael Spinks. Roughly 700,000 customers are thought to have subscribed to the fight. Since then pay-per-view boxing has been screened nearly 100 times. That's an average of almost five fights per year. Last year, more than four and a half million US customers paid to watch Floyd Mayweather and Manny Pacquiao. 

The increased incidence of pay-per-view boxing by British fighters probably demonstrate the improving standard of fighters in the UK and increasing demand to watch the sport, despite the additional cost of viewing. The hugely impressive performances of Anthony Joshua mean we are likely to see much more ​pay-per-view boxing on British television in the months and years ahead. 

By David Butler

Last week Matt Cooper spoke about the possibility of allowing professional boxers compete in the Rio Olympics on his talk show the Last Word. The guests considered the merits of the AIBA’s proposal and the implications for Ireland. The aim is to abolish rules that stops boxers with 15 or more paid bouts from competing at the Olympics. The Independent newspaper carried the story and details last Wednesday. 

While Ireland’s Katie Taylor said the new rules would not alter her preparation, the re-design could spell trouble for Ireland’s medal chances at Rio. 57% of our Olympic medals have come from boxing – two gold’s, five silvers and nine bronze. The table shows Ireland's medal tally at the Olympic games.  

While nothing would be stopping Irish professional boxers from competing for a gold, something tells me that our share of boxing medals may not be as high if the proposal is ratified.You would have to worry for the amateurs, surely Wladimir Klitschko would like to add more Olympic golds to his CV?

By Gary Burns

After the Froch-Groves rematch some time back, I was asked by many people why boxing rematches are so common. The concept of a rematch clause or negotiated rematch is one that many sports do not encounter because of centrally governed bodies. Rematches occur naturally when these bodies exist and contracts do not have to be recurrently drawn up. Very rarely do rematches, or indeed any encounters, occur naturally in boxing.

There is probably a blend of  sporting and economic reasons that ensure rematches occur in boxing.  The sporting ones include a boxers desire to right a wrong or to correct for a poor performance while  economic ones may include the mutual monetary benefits of a rematch and the need to diminish the effect of a previous defeat to invest in ones reputation for future big fights. A champion can reduce the risk of losing a title for a prolonged period by including a rematch clause if they lose and is really a means by which a champion can insure against the loss of future earnings. 

In the most recent high profile rematch, Carl Froch once again defeated Georges Groves albeit a lot more convincingly this time. In weeks previous, Manny Pacquiao overcame Timothy Bradley, which many believed to be the correction of a controversial and some would say poorly judged first match.

If we assume that both fighters are of similar elite level (rematch clauses would generally not be applied to lower level opposition), generally if the champion loses the fight, they will have the right to invoke a rematch upon loss. If the rematch is not granted a fighter may be taken to court or  can potentially be stripped of any titles by the governing body in question. There seems to be distinct reasons for the inclusion of the clause depending on the fighter. When defeated in a huge shock knockout in 2001 to Hashim Rahman, Lennox Lewis was forced to go to court to invoke the clause. He subsequently regained the heavyweight championship. This case is an example of a straightforward champion wanting to regain his title in light of an unexpected result.

Another example is Scottish lightweight Ricky Burns who lost his world title to Terence Crawford. Although insisting he does want a rematch, many analysts believe any repeat of the first fight would detrimentally affect his value as a prize-fighter and thus the rematch clause should not be invoked in this case.

An unusual case of a winner wanting a rematch clause invoked was that of Timothy Bradley who won his first bout with Pacquiao. He was so distraught by criticism of his controversial victory levelled at him he wished to prove his critics wrong by beating Pacquiao again. The economic motives of fighting the much followed Pacquiao surely played a significant role too. Unfortunately for him he lost the rematch.

Arguably the greatest of his generation, Floyd Mayweather Jr insists on rematch clauses. A recent opponent Robert Guerrero, when asked about the rematch clause that Floyd Mayweather insisted upon, said it showed him “where his head is”. In a sport like boxing, the admittance of even the potential of defeat by a champion can give a challenger a
psychological edge.

Rematches can also be negotiated. As can be seen historically, they have gone some way in cementing the legacy of fighters. Perhaps relying on each other is not only a lucrative tactic but also a means to strengthen ones place in the sport. Rematches generate interest through the formation of a rivalry which can be difficult to create in a sport where once off opponents are more common. Part of the success of Froch-Groves II can certainly be attributed to this. Manny Pacquiao- Juan Manuel Marquez (4 fights), Israel Vasquez – Rafael Marquez (4 fights), Arturo Gatti –Micky Ward (3 fights) Erik Morales – Antonio Barrera (3 fights), Muhammad Ali –Joe Frazier (3 fights), Roberto Duran- Sugar Ray Leonard (3 fights) are just some examples of great multiple fight rivalries.

What is the net effect of a rematch clause in economic terms?  Research has been conducted on this question. In Rematches in Boxing and Other Sporting Events, J. Atsu Amegashie and Edward Kutsoati look at the incentive effects of rematches, particularly in professional boxing and found that if there was a high chance (mandatory) of a rematch or very low chances of rematches it generated greater aggregate effort. In reality however as most elite boxers need other elite boxer’s, chances are rematches are quite high without any clauses. 

By Eoin Whyte

The ‘Rooney rule’ was adopted in 2003 and established a set of guidelines for all NFL teams in their selection process for head coaching and senior football operation jobs. Under the new rules all NFL teams are now required to interview people considered to be of an ethnic minority when making an appointment for any of the sport’s top coaching positions. The rule has made a significant impact on the number of African American head coaches in the NFL. In 2002, the year prior to the adoption of the Rooney rule, there were only 2 African American head coaches employed in the NFL. Four years later this number had increased to 7. 

Madden and Ruther (2011) argues that this increase illustrates that there had been discriminatory influences in the previous selection process of new coaches in the NFL. According to Madden & Ruther, discrimination occurs “when the marginal or last African American coach hired must be better than the marginal white coach”. Table 1 below, from Madden & Ruther (2011), details how, prior to introduction of the Rooney Rule, there was a significant discrepancy in the number of African American coaches to white coaches in the NFL. The table also highlights how, prior to the rule, African American coaches enjoyed a significantly higher win rate averaging 9.1 wins a season versus 8.0 of their white counterparts. Sixty-nine percent of African American coaches got their respective teams to the play offs versus thirty-nine percent of all other coaches. Since the Rooney rule however, these discrepancies has evened out and the win rate of African American coaches has decreased.

The Madden & Ruther paper comes to mind when examining the Irish data for International Carding Scheme funding between 2008 and 2014.  It is interesting to note that there are  discrepancies in the funding between males and females in Athletics, Boxing, Cycling and Swimming, what I label the ABC’s of Irish sports.

The first chart below highlights that more male athletes have received funding than their female counterparts in all of their respective sports under ICS funding between the  discussed years. 65 males were funded in Irish athletics versus 64 female athletes. 79 male boxers were funded versus the mere 3 female recipients. 42 male cyclists were funded as opposed to the 10 female counterparts. And 36 male swimmers were granted funding in comparison to 27 female swimmers.

However on average, female athletes have been granted more funding than their male counterparts. The second chart illustrates how female boxers on average received over 3 times more funding than male boxers. In athletics, on average females enjoy 16% more funding than male athletes. Cycling has a 21% difference in the average funding for male and female athletes in favour of female athletes. While the average funded female swimmer also earns 53% more than the average male swimmer.

Of course is it is easy to recognise these figures being possibly distorted by the success of Irish female athletes such as Taylor (Boxing), Murphy (Swimming), O'Rourke and Loughnane (Athletics), all of whom are amongst the higher funded recipients.

However, these differences still pose some questions.  Akin to the African American coaches’ previous higher success rate in the NFL, do Irish female athletes receive more funding versus their male counterparts only because they have to be exceptional in their respective sport to receive funding in the first place?  Or, are females athletes funded to a higher level in an attempt to encourage more females into sport?  It is hard to say. It requires further investigation.

By Robbie Butler

In 2005 American journalist James Surowiecki wrote the book The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations. The book was an instant hit and the author gained worldwide recognition for his explanation of how ‘the many’ are smarter than ‘the few’, an idea he introduces by telling the intriguing story of how Francis Galton was shocked to find that the crowd at a county fair accurately guessed the weight of an ox when their independent individual guesses were averaged. 
 
A similar experiment could be run for the upcoming World Cup in Brazil. If one were to ask people independently how many goals will be scored in the entire competition, the mean value of all the guesses should be the ‘best guess’. 
 
Undefeated boxing legend Floyd Mayweather Jr took a similar approach on Twitter last week. The Grand Rapids native tweeted the following to his followers last week:

Mayweather reckons his followers know what fight is best for him next- exactly what James Surowiecki would say. Luckily (or maybe unluckily) for Amir Khan, he came out on top. 60% of the 35,000 voters opted for the Bolton fighter, according to ESPN. 

By Gary Burns

While risk assessment and strategic decision making have positioned Floyd Mayweather far and above his peers, it may not be in this remit that his next opponent will be decided. He is contracted for another four fights with Showtime in the US, however finding four suitable, worthy opponents is another matter. Names being booted about include the three times beaten Brit, Amir Khan. 

Khans most recent victor Danny Garcia, Timothy Bradley, Adrien Broner and far reaching speculation of a bout with 48 year old light heavyweight Bernard Hopkins are names that have also been mentioned. Unfortunately for Mayweather his skill, talent and position as the most talented boxer of his generation means  that decisions concerning opponents are not as simple as sanctioning bodies official rankings.

The Contenders?
In the US a fight with Khan would not generate half as much attention as the record breaking Canelo fight however it
would have a positive effect on revenues in the United Kingdom. However, Khan is not even the best welterweight from the U.K., Kell Brook has overtaken him.

Bradley, coming off a decision victory over Juan Manuel Marquez, whom Mayweather dispatched with relative ease, does not have the style or fan backing to put up big PPV numbers. Problems in negotiations may also materialise with Bob Arum's Top Rank who promote Bradley, unwilling to negotiate with Golden Boy promotions that partially promote Floyd.

Garcia is an interesting opponent, particularly due to his position on the Mayweather/Canelo undercard, a ploy often used by promoters to generate interest in future bouts. But again there would be doubts as to his chances and whether the public would see him as a live opponent. Although a mix of Garcia’s father and Mayweather in the build up
to the fight would be worth the PPV fee alone.

Broner, I suggest,  would not be risked against Mayweather. He is being groomed as the ‘Next Floyd’ and therefore promoters want an extension strategy for boxing when Floyd finally decides to hang up his gloves. Broner is that strategy. Floyd does not need gimmicks. A catch weight fight with a 48, nearly 49 year old Hopkins would do nothing to enhance his legacy.

Perhaps then what the public has called for the last five years, a bout with Pacquiao may be one of the only viable option for Floyd. Manny, in his next fight, takes on Brandon Rios in a fight that could regniitie his career or perhaps the end of it. He has suffered two recent defeats including a devastating knockout loss to Marquez. Heavy knockout losses
of that nature have proved time and time again most difficult to rebound from. What Pacquiao has though is an international appeal, exciting style, huge support and an impressive career record. If Rios wins he could throw his hat in the ring, although less likely. Pacquiao seems the most likely opponent although the Top Rank stumbling block is evident here also.

Dark Horses?
Ruslan Provodnikov is an interesting fighter. His most recent destruction of Mile Alvarado has backed up his controversial loss to Bradley. If he can get one or two big wins under his belt in the next year, Floyd could consider him. What he also has is a loss on his record which unlike Bradley means he has less to lose. Kell Brook could also
fall into this category, but again not just yet.

Unfortunately for Floyd his career trajectory has simply not been matched by anyone of his ilk at present and has meant that in a sport with a unique competition structure, where opponents are chosen and not devised in a league/championship format, Floyd may have very few options if he is to end his career on a high which it so richly deserves. Floyd, however, will finish his career on his terms. You will not see Floyd fighting into his forties due to financial woes such as the once great Sugar Shane Mosley. Therefore the next year and most importantly next opponent will tell us a lot about how Floyd wants to end things. Five fights equates to about 2 and half years in boxing terms. Perhaps someone new will emerge, like Saul Canelo Alvarez.

But one thing is for certain, whoever Floyd decides to fight, it will be on his terms once again. More likely than not,
 Las Vegas, MGM Grand, 147lbs – 150lbs.

By Gary Burns

The heavyweight division is quite different from other divisions in boxing as no upper weight limit exists for fighters. In other weight categories a new division is created every 3lbs to 8lbs.  Only within the cruiserweight division is there a potentially larger gap (175lbs to 200lbs).

Boxing currently has a significant 17 weight categories. The newest of which is the minimum-weight (Straw-weight or mini flyweight) division introduced in 1987. Before this new division, the most interesting introduction, was the cruiserweight division in 1980 when a upper weight limit of 195lbs was set and later extended to 200lbs. Before the introduction of the Cruiserweight division Heavyweights were fighters above the Light-Heavyweight limit of 175lbs.

A quick scan of the data from the 50’s, 60’s and 70’s, suggests why such a division was introduced. The average weight of heavyweight contenders and champions in 1954 was 86kg. By 1984 that had increased to 110kg. Due to an increase in the size of competitors, the cruiserweight division was introduced as a matter of competitive parity.  Boxing was now making structural changes based on fairness. Smaller men should not have to compete against bigger men. The result of the cruiserweight division was that the Heavyweight division was now only available to fighters over 195lbs and later 200lbs. The crux of the problem however remains; as there is no upper limit for Heavyweights, smaller Heavyweights still have to fight much larger opponents.

The most successful heavyweight clash, at least financially, of the last number of years was undoubtedly Wladimir Klitschko v David Haye that took place in Hamburg in 2011. The disparity in size, in what was considered Klitschko’s
biggest challenge to date, was enormous in boxing terms. Weighing in at 242lbs, Klitschko was 30lbs heavier than Haye. Coupled with a height and reach advantage, the result was not surprising. Haye’s next fight is against an even larger opponent, Tyson Fury, who weighs in excess of 255lbs and is 6 foot 9 inches.

Putting it in terms of other divisions it is the equivalent of a Super-Middleweight (perhaps somebody like Carl Froch) fighting a Lightweight or even Super-Featherweight. I think most boxing analysts would agree that the size, height, power and reach advantage that a super-middleweight would have would simply be too much. So why is it ok for the heavyweight division to allow such disparities?  And why would a fighter such as Haye, who was a dominant cruiserweight, want to be a Heavyweight against a much larger opponent? 

In short, the risk is easily off-set by the financial reward, with Haye making a reported £15 million for the Klitschko fight and potentially £5 million to fight Tyson Fury. This far exceeds any potential earnings Haye would get at cruiserweight.  

Since its introduction the Crusierweight division has been seen primarily as a training ground for future heavyweights and has, as a result, garnered very little respect in boxing circles, relative to other weight categories.  It also highlights the financial incentives to become a heavyweight even if the risk is greater at heavyweight. All cruiserweight champions who have fought the Klitschkos in recent years have lost; Thomas Adamek, Jean Marc Mormeck and David Haye. Arguably, the cruiserweights most notable champion, Evander Holyfield, is primarily remembered as the Heavyweight he became. The general public, I would imagine, would only remember him as a heavyweight such is the lack of notoriety the cruiserweight division holds.

Is a Super Heavyweights division an answer?

One solution mooted to combat the disparity between Heavyweight competitors is the introduction of a Super Heavyweight division. Perhaps an upper limit of 225/230lbs. But I feel this will further dilute the value of the Heavyweight division. I would also argue that there is a case for diminishing returns when it comes to weight in the Heavyweight division. Bigger fighters are not always better fighters. Larger weights can often lead to poorer performances. The biggest champion ever of the division, Nikolai Valuev, would be a prime example of where size does not always equate to dominance. This point is also highlighted by the fact Haye is a firm favourite to beat Fury based on his record and ability. 

Perhaps more of a promotion, by broadcasters and promoters alike, of the cruiserweight division would be of better value to boxing.
 
One of many such examples, in what is regarded as one of the greatest heavyweight fights of all-time, saw Rocky Marciano overcome Jersey Joe Walcott in 1952 in their first meeting. If that fight were to take place today, the fight would be in the cruiserweight division. Nobody could argue that the fight would be less significant because of this. However the perception that it’s for the heavyweight title may make it more valuable in peoples mind. And that is the problem for the cruiserweight division and more importantly smaller heavyweights. The public, that dictates the success of fights through ticket sales, pay per view purchases and TV numbers, simply have a bias towards Heavyweight fights.