The Model

By John Lumpkin: The other day there was an article published by Allan Scotto entitled “Boxing Sucks” where the author concluded that we should blame Bob Arum. The article attributed a quote to Arum that plainly stated Arum’s lack of interest in serving the boxing consumer as perfect evidence of why the young consumer is turning to MMA instead of boxing. Whether Arum said it or not, the premise is correct. If one does not serve the customers, the business will die.

Is it really fair to blame Bob Arum? The real difference between boxing and MMA is that MMA organizations are self-sustaining entities. Like Bob Arum, they are promoters. Unlike Bob Arum and other boxing promoters, what MMA organizations like the UFC do is sell a branded package. Included in that package are a number of events, the fighters, and the belts. They are effectively all-in-one organizations which gives them a huge advantage over boxing which must continuously struggle to balance the interests of fighters, promoters, and multiple sanctioning bodies.

Selling a sport as a brand package means that you can market it the same way you market any brand. Brand marketing is how we sell to the public today and it is why MMA is exploding in popularity while boxing is floundering. It works the same way for Corn Flakes as it does for the NFL. It is about delivering on overall image of what you are selling to your market. This is done using multiple channels such as direct advertising, promotional materials, word of mouth, complimentary products, sponsorships, and of course, the product.

Boxing suffers today because it effectively cannot speak for itself. Boxing does not have a true representative body which can promote the sport. Boxing has organizations that promote events or specific fighters. People in the boxing business assume that the sport will be promoted when they promote the fights. This worked fairly well when fighters routinely fought more than a hundred fights in their careers and there were thousands of fighters ready to fight. Today, fighters fight much less frequently and in the USA there are only about 3,000 total professional boxers (for all weight classes). Compare that to the 50,000+ Muay Thai fighters in Thailand alone and you get a sense of the magnitude of the problem.

Bob Arum earns a living in a sport without a commission or centralized governing body. He is an independent entity that sells events to the public. Every event involves a significant risk that he will lose a lot of money, so he needs big paydays to ensure his business thrives. Boxing fans are often fickle and do not always treat fighters who have lost their zero or title with the same reverence, so Bob Arum’s revenue may suffer dramatically should one of his fighter’s lose. If you were in Bob Arum’s shoes, you would think twice about putting your cash cow in a dangerous contest, too.
In the current boxing business model, Bob Arum is doing exactly what he should do. Bob Arum did not invent the model; he is just very good at what he does. There is some truth to that idea that he should ignore what the public wants. If he immediately delivered the high risk fight, he loses and so do we – in the short term. Unless it is a really good fight which we demand a rematch, the result will be one fighter we are interested in following instead of two. By having the fighters in question fight other fights; we get more cards and our interest in the big fight increases as the fan base for these fighters increases. When the fight finally does happen, it is bigger and more profitable for all. If the people in the boxing business do not make profits, boxing will go away.

This is where having more fighters fighting more frequently matters most. Promoters can risk having a fighter lose a fight if they have many more from which to pull from for their next promotion. When the pool is limited, two things happen. First, it can be years before another star is available in that division effectively icing them out of that division until a new one comes along that they have a promotional contract with. And second, with limited competition, there is a tendency for fighters not to be as well rounded making them more susceptible to surprise loses increasing the risk for the promoter. Careful matchmaking then becomes a priority to protect one’s investment.

Boxing has been doing OK in recent years because the people behind the sport have been able to deliver enough good shows and make money. Its fans are aging as you can see by the sponsors the televised bouts attract, but they also have more disposable income to spend on events. As long as there is a market and profits can be made, boxing will persist. The US is getting a boost from the increased Hispanic population and will continue to benefit from that growth over the next couple of decades – assuming their interest in the sport remains at the same levels.

MMA only relatively recently started to become very profitable. The sport is surging and actually surpassed boxing and wrestling in pay per view annual revenues in 2006. The trend is likely to continue as they are expanding their operations to new markets are extending their brand marketing across new frontiers. Many of their fans come from boxing’s current target market, but they are also doing a great job of attracting younger fans. Since the products are similar, the big question is whether or not MMA’s pull with the younger generation will help introduce them to boxing. If the younger generation fails to view boxing as a viable alternative, MMA could completely overrun boxing in 20 to 30 years.

So, back to Bob Arum – can he change the trend? Bob Arum is 78 years old and has been running his business since 1966. Boxing is profitable for his company right now and will likely be so several years from now, so there really is not much incentive for Bob Arum to change things. It is going to be up to the next generation of boxing businessman to access the shape of the market and create strategies to bring their company’s success.

It is going to be difficult for any company in boxing to make the kind of changes that enable boxing to help promote itself as a sport. A large part of the challenge is that the fans and writers simply do not trust the organizations. When is the last time anyone thought that a sanctioning body did the right thing? How often do we believe that a home town decision took place or that the judges were coerced by the promoter?

When Oscar de la Hoya purchased Ring Magazine, there was a tremendous amount of speculation and suspicion that its rankings would be unduly influenced by Golden Boy’s promotional interests. Oscar has repeatedly stated that the two will remain separate and independent, but few believe him because of the obvious conflict of interest. The oddity here is that this is exactly how MMA organizations operate and it is their edge over boxing. Maybe what we should be doing is encouraging Oscar to merge the two organizations? Carry this idea forward a bit and what would likely ensue is mergers between other promotional firms and sanctioning bodies creating competing inclusive shows like you see in MMA. The major drawback of which is that the champions of their respective organizations do not fight each other. The real fix is probably more like a monopoly much like NASCAR, but an awful lot of things have to happen before we can get here. Boxing is likely going to have to take a bit of a dive before any of the existing organizations feel compelled to move in a different direction so the status quo is likely to remain and the customer will likely continue to feel ignored.

January 8, 2010
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