HBO Boxing Should Julio Cesar Chavez Jr. Fight on Cable or Pay-Per-View?

By George Foster, David Hoyt
2013 | Case No. SPM51 | Length 40 pgs.
Professional boxing was once a mainstream sport, whose stars were widely known to the general public. Major fights were broadcast on network television. By the 2000s, the landscape had changed dramatically. Boxing had become a niche sport in the United States, few boxers were known beyond the hard-core fan base, top fights were only available on premium cable or pay-per-view (PPV), and other combat sports were on the rise. This case describes the world of professional boxing, including the roles of fighters, managers, promoters, and television. It focuses on a decision facing HBO, one of the important economic drivers of the sport. In September 2012, Julio Cesar Chavez Jr. lost a title fight to Sergio Martinez despite a thrilling final round. The fight was seen on HBO PPV. Most observers thought that a rematch would be held, and that it would attract a substantial PPV audience. However, Martinez planned a fight in his native Argentina prior to a potential rematch. Chavez would likely also have an interim fight. HBO considered the possibility of having the interim Chavez match on their cable channel rather than on PPV. This would make the fight available to more viewers, hopefully increasing the audience for the PPV rematch with Martinez, and would guarantee Chavez a sizable payment from television rights. However, if the fight were on PPV, Chavez would have the opportunity to earn more money based on PPV sales (and also take the risk of a lower payday if PPV sales did not meet expectations). If HBO believes that it is in the long term interest of the sport, the fighters, and HBO to have the fight on cable rather than PPV, how can they convince Chavez’s promoter, and how can they help the promoter convince Chavez to accept a lower potential payday in exchange for an increased audience and the opportunity to build PPV sales for the planned rematch with Martinez?

Learning Objective

This case is intended for a course on sports management. It describes a sport in decline, without a centralized governing body. Powerful promoters, managers, and television executives all play important roles in determining fight matchups and opportunities for fighters to progress. Students are asked to consider ways that the sport can grow, and how a specific event can help develop the sport. It can be used to discuss sport governance and development, in a highly fragmented environment.
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