Money is the Big Winner

In today’s Money Morning…TV sales and profits…big event investment opportunities…what these events mean for large corporations…and more…

The circus that was the McGregor — Mayweather fight finally ended yesterday.

And to be honest, it was more entertaining than I thought it would be.

But, from day one, it was obvious who the real winner was going to be…

Money.

No, I’m not talking about Floyd Mayweather, who goes by the crass, but apt, nickname of ‘Money’ Mayweather.

Though, his victory was pretty obvious from the very start.

I’m talking about the corporate heavyweights who are looking to make big profits from this event. In the global village, events like this command global audiences in the billions.

Billions of eyeballs — means billions of dollars.

In a moment, I’ll look at the investing opportunities in these type of event. But first, let’s look at the fighters’ purse.

Despite the pre-fight acrimony, they certainly seemed to have kissed and made up post-fight (now there’s a surprise!).

Mayweather Connor McGregor 28-08-17
Source: The Independent
[Click to enlarge]

And it’s no wonder when you see the money they have just earned.

According to reports the Irishman, Connor McGregor, made a minimum US$30 million for the fight.  Mayweather, being the champion, is set to earn at least US$100 million.

That’s only the start of the story. The actual prize money received by each fighter is calculated from TV pay-per-view (PPV) figures — this takes a bit of time to work out.

So the purse could be even bigger.

To give you an idea, the Mayweather-Pacquiao fight had around 4.4 million viewers and Mayweather came away with somewhere between US$220 and $230 million.

The fighters usually share around 40% of the PPV, with the fighter’s split expected to be around 70-30% in Mayweather’s favour.

Judging by how packed the Melbourne pubs were yesterday — and how strongly supported the Irish boxer is worldwide — I wouldn’t be surprised to see the final figures surpass the Pacquiao fight numbers.

But the fighter’s weren’t the only ones looking to cash in.

The money-go round

Like the celebs desperate to be noticed paying $100,000 for ringside seats, corporates coughed up big dollars for similar attention.

Anheuser Busch In-Bev [NYSE:BUD] subsidiary Corona is the fight’s main sponsor. While it’s not known how much the company paid to have its logo prominently displayed in the centre of the ring during the fight, the original asking price for that sponsorship spot was reportedly $10 million.

Previous Mayweather sponsor Hublot’s logo and subsidiary of LVMH Moet Hennessy Louis Vuitton [OTC:LVMUY] was on Mayweather’s trunks for the fight.

Sports drink BodyArmour is sponsoring the fight itself as the ‘official hydration beverage of Mayweather vs. McGregor.’ Though, McGregor turned up to the post-match conference drinking his own-brand ‘Notorious’ Irish Whiskey, so it looks like hydration is off the cards for him in the foreseeable future.

But it’s a sign that these days, the money making doesn’t stop with the final bell.

Entertainment venues stumped up as much as US$5,100 to show the fight, with several big US restaurant chains announcing they would be showing it in the hopes of attracting full bookings for the day.

With a packed out stadium and tickets from $2,100 to $100,000 ringside, the online ticket companies will also be big winners this morning. They usually take a booking fee as a percentage of ticket sales, so the higher prices will benefit them as well.

‘Sin city’ is another obvious winner, with the various industries in Las Vegas all benefitting. Some reports state, Las Vegas sportsbooks are selling betting slips at record numbers, nearing $60 million.

The casinos are full, everyone from the bell boys to the call girls will be busy…

Getting Your Cut

We live in the era of the ‘Big Events’ it seems.

Everyone watches the same things together. Whether that’s a sports event or just the finale of The Voice, the same forces that drove interest in this fight are at work.

And with the world shrining all the time, the value of these big events is getting larger every time.

So where should an investor look to benefit from this trend?

The first opportunities are in the media companies that sell the rights to the events. So in Australia that’s Foxtel, owned jointly by News Corporation [ASX:NWS] and Telstra [ASX:TLS].

For those who want to get even closer to the action, you can buy shares in MGM Grand Resorts International [NYSE:MGM], the venue for this and many other events. Some analysts expect a big spike in quarter three earnings on the back of this event.

Or if you believe the hype has legs, maybe an investment in one of the big name corporate sponsors will benefit from the brand association they have paid so dearly for.

McGregor recently signed deals with Beats by Dr Dre, Monster Energy [NYSE:MNST] and luxury car brand Rolls Royce owned by BMW [FSE:BMW].

Will this translate into sales and profits for them? I don’t know.

But there are clearly profits in this sector for an astute investor who can join the dots.

Good investing,

Ryan Dinse,
Editor, Money Morning


Ryan Dinse is an Editor at Money Morning.

He has worked in finance and investing for the past two decades as a financial planner, senior credit analyst, equity trader and fintech entrepreneur.

With an academic background in economics, he believes that the key to making good investments is investing appropriately at each stage of the economic cycle.

Different market conditions provide different opportunities. Ryan combines fundamental, technical and economic analysis with the goal of making sure you are in the right investments at the right time.

Ryan's premium publications include:


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