The Economics Behind The 'Fight Of The Century'
The debate over who will win the highly-anticipated May 2 boxing match between undefeated Floyd "Money" Mayweather and Manny Pacquiao rages on in the sporting world. There is no debate that the Las Vegas economy will certainly be a winner regardless of which fighter's hand is raised at the end of the night.
The bout, which some are calling "the fight of the century," has been years in the making, and MGM Resorts International (NYSE: MGM) might have even more riding on the contest than either of the two fighters.
While the legacies of each of the two fighters hinge on the outcome of the fight, one thing is for certain: neither fighter will go home empty-handed. Mayweather and Pacquiao are splitting the purse 60/40, with the undefeated Mayweather laying claim to the larger stake. The purse for the fight could be in the neighborhood of $300 million, meaning that Mayweather, already listed as the world's highest-paid athlete by Forbes, ESPN and Sports Illustrated, could take home upwards of $180 million, win, lose or draw.
That's not a bad payday for one night of work.
MGM's Prime Positioning
Not only is MGM Grand hosting the fight, the company is also well-positioned to capitalize on the event in several ways. A standard king room at MGM Grand on Friday, May 1, was recently priced at over $1600. Tickets to the fight itself have reached as high as $7,500 per ticket recently.
However, MGM's profits will not be limited to the Grand. In addition to sky-high room rates at other resorts, MGM has the exclusive closed-circuit broadcast rights to the fight. That means that gamblers and boxing fans who want to watch the fight on closed-circuit broadcast at a Vegas casino will have to do so at one of MGM's properties, such as the Bellagio, Mandalay Bay, Luxor, Excalibur, Mirage, Aria, Monte Carlo or New York-New York.
Vegas casino operators Las Vegas Sands Corp. (NYSE: LVS), Wynn Resorts, Limited (NASDAQ: WYNN) and Caesars Entertainment Corp (NASDAQ: CZR) could also benefit from the estimated $400 million boost the fight could provide to the Las Vegas economy.
It's not often that a single event can materially affect quarterly earnings for all of the major Las Vegas gaming operators, but then again a "fight of the century" only comes around once every 100 years.
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