Canelo vs. GGG 2, pay-per-view and small business discrimination

The Canelo vs. GGG 2 is the hot pay-per-view fight of 2018. The average consumer can buy it for $84.99, but small businesses are kept out of the loop.

On Saturday, Sept. 15, Canelo Alvarez and Gennady Golovkin meet for the second time to settle unfinished business. They fought to a draw a year ago, which is why the rematch is so marketable. Every year, the sport of boxing produces at least one megafight that captures the attention of the general public. Canelo vs. GGG 2 is 2018’s blockbuster boxing pay-per-view event. Unfortunately, small businesses are virtually forbidden access to the fight.

Any individual wishing to purchase Canelo vs. GGG 2 can do so through their cable providers or online at the cost of $84.99. It’s a high price, but not unusual for a fight of this magnitude. Last year’s bout between Floyd Mayweather Jr. and Conor McGregor had a pay-per-view price tag of $89.95. The 2015 contest between Mayweather and Manny Pacquiao had a pay-per-view cost of $99.99. The cost to televise Canelo vs. GGG 2 for the average consumer is high but not outlandish. It’s a different story for big business and unattainable for small businesses.

Every commercial business that provides television to its patrons has to have a commercial television account. Cable and other television providers charge businesses at a higher rate than residential prices. They do this because they know that businesses purchasing their service have multiple customers appropriating their product. This makes sense. But when it comes to pay-per-view events, uniform pricing for businesses goes out the window.

HBO is the network responsible for producing and broadcasting Canelo vs. GGG 2 via pay-per-view, but it works with a closed circuit event company called G & G Sports Productions. HBO’s team films and produces, but G & G controls who has access to pay-per-view events.

When a household buys a pay-per-view fight through their cable provider, it’s G & G who manages the sale and receipt of the event, not HBO or the cable provider. Everything runs through G & G.

When a bar, restaurant or other business wants to televise a pay-per-view sporting event, they need to contact G & G or the closed circuit company managing it to obtain a license. The price of a license for a massive boxing match is outrageous.

In 2015, Deadspin published an article discussing how much money local bars had to pay to televise Mayweather vs. Pacquiao. They called G & G (then J & J Productions) pretending to be a bar asking for a quote for a license to show the fight. Here’s the information Deadspin received from G & G:

"Prices are determined according to the fire code’s limit for the business. If it holds 200 people, this event will be $6,500. For 500 people it will be $15,500. We have a program that gives us a price when we put the fire code limit into it."

Based on Deadspin‘s quote, a bar with a 200-person capacity would need to make $32.50 per customer to break even. A bar with 500 people would need to make $30 a person to break even. That’s a hefty price tag for a bar, but if they can seat 200-500 people, then they are a large business and most likely a chain. How much would a major boxing pay-per-view event cost a small business with far fewer customers? FanSided found out, and it’s not pretty.

Jack Touma is the proprietor of a small cigar shop called ST Cigars in Algonquin, IL. ST Cigars provides seating for about 15 maximum customers to sit back enjoy a cigar. Touma’s shop is open until midnight on Saturdays, so he wanted to have some friends over to the shop to watch the fight and enjoy their favorite stick. FanSided was present when Touma called G & G for a quote to televise Canelo vs. GGG 2.

While talking to a G & G representative, Touma cited his shop’s full capacity as 15 people. He also offered his address and his business’s website which includes photos of his shop as evidence that his business is small.

The representative put Touma on hold while he conferred with his manager. When the representative came back on the line, he gave Touma his quote: $2,500. That’s a $2,500 quote for a business that seats 15 people at most. Let that sink in for a moment.

Touma’s eye’s widened when he heard the number, and his face went blank. He pointed out how ludicrous the quote was, but the representative explained he was just repeating what his boss told him. He had no power to change it.

G & G quoted Touma the price that they charge for a license of a business that seats 100 customers. For a business that has a max volume of 100 people, they need to make $25 per customer to break even. ST Cigars holds nowhere near 100 people. Touma would need to make more than $166 for each of his 15  customers to break even on the fight. That’s a lot of money for one cigar.

Touma continued to protest the quote, but the representative’s hands were tied. The representative even admitted, “Yeah, I know. That price is crazy.”

If it was any solace to Touma, the representative agreed with his assessment of the quote.

Touma offered his perspective as a small business owner:

"I feel discriminated [against] as a small business owner. And for a bunch of friends, 10 to 15 people, to sit and watch the fight while smoking cigars to pay $2,500 because that’s the minimum they can charge for 100 people — I think it’s ridiculous."

Touma isn’t ordering the fight. G & G’s refusal to provide a quote for businesses with less than a 100 total occupancy essentially prohibits small businesses from viewing their events. That’s not fair.

Touma provided a solution:

"They [G & G] should have quotes for small businesses and they [can] go with a $2500-$6000 [quote] for big corporations but not for us. So now we’re punished, and we cannot enjoy the fight because we’re small businesses? That’s ridiculous."

It is ridiculous but nothing’s going to change. Third party closed circuit promoters like G & G only care about money. If your business brings in less than 100 people, then you’re too small to deal with in their eyes, even for an event like Canelo vs. GGG 2. It’s not fair, but apparently, that’s business.