Q&A with Stephen Espinoza: The man behind Showtime's rise in boxing
NEW YORK -- By any measurement, it's been a banner year for Showtime Sports. With a newfound commitment to boxing, Showtime has seen its ratings soar. In 2013, the network's championship boxing telecasts increased by 24 percent from last year and by 64 percent since 2011. The rise has positioned Showtime, perhaps for the first time, as a virtual co-leader, along with HBO, in the boxing broadcast industry.
Last week, Showtime Sports Executive Vice President and General Manager Stephen Espinoza sat down with SI.com to discuss the year that was.
SI.com: Let's get right to it: How many pay-per-view buys did Floyd Mayweather-Robert Guerrero do?
Stephen Espinoza: You know, I stopped answering that question because no one believes whatever answer I give. I say that half jokingly. I've been truthful in my public statements. I know there is a fascination in sports with numbers and salaries. I'm not sure where the fascination with the pay-per-view numbers came from. I think it's a little misplaced.
SI.com: Did you expect Floyd to fight Canelo Alvarez?
SE: It didn't surprise me that much. Call me a little naïve, but when Floyd said at the outset of the deal that he wanted to make his remaining fights big events and as competitive as possible, I believed him. That was one of the fundamental understandings we had in making this deal. I was more concerned it would fall apart over finances or some deal point, not because the fighters didn't want. It was the right fight at the right time.
SI.com: Taking Floyd away from HBO was a major coup for Showtime. Looking back, how were you able to do it?
SE: It was the result of a couple of things. One, the CBS platform was a big attraction for Floyd. Being able to be exposed not just on the CBS television network, but bringing in CBS Outdoor, CBS Interactive, CNET, TV Guide, TV.com and the whole range of assets, including the CBS Sports radio network, an outlet he didn't have access to. That was, from a business standpoint, the fundamental attraction.
From a non-business point, I think some irritations had built up [with HBO] over the years. A fresh start with someone that had a different perspective was probably appealing to him. After a year, in hindsight, I couldn't have asked for it to have gone any better. There were things I'd like to improve on, but overall, I'm thrilled with it
SI.com: What would you improve?
SE: I think we missed the mark on the messaging of Mayweather-Guerrero. We made it a little bit too much about Guerrero the person and not about Mayweather-Guerrero the matchup. That was intentional. It was a choice. We look at the Mayweather events not as boxing matches, but events. To sell it as a boxing match undersells it. Our focused was maybe misplaced, in hindsight.
SI.com: You guaranteed Floyd a lot of money. Is it possible for him to meet your financial expectations?
SE: There is a lot of misinformation out there about the deal and about the way it is structured. That's the risk of not handing out the details of the deal. It comes with the territory. There are no $12 million losses, no financial disasters on his fights, the first or the second. We're not going to create a situation in the future where that happens again. Floyd is going to get paid very well, well more than anyone else in the sport. More than anyone in any sport, really. It's commensurate with his value but it's not going to be under a deal structure which is a major constraint on Showtime Sports or the company as a whole. We have structured a flexible deal that will be beneficial for both sides.
SI.com: The perception is that Showtime guaranteed Floyd tens of millions, no matter who he fights. How close is that perception to reality?
SE: We have made certain guarantees based on certain levels of fights. That much is true. Where people misunderstand the deal structure is whose cost are whose, who pays for marketing and what additional cost beyond these guarantees Showtime normally has to bear. If you look at a guarantee of X plus a bunch of expenses, that's how you get to crazy numbers like $12 million, $13 million losses. If you understand the PPV business and say there is a guarantee of X and some additional expenses but not excessive, then you understand it is an aggressive but realistic business model.
SI.com: Are you outspending HBO?
SE: I think the perception [that Showtime is spending more on boxing than HBO] is accurate. If you look at the number of events, the number of fights, the stature of the events that each network has done, I have to conclude that the budgets are very similar, or that ours is even larger.
SI.com: Why was investing so much in boxing the best course for Showtime Sports?
SE: This year, from an overall sports perspective, our strategy was to re-prioritize our resources and personnel into high quality, high impact programming. We made the decision not to renew Inside NASCAR and not to move forward with Strikeforce MMA. Those were simply because we just weren't getting the return on the investment that we thought. That freed up money to do some other things, like launch 60 Minutes Sports, do a couple of documentaries and, in a sense, double down on boxing. I've never been one to subscribe to the 'boxing is dying' fallacy. I think boxing is stronger now than it has been in maybe the last 20 years. You have more networks televising more hours, both in English and Spanish, than we have seen in recent past. We have a depth of talent that exceeds what we have had in the last 20 years, particularly in the mid-range weights. Demographically, boxing still draws an attractive audience. It's one of the few sports that as a premium network we can participate as a leader in the sport.
SI.com: Other promoters use the phrase "closed shop" when it comes to Showtime, obviously referring to your close relationship with Golden Boy Promotions. Your reaction?
SE: I understand the perception. What the public isn't privy to are the things we pursued and didn't get. The Sergio Martinez fights we bid on and didn't get. The Gennady Golovkin bids we put in. The Mikey Garcia fight that we tried to get. Ultimately we didn't get them, and that's part of the business. The result may appear that we are not pursuing other things, but there are definitely other promoters that we are engaged with. By the same token, the majority of talent is concentrated in two promoters. One promoter [Top Rank] is pretty much exclusive to HBO. The other promoter, Golden Boy, for my money has the deepest talent base anyway. Of the talent available to me, most people would look at it and say the most attractive talent is with Golden Boy. So it's a combination of the way the market is set up and the way that some of the chips have fallen.
SI.com: Hold on....you bid on Martinez and Golovkin fights?
SE: Yes. And immediately after losing out on them, those fighters were signed by HBO to multi-fight deals. I looked at it as a compliment.
[Writer's note: Golovkin's promoter, Tom Loeffler, told SI.com that while Golovkin did visit the Showtime offices, no formal offer was made]
SI.com: Boxing has had a good year, I get that. But can boxing really grow more into the mainstream when the sport is basically divided into leagues, when we can't see obvious good fights, like say Danny Garcia-Ruslan Provodnikov?
SE: Candidly, no. That is a major hindrance. I don't want to sound like I'm pointing the finger at everyone else, but I have no problem with Provodnikov or any other 140-pounder calling me up and trying to arrange a fight with Danny Garcia. If the fight makes sense, and it's an attractive one, I'm happy to put it on the network. It doesn't matter if it's promoted by Top Rank or Artie Pelullo or anybody else. Unfortunately that can't be said for the other network. I'd love to do Provodnikov-Garcia.
SI.com: Do you still care about Mayweather-Pacquiao?
SE: I do because the casual fan does. There can be a tendency among hardcore boxing fans to turn their noses up at what the casual fans want or say but the casual fan is critical to the continued health of the sport. If the casual fan wants that fight, and they definitely do, it's something I think that is worth trying to achieve. If there is something the casual fan wants, we would be wise to listen.
SI.com: Mike Tyson-Lennox Lewis was a shared pay per view by HBO and Showtime. Could you ever see a similar deal for Mayweather-Pacquiao?
SE: I could see participating if it was necessary. But the thing that made Tyson-Lewis necessary as a co-production is missing in Mayweather-Pacquiao. Tyson and Lewis were locked up into long term contracts with their respective network. That's not the case for Pacquiao. Pacquiao is a free agent that is under no contractual restrictions. I've taken the step of investing in Mayweather, financially and otherwise, and supporting him with a long term contract. HBO didn't think Pacquiao was worth that. I don't know why they should be rewarded by being kissed into the deal.
SI.com: HBO is known for building stars. Can you?
SE: I think the other network takes credit for a lot of star building that they didn't do. Off the top of my head, I think Canelo was only on HBO network three times. HBO didn't create Canelo. Neither did Showtime. Televisa created Canelo. When I hear that he is an HBO-created star or Danny Garcia is an HBO-created star, I don't know what that means. Even Mayweather. 24/7 is an incredible tool. What Ross [Greenburg] created has turned into an entire industry in sports. But Mayweather created Mayweather. He created the character and the marketing approach that made him what he is.
I'll claim Garcia as a star we have grown. I'll claim Peter Quillin. I'll claim Leo Santa Cruz as a guy we have groomed from ShoBox to CBS to one day being a headliner. Omar Figueroa isn't a star yet, but give him another year. I understand where the perception comes from because HBO has a lot of history with a lot of names. For us, it was really this year that we got our feet under us. With time, that perception disappears.
SI.com: The viewership numbers are an obvious measure of success. But are there other metrics you look at internally?
SE: The first criteria for measuring whether we are doing things right is looking at the quality of our fights. If we are not doing great fights, it doesn't matter what we are doing for ratings because what is the point of getting a bunch of people to tune in for something that wasn't entertaining. Once we have established great fights, then it is a combination of a couple of things. It's ratings. We don't look at absolute numbers since HBO has a significant advantage in the number of subscribers. We look at the trends. We look at viewership growth. We finished 2013 with the highest average viewership for championship boxing since Showtime started being Nielsen rated, in 2004. We are on the right trajectory, audience wise.
But it's also to what extent are we successful injecting our events and the personalities on our network into the sports culture. It's a little anecdotal. We did a good job of capturing the sports culture with our September event. But there are other examples. Canelo-Austin Trout. You look at that, we contributed to an event that attracted 40,000 people and reverberated in different ways. That's success.
SI.com: All the guys who performed in big fights this year are probably going to want more money next year. Can Showtime afford that?
SE: That's more a promoter issue than ours. One of the things that we have been focusing on is treating the promoter relationship as a partnership. Together, we can create a bigger event that helps both of us. It helps with the afterglow effect that the network gets. And it helps their gate. If we're successful in building fighters going forward, their gates are going to improve as a result, and that is going to take some of the pressure off of us to keep increasing purse amounts. It's a nice problem to have. If we have a half dozen new stars next year, I'll figure it out.
SI.com: Canelo is supposedly going to fight three times next year, all on pay-per-view. Were you involved in that decision?
SE: We talked about it. I look at it slightly differently. I think we look at each fight individually. Given Canelo's popularity, it's easy to see why you would be tempted to put him on pay per view every time. But I think for the continued expansion of his fan base, for the benefit of the network, there may be situations where it is better to put him back on the network. As much as I'd like to impose more long-term structure on the scheduling of boxing events, just by the nature of the sport it's practical to do that only so far. We all know how quickly things change. I have little confidence talking about what the sport may look like next July.
SI.com: Do you and [Golden Boy CEO] Richard Schaefer disagree on anything?
SE: (Laughs) Not confrontational disagreements. That's one of the good things about knowing somebody as long as I have known him, which is going on 15 years, and having worked with him so closely, we can be completely candid and blunt. It doesn't affect the relationship. I think there is a perception that we operate in lockstep on everything. Our view points differ fairly often. We are able to come to a compromise pretty quickly. Richard is a practical guy, and so am I.
SI.com: Say HBO and Golden Boy start doing fights again. What does that mean for Showtime?
SE: That possibility doesn't frighten or upset me. I don't wish bad fights on HBO. I don't cheer for them to fail. Quite honestly, I want their fights to be competitive and entertaining and help continue to grow the sport. If Golden Boy and HBO getting back together helps the sport, more power to them. It's a positive thing. I don't think Fox NFL hopes that NBC has bad games. They all benefit from the continued growth of the NFL. I think when it comes to boxing, we have the better fighters and the better fights. But I hope they continue to keep working to grow the sport.
SI.com: Bob Arum has had some harsh words for you. Think you could ever work with him?
SE: Bob's comments never cease to surprise me. Ultimately, that's not going to determine whether we as a network acquire good fights from him. To me, it makes no difference who we are acquiring the fight from if it is a good fight. That's why the focus on the Golden Boy relationship is sort of irrelevant. If we are putting on good programming, what does it matter? If the fights we are doing are premium level, top quality fights, who cares where they come from? Whether I bought them from the guy off the street or from Golden Boy, it's all the same to the guy at home watching. No one tells CBS they are doing too many Jerry Bruckheimer series. If they are good, you keep going back to the well.
SI.com: Do you plan on tweeting about this interview?
SE: I never plan my tweets in advance. Which is why they are probably more entertaining than they should be.
SI.com: Lot of matchmakers out there with suggestions for you....
SE: One of the flaws in boxing is also one of its greatest attractions. In a sense, all of boxing is fantasy boxing. There is no schedule. There is no set matchups. There is no saying a guy has to stay in one weight class. Anyone can send a tweet to a network exec and say hey, how about Leo Santa Cruz against Gennady Golovkin? As someone that is a fan and an executive, I enjoy participating in that. It creates a connection with the fan base. That's something more networks, more programmers should do. Ultimately, being in touch with those fans gives me a better sense of what the marketplace is, as opposed to sitting in this office with the door closed scribbling on a notepad.
SI.com: Would you like to use this forum to announce Floyd's next fight?
SE: (Laughs) Well according to Twitter, everyone already knows, right?
SI.com: And it will be...
SE: Yeah, no. It will come in some late night tweet when people will least expect it, I'm sure.