New insights on the Louis-Schmeling paradox: determinants of demand for subscription and pay-per-view boxing

Abstract

ABSTRACT Research question Studies considering demand for professional boxing are almost completely absent from the Sport Management/Sports Economics literature. Little is known about consumer preferences for a sport which attracts global attention but is unique insofar as it is exempt from standard sporting institutions maintaining competitive balance. We use two new datasets to ask, what are the determinants of main event viewership (Nielsen ratings) and pay-per-views buys? In addressing this question we offer new insights on the uncertainty-of-outcome hypothesis and extend research on direct demand for individual sport. Research methods The datasets comprise of 210 HBO and Showtime broadcasts from 2006 to 2018. We estimate generalised linear models, controlling for economic determinants, bout features, boxer popularity and scheduling factors. Results and Findings For main events, we find conflicting evidence to the uncertainty-of-outcome hypothesis. Fans show a preference for rematches, domestic boxers and heavier divisions. NFL broadcasts and earlier scheduling negatively impact viewership. For pay-per-views, we find a positive price effect. Expectedly, Floyd Mayweather Jr increases buys. Both categories exhibit a negative trend with viewership and PPV buys declining over the sampling frame. Implications The results offer new evidence that is contrary to the uncertainty-of-outcome hypothesis for an individual sport. The findings point to differences in consumer preferences between two sources of demand for the same sport. Practically, these can inform the strategic decision-making of broadcasters, promoters, advertisers and potential new broadcasting entrants.