From high-risk to high reward, his bold bet to becoming a billionaire.
Floyd Mayweather, a retired American boxer, earned over $1.1 billion, making him the world’s highest-paid athlete for eight years between 2011 and 2018. Mayweather’s earnings were primarily derived from fights against Manny Pacquiao and Conor McGregor, with his peak earnings reaching $200-300 million annually.
What’s particularly impressive about Mayweather’s success is that he boldly decided to become a free agent and launch his own promotion company, Mayweather Promotions, in 2013, allowing him to keep a greater percentage of profits from his fights.
Prior to Mayweather’s gamble to become a free agent, he was an employee of Bob Arum’s Top Rank Boxing promotional company for 10 years. When a boxer signs with a promoter, they are essentially an employee and receive a set amount of money to appear at a fight, while the promoter fronts all the costs and takes on the risks.
Mayweather rejected an offer of $8 million to face Antonio Margarito in favor of a $20 million demand to face Oscar De La Hoya. When Arum turned down the offer and persisted in pressuring Margarito to fight, Mayweather decided to take the biggest risk of all by paying $750,000 to get out of his contract and become a free agent.
In November 2006, Mayweather earned $8 million to fight Carlos Baldomir, and that win generated enough hype to warrant a fight against Oscar De La Hoya in May 2007. Mayweather earned $25 million for the De La Hoya fight, which became the highest revenue-producing fight in boxing history up to that point.
From there, Mayweather’s earnings skyrocketed, and he launched Mayweather Promotions in 2013. Every single fight he participated in from that point on was either 100% produced by Mayweather Promotions or co-produced 50/50.
When he was the solo producer, that meant he fronted all the money for an event, including his opponent’s purse. In fact, weeks before the fight, he sent Saul Alvarez a check for $10 million from his personal bank account. That fight took place in September 2013.
He also paid tens of millions for the event space, vendors, food, beverages, etc. The downside was fronting all the costs, but the upside was that he got the lion’s share of profits. With the victory over Alvarez, Mayweather pocketed $75 million.
The calculations used in the fights between Conor McGregor and Manny Pacquiao were the same. When he faced Pacquiao, he covered all the expenses for the fight’s planning and gave Pacquiao a $50 million guaranteed cheque as payment in exchange for his participation.
Mayweather received 60% of the proceeds at the end of the night. His earnings from just one fight totaled $250 million. He applied the same strategy when he faced McGregor and made an astounding sum of money.
His accomplishment has demonstrated that being incredibly wealthy requires ownership rather than employment. A crucial turning point that opened the door for his future success occurred in 2006 when he was ready to take chances and buy himself out of his contract.