Business

The Pac Man effect: Boxer boosts Philippines economy

Fans of Philippine boxing superstar Manny Pacquiao pose for a picture by Pacquiao's statue at the bay side of Manila on November 26, 2010. Image copyright AFP
Image caption Pacquiao's statue in Manila is a major attraction for locals who consider him the 'Philippines pride'

In the southern Philippines city of General Santos, there is a dusty little barangay, or village, where boxer Manny "Pac Man" Pacquiao recalls having slept in the streets, starving and hungry.

He grew up there with a family so poor, they often went to bed having only drunk warm water for dinner. To earn money, he dropped out of school as a teenager to fight at local fiestas for a winning purse of 100 pesos, or less than $4 (£2.60).

In a sign of how far he's come, this weekend he earned at least $100m in the "fight of the century" against American rival Floyd "Money" Mayweather Jr. The highly anticipated bout took about half a decade to organise and is the richest event in the history of boxing.

Pacquiao wasn't able to defeat Mayweather. Despite his loss, the 36-year-old remains a hero in locals' eyes and there is speculation he may turn to politics and possibly run for president in the coming years.

Following his sporting success, he's become so influential in the Philippines it can be said that he single-handedly boosts the economy each time he fights.

Image copyright Getty Images
Image caption Filipino boxer Manny Pacquiao (L) is widely expected to run for the country's top office, currently held by President Benigno Aquino III (R)

Some analysts have gone so far as to claim the Philippines' currency the peso rises ahead of his matches. One media report said the peso strengthened against the US dollar in six out of 10 of his last critical fights.

'Virtual standstill'

Whenever Pacquiao enters the ring, the South East Asian nation is famously said to come to a virtual standstill. This past weekend was no different. The normally gridlocked streets of its capital, Manila, stood mostly empty in the hours leading up to and during his match against Mayweather.

Across the country, millions gathered in private homes, town halls, schools, cinemas and stadiums to watch him fight across the Pacific, cheering loudly each time he managed to land a blow on his arch rival.

It is estimated that seven out of 10 people in the Philippines watched the match on Sunday. And that level of viewership translates into a lot of money.

Tickets to the match at the MGM Grand Garden in Vegas officially ranged from $1,500 to $10,000. They were sold out in minutes.

In the Philippines, most people would never be able to afford that. It is estimated that more than a quarter of its population live under the poverty line, or with less than $2 a day.

However, many paid out of pocket to watch the Pacquiao-Mayweather match at home, a bar, hotel or casino, and a variety of businesses have cashed in.

Image copyright AFP
Image caption A post office employee shows commemorative stamps of Philippine boxing icon Manny Pacquiao

Sky Cable charged a pay-per-view rate of 2,500 pesos. Others paid 800 pesos per head to watch Sunday's fight in a cinema. Operator SM Prime Holdings said it sold 100,000 tickets for showings in 200 of its 300 cinemas.

Even the Philippines' biggest power distributor Manila Electric (Meralco) benefited. It said electricity usage is about 10% higher during Pacquiao fights. On the islands of Palawan and Mindanao, residents were advised to turn off their refrigerators to save electricity ahead of the match due to intermittent power outages.

Then there are the lucrative sponsorship deals.

When Pacquiao first went professional, he only had one advertiser willing to pay for their logo to feature on his trunks. In Las Vegas on Sunday, they generated about $2.5m after at least six companies paid for a space on his shorts, including Philippines telecoms giant Smart Communications.

Image copyright AFP
Image caption Manny Pacquiao has a range of sponsorship deals with brands like Nike, Rexona and Nestle

It's also impossible to escape his mug in the sprawling capital of Manila; its plastered on flyers in shopping malls and in multiple sections of the daily newspapers. Brands such as Nike, Rexona and Nestle's Butterfinger Peanut Butter Cups also hawk merchandise with his name or likeness on them.

Small businesses have benefited from the "Pac Man effect" as well.

In a small shopping mall in Quezon City, a suburb of Manila, the Bunny Baker café has seen an increase in traffic after its owners created a life-sized cake of the boxer.

"I think Pacquiao is phenomenal for the economy," co-owner Zach Yonzon said.

"Whenever there is a fight, everybody goes out. If you're not watching at home, you're going outside to eat at a restaurant.

"When Filipinos are happy, they spend money," he added with a smile.

Money matters

The biggest and simplest way Pacquiao contributes to the local economy is through taxes.

Image copyright AFP
Image caption Manny Pacquiao's face is being sold on shirts, dolls and postage stamps

As one of the world's most highly-paid athletes, Pacquiao is the Philippines' top individual taxpayer despite having been accused of under-declaring his income.

He drew $42m in earnings last year, according to Forbes, a figure that will exponentially increase following his fight with Mayweather. Their bout was the richest in boxing history having generated as much as half-a-billion dollars.

Pacquiao, who dropped out of high school aged 14, has also demonstrated business savvy over the years.

In General Santos, known as the country's tuna capital because of its fishing industry, Pacquiao has set up a gym and hotel, where you can buy an "8 World Title" or "Pound for Pound" Pacquiao burger at its Roadhaus restaurant.

The poverty that Pacquiao famously grew up in is long gone. Now he lives in large mansions and will never go hungry again. And that's why he has captured the Philippines' consciousness.

His is the true Cinderella story, and millions of Filipinos still aspire to emulate his escape from grinding poverty and make their own mark on the world stage.

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