Category: Boxing

Why Is Pacquiao Vs. Rios Being Held In Macau? Taxes.

Manny-Pacquiao-v-Miguel-C-001Manny Pacquiao, arguably the second best boxer in the world behind Floyd Mayweather Jr., is due to fight this Saturday in Macau against Brandon Rios. The fight is to contest the WBO International Welterweight Title. It is the first fight for Pacquiao outside the US since 2006.

Pacquiao last fought in December, and just a couple of months after his loss to Juan Manuel Marquez he stated he’d be looking outside the US for his next bout. The reason? Taxes. Despite Nevada having no income tax, Macau is a much more lucrative destination for the fighter.

His team have made no secret of the fact that taxes are a huge reason in him shunning the bright lights of Vegas. His promoter, Bob Arum said : “Manny can go back to Las Vegas and make $25 million, but how much of it will he end up with – $15 million?”. Arum went on further to state that he’d have to be “lunatic” to fight under these tax laws. It is also important to note that Manny is not a resident of the United States, so they have no jurisdiction over his purse in Macau.

Manny earns roughly $25 million per fight in Las Vegas, but he should not expect the same amount in Macau. Industry analysts expect a payday of approximately $20 million. Nevertheless, he still comes out in front thanks to the disparity in tax rates. Macau has a top marginal tax rate of just 12%, while the state of Nevada has a top rate of 39.6%. Based on rough calculations, Team Pacquiao will net approximately $17.6 million from his bout in Macau, compared to $15.1 million if it were held in Vegas. A clear $2.5 million advantage.

Pacquiao isn’t the first athlete to take tax rates into their career. Golfer Phil Mickelson, who currently resides in California, has stated he will re-consider his residency as both federal and state taxes took a significant hike.