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  • The PGA Tour’s New $6.3 Billion, Nine-Year Media Rights Deal is Another Head Spinner

    Sorry VideoNuze readers, my head is spinning again, and this week it’s not just because of the stock market’s wild swings or the drama around the coronavirus. Rather, it’s because yesterday morning, while waiting in the doctor’s office, I read the Wall Street Journal article “Golf’s PGA Tour Gets Big Boost in TV, Streaming Rights.” The article described how ViacomCBS, Comcast and Disney are going to pay the PGA Tour over $700 million per year, up from the current $400 million per year, in a new nine-year media rights deal.

    That means the total value of the deal would be $6.3 billion. Add that to the 12-year, $2 billion international rights deal the PGA announced with Discovery in June, 2018 and that’s $8.3 billion in TV money coming to the PGA over the next decade - a good chunk of which will go to its players. 

    The deal essentially means leaving the status quo of CBS, NBC and Golf Channel handling live and weekend coverage, with ESPN+ taking over streaming from the PGA itself, which has worked with NBC Sports Gold and Amazon Prime. ESPN+ will provide 4,000 hours of streaming coverage per year across 36 PGA tournaments.

    I realize that the PGA striking a lucrative media rights deal may not mean that much to many VideoNuze readers. But to me it does, at both a personal and professional level. I am a golf fan; I’ve been watching golf on TV and playing the game since I was 12 years old. For 99.99% of the world, watching golf on TV is akin to watching paint dry. Even for golf fans it is something that is hard to do without multi-tasking (e.g. sending emails, texts, etc.).

    After four rounds, the winner is usually 15-20 strokes under par, as are dozens of other players who are just slightly behind. Depending on the winner’s place in the field that day, his reaction on the 18th green will range from smiling tightly in acknowledgement of the gallery, to tipping his cap, to pumping his fist (if his putt on 18 mattered) to really pumping his fist (if the putt really mattered). When it’s all over the winner will have a 2 minute or shorter green-side interview (often with his young adorable family in tow), collect the trophy and a $1 million+ prize (at this weekend's PLAYERS Championship it will be $2.7 million) and then hop on his private jet or NetJet to go home and enjoy, or head on to the Tour’s next stop.

    Professional golfers today are strapping (mostly white American, but sometimes international) young men, dressed in custom-fitted, high-tech clothing. The more successful a player is, the fewer logos they'll have on their cap and shirt (though there are exceptions to this rule). On a 500-yard par 4, they hit a driver off the tee 300-350 yards (or often further), then hit a 9-iron or less onto a green and try to one-putt for a birdie (or often an eagle). When things go awry they hit mind-boggling shots from behind trees, deep bunkers and unimaginable lies. The percentage of time they need to do any of this is very low.

    It should come as absolutely no surprise to anyone that the audience for watching all of this is declining (as is the number of rounds played by amateurs annually which is critical because non-golfers are very unlikely to become golf viewers). In fact, I read that the ratings for the past 10 broadcast windows for PGA are all down vs. last year sometimes by double-digit percentages. If Tiger Woods isn’t in contention on Sunday (which he rarely is), ratings are almost certain to be down.

    And these are not NFL-size audiences to begin with. If 3 million or so viewers tune in for an average non-major final round these days that’s a good day. So even if you believe sports are the firewall for linear TV/pay-TV, golf’s audience is so small it barely seems relevant (and I say this as a fan myself). Another thing to keep in mind is that golf viewers are seriously upscale (for further evidence, tune in some time and watch the repetition of ads from investment firms, insurance companies and luxury carmakers). Relatively speaking, upscale audiences don’t watch a ton of TV. They also tend to make smart choices about their money, such as, if someone they trust tells them they can save $50 or more per month dropping their traditional pay-TV service and switching to YouTube TV (which carries golf), they’re likely to do so.

    If I had a crystal ball, here’s what I’d foresee for PGA golf over the next 9 years: Lower ratings. Older audiences. Smaller galleries. Less cultural relevancy. Increasing difficulty for remaining viewers to feel “connected” to golf’s stars, especially to international winners, about whom little is often known and when from Asia, likely don’t speak English fluently. The TV viewers who remain will want to feel smarter as they watch - which means better integration of technology and data, for use by announcers who are often ex-players who are already challenged to use what’s at their fingertips or explain basic math about the probabilities of players’ shot choices working out.

    Back to the PGA’s new nine-year deal. It is hard to imagine there were any serious contenders for the primary broadcast/cable rights other than CBS and NBC/Golf Channel. Maybe WarnerMedia kicked the tires, for example (but AT&T is leveraged to the gills and likely couldn’t have afforded to pony up billions of dollars), or ESPN dabbled in the idea of doing more than streaming (also unlikely given D+ is Disney’s #1 priority). The PGA is very intertwined with CBS and NBC/Golf Channel and it’s hard to see how anyone would have elbowed them out.

    The PGA, in its announcement said this: “The nine-year deals will put us in a position to significantly increase player earnings, deliver more value to our tournaments and sponsors, and ultimately allow us to continue to grow our charitable footprint.”

    For many journeyman players, increased payouts will be welcome. But to the game’s upper echelon, the money is virtually meaningless. When Rory McIlroy won $15 million at the TOUR Championship last August, the money, after expenses, likely went straight into his bank account. When he - or a future #1 player - wins $25-$30-$35 million(?) in the 2029 TOUR Championship, it will be the same thing. And the audience will feel even less connected to the winner.

    It wasn’t that long ago when players like Arnold Palmer, Jack Nicklaus, Lee Trevino and others wore billowing shirts that became untucked and sweat-stained as their rounds wore on. They also donned cardigan sweaters and ill-fitting plaid pants. Successful past players had the requisite massive forearms, but they often had soft bellies as well, from too much time spent at the 19th hole. When they hit a really good or bad shot they emoted. Viewers could relate to them.

    Against this backdrop, one has to wonder what CBS, NBC/Golf Channel and Disney were thinking when they bid against themselves to increase their annual payout to the PGA by 75% per year? I don’t get it. If CBS and NBC/Golf Channel had offered nothing more than to continue their current deal, my hunch is they would have likely retained the rights.

     
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