The 12-year deal the USGA struck in August with Fox to broadcast their championships on Fox and Fox Sports 1 is more than remarkable. It's unprecedented and stupefying.
The USGA signed a contract for two-and-a-half times the previous annual licensing fee with a company that has never broadcast a golf tournament of significance. It locks them in to that relationship for a dozen years, sending over $1 billion to Far Hills, N.J., in exchange.
How that happened deserves some in-depth, honest, startling reporting. That's precisely what Ron Sirak did for Golf Digest's November issue. The story, entitled "The Fox & The Peacock" (available online), is a staggering look into the mindset of the USGA and the years-long view it took in approaching a negotiation it knew could and would impact their future for years to come.
My roots are in blogging, not reporting. Don't get me wrong: I love reporting a good story, but I began writing in reaction to the good (and bad) work of others. This story made me react in a way I remembered so vividly from years ago. Instead of just sharing the link with you, I feel compelled to interject with some commentary of my own.
First, go read Ron's piece, in its entirety. It's very good, and it'll take 20 minutes of your time -- maybe 40 if you're so stunned that you choose to read it again. I'll be here when you're done.
So what did you think? Crazy, right? The only gripe I had with Ron's story is that he didn't have enough sources available to him on the Fox side of the equation. And that's where my questions begin.
1. When did Fox decide that they wanted in on golf?
Commissioner Tim Finchem has acknowledged that Fox has shown significant interest in golf in the past with the PGA Tour, getting somewhat in-depth into discussions about a rights agreement. But it's obviously been known for years that the USGA TV deal would be up for grabs in 2013 given their agreements with NBC/Golf Channel and ESPN would end in 2014.
So when Fox announced it would be converting Speed Channel into Fox Sports 1, did they eye the USGA rights package then? Or when they were struggling to get the per-subscriber fee they wanted for FS1? Ultimately, they got nowhere near what they wanted from cable operators for the network when it launched Aug. 17, so the deal did little to boost their initial monthly fee.
Did Fox reach out to the USGA? It seems their bid was unsolicited, or at least it's classed that way by Golf Channel sources in Sirak's story. However, maybe the USGA -- as well its media negotiator, Wasserman Sports Group -- thought of Fox as a potentially cash-loaded dark horse. They could have tickled Fox to let them know they wanted a bidding war for the rights, rather than simply running back into the arms of familiar partners.
2. Why is USGA president Glen Nager so obsessed with Masters ratings?
A fascinating and illustrative insight in Ron's piece is the obsession USGA president Glen Nager supposedly has in the Masters beating the U.S. Open in the ratings every year since 1974. (By the way, that's also an illustrative fact. The '74 Open was the "Massacre at Winged Foot," where scoring was almost hilariously awful. A memo to the USGA from this karma-based fact: No one wants to watch players get embarrassed. Protecting par is unimportant.)
But why does Glen Nager, a lawyer by trade and a relative newbie to golf, care? He's only been involved with the USGA since 2006, when he began as the body's general counsel. Does it matter to him because he wants to be the boss -- or, at least, remembered -- of the organization behind the preeminent golf tournament in the world? Was this merely an ego play, trying to demonstrate his ability to flex his brain muscle to steer the USGA in the direction of Wall St. instead of Club Drive?
Perhaps that also explains Nager's defiance in the news conference to announce the USGA's decision to implement the proposed Rule 14-1b which bans anchoring. Nager wants to show the USGA -- and, by association, he -- has the power to shape the game.
Back to Augusta, though. The reason the Masters beats the U.S. Open is multi-faceted. It's the first major of the year. It's in April, when the sporting calendar is relatively light, with the NBA's bland regular season soldiering on and the NHL driving to the playoffs in relative anonymity. Meanwhile, baseball's long ride is just starting.
By June, baseball is rolling, people are thinking about football and the NBA and NHL are at their peak piquing the public's interest. Sorry, golf.
Also, the Masters brand is simply better than that of the U.S. Open. The Masters has mystique. It has tradition -- one that people love and associated with happy roars instead of dejected groans. It has 56 minutes of golf action per hour, with no commercial obstruction to watching golf. It has pimento cheese sandwiches, for cheap. It has Augusta National Golf Club, one of the top two golf courses in America.
Netting $93 million per year to get the attention of a network that has never broadcast golf and, I assure you, won't land larger audiences for the U.S. Open, does not help the brand.
3. Why sign a 12-year contract with Fox?
Sports rights contracts are stupid long right now. Leagues and sports networks are well aware of the eventual sports-rights bubble, so they're locking in long deals now.
Leagues do it to get what they perceive is the max dollars available for their rights before the market forces of Web broadcasting drive down their price.
Sports networks do it because their relative explosion, with the advent of CBS Sports Network, NBC Sports Network and Fox Sports 1 (and 2), they need to fill a 24-hour grid. With so few rights deals available in this environment, sports networks go out of their way to sign a long-term deal to not only lock in their price but lock out the growing competition.
But if Glen Nager and the USGA wanted to be more like the Masters, then why sign a 12-year deal? The Masters works on one-year contracts with CBS and ESPN. It allows them to dictate how their tournament is broadcast, albeit at the expense of some rights money. The USGA seems to believe they have their cake and a padded bank account, too, getting Fox to agree to all of their branding demands and slapping a huge price tag on the privilege. However, the USGA has also signed on to be the golf training wheels for Fox Sports, which may be required for several years.
4. What is the USGA going to do with all of this money?
The $93 million annual fee Sirak reports is astounding. That means Fox is basically paying $100 million per year for the U.S. Open and taking the other programming for free (really, probably at a loss). But what is the USGA going to do with the extra $56 million per year they'll be getting starting in 2015 over what they rake in now? The USGA has nearly a quarter-of-a-billion dollars in assets. Another $1 billion is great, but what will it be used to do? Will that billion be auditable? How transparent will the USGA be with the public about this money?
Clearly, it's not about stashing cash to protect against a potential lawsuit from players or equipment manufacturers about rules changes -- known or unknown. If the USGA can't fight a lawsuit with the massive assets it already has, then what it is planning to do? It could roll back the allowed distance the golf ball travels, the likes of Titleist could be happy to pony up a lawsuit, but does this new cash stream imply the power-playing USGA will fight any civil action to the death? There's no money in manufacturers suing the USGA, but there is a lot of money is instead taking their marketing message to the game's masses and suggesting they buy the same equipment they always have -- legal in the USGA's eyes or not.
Frankly -- and this comes from someone who applauds the equipment sandbox the USGA has tried to create with the anchoring ban and grooves makeover of 2008 -- the equipment rules have done more to deteriorate their reputation than anything. There are passionate forces on both sides of that rule, meaning potentially millions have been turned off to the USGA because of where they stand on regulating the game. It has nothing to do with the U.S. Open.
But if the USGA is looking to spend some of that sweet, sweet cash on building the brand, a great pair of places to start is with the creation of a U.S. Senior Women's Open and boosting the purse of the U.S. Women's Open to equal that of the U.S. Open, making it by far the most lucrative event in women's professional golf.
5. What are the consequences of this deal for the TV audience for USGA events?
The U.S. Open currently limits NBC and ESPN to six commercial minutes per hour, along with another two minutes for promos. That $93 million coming from Fox will likely not come with that same viewer luxury. Fox has to at least recoup its costs, and the U.S. Open is the only place it can do realistically do it. The U.S. Open telecast could quickly become more like the PGA Championship, playing a form of alternate shot with golf action and commercial messages seemingly in almost equal doses.
The U.S. Open audience also gets to watch the petri dish that will be the broadcast and production teams for the championship. Who will call the U.S. Open on Fox? Joe Buck? Gus Johnson? Who will be the analyst? Greg Norman? For how long? The voices inside the ropes and the other towers will be just as important. And less than two years out from the 2015 U.S. Open, Fox is happy to be light on particulars about their team. The U.S. Open is planned out eight years in advance, so Fox had better get crackin'.
On top of Fox being new to the scene, their first Open will be at Chambers Bay, a new U.S. Open venue whose awkward setup will prove a challenge for players, spectators and broadcasters alike. The telecast in Washington was already going to be difficult, but the USGA claiming it can hand-hold Fox through it at the start may be too bold of a claim.
6. Can the full-time, permanent staff of the USGA take their power back?
This 12-year deal was largely orchestrated by USGA president Glen Nager, current employees of Wasserman Media Group and former employees that recently jumped ship to the USGA staff or, even worse, their Executive Committee. Those people will not be involved with the USGA several years into the deal, either be attrition or USGA term limits.
Meanwhile, the golf people that run the USGA day-to-day, including venerable executive director Mike Davis, have been seemingly minimized in power and potency by what are essentially temp workers. If that doesn't give staffers the feeling that they and their work have been neutered by a drive to make the USGA more of a business than a passion for golf, then there's something wrong. How can morale at Golf House be high when it seems so clear the motivating factor in this deal was money, not the Good of the Game (TM)?
And if you made it through the last 1,900 words and are willing to read some more very good questions for the USGA, go read Geoff Shackelford's take on the Sirak piece. He wrote the quintessential book laying out the battle for the game's future, so his view into the USGA's transformation and decision-making process is a must-read.