August 11, 2013
The mood among USGA officials at the party in the posh Hamptons summer home during the U.S. Women's Open at Sebonack on New York's Long Island in late June was ebullient. The presentation to the governing body for a new broadcasting contract in New York City earlier that day by NBC/Golf Channel had been, by all accounts, a home run, capped with a surprise appearance by Arnold Palmer, who stressed how important he felt it was for golf that NBC and Golf Channel expand its TV coverage of USGA events.
The money on the table was more than double the current $37 million a year combined package by NBC and ESPN and the promise was that the big three USGA events -- the U.S. Open, U.S. Women's Open and U.S. Senior Open -- would get more than 140 hours of TV exposure.
In Tommy Roy, NBC has the most-respected producer in golf; in Johnny Miller the most talked-about commentator. And the two Comcast-owned properties provide the twin exposure of a national network with brand equity established through nearly 90 years in broadcasting and a cable outlet that is the only station dedicated solely to covering golf.
This seemed like a no-brainer. Still, when the 60-day exclusive negotiating period ended Aug. 1, the USGA told NBC/Golf Channel it was going to listen to other offers. What NBC/Golf Channel didn't know is that contact between FOX and the USGA -- although not real negotiations, the USGA says -- had already been initiated.
In less than a week, at 6:32 p.m. ET on Aug. 7, the eve of the PGA Championship, an email from the USGA began dinging into inboxes announcing a "comprehensive multi-media agreement that makes the FOX network and FOX Sports 1 the principal domestic media partner of the USGA" for 12 years beginning in 2015.
While NBC/Golf Channel did not want to comment on the failed negotiations, sources familiar with the situation say the move ending NBC's 20-year business relationship with the USGA stunned executives at all levels. Sarah Hirschland, senior managing director for business affairs at the USGA says: "The Board made its decision on Wednesday morning and our president [Glenn Nager] informed NBC sometime Wednesday." The email press release went out later that day.
While terms of the deal were not made public, sources indicated to Golf World it was for $1.2 billion over the length of the contract, or about $20 million a year more than the NBC/Golf Channel offer.
"Financials are absolutely important but that was not the only factor," says Hirchland, neither confirming nor denying the $1.2 billion figure. "TV money is our largest revenue stream. We had very good choices."
The windfall from the FOX deal fattens what some in the USGA privately refer to as the war chest that might be needed if the governing body is sued in disputes over rules, especially equipment regulations. There have already been threats of legal action regarding the ban on the anchored putting stroke.
Another detail that remains vague in the negotiations involves whether or not NBC/Golf Channel was given an opportunity to match or beat the FOX figure, with multiple sources saying NBC/Golf Channel did not know it had lost the deal until receiving that email. Those sources said that while NBC/Golf Channel may not have been able to match the FOX money, they were willing to sweeten the offer on the table.
"We're looking forward to FOX Sports becoming home to the preeminent golf championship in the world," said FOX Sports Co-President and COO Eric Shanks. "We're committed to elevating coverage of USGA events on every level, infusing them with a new energy and innovation that will make every championship the best golf event on television."
For FOX, whose FOX Sports 1 joins NBC Sports Network (NBCSN) in challenging ESPN's dominance as a sports-only broadcaster, the expensive contract gives it a ton of golf content -- the USGA runs 14 national championships plus the Walker Cup and Curtis Cup.
The USGA gets a lot of money -- some cynically called it a cash-grab pure and simple -- and, it hopes, a broader audience and perhaps some fresh thinking in how to package golf on TV. The question is what does the golf fan get? The answer to that will only be known once FOX starts showing golf.
"First, we get the opportunity to expand our exposure and tell our story to a broader audience," says Hirchland. "We also get the opportunity to create some distinctiveness about the role we play in the game through ancillary programming like previews of major events, wrap-ups of lesser events and documentaries that use our archival material."