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The Fox & The Peacock

How a network that has never done golf worked with a new faction at the USGA to stun NBC and take the U.S. Open in a billion-dollar raid

November 2013

"You're right from your side, and I'm right from mine. We're both just one too many mornings and a thousand miles behind."
Bob Dylan, "One Too Many Mornings"

Seminole is the kind of golf club where openly doing business is frowned upon, thought of as kind of a dirty nuisance that need not intrude upon leisure time. Still, because of the powerful nature of its membership, business happens there. The Donald Ross gem not far from the high-end shops on Worth Avenue in Palm Beach was where Ben Hogan, a four-time U.S. Open champion, liked to prepare for the Masters. And over the years many of the most powerful in the game—presidents of the United States Golf Association among them—have been members.

Like Augusta National, Pine Valley and Cypress Point, Seminole is a place for those who have multiple memberships, and because the clubs are havens from the hustle and bustle, important people get important things done there. That was the case on March 4-5 this year when five top USGA executives hosted four key officials of NBC and Golf Channel at Seminole in what began a process that ended with a stunning $1.1 billion contract for the USGA—$93 million a year for 12 years beginning in 2015—and reshaped the broadcast landscape of golf by bringing FOX Sports into the sport.

The fact that the meeting was at the place Hogan readied for the Masters is not without irony. According to sources within and outside of the USGA (almost three dozen were interviewed by Golf Digest for this story), the seven words that most motivated the governing body's president, Glen Nager, to make a bold break and bring FOX into the mix were these:

"The Masters: A tradition unlike any other."

From the NFL playoffs in January through NCAA basketball's March Madness until the elite field arrived at Augusta National in April, those words echoed in the ears of Nager from CBS broadcasts and fueled his feeling that the U.S. national championship had fallen behind the Masters in stature as well as TV ratings. He believed the public's perception of the USGA as the governing body of the game, a role it shares with the Royal & Ancient Golf Club of St. Andrews, had diminished as well.

The competition for the USGA rights was ostensibly between NBC, which has televised the U.S. Open since 1995, partnering with its cable cousin Golf Channel (both properties of cable giant Comcast) against ESPN, which will do its 33rd and final U.S. Open next year under the existing contract. But it was FOX, the outsider, that apparently had the inside track, partly because it was a novice in golf.

In Tommy Roy, NBC has arguably the most respected producer in golf; in Johnny Miller, the most talked-about commentator. And the two Comcast-owned properties provide the exposure of a national network with brand equity and a cable outlet that is the only station dedicated solely to covering golf. But in FOX, the USGA could have a loud voice in entertainment, news and sports with only one golf property to ballyhoo. To negotiators for the USGA, it appeared to be a platform unlike any other.

Nager, chair of the Issues & Appeals practice at the Washington law firm Jones Day, has a way of teeing up a sentence with a snorted harumph of a half-laugh that seems to say, "Listen closely; this is important." And usually it is. A lawyer doesn't get to argue in front of the U.S. Supreme Court 13 times—the first when he was 28—unless he has the smarts to craft a solid game plan and the agility to subtly redraw that blueprint on the run.

During an interview with Golf Digest, Nager refers to his notes to build the framework of his argument, then puts the finishing touches on his design with succinct, often pointed responses to questions, at times dismissing assertions with an abrupt, "That's false." And then he explains why.

A relative newcomer to the game, Nager, 54, took up golf in his 30s and wasn't active in the USGA until becoming general counsel in 2006. He merely smiles and offers a shrug when asked if it's true he scored a rare 100 on the Rules of Golf test. Behind the smile is the heart of a lawyer, a litigator and a negotiator. He is also a man hellbent on reinventing the USGA to make it what he sees as more relevant. NBC/Golf Channel executives who met with him that day at Seminole heard evidence of that.

"I told them that if you went back to the '70s and looked at TV ratings and other indicia of what makes a championship great, the U.S. Open was considered the premier major championship in golf," Nager says. "And that if we looked at indicia today, the Masters is considered the No. 1 major in golf. I said I wanted to work with a media partner that had a proposal to elevate the U.S. Open and the other USGA championships and the USGA as a governance organization." (The weekend rating of the 1973 U.S. Open beat the Masters, 9.0 to 8.4. The next year, the Masters edged ahead and began widening the gap after that.)

Other USGA officials joining Nager at the Seminole gathering were executive director Mike Davis; Sarah Hirshland, senior managing director of business affairs; vice president Tom O'Toole, who is expected to be nominated this year for the first of two one-year terms to follow Nager as president; and Gary Stevenson, a member of the Executive Committee.

Missing was everyone from the USGA who had negotiated the last TV deal 10 years earlier: retired executive director David Fay; Mark Carlson, who was still nominally in charge of negotiating TV deals but who no longer was being invited to meetings; and Reg Murphy, a past president whose wife, Diana, is on the Executive Committee.

On the NBC side at Seminole were Mark Lazarus, the chairman of NBC Sports Group; Golf Channel president Mike McCarley; Jon Miller, the president of programming at NBC Sports; and Tommy Roy.

The NBC executives left Seminole optimistic about their chances of getting a contract extension. FOX was not on their radar yet. But the NBC negotiators still sensed something was afoot.

THE FOX FACTOR
Hirshland met in April, a month after the Seminole get-together, with FOX's Randy Freer, Larry Jones, Chris Hannan and Kai Dhaliwal. The real negotiations had begun.

NBC/GC officials might have overestimated the incumbent benefit they would receive from the USGA. "Over and over we heard, 'This is the new USGA. What happened in the past is in the past,' " says one NBC executive. And that meant not only a new attitude, but new people without personal ties to the network. "They thought that we were too much in bed with NBC and ESPN," says a USGA insider.

That meeting at Seminole was actually closer to the end of a process the USGA had begun years earlier as it reshaped its staff to put in place the team that would increase the USGA's TV rights fee from $37 million a year (NBC and ESPN combined) to $93 million a year.

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