The membership fees for TV’s golf club just got a lot more expensive.
The PGA Tour, the organizer of the main professional men’s golf tours in the U.S., has struck a new nine-year deal with CBS Sports, NBC Sports and ESPN that significantly raises the costs of bringing golf to U.S. fans while gaining new traction for digital coverage of the sport. The new pact grants TV rights to CBS and NBC and digital rights to ESPN between 2022 and 2030, and spotlights the increasing need the nation’s top media outlets have for live sports rights at a time when streaming-video entertainment continues to siphon away the audiences for live scripted fare.
A previous deal between the PGA Tour, CBS and NBC was valued at around $400 million, according to people familiar with the matter. PGA Tour officials are said to have negotiated an increase of at least 70% for the next rights pact, meaning the new cost could come to at least $680 million. The cost of the digital rights increased noticeably, according to some of these people. PGA Tour said it would not reveal financial terms of its agreements.
“All the major media companies are dealing with the changing landscape. The digital companies are getting more deeply involved in content, and I don’t think any of them know exactly how the business models are going to come out,” says Rick Anderson, the PGA Tour’s chief media officer, in an interview. “They have to have the best content, and live sports seems to be at the top of that food chain. We definitely felt that in the market.”
Under terms of the new pact, ViacomCBS’ CBS Sports and Comcast’s NBC Sports will continue to show FedExCup tournaments on broadcast TV, while NBC’s Golf Channel will remain the league’s cable partner. Rights to PGA Tour Live – a subscription-video service that was being offered in part by NBC via its subscription-based NBC Sports Gold – will migrate to Walt Disney’s ESPN Plus, which will make available a wider array of content from four live channels. PGA Tour also negotiated a new deal of similar length for the LPGA that keeps it on Golf Channel and gets more of its events on CBS and NBC.
“This gives us a chance to go from being an occasional network TV player to a more regular network TV player,”” says Mike Whan, LPGA Tour Commissioner, in an interview. He says LPGA intends to unveil terms of its deal at a later date.
The digital rights were appealing to ESPN, says Burke Magnus, executive vice president, programming acquisitions and scheduling at the Disney-owned outlet, as executives believe they will provide a natural draw to ESPN Plus, the subscription based streaming service ESPN launched in 2018. “Golf fans are already familiar with [PGA Tour Live] and they are used to paying for it,” he says in an interview.
NBC, meanwhile, placed more emphasis on keeping its TV ties intact, says Pete Bevacqua, president of NBC Sports, in an interview. “We currently have digital rights and our PGA Tour Live product. We took a long, hard look at them, and our priority was making sure we retained our cable exclusivity and the weekend programming we’ve had on NBC. We feel we are coming out of this in a very good spot.”
TV has good reason to take a new swing at golf, no matter the cost. The sport tends to appeal to a higher income demographic and has seen interest grow since Tiger Woods returned a few years ago. And it has been a core property for many sports outlets. CBS Sports has been working with PGA Tour for six decades, says Sean McManus, chairman of CBS Sports. ESPN has deals in place for coverage of The Masters and The PGA Championship. NBC considers PGA Golf “to be part of our Sports Group’s DNA,” says Bevacqua.
Part of the sport’s luster comes from its ties to sponsors. “The marketplace for golf advertising is very strong and it’s important to remember that the Tour delivers to its broadcast partners roughly 70% of the advertising in its underpinning deals with title sponsors and FedEx,” says McManus, in an interview. “We know each year that 70% is pre-sold, If you will, and that’s a real advantage. It helps unwind any risk we would have and enables them to have a significant but fair rights increase.”
PGA Tour reworked some of its past scheduling to give its partners a boost. Under the new PGA Tour schedule, NBC or CBS will televise all three FedExCup Playoff events each year, starting with NBC in 2022, then typically alternating with CBS. That arrangement provides an incentive to each network, as it gives them all the events over three weeks, rather than having fans shuttle between networks to watch all of them.
In turn, the media companies have agreed to work with PGA Tour to create more sponsorship and marketing opportunities, inside and outside golf coverage.
PGA Tour has been eager to expand its sports-world presence. In 2018, it struck a deal with Discovery that lets that media company distribute PGA Tour content outside the U.S. on TV and via digital media. The ESPN Plus deal should make more coverage available to fans, says PGA’s Anderson. “The real opportunity for us is to capture more content and more live content, and really expand what we can bring our fans.” In October, the Tour said it would make available every shot taken at The Players Championship in March 2020 via PGA Tour Live. Anderson says a good chunk of shots at golf matches were not being made available to fans via media.
The market for sports rights has always been costly, but prices are expected to continue to soar as media companies including ViacomCBS, Comcast and Walt Disney seek out content that draws bigger audiences who watch all at once, rather than at times of their own choosing.
And yet, no matter how much they crave sports rights, the networks have to keep an eye on their purse-strings. After all, there are other sports to consider. Contracts for NFL rights come due over the next two or so seasons.
“We are always going to be aggressive and we are always going to be smart,” says NBC Sports’ Bevacqua. “You’ve got to strike that balance.”