Inside sports business
The past week officially launched a billion-dollar gamble by Fox Sports to unearth an undervalued sports property.
Yeah, it’s tough to call something a bargain when you sign a 12-year, $1.2 billion deal that’s roughly double what anybody expected. But given skyrocketing prices for live sports — think nine years, $24 billion for the NBA — what Fox paid to partner with the United States Golf Association (USGA) could ultimately amount to a few extra golf balls.
All Fox must do is avoid ticking off too many viewers while learning the sport.
Fox clearly needed something to help it stand out. Not necessarily its main network, but a fledgling Fox Sports 1 cable offshoot taking on giant ESPN.
Enter the USGA and its flagship U.S. Open, which, despite the brown grass, sound issues and spotty camera work from Chambers Bay, provided FS1 a showcase. Sports fans with no clue where FS1 was on their TV channel listing got an education the network hopes can lead to a shift in viewing habits.
“We’re still big believers in putting the big events on broadcast television for everyone to see,’’ Fox Sports president and COO Eric Shanks told me the day before the tournament opened. “That comes along with USGA content that is going to be put on Fox Sports 1… It’s part of the plan to add more high quality live events to this new sports network. You’re not going to build a new sports channel without live events.’’
Shanks added of Fox’s relationship with the USGA: “It’s rare you’re partnered with folks that have the same goals and agree on how to get there.’’
One glance at the boyish-looking Shanks, 43, who five years ago became the youngest executive to lead a broadcast network sports division, tells you all about those goals. Shanks had barely started grade school when Jack Nicklaus won his final U.S. Open, so it isn’t exactly traditionalist golf viewership Fox is after.
The network’s core audience is only now growing into income levels TV advertisers covet. Shanks had flown in from Canada, where he’d monitored the Women’s World Cup — another new property through which Fox and FS1 are courting millennials and their expanding wallets.
And the USGA is playing right along in that hook-‘em-young’game, needing the next generation of fans for golf to thrive.
This isn’t only about the U.S. Open. The Fox deal encompasses seven other pro and amateur championships the USGA hopes will gain prestige with a network dedicated to promoting them.
After all, amateur or pro, a championship is a championship when you’re FS1 and lack ESPN’s big-event depth. It’s in FS1’s interest to hype all USGA events into the biggest thing since Tiger Woods’ putt at Torrey Pines.
So, this could be win-win for both partners. As long as Fox doesn’t blow the coverage.
There’s pressure anytime you drop a billion dollars and Shanks clearly feels some. He’d barely gotten off the plane from Canada on Wednesday when he began touring Fox production trailers, viewing last-minute preparations for graphics and on-air features.
Fox expected U.S. Open glitches and hopes to improve at future events. But the longer Fox takes to hit its golf stride, the slower those changed viewing habits will come and the tougher it will be for FS1 to dent ESPN’s armor.
So there’s urgency. But if Fox proves a quick golf study, this gamble appears well-timed.
The network is banking on a new generation of golfers that includes Jordan Spieth and Rory McIlroy to appeal to younger viewers.
“They’re shining a light on how fun golf can be,’’ Shanks said.
Those names don’t resonate quite like Tiger yet. Which is why all cameras were still on Woods when the tournament began.
But it’s also why Fox secured more than a decade of golf for only one of the billions usually spent by the bucketload for other sports.
“With any top-tier sporting event, I think it’s tough to say that any of them have proven to be overvalued,’’ Shanks said. “Whether it’s the first NFL deal we did in 1994 in which everybody went crazy. Or the recent NBA deal that Turner did. There are really smart people running those companies. And at the end of those deals, people usually end up thinking that they were pretty smart and it worked out.
“I think golf is on a great trajectory,’’ he added. “Because really, any sport is about the stars. And this new crop of (golf) stars is pretty exceptional.’’
And if Fox helps Spieth and McIlroy become household names for casual fans, this deal could prove downright cheap.
