USGA CEO Discusses Television Rights Negotiations
Mike Whan could sell honey to a bee; it’s just how he’s wired. He is passionate about whatever topic he is discussing.
Earlier this week, Whan, the USGA’s Chief Executive Officer, held a virtual town hall for USGA members to discuss his job and passion: golf.
The answers to some questions were interesting, but today's focus is discussing the new television contract negotiations.
The USGA shared the financial breakdown of revenue for 2023, and it was startling that the 501 (c)(3) organization generated $306 million.
This is 38% of its operating budget, which is a significant amount for an organization whose revenue is so highly correlated to one event, the U.S. Open.
The USGA generated revenue in the following six categories:
Broadcast & Media Rights $115.3 million (38%), Championship Revenues $110.3 million (36%), Corporate Partnerships $38.1 million (12%), Member/Donors $24.0 million (8%), GHIN/Handicapping $11.8 million (4%), Other $6.5 million (2%).
With broadcast and media rights accounting for such a large percentage of the USGA revenue stream, it was interesting to hear Whan’s take on the discussions with NBC on a new contract since the current contract expires at the end of 2026.
Bryson DeChambeau watches his drive on the eighth tee during the final round of the 124th US Open Championship at Pinehurst No 2,
Fran Caffrey / Golffile.ie
Whan’s answer about the television negotiations is edited, but the substance is intact.
“Because these are big contracts and a lot goes into a TV partnership, it's good for us to sort of know the future well enough into advance so that the partners can build up,” Whan said when first discussing the timing of the start of the negotiations. “So, we will probably spend a good portion of 2025 if we get, if we don't have an agreement sooner, working on what the 2027 and the beyond looks like.”
In understanding the value of the USGA property, Whan mentioned an adage provided by John Podany.
“Our Chief Commercial Officer, John Podany, always says that the TV rights are like selling a house. Your house is worth what people are willing to pay for,” Whan said. ”Nobody could really tell you what your house is worth until you offer it up, and then you see what people think it's worth. So exactly what TV rights are worth is a bit a marketplace dynamic.”
Whan discussed the live sports dynamic, which has worked effectively for the NBA in recent television negotiations. The NBA signed a rights deal with Disney, NBC and Amazon, reportedly worth $76 billion over 11 years, starting with the 2025-26 season.
“The good news, I guess, if you're us, is live sports have overwhelmingly been the most important thing for any significant TV partner today because live sports deliver audiences like no other,” Whan said. “Live sports have continued to increase in value almost virtually any sport you talk to, and in some cases, even when maybe the viewership hasn't increased. I mean, the good news for us at the USGA is our last five or six years have been stunning in terms of our viewership and you know, been helped by some incredible venues, some incredible finishes. We're very proud of our relationship with NBC, Golf Channel, Universal, Comcast. It's really an amazing partnership. If it continues going forward, that'd be great. And if there's another partner that, quite frankly, steps up to be a more significant partner, we'll see how that process goes.”
Does Whan believe that the USGA can improve on its 12-year, $1.1 billion deal with Fox that it signed in 2013?
Fox was so disheartened by the deal that started in 2015 that in 2020, it sold the rights to NBC, paying the network to take them off its hands.
With the U.S. Open, the only moneymaker of all the 12 USGA championships, and Comcast spinning off two golf properties, Golf Channel and GolfNow, by 2026, what appetite will NBC have for golf?
They have shown an unwellness in overpaying for the asset in the past, letting Fox pay $93 million a year instead of the $37 million that NBC had paid.
Even with NBC doubling its previous offer of $37 million, that is still far below what the USGA currently receives.
Add in the fact that it’s unlikely CBS/Paramount would show little interest, and Fox has been there and done that, and only ESPN or one of the streamers, Amazon or Netflix, would be the potential suitors.
But it’s unlikely that any company will overpay for the rights to a golf event, even if it’s a major championship.
