What are the media rights for the PGA Tour? How does it work?

Broadcasting the PGA Tour costs you a pretty penny, and for good reason.

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I’ve heard, like many others, that money speaks. You’ve seen growing prize money and a growing fortune from the Tour’s biggest players, heard whispers of $1.5 billion in Saudi cash to fund a rival league, you’ve even thought about the merits of a $50 million popularity contest, and you only have one question:

Where did all this money come from?

The short answer is television. The longer answer began in the 1970s, when the second commissioner of the PGA Tour found himself negotiating expansions of golf rights deals from the polar opposite position of “hateful greed.”

Legendary Tour president Deane Beman saw valuable television rights money delivering leagues like the NFL, MLB, and NBA in the 1970s. Each of the three professional sports leagues was thriving under the weight of long-standing contracts with their television partners.

In those days, the deals were simple: broadcasters (television networks) were paying rights holders (professional sports leagues) for the exclusive “right” to show a sport on TV. If the games attract big ratings, TV networks make more money, which leads to a higher cost of league rights fees. As long as people watched, the rights deals created a snowball effect, increasing the values ​​of the league and broadcaster alike Infinity.

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“Media rights are important in two fundamental ways,” says Ed Deisser, a sports media consultant and rights expert. “First of all, it’s how the vast majority of consumers actually experience the sport. So, that’s at the top of the pyramid. Second, it’s one of the biggest revenue streams that any sport generates.”

Knowing whether or not the Tour would be a success, Beeman desperately needed television rights deals that rival those of other professional sports leagues. But there was only one problem: the networks weren’t interested.

Up until that point, the tour broadcasts had been a loss lender to the networks, who were unable to sell the ads needed to offset the cost of broadcasting the tournament on air. paying off more money for broadcast more Golf was, in essence, subscription to generate less Money.

But Beeman had an idea. What if the tour takes advantage of its partners to sell ads about broadcast networks?

Beeman’s proposal was a win-win: sponsors would get “free” TV ads for the cost of sponsoring the tournament, networks would need to sell fewer ads to make money from their broadcasts, and the PGA Tour could charge both parties more money in the process.

Thus, the Tour’s unique television rights structure was born, giving rise to a business model that has grown to over half a billion in annual revenue and made the PGA Tour one of the richest professional sports leagues on Earth.

Today, the PGA Tour is believed to be the only professional sports league that bakes ad revenue as part of media rights deals — a structure credited with allowing the Tour to negotiate the most lucrative rights deal ever in 2020, with network executives bracing for the Tour’s future without Tiger Woods full time.

In the years since Peyman’s birth of the original rights structure, the complexity of the tour’s media rights has increased. The spread of the internet has resulted in unions breaking their rights across a variety of different mediums, greatly increasing the potential earnings for rights deals. Previously, where professional sports leagues could only generate media money from their television partner, leagues can now strike lucrative deals with a few different providers.

The PGA Tour’s new deal with ESPN+ has expanded the financial scope of its media rights.

ESPN +

Today, the tour generates money from domestic and international television deals (NBC/CBS and Sky Sports, respectively), and domestic and international broadcast deals (ESPN+ and Discovery). The tour also owns the rights to all of its digital and archival footage, which generates license fees and other small revenue. These agreements generate nearly half of the tour’s annual revenue, according to documents reviewed by GOLF.com.

Central to the value of every media rights deal, Tour Signals lies in its position as the sole “owner” of the content created. This is why the PGA Tour requires players to sign their media rights at the start of each season and why the Tour is so tight on creators posting unpunished videos on social media and elsewhere.

But while the tour’s approach has helped transform it from a player-run operation into one of the world’s largest sporting entities, its media rights rules haven’t deflected criticism from its constituents. Critics say the Tour would be better off with a friendlier approach, leaving the ruthless police of social media networks to horrific abuse, as many other sports leagues have done. They also argue, as did Phil Mickelson, that the tour doesn’t gain much from maintaining rights over archival media rather than returning those rights to players.

But the tour says exclusivity plays an important role in the value of its rights deals (although it remains to be seen how viral moments shared from an individual’s Twitter account effectively affect any broadcaster’s bottom line, or the tour). Tour brass also argues that it is easier, cheaper, and more standardized to keep archival footage under one roof, and that through the revenue-sharing model of the tour, players benefit indirectly from their rights sales.

For some golfers, this simply isn’t good enough. Mickelson referenced the tour’s archival pickup rules in reference to NFTs, which he says could be worth untold billions to players. Tiger Woods was among those who shared some of his concerns with Phil at his press conference in Riviera last week.

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“Media rights are a big thing,” he said. “A lot of us are concerned about which direction we’re going and how we can have more control over that. There’s been a lot of talk whether it’s from the PAC, the board or the players internally. Everyone has their own opinion on that, but we have to come to a collective decision.”

Finally, the tour told GOLF two weeks ago, the value of the archival footage is nowhere near Phil’s multi-billion dollar valuation.

But golf isn’t the only example of a system that works against star players. In fact, Deisser knocks, the system’s action against the stars is a sign that it’s working.

“If you’re a superstar, you probably have to compromise more of what’s possible,” Deisser said. “Could Michael Jordan have done better on his own? The fact that it’s my league and that there’s a player union and the fact that it represents all other things, [the system] It may not have been optimized for Michael, but it is somewhat optimized for the NBA’s 400 Singles Player.”

This is the modern golf media landscape: a system built to maximize revenue, but perhaps not just for golfers who make millions from it. It’s a system that can be subject to change – especially since the best in the world is a well-funded competitor – but don’t get your hopes up. As long as the PGA Tour money is still talking, Somebody It will be there to listen.

James Colgan

Golf.com Editor

James Colgan is Associate Editor at GOLF, and contributes stories to the site and magazine on a wide range of topics. Hot Mic writes GOLF’s weekly media column, and uses his expertise in broadcasting across social media and the brand’s video platforms. A 2019 Syracuse University graduate, James — and his golf obviously — has been melting in the snow for four years, during which time he cut his teeth at NFL Films, CBS News and Fox Sports. Prior to joining GOLF, James was a scholarship holder (and a smart looper) in Long Island, where he belongs.

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