Golf "remains a profitable sports property" for its TV
partners, but the new TV deal means the sport has
"redistributed the wealth TV once enjoyed," according to
Dave Shedloski of GOLFWEEK. In prior years, TV networks
earned profits "estimated" at $1M per PGA Tour event. But
with the current $400M, 4-year TV deal, which was negotiated
in '97 and started in '99, this year's net income is
"expected" to be 10-20% of the previous $1M figure, a number
that is "not great, but better than initial break-even
projections." NBC Sports President Ken Schanzer admits the
net is "not seeing profits" like it was: "We knew we were
stretching the edge of the envelope (when the deal was
struck), and we've had to work an enormous amount to make it
as successful as it is." Part of the financial drop is
attributed to golf equipment manufacturers, which "cut back
significantly" on their advertising expenditures this year
because of "weakening sales and industry consolidation."
Industry sources say that "upward of" 10% of ad inventory
remains for this year's PGA Tour coverage and "probably will
be peddled at a discount." The "higher inventory coupled
with nearly flat demand" has kept price increases to 7-10%
per unit, which is "consistent with previous years," but
"nowhere near" the 15-25% increases projected two years ago.
Shedloski adds that financial service companies have filled
the "void" left by the golf companies (GOLFWEEK, 5/15).
