Will Talent Raiders Create Two-Tier Sports?
In business they’re called corporate raiders. People who buy up a publicly traded stock whose assets are thought to be undervalued. They then strip out the valuable assets and sell them at a large profit, leaving the shell of a company behind.
The world of sports has been largely immune from raider capitalism so far. But the barbarians are at the gate in several high-profile instances as big-money investors look to strip out the superstars from the chaff. And the future of franchise-based leagues and pro sports tours may hang in the balance.
The most prominent example is in the world of golf where the Premier Golf League is making a concerted pitch to capture the stars of the men’s sport away from the PGA Tour and European Tour. According to a report from Golf Channel it would feature an 18-event schedule from January to September with 48-man fields and big-money payouts. Journeymen will not be invited.
It’s not a new idea in golf. Investors using former world number one Greg Norman as their front man tried the same tactic as far back as the 1980s. But the combination of Norman’s reputation with fellow pros and the lack of a digital media marketplace stalled the idea. This time, with integrated media and innovation in travel, it could succeed.
Rory McIlroy confirmed that he’s talked to the people behind the idea to create a league of extraordinary golfing gentlemen. “You know, it’s a hard one. … I love the PGA Tour, but these guys have exploited a couple of holes in the system, the way golf at the highest level is nowadays and how it’s sort of transitioned from a competition tour to entertainment. Right? It’s on TV, it’s people coming out to watch. It’s definitely a different time than what it was before.”
Indeed, it’s a different time. As Tiger Woods’ career winds down, fans are moving away from fields without superstars toward appointment watching at the Masters, the Open Championship, the FedEx Cup or the Ryder Cup. Already the PGA Tour has moved to hype these premier events while transitioning lesser attractions such as the Houston Open or the Greenbrier Classic to its fall schedule where they’re lost in the NFL season. The goal is to attract a world golf audience with an appetite for elite stars.
It’s the recipe soccer has adopted to become a global power player by creating elite teams populated by superstars in high-profile competitions and beaming them globally. It’s one of the reasons that soccer has now a firm foothold in North America after decades of trying. Younger consumers are star-obsessed compared to their parents and have less loyalty to traditional brands and crest-on-the-chest purchasing.
The Premier Golf League is likely not ready to launch before 2022, but it has already caught the attention of the PGA Tour. Commissioner Jay Monahan has let players know that if they play the PGA Tour they will not be allowed to play the competitor. There will be no cherry-picking of the Tour’s top events while also cashing huge cheques with the Premier Golf League.
The parallels in the tennis world are obvious, although no one has come forward yet to exploit a superstar tour. In part this is because the men’s ATP Tour has already been dominated by three superstars the past generation. With Novak Djokovic’s win at the Australian Open on Sunday no one outside of him, Rafael Nadal and Roger Federer has won a men’s singles Grand Slam since 2016, when Stan Wawrinka won the U.S. Open singles title. But with a wider pool of winners, they too could be vulnerable to “corporate raiding”.
The major pro sports leagues in North America remain happy with their current configurations, but there could be some shocks ahead as new buyers enter the market for the broadcast/ digital rights to their product. With Amazon, Google and Apple swooping in to bid against the traditional networks, the value of the premier attractions— postseason/ playoffs— is likely to play an important part in who paid how much for which events. Could the leagues create a buffet of rights to maximize the payout for major events while selling the rest as a loss-leader? All the leagues have new contracts due in the next five years so the dynamic should be interesting.
While the top leagues are stable in the number of franchises— or still expanding like the NHL— MLB has decided that it’s time to reduce its obligations by eliminating many of the traditional teams it has supported since farm systems began in the 1940s. At the peak, the St. Louis Cardinals boasted 20 affiliations, the New York Yankees had 21, and the Brooklyn Dodgers had agreements with 25 Minor League teams.
Now MLB is looking at ditching 42 clubs from its payrolls, leaving teams such as the Bluefield Blue Jays (rookie), Quad Cities River Bandits (A), Jackson Generals (AA) and Erie Seawolves (AA) to fend for themselves— likely in independent baseball. Again, unless it helps the bottom line for the elite teams, the public is not likely to rescue these clubs.
Is this the thin edge of the wedge as “corporate raiders” strip out the media assets of leagues and sports? Golf may show the way. Or else it just may be Rod Tidwell, Mr. Show Me The Money.
Bruce Dowbiggin @dowbboy is the publisher of Not The Public Broadcaster. He’s also a regular contributor to Sirius XM Canada Talks Ch. 167. A two-time winner of the Gemini Award as Canada's top television sports broadcaster, he is also a best-selling author whose new book Cap In Hand: How Salary Caps Are Killing Pro Sports And Why The Free Market Could Save Them is now available on brucedowbigginbooks.ca.