The WSL is $30-milli in the hole

Story by Jake Howard

Remember that dust up between Jordy Smith and the ASP? Jordy wore his Red Bull hat on the podium after winning the Hurley Pro, and the ASP threatened to fine him fifty large for sporting inappropriate headgear.

Policy was cited as the reason (and the fine was withdrawn), but business was solely responsible for the scuffle. The ASP had recently inked a deal with Red Bull rival, Monster Energy, meaning that any branding seen at contests, and especially on podiums, was to exclusively feature that big, fluoro green claw. But for the conspiracy-minded punditry of surfdom, the Monster/Red Bull issue goes much deeper than a hat covering the dome of Mr Smith.

According to multiple sources, none of which hold the purse strings to the ‘new’ ASP but are all very familiar with the organisation’s goings-on, the world tour could be on the financial ropes. Potentially operating at a loss in the vicinity of an estimated $30 million this first year, according to their biz model they have two more years to turn things significantly around.

This brings us back to Red Bull and Jordy’s hat. In 2013, ZoSea (i.e. the ASP, i.e. The World Surf League) were shopping themselves around for media and sponsorship deals. All was going swimmingly when an alleged deal between the Bull and the ASP was close to being brokered. On the ASP side, negotiations were being headed by Liam Ferguson, formerly of Transworld publishing. Holding the title of Vice President of Sponsorship Integration, he allegedly botched the deal after Red Bull got wind of the ASP exploring other options with Coca Cola and Pepsi (both non-starters). Red Bull promptly pulled their offer, refusing to conduct further business with the ASP. Ferguson has since departed the ASP and taken up residence as the new Director General of the ISA.

Based on conversations with people both inside and outside Red Bull HQ in Santa Monica (the same little LA village the ASP calls home), the basic outline of the deal was that the Bull would become the title sponsor of the tour, receive webcast rights and be involved in a network TV deal on NBC’s Red Bull Signature Series. Reports put the cash value in the neighbourhood of $25 million. To run a full world tour season costs an estimated $45 million (which bundles wages, logistics, tech and the rest). So in theory, had the ASP taken the Red Bull deal, they’d have been well on their way to covering the year’s costs.

With only the primary backing of Florida billionaire Dirk Ziff (or actually, his wife Natasha, who has a soft spot for competitive surfing, especially women’s competitive surfing), once the Red Bull deal fell apart the first order of business was to lock in a TV deal, which they did with ABC. Now armed with guaranteed airtime all CEO Paul Speaker and Terry Hardy had to do was sit back and wait for the offers to come rolling in.

The problem is, they didn’t. The ASP ended up inking a naming rights deal with Samsung. The only catch, based on several sources, is the Samsung deal was worth a purported $3 million. Then came a deal with GoPro, estimated to be in the neighbourhood of $1 million. And most recently, Monster’s signed on for another estimated $1 million. So… $5 million to cover a $45 million expenses bill?

The new ASP have cut no corners this year. How much d’you suppose a bespoke news desk for every tour event location adds up to?

And because the ASP came in playing hardball by controlling all media and distribution rights, establishing themselves as a “media brand,” the Quiks and Bongs and Rip Curls that had so diligently supported the tour for the previous 30 years, recoiled. Some, like Rip Curl, who owns the license to the Bells event, or Vans/IMG, owners of the Triple Crown, simply refused to cow to ASP demands. While in the case of other brands, concessions were made and the million-dollar event sponsor price tag went out the window. Quik nearly pulled out of the Gold Coast, and Bong, circling the fiscal drain, just hung onto Teahupoo.

The real saving grace for the ASP is that regional governments and tourism bureaus see value in attracting surf tourists. The 2014 schedule would have been bleak had the governments of Western Australia, Brazil, France, Tahiti and Portugal not chipped in for events in their respective regions.

So for the sake of hypothesising, say the ASP got $3 mil from Samsung, and another mil each from both GoPro and Monster. And maybe, in a dream scenario, the surf brands kicked in another $10 mil (which is doubtful). That means the ASP cleared approximately $15 mil in sponsorship revenue.

The number is unverified and unsubstantiated, but it aligns with intel that the ASP is operating at roughly a $30 million loss this year.

“We’re nearing the end of our first official year of the new ASP and we’ve seen positive growth across multiple sectors,” explained the ever-charming and helpful ASP VP of Communications, Dave Prodan, when asked about the current situation of the business. “The convergence of the world’s best surfing onto a singular platform has fostered record-breaking digital audiences at virtually every event this season. Our social growth and engagement is incredibly strong, seeing a significant increase across all platforms. We’ve had incredible waves this season and the world’s best have continued to perform at barrier-breaking levels. We’re looking forward to an exciting finish in Hawaii and the 2015 season.”

The business model for the initial post-acquisition phase always intended to invest in audience growth, which is something you can expect to see more of next season—quality venues, and more cohesive infrastructure and broadcast product. The expectation is that the analytics are moving in the positive direction, which translates into stronger commercial and media partnerships as “the sport” continues to grow. It’s been stated repeatedly that the ownership group is in for the long haul, that they understand the potential of professional surfing and see it as a long-term investment.

Then again, another well placed source put it like this: “Most people are giving the ASP another year before it all falls apart and goes back to the way it used to be with the brands controlling the events… what happens when Natasha decides she’s over surfing and wants a new yacht?”

Production value like this doesn’t come cheap. Watching Pete Mel interview Kelly Slater and John John Florence while waiting for a final score to drop? Don’t take quality viewing like that for granted.