The WSL’s Not Dead Yet
They spend a ton of dough, but are they making any?
With the resignation of WSL CEO Paul Speaker announced and the ascension of owner Dirk Ziff to the top spot for the immediate future, one must wonder what the future of professional surfing looks like. More importantly, is professional surfing in the form of the World Surf League sustainable?
In 2015, I wrote a story projecting that the WSL was operating at a $30 million loss. According to anonymous sources inside the WSL, it appears that surfing’s governing body has righted the ship to a degree. Thanks to exceptional audience growth (purported to be growing at a rate five times faster than the NFL) and an ambitious sales team armed with an effective multi-tiered strategy that goes after big fish like Samsung as well as little fish like, say Shoe City, they are believed to be on target to hit their numbers.
“The WSL enjoys a healthy blend of endemic and non-endemic commercial and media partners. In recent years, long-standing supporters such as Quiksilver, Hurley, Billabong and Rip Curl have been joined by the likes of Samsung, Jeep, Swatch, GoPro, Workday, Corona, etc. We anticipate more announcements in this arena in the coming weeks,” reports Dave Prodan, the WSL’s VP of Communications.
Nevertheless, scepticism remains. Sources both within and outside the WSL organisation indicate there is some unease about what the future may hold and that they’re still operating at a severe loss. They indicate that WSL is largely dependent on the generosity of Ziff.
“The lights would go out if he stopped cutting checks, it’s as simple as that” said one source who asked to remain nameless due to the close nature of their relationship with the WSL.
The early years of the WSL were intended to be dedicated to audience growth and brand building, and even before Speaker left the organisation, the WSL was well on its way to achieving these goals.
“The transition from the pre-acquisition era’s disparate system to the consolidated system that we enjoy today, as well as investment into consistent product at every level has generated a considerable increase in global audience year-over-year for several seasons,” says Prodan.
“The rise of Brazil as a global surfing entity, the investment and subsequent barrier-breaking performances in women’s surfing and the historic showings in the big wave realm have invaluably complemented the business enhancements for the sport from an audience standpoint,” continues Prodan. “As a digital-first company, and sport and entertainment leader in the social media space, the WSL now enjoys a global reach that was not possible a few short years ago. We anticipate continued growth across all sectors of the company in the coming years.”
According to Stab’s sources, the main players responsible for doling out marching orders and implementing the WSL vision included Jed Pearson, the WSL’s Sr. Vice President/Executive Producer, Content and Programing, Tim Greenberg, the Chief Community Officer, Graham Stabelberg, the EVP/ GM Tours and Events, as well as Scott Hargrove, the Chief Marketing Officer. They will continue to be the main drivers of the WSL experience in the months ahead. Pearson is a former Fox executive, and Greenberg was formerly with Coca-Cola. And while it’s hard to argue that the world tour isn’t in better shape today versus the twilight of the ASP (they have a measurably larger audience and a more cohesive look and feel) the WSL still struggles on with their storytelling and transforming their athlete into compelling “characters.” They continue to preach to the converted while struggling to penetrate the mainstream consciousness (which is where the big money is). Plus, as an event platform the WSL is an unwieldy beast that’s extremely complex to manage.
Consider that on any given weekend during the year, somewhere in the world a WSL-sanctioned event is taking place. Whether it’s a lowly Pro Junior or a full-fledged CT contest, every event comes with a cost. Judges and staff have to be paid, permits have to be acquired, insurance paid for, etc. For the CT, it’s estimated that to run an event with a two-week waiting period, webcast, all the bells and whistles costs between $3 to $5 million (obviously a location like Fiji is going to be more expensive than somewhere like Trestles). In 2017 there are 11 events on the schedule, which at the bare minimum means the WSL will spend at least $33 million this year just to run the men’s CT. Women’s events are a little cheaper because they’re shorter and there are less competitors, plus out of the 10 events on their schedule, six run in conjunction with the men. For the sake of argument, let’s estimate that it costs another $10 million a year to run the Women’s CT. Conservatively, that puts the total price tag to run both the men’s and women’s CT at approximately $43 million, although some would argue it’s closer to $50 million.
But that’s just the tip of the proverbial iceberg. There are 59 men’s and 41 women’s QS events on the schedule in 2017. Add to that the Big Wave World Tour, the Big Wave World Qualifying Series, the men’s and women’s Pro Juniors, as well as the men’s and women’s Longboard events and the capital investment needed to pull off all these contests skyrockets. True, most of these contests are underwritten by varying levels of sponsorship and competitors do pay entrance fees, but logistically speaking, it’s hardly a well-oiled machine. There are literally hundreds of people involved around the world, and for those that have ever tried to email a pro surfer, former pro surfer or scenester, you know a reply isn’t always immediately forthcoming.
A circus that big takes a lot of infrastructure, which is both complex and expensive. On LinkedIn the WSL say that they have between 51-200 employees. Other publications have noted that they have 50 full-time employees in their Santa Monica headquarters. Whatever the specific number, all of those employees require full-time salaries, healthcare benefits and retirement programs. None of that is cheap, especially if you’re basing yourself in California, and even more so if you’re living in Santa Monica. Current market research indicates that Santa Monica is the most expensive place in the country to rent, topping places like Manhattan and San Francisco. The WSL global headquarters sits in a 10,000-square foot refurbished warehouse a block from the beach. And they also have Commercial Offices in New York, as well as regional centres in Africa, Asia, Australasia, Europe, Hawaii, North America and South America.
Additionally, the WSL has outfitted their Santa Monica operation with a state-of-the-art video production facility. That kind of technology doesn’t come cheap and it very much sounds like they’re struggling to monetize that investment. If the WSL’s strategy is largely based around its social media audience, they should know that those people want to see big waves, even bigger wipeouts, and Kelly Slater biting John John’s ear off.
The WSL is also still footing the bill for the majority of their TV production. The deal they made with ABC/Disney is a losing proposition due to the fact that they have to use all their own resources to produce the TV show and get paid remarkably little in return. I was working for ESPN when the original deal was made. At the time it seemed like more of an opportunity to promote and brand build than make money. They’ve since cut other deals with CBS Sports and Fox, which may offer a differing scenario, but sources do indicate that the TV deals have been a drain on the system. The eyeballs, and subsequently the money, have always been in the webcast (that is, after all, the source of their feud with Red Bull, which goes back to my original story from a couple years ago).
Samsung and Jeep appear to be the WSL’s two biggest sponsors. As a company GoPro took a nosedive in 2016, but they remain involved with the WSL as well. Corona has stepped up by picking up the J-Bay Open (leaving only two contests on the men’s CT schedule without a title sponsor). Tourism bureaus, endemic brands and other relatable businesses help round out the lion’s share of the sponsorship money. Given the cost-per-impression rate these days, it’s hard to imagine that the banner ads the WSL is running on their site are making a dent, but that’s more or less small change compared to the multitude of other sponsorship deals they’re making.
“Despite the seismic changes that this sport has undergone in recent years, the core DNA of the World Surf League, from the ownership level on down, has never deviated: we’re here to champion the world’s best surfing,” says Prodan. “We create environments—via development programs, events, tours, formats, career pathways, judging criteria, etc.—where this can flourish and the performance level seen in the live arena at every corner of the sport in recent years is a testament to this investment. 2017 is going to be a great year.”
Wherever you fall in your appreciation of the WSL, it’s a vitally important component of surfing today. It gives the sport a backbone that other sports like skateboarding and snowboarding don’t have. For over 30 years they’ve been crowning world champs. Other “action sports” can’t make that claim. It doesn’t mean you have to be a super fan, or play Fantasy Surfer, or even keep the volume turned up when Strider takes the mic, but the tour apparatus does help support the industry, which in turns pushes innovation in the boards you ride and wetsuits you wear.
The WSL has made it clear that they intend to name a CEO sooner rather than later, but for the time being the ball is in Ziff’s court. His stepping into the interim CEO role could be perceived as his commitment to the sport, and when combined with his investment in the Kelly Slater Wave Company one gets the feeling he’s not going anywhere anytime soon. Whatever happens next, the future of pro surfing as we all know it hangs in the balance.
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