The PGA Tour’s current television deal with CBS and NBC expires in 2012 and negotiations for a new contract are expected to begin soon. For obvious reasons, both sides are closely following Tiger Woods’ recent travails.
So what negotiation lessons come to mind?
First, leverage is fluid so strike while the iron is hot. Here, the networks’ leverage improved dramatically with Woods’ announcement that he’s taking a sabbatical from golf. His absence will almost certainly result in lower TV ratings while he is out, which lowers the value of the broadcast rights, including for the future (for who knows if and when Woods will return and the impact his problems will have on his and the PGA Tour’s popularity). As a result, the PGA Tour most likely will try to delay signing any new deal until after Woods’ return has been confirmed and some of its impact evaluated. Likewise, the networks may push for a deal sooner not later.
And second, watch the negotiations to see how the networks will rely on objective criteria to support their position. Specifically, television ratings decreased by half while Woods’ was sidelined by knee surgery in 2008 – and they will very closely monitor their current ratings while Woods is out now. And if the ratings, as expected, drop precipitously, then watch the networks use those to try to get a better deal.