ASP Update: Ready For Healing?

There are 43 days until the Association of Surfing Professionals (ASP) 2001 World Championship Tour kicks off, and just seven days until the next ASP Executive Board meeting in Coolangata, Australia. So what’s the state of affairs?

The last meeting of the board, held December 2–4 at the Turtle Bay Hilton on the North Shore, turned into a bit of a bloodbath — with scheduling conflicts and serious brand rivalries bubbling to the surface.

By the end of that meeting, however, the most contentious points had been worked out to the satisfaction of almost everyone involved. A compromise schedule was in place, and it looked like the Sportsworld Media Group/ASP deal that would infuse approximately 12.5-million-dollars’ worth of media coverage into the ASP was days away from being finalized.

The ASP had also received approval to expand its Executive Board to include two neutral third parties — individuals from outside of the industry with business acumen and enough passion for surfing to take on a tough, unpaid position on the board. It was hoped that these two new “level heads” would help break open the logjam created by a board evenly split between athletes and event owners.

For the most part, at the end three-day Turtle Bay marathon everyone involved had every reason to believe that the most serious wrangling was behind them.

Things appeared to be on track until the middle of this month, when the rumor mill kicked back into gear. The first and foremost concern was that the Sportsworld/ASP deal hadn’t been signed yet, leading to a delay in the events receiving their sanctioning agreements from the ASP.

There was also some skepticism about Sportsworld Media Group (SMG) being able to obtain an umbrella sponsor in time for the 2001 tour — and how many sponsors this media group was planning to get.

Finally, some were openly wondering if the ASP would be able to recruit the type of high-caliber executives the Executive Board needs, and just who was selecting these individuals.

So, with the next board meeting just days away what’s fact and what’s rumor? Let’s try to sort things out.

**** SMG Deal Still Not Signed ****

One thing is certain, the SMG deal hasn’t been signed — although the ASP believes that’s imminent. When asked about where the negotiations stand, ASP Executive Director Wayne “Rabbit” Bartholomew understandably declines getting into specifics, saying only that, “The details of the ASP/SMG deal are subject to strict confidentiality between the two parties. A joint ASP/SMG press release will be issued as soon as the outcome of negotiations is reached.”

When asked when we could expect such an announcement, Rabbit replies, “I anticipate releasing a press statement on or about the time of the March AGM executive board meeting on March 5–7.”

So, what’s been the holdup? According to Robert Gerard, well-known surf industry lawyer, ASP advisory board of directors member, and a partner at the law firm of Friedman Peterson & Stroffe in Irvine, California, “SSM — to a degree — got cold feet given some of the adverse quotes that appeared in print after the Hawai’i ASP Board meeting. SSM understandably thought they were dealing with a unified body.”

According to Gerard, many of these “adverse quotes” were found in TransWorld SURF Business’ coverage of the meeting.

Sportworld Media Group — parent company of SSM Freesport — was contacted about these and other issues and promised to respond. At this point, however, our questions remain unanswered.

While apparently few of these quotes were directed at SMG or the quality of work they produce, Gerard says they’ve had a chilling effect on the negotiation process. Without giving any specifics, he says, “One of the challenges of such a large and diverse board is for both the board members and the industry to discern fact from rumor.”

However, Gerard — in true statesman fashion — says the controversy surrounding the last executive board meeting can be viewed as a positive as well. “The vocal dissension confirms what I’ve always suspected: everyone involved with the ASP is incredibly passionate about surfing. The challenge is to get all that passion positively focused. But the foundation is that passion — we have a room full of believers. And after hearing from the most passionate critics, I view their concerns as a validation about how much people care about the ASP.”

With the SMG/ASP deal bogged down, the events didn’t receive their sanctioning agreements until last week. These documents are complex, 45-page contracts that formalize the duties and responsibilities of ASP and event owners to each other in regard to WCT contests. While the tardy sanctioning agreements weren’t an issue for brands sponsoring WCT contests toward the tail end of the tour, it did create a time-crunch for the tour’s kickoff events, namely the Rip Curl Pro at Bell’s Beach on April 10–22, and the Gotcha Pro Presented By Globe at Teahupoo, Tahiti on May 8–19.

“It was probably naive to think that the SMG/ASP negotiations would take less time,” says Rip Curl Advertising and Promotions Manager Steve Kay. “It will end up being a detailed agreement.”

While the delay in signing the SMG deal is affecting finalization of Rip Curl’s media plans, Kay doesn’t appear overly worried: “Life will go on. There will be a Bells event!”

TransWorld SURF Business contacted Bluetorch CEO C.J. Olivares a few days before he received the sanctioning agreement. “We have not received our sanction agreement,” said Olivares, “but have been told it’s ‘days away.'”

At that time, Olivares said planning for the Gotcha Pro — which Bluetorch owns — was being affected by the lack of a sanctioning agreement. “It’s certainly affects us,” he said. “We’re developing all kinds of contingency plans, pending the receipt and the details of the agreement. Timing is critical for us — and even more so for Rip Curl with Bells.”

Contacted after he received the sanctioning agreement, Olivares was somewhat mollified, although he says he still has concerns about clauses within the agreement dealing with media rights, and the tight deadline events had been given to approve and sign off on the contract.

Gerard says he understands why the lack of a sanctioning agreement might have ruffled some feathers, but he says the ASP and Rabbit both deserve a little more credit and that they would have been able to resolve the sanctioning agreement issue in a timely manner.

“Coming out of Hawai’i the entire board was sure the SSM deal would be inked within a week or two,” says Gerard. “The fact that it hasn’t been inked has very understandably caused some concern about the status of the sanctioning agreements. However, I truly believe Rabbit and the ASP are flexible enough that these concerns will be easily worked out prior to the commencement of the season.”

According to Triple Crown Event Director Randy Rarick, the SMG/ASP negotiations do have a silver lining. “The SMG deal has forced the ASP to be more businesslike than ever before,” he says. “That’s a real plus. They’re crossing their t’s and dotting their i’s. They’ve really had to come up with a serious game plan for SMG. Now that’s crossed over into the sanctioning agreements they’re sending out. They’re all 45-pages long and very detailed. So the ASP has raised the bar with the events as well. In doing so, some of the autonomy the events once enjoyed will have to go by the wayside, but that’s a good tradeoff for the ASP being more organized.

“The big issues going into this meeting are that the events have to sign their licensing agreements before they can vote on the SMG deal,” continues Rarick. “I know the ASP is working hard to wrap up negotiations in time for the meeting and all the events are busy reading the agreement so they are in a position to sign.”

**** The Tour Needs An Umbrella Sponsor ****

Only the ASP and SMG know exactly what the sponsorship portion of the deal they are n
egotiating entails. However, there’s plenty of speculation about what this sponsorship package probably looks like.

Some believe SMG is hoping to get major sponsors in three separate categories (for example, with a soft drink company, an airline, and an auto manufacturer), and is hoping to get these sponsors signed into three-year deals.

With the first stop on the WCT only 43 days away, and with a media deal still not inked, it seems unlikely that this sort of substantial sponsorship agreement will be reached before the start of the 2001 season.

However, Gerard says he’s confident that some sort of sponsorship deal could still come together. “I have lots of confidence in SSM and its ability to go get the types of sponsors the ASP needs. I view it as we have all the farmers we need. We just need to turn them loose to harvest the crop. Right now all the farmers are sitting around in the barn. As an industry we need to rally together behind the ASP and SSM and lend them our full support.”

Olivares — who has plenty of experience negotiating television sponsorship deals of this sort — doesn’t hold out much hope that SSM can move that fast. “Deals of this nature — multi-year, multi-million dollar sponsorships — tend to take careful nurturing and time,” he says. “For the sake of the athletes and the event operators, I sincerely hope that SMG can make something happen for 2001.

“The global sponsorship deal, whether multi-year or not, is critical to the success of the SMG/ASP deal,” continues Olivares. “Having made an unsuccessful run at the media and marketing rights early last year, I can tell you that the international TV syndication and Internet rights are not likely to generate revenue that will exceed the cost to produce both. Sponsorship is the real revenue engine that will drive profitability in this relationship. I don’t think anyone involved is under the impression that it’s not. The challenge is to devise a sponsorship strategy that is a win for both the ASP and the events.”

A key issue in this scenario would be how the events are compensated for signage at their events, and whether having one umbrella sponsor would be easier to deal with than three. After all, with the events ponying up more than seven-million each year in contest expenses, they are justifiably interested in how to recoup some of that cost.

**** Newcomers To The Board ****

Rabbit is in a particularly unenviable position at this point. With the board evenly split between athletes and event owners, any tie vote ultimately lands on his shoulders alone. However, with the board restructured to include two neutral third parties, it’s likely most of this burden would be lifted.

With the two ASP voting blocks split so evenly, the newcomers might just have an inordinate amount of say so when it comes to the direction of pro surfing. This is especially true when you consider that the main reason these individuals are being brought on board is to heighten the sophistication of the ASP board — people are looking for individuals who can make something happen. So how are these go-getters being selected and who’s in charge of coming up with a short list of candidates?

Gerard — who drafted the proposal to change the board of directors — appears to be on point. In fact, he already has more than a few qualified candidates in mind. “In the conversations I’ve had thus far,” he says, “I’ve made it a point to talk to those individuals with no ties to the surf industry — except that they all surf and are smart, intelligent, and hard-working business people.”

Kieran Perrow, WCT pro surfer and ASP board member, says he looks forward to the changes to the board. “The proposal is to bring in two non-industry business-oriented people to the ASP,” he says. “We won’t be replacing any of the surfers or event reps — they will remain at five each. I think it will be a great thing and will give the ASP increased strength and input as an organization, which currently is powered by eleven surfers — even the events are represented by them surfers! It can only be of benefit to the sport as a whole. I’m positive that it can and will happen this year.”

So just how many people would be willing to spend their own money to get involved with a sometime infighting board of directors of a surfing association — a position that could put them in the middle of the fray, in the veritable crosshairs of both the athletes and event owners?

Some have voiced concern that finding qualified candidates under those criteria might be a tough task. But Gerard certainty doesn’t agree.

“Those concerns are laughable,” he insists. “For people to be so cynical that they don’t understand that qualified people will want to make a voluntary and positive contribution is nothing short of silly… It’s no different than wanting to serve on the board for the Red Cross or YMCA.”

Gerard does agree these board members need to remain neutral representatives with the ASP’s best interests in mind. “I highly disagree with the concept that board members on a nonprofit should represent a specific constituency,” he says.

And even with the brands fighting for prominence, Gerard says the existing board has remained unfettered by conflict of interest. “Every board member has a fiduciary duty to do what’s in the best interest of the association. And that’s occurred. For example, I’ve seen Billabong Founder Gordan Merchant strongly express the position of Billabong and then almost argue with himself about what would ultimately be best for the ASP. And every time he’s chosen what would be in the best interests of the ASP. The same is true of Triple Crown kingpin Randy Rarick, Quiksilver executive Norm Innis, and women’s representative Kata Skarrat — among others.”

**** Moving Forward ****

The ASP may have its critics, but Gerard says the road ahead looks clear — if the organization takes several important steps.

“There are four things — all of them very realistic and obtainable– that need to occur to get the ASP unified and heading in the best direction,” he says. “One, we need to implement the changes to the board structure that were approved in Hawai’i. Two, we need an effective committee structure so Rabbit can use the intelligence and business resources available to him to the fullest extent possible. Three, the ASP needs to sign a deal with SMG or with some other similar partner. Four, the entire board would benefit from a board retreat where we would draft a mission statement and one-, five-, and ten-year cohesive plans for the ASP.”

But ultimately, concerns about the ASP all boil down to cold, hard cash. “Let’s be real,” he says. “The Machiavellian reality is all these issues are ultimately about money. Money is the great healer, and with the proper sponsor in place, these issues will all be resolved.”

For the sake of the athletes, event owners, and the sport of surfing, let’s hope the ASP can find some healing soon.

Look for TransWorld SURF Business’ coverage of the Coolangata ASP Board Meeting in the weeks to come.

**** Related Links ****

Blood In The Water: Behind The Scenes At The ASP Executive Board Meeting
An often acrimonious December meeting results in a 2001 tour schedule compromise. (December 7, 2001)

ASP Teams With Sportsworld/SSM In $12.75-Million Deal
While the fact the negotiations were underway was a poorly kept secret, the announcement that a final deal had been reached was a shock to many in the industry — including those with the most at stake. (November 15, 2000)

Rabbit Talks About SSM
Twenty-four hours after it was announced that the Association of Surfing Professionals (ASP) and Sportsworld Media Group plc (SMG) had reached an agreement on a five-year, 12.75-m
illion-dollar (U.S.) deal that grants Sportsworld exclusive marketing and media rights to the ASP brand, a host of questions remain. In light of the all the questions surrounding the deal, TransWorld SURF Business contacted ASP President and CEO Wayne “Rabbit” Bartholomew for some answers. (November 16, 2000)

SSM Answers Some Questions
We tracked down SSM Communications Manager Jonathan O’Neil via e-mail to answer some questions about SSM and the pending deal. The written answers are painfully short and to the point — but provide a few insights into the deal. (November 16, 2000)