October 15, 2012

Catching up with Randy Rarick on ZoSea, the ASP and the future of pro surfing

"I think this is probably the most significant thing that has happened to the ASP since its inception."

Few people are better equipped to talk about professional surfing than Randy Rarick. He's been deeply involved in the competitive aspect of the sport since co-founding the International Professional Surfers (along with Fred Hemmings) in 1972. A decade later, when Ian Cairns founded the ASP, Rarick started producing the Triple Crown of Surfing on the North Shore -- which is celebrating its 30th anniversary this year. Rarick has seen it come and seen it go from his various perches on the North Shore and in the ASP boardroom. And three decades of experience affords both perspective and the freedom to share it. This is why we tracked him down at his Sunset Beach house after the France meetings and before the Tripwire Crown: he's always been known for speaking his mind. Which, a little over a week after the ASP/ZoSea deal was announced, is exactly what we need about now.

What does the relationship between ASP and ZoSea mean for the future of pro surfing?

This ZoSea deal has basically taken the ASP private. They won't have to answer to any shareholders, which used to be the license holders (the brands) and the surfers themselves. They realize it's in their best interest to build the sport, which will make them money and grow professional competitive surfing. The brands have taken it about as far as they could; it wasn't sustainable to keep growing bigger and bigger every year. The amount of money they're putting in versus the return on their balance sheets just wasn't making sense. So I think the timing is actually perfect. They've come along when things are tight, the industry is definitely not booming like it was four or five years ago. So they're going to take the sport, privatize it, monetize it and move it forward. Their goal is to take it from a niche sport and move it to maybe not a first tier sport, but certainly something that will make people sit up and recognize.

We've seen that promise before. Are these guys that much better? Is it the timing?

I think a little bit of both. I think the timing is right. I think they have the smarts, the drive, and the wherewithal to probably take it to the next level. We don't have any details yet, we're meeting in about three weeks to start hammering through those details, but I think they have some connections in the media world that we haven't been able to tap into, and whether it be ESPN or Fox or NBC, I think you will see the elevation of surfing in the media, no question. I think it's really good that someone like Terry Hardy who is Kelly's manager is a portion of this. People are putting way too much emphasis on him just because he is a known entity, but really the people that are making up this ZoSea group, there are investors that are behind the scenes that are relying on the expertise that Terry brings as a manager and representing athlete's interests, so I think that's going to be really good in that sense. By eliminating the specter of the brands having to try to outdo each other, now the brands can focus their energy on using these as a promotional platform and I think these ZoSea guys will bring more money into the sport simply because that's what they're doing, that's what they want to do. They want to monetize it, and good for them. Hopefully they get rich on it. And if they get rich on it, that means the tour will improve because it'll bring in more money, which means more money for the athlete, more money for media coverage. I'm sure some people will bemoan the loss of the soul or the grassroots-ness of the thing, you know, but commercial competitive surfing has always been like that anyway. So in that sense I don't see any difference. I just hope it will improve it. You know, time will tell obviously, and I'm putting my optimism behind these guys that they can do it.

When you said they're making it private, will the surfers still have a voice?

The World Professional Surfers (WPS) will be the conduit by which they'll set up their pension plan and they will be the ones that pick the representatives. And they will have a surfer representative on the board, as well as the ZoSea events. Those of us on the events council, we're going to get together as a group and form somewhat of a trade group representing the license holders. So there will be a vote for both the surfers on one side and the events on the other side, but the control of the board will be by ZoSea. They will have a controlling interest of the board. We used to have an equal interest; we will no longer have that. We will have a voice, but not a controlling voice.

How will the events be affected?

Event licenses will be taken over by ZoSea. The brands and or title, whoever owns that license, has first option to retain naming rights. There's a staggered buy-in by the brands for that. ($250K in 2013, $500K in 2014, $1mil in 2015; currently events cost brands between $2-3 million.). But the difference is the brands no longer have to pay for the webcast; they no longer have to pay for the TV, they no longer have to pay for production. That will be guaranteed by ZoSea. This is why this deal went through -- because it's going to save money for the current license holders. Instead of paying to produce the event, put up the prize money, pay for the webcast, all that's gone. Now ZoSea is responsible. They're going to hire a production company. And if the brands want to keep their name on it, they will basically pay for the rights to put their name on the event that is now owned by ZoSea.

If ZoSea is going to take out all this cost, have they explained how they plan to make money?

Yeah. Selling sponsorships and advertisements across the board. They have the web rights, the marketing rights, the naming rights. So they're hoping that the brands stay involved, which I think they will, and continue to title the events. And they'll bring in associate sponsors and overall sponsors who will help bring in money. And then they'll sell the media rights. They're going to package it, they're gonna have one production team that goes and films every single one of the events, so they're all going to have the same look and feel. And let's say they cut a deal with NBC and NBC decides they're going to show the whole ASP World Tour. And then say they hire ACME Productions and they go film it, and say Dave Stanfield and Pottz are going to be their announcers. It'll be basically following on standard sports -- like you go to ESPN and you see the same guys making the same comments every week, so you're going to see the same thing. I think the point being is they really want to legitimize and take the Mickey Mouse and amateurness that's existed and bring a degree of professionalism to this.

How is this all going to lay out?

The brands are going to save money by being the naming rights sponsor; ZoSea will make their money off third party sponsor associations. Whatever it might be. I'm guessing here. They've probably already got a deal with, say NBC: "We'll give you a ten-event tour, you give us five million dollars." Let's just say that's the figure. Then they go to Google and say, "We'll give you the rights to webcast this ten-event tour, give us five million dollars." So they get five million for TV, they get five million from Google, and they've got five million from other sponsors, whoever it may be, so they got $15 million -- so they know they can produce their ten events. And then on top of that they're getting their quarter million, half a million and one million three years down the road from the brands for naming rights, so they've got a formula where they're going to cover their bases and then ideally sell off the valuable pieces of it to make a profit.

And the number of surfers and structure of events is going to stay the same for now?

Exactly. Probably the only thing you're going to see is two or three specialty events get sanctioned. It could be the Eddie. It could be an All-Star event. It could be a new event they create made for TV only. There's probably going to be two or three specialty events added to the mix. It's kind of like NASCAR has the regular circuit event, and in the middle of the season they have the All-Star event. It could be something like that. They're not going to change the World Tour structure because it's fine the way it is. It determines the world champions. There may be tweaking it over the next couple years. Like I would take the Tour down from 32 guys to 24 and make life simpler, but whether the surfers allow that or not is questionable. They've already committed that the prize money is going to go up to $500,000 for the men and $250,000 for the women. They've stepped up their commitment to the athletes particularly, and I think that's probably Terry Hardy's involvement with this group. Like, 'hey these guys are underpaid. They're worth more, they're more marketable, let's give 'em a half a million dollars and let's give 'em a pension plan and let's make these guys feel like athletes and not just surf bums.'

What about pay-per-view webcasts?

You might see that, especially in the bigger markets like the US and Brazil. Maybe not in Europe or Japan, it might be free to air to create more awareness but then they might get a European sponsor to come in and say, well that part of the leg we'll give you a million dollars for advertising rights and be able to show it for free in the European marketplace. I'm sure they're going to cut all kinds of deals to monetize it -- because they have the rights to do it.

Kieren Perrow said there will be a new 'Office of the Commissioner'. What's that?

That will probably be someone that the surfers pick that they are comfortable with; that person will be the conduit between the events, the surfers and ZoSea. So let's just say arbitrarily it was Shaun Tomson. They thought he had the stature and the smarts and the wherewithal. So Shaun becomes the new commissioner and he will be the guy who Kieren and the WPS guys come to and say, 'Shaun we want more money, we want to change this rule or that rule.' Or me as an event, I might come to Shaun and say, 'Shaun we want the ZoSea guys to have 12 cameras instead of ten.' So Shaun will be the conduit that goes to ZoSea and says, 'here's what the surfers want, here's what the events want, let's implement this.' I think it could be somebody like Snips, or even Kieren. He could retire from the tour; he'd be perfect. Somebody who'd well-versed in surf-lore and knowledge and has respect. And can work with both the surfer side of things and the event side of things.

There's no real figurehead for pro surfing right now.

No there isn't. And that's another reason why the timing for this deal is right. The ASP, purely for financial reasons, has not filled Brody's position because by not filling it for a year they were able to balance their books. And I think the lack of a CEO for the ASP made this deal even easier to push this thing through.

What's some background on ZoSea? What's their goal?

They recognize that surfing is unique, which is smart, and they're keeping the ASP admin staff on board because they don't want to reinvent the wheel. What they want to do is take the top tier and monetize it. They don't want to be running contests. They don't want to be dealing with surfers; they don't want to be dealing with tech issues. They see the media rights as a way to monetize it. They know they can make money, and in doing so the athlete's profiles will go up, surfing as a sport will be more legitimized. It's always been a second tier lifestyle sport. They're hoping to take it up a notch. Will it be as big as gold or tennis? Probably not, because you don't have the participants that those sports have. But from a legitimacy point of view they're going to raise the profile of the sport, no questions asked. They're going to take guys like Kelly and immortalize him and take it beyond just surfing. The common guy will know his name and know he was a fantastic athlete.

So...how will this change surfing?

No. I mean the average act of going surfing is going to be the same. When the Triple Crown is done I'm going to go out and surf Sunset just like I always do. But what it's going to do is legitimize surfing for the masses more. And for the people that are associated with professional surfing, it's going to ideally make them more successful at it. Surfers will make more money, brands will hopefully sell more boardshorts. The credibility of the sport will be enhanced in the public eye. Somebody like Kelly is an actual sportsman, not just a guy who does a weird lifestyle thing. Or somebody like John John in a couple years will be recognized as a young athlete that's at the top of the game in the sport he does. So you've got guys like Michael Jordan or Tiger Woods or whoever the top guys are in their particular sports are recognized for their promise in that and I think they're going to try to elevate surfers to that level in the public eye. And in doing so it will help to build the sport. I don't think any of it is bad. I think the timing is right.

By: Marcus Sanders