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Monday, October 8, 2012
Updated: November 21, 11:56 AM ET
What is this ASP deal about?

By Peter 'Joli" Wilson
ASP Action Sports

Sunset Beach
The new changes to the ASP leaves a lot of questions unanswered. Many are just waiting and watching.

The news is finally official, with a Press release from the ASP last week stating: -- Association of Surfing Professionals (ASP) International has entered into a Term Sheet with ZoSea Media (founded by Paul Speaker and Terry Hardy) designed to enhance the organizational structure of the sport as well as the direction of professional surfing in the coming years. This measure enjoys the comprehensive support of surfers, events, staff and ASP Board Members.

For the uninitiated, this is Wikipedia's definition of a 'Term Sheet': "A bullet-point document outlining the material terms and conditions of a business agreement. After a term sheet has been "executed," it guides legal counsel in the preparation of a proposed "final agreement." It then guides, but is not necessarily binding, as the signatories negotiate, usually with legal counsel, the final terms of their agreement."

The rumors have been circulating for months that somebody had put in an offer to "buy" the ASP. Board members had signed a confidentiality agreement and getting any of them to open up about the rumors was impossible. While the surfers in the Top 34, who are part owners of the ASP, were not so tight lipped about the buyout, few really seemed to have a handle on exactly what was being proposed or what the outcome of the proposed offer entailed. Those that did weren't talking either.

In an sit-down interview with Kieren Perrow, the ASP's surfer rep, he declined to comment on the subject.

Details of the "Term Sheet" signed between ZoSea and the ASP are still very light, but it all comes back to the ASP media rights with the broadcasting of contest webcasts, cable TV and the digital broadcasting of ASP events. Like the NFL or NBA or MLB, licenses and broadcast deals are where the monetary value of a sports organization lies. In theory, ASP/ZoSea would now be able to pursue somebody like Red Bull Media House, the media production arm of the energy drink company, and strike a deal, giving Red Bull and outlet and platform to broadcast from and the ASP/ZoSea a chunk of change for their balance sheet.

For a number of years the ASP held the media rights to the events, but when sponsorship money dried up they were given to the sponsors of each event. In the majority of cases this meant the big industry apparel brands like Quiksilver, Hurley, Billabong and Rip Curl. They were good at making surf products, but all of a sudden they found themselves having to become media companies as well. In doing so, the budgets for running a World Championship Tour event doubled overnight.

Conservatively it costs over $1.5 to $2 million to run an event, so with web casting and a television show of the event, the budgets blew up to $3 to 4 million. In this weakened economic state, the brands have all been looking at their bottom lines and cancelled events, such as the Rip Curl Search, Quiksilver Pro New York, along with the downgrading of the Billabong Pro in Jeffreys Bay, South Africa. In a recent conversation with Billabong Vice President of Marketing Graham Stableberg, he noted that the surf industry as a whole is contracting from its pre-2008 high.

According to sources close to the new ASP/ZoSea deal, when everything goes into effect in 2014 the price tag for running an event will be cut almost in half. The ASP/ZoSea deal will make managing every brand's contest calendar considerably more affordable.

And something to keep in mind, Terry Hardy, who among other things handles Kelly Slater and John John Florence's business affairs, was largely behind the so-called "Rebel Tour" idea in 2009 that threatened to compete with the ASP tour (he and partner Paul Speaker were also behind Jackass star Bam Margera's "Bam's World Domination"). Chances are very good that some of those ideas will be part of the new ASP. This is already evident in the reported elevation of prize money for both the men's and women's tours. The men's purse will now be $500,000 for men's events, up from $425,000, and the women will go from $110,00 to $250,000.

The proposed deal from ZoSea Media comes at a very opportunistic time for the ASP World Tour in its present form. The surfwear brands that have been the lifeblood of the tour for years have now been thrown a lifeline to continue their sponsorship of events. Their marketing budgets will virtually necessarily adjusted, and they will be able to go back to doing what they know best, making products and sponsoring athletes ... not trying to be media moguls.