How new media is evolving traditional sports

A version of this article first appeared in the CNBC Sport newsletter with Alex Sherman, which brings you the biggest news and exclusive interviews from the worlds of sports business and media. Sign up to receive future editions, straight to your inbox.

This week, I spoke with TMRW Sports CEO Mike McCarley about TGL, the indoor simulated event he co-founded with Tiger Woods and Rory McIlory, which wrapped up its regular season this week. Playoffs begin March 17 at 7 p.m. ET on ESPN2. 

You can find the full interview a little further down in the newsletter in our “On The Record” section, but I wanted to take some time to expand on an interesting point he made toward the end of our chat. 

McCarley served as an NBC Sports media executive for two decades, eventually running Golf Channel. He told me that he crafted TGL specifically as a media product. In other words, he designed the rules of the game and the pace of play to match a TV commercial break system, using the National Football League as his model rather than the PGA or LIV. 

“If you watch it on television, it’s paced a lot more like a football game,” McCarley said. “It allows you for the commercial opportunities where – the shot clock is important, but TV timeouts are important too, to commercialize and make sure that you can monetize the business.”

Most of the money from big-time sports stems from the media rights, so it only makes sense that new sports would be tailored specifically to TV. 

McCarley made an interesting observation that has potentially fascinating ramifications for the future of sports media. He noted that certain sports, such as traditional golf, motor sports, boxing, and UFC, don’t have built-in TV commercial opportunities once the event begins. This is why TGL built pauses into the game.

TV networks have dealt with the constant-play issue by either staying with the action (and airing fewer commercials), showing ads in small side boxes, or cutting away for a few minutes and missing live action.

As sports move to streaming, most services have ad-free experiences that can now cater to sports without built in breaks. This doesn’t work as well for baseball, basketball, hockey or football, which easily integrate commercial breaks into their products.

But watching with no ads fits nicely for golf, motor sports or combat sports. Streaming services could conceivably market their ad-free tiers to super fans by offering them more live action than a viewer who gets ads. F1 and UFC are both engaged in rights talks this year, and could strike deals with streamers such as Netflix, Amazon or Apple. 

What McCarley is saying is that the essence of certain sports may lead them to particular platforms. Traditional golf fans may prefer an ad-free viewing experience to the pacing of broadcast or cable TV, which has defined the sport for decades. If viewers want alternative casts – following a particular player or just watching a particular hole – streaming services can easily create different viewing experiences. 

TGL’s experiment giving players microphones has already pushed PGA Tour golfer Justin Thomas to write an open letter to his peers stressing the importance of allowing fans to hear interactions between caddies and golfers. These types of conversations could come at the expense of TV commercial breaks. 

“On-course personality” is “the highest ranked driver of interest for young fans (18-34). Getting the younger age group interested and watching our sport could be a huge difference in our popularity,” Thomas wrote in his letter. 

Just this week, Mastercard announced it will sponsor segments at this week’s Arnold Palmer Invitational during live play featuring player-caddie interactions in lieu of traditional commercials 

“We’re looking at a world in which different sports may be tailored to different audiences for different reasons,” McCarley said. “On a streaming service, you have the opportunity to monetize that audience differently than you would in a much more traditional, dual revenue stream, advertising-driven world.”

This is something Netflix has already encountered with WWE. Internationally, Netflix subscribers that don’t pay for ads have been getting extra match footage instead of commercials. American Netflix customers have thus far received the ads for “Raw” even if they don’t pay for commercials.

Improving the viewing experience with no ads is likely the next frontier for sports. But here’s the rub – it may also lead to yet another increase in the price of commercial-free viewing. That’s because sports drives TV ad revenue higher – both in volume and rate. If customers can watch sports but skip the ads, they’ll have to pay for the right to do so. 

With TMRW Sports CEO Mike McCarley …