Tiger, IMG, and PGA Tour: The Battle For Pro Golf in the U.S.
March 24, 2010 by Ryan Ballengee • Print Story •
In this week's New York Times Magazine, Jonathan Mahler investigates what he calls the "Tiger Bubble" — the perceived phenomenon that the PGA Tour has put all of its eggs in the Tiger's basket, leaving them unprepared and incapable of sustaining the Tour in the event of his prolonged absence or retirement.
Mahler, who is not a golf reporter, but clearly an astute guy, looks at corporate sponsorship in the Tiger Era. His conclusion is that the Tour is not in a very good position to handle its portfolio in a world sans Tiger, but would not be crippled by his absence.
The truth is this: ratings are down, about 10 tournaments will need to secure a sponsor contract for '11 and beyond, and next year is a negotiation year with the Tour's TV partners, who have surely taken note of Woods' lengthy absences in two of the last three seasons. Not exactly an enviable position for Tim Finchem.
Most of Mahler's conclusions are draw from conversations with folks from around the world of golf. He also attended the Torrey Pines event and the new Wasted Open in Phoenix. The curious thing is that both of these events have been victims of the growing strength (read: oil money) behind the European Tour's Desert Swing. While everyone has grown accustomed to the Tiger & Phil Show at Torrey each year, Tiger's absence poked a hole in the mystique that the tournament is actually a strong field. Without Tiger, the tournament is perceived to be Phil and no one else. (He sure made that evident with his Ping Eye 2 wedges.) Without them both, well, imagine Innisbrook — still solid, but not exactly magnetic to the general public.
Mahler notes that Tour purses have increased dramatically during Woods' pro career, now in its 15th season. At the same time, the conclusion of the piece is that Woods has had little impact on the growth of the sport. True, too, Woods' impact on the growth of Tour purses may well be overstated. Take the Tour Championship, for example. Tom Watson won the inaugural and took away $360,000. In 1996, Woods' first season on Tour, Tom Lehman won and earned $540,000 — an increase of 50%. Provided the same return nine years later, the 2005 Tour Championship winner Bart Bryant should have taken away $810,000. He got $1.17 million, some $360,000 more than trending would have indicated. Inflation takes away a good chunk of that, so credit Tiger for some $200,000 more for first place — if you so choose.
Total Tour purses have skyrocketed since 1974, when the total money doled out was just above $8 million. For 1998, it was $96 million. In '09, that tally was $275 million. In 24 years, the total purse on the PGA Tour increased by a factor of 12. In the 12 years since, by a factor of almost three.
Back in 2001, Tim Finchem told media that he expected total prize money for the Tour to topple $300 million by 2005.
"I think it is not unreasonable to assume that our prize money the next four years would grow to somewhere upwards of $300 million U.S. by the end of that cycle," he said to the Associated Press.
That was unrealistic thinking blinded by the fruits of a television contract negotiated before the post 9/11 recession. Equally unrealistic is boiling down golf's economy to a single player. Mahler addresses this in his piece by noting that Tiger typically plays a schedule in the teens as opposed to a larger PGA Tour schedule of nearly 50 events — all appropriately title sponsored today. The concern lies, though, in that the combination of television revenues and corporate sponsorship drives the Tour today. Given the downturn, how the sponsorship half of that equation continues to function mystifies critics and observers.
The other half — television ratings — continues to be a sore subject for the Tour when Tiger is not around to attract curiosity seekers (which Woods still has 15 years into his career). In the same way that Tiger has had little influence on golf participation that is now basically flat with when Tiger began on Tour in 1996, the audience for golf on TV has shrunk, as well. People who play golf usually are the ones watching golf on TV. If less people play golf, then less people watch golf. This is true in the United States, where seemingly more courses are opening in former landfills than in undeveloped spaces, but it is not true abroad. The growth of the sport abroad has created a conundrum for the sport in the U.S.
That growth had been taking place on the Asian mainland for years now, but the rapid economic expansion in Indochina has created an untapped market of new status seeking golfers. The golf industry must take advantage of the opportunity. The PGA Tour and USGA — both American-based organizations — led the charge to get golf into the Olympics partially under the guise of growing the sport. The corporate community in Asia, as well as the Middle East, sees pro golf as a chance to showcase their gains and flex their new muscle. The result is that the European, Asian, and OneAsia Tours have stood to gain from the international corporate willingness to fling money at the game when combined with the tours' abandon for paying players to appear rather than win.
At the forefront of that marriage is IMG — the same people that represent Tiger Woods and many of the world's best golfers. A large chunk of their business comes from owning and operating golf tournaments around the globe. They arrange for sponsors, lure players (especially ones on their talent roster because of the double dip in fees), and promote the event. Since IMG does not have a large foothold on the men's prog golf in the US, the organization has opted to leverage its global resources at the cost of some stretches of the PGA Tour's schedule strength.
While IMG, a single organization with a limited stable of players, is not able to challenge the PGA Tour on a weekly basis, it has been successful at times. If a management agency can be a full service tournament operator and ensure success, surely the PGA Tour must find a way to respond. The problem for the Tour is that it does not have that capacity. Its relationship with Tour members is largely hands-off and the Tour deems players as "independent contractors." Though that is a ruse in many ways, the Tour does not have the dual business interest in representing players and tournaments. Instead, it manages tournaments and venues. But what good are either without players?
That's why the pro golf tour model faces problems, and not just in the United States. The expansion of the sport has created fleeting loyalty to pro golf tours and more loyalty to sponsors and handlers. Were IMG and Octagon — its major competitor — able to join forces, they could create a truly formidable and profitable global series. Armed with all aspects of tournament services, the battle would be fierce. While it does not appear that looms on the horizon, the PGA Tour and its counterparts may want to consider a halt to bickering with each other for control and facing the common enemy between them.
Golf does not face a Tiger Bubble. It is much more than that. Tiger may have been the first golfer in decades to transcend sport in this country, but representation agencies and global economics are now in position to transcend the PGA Tour without Woods' presence. The future business model of the sport depends on the ability for tours to deliver events with star-studded fields. All politics aside, the groups that are most likely to deliver on that promise in the years to come are private, for-profit groups. That is, unless the Tour (or tours plural) decides that it is time to become a complete golf property and fully represent its players in addition to its schedule.