Monte Burke looks at how Tim Finchem--all by himself!--saved the tour from ruin as the markets crashed and a fire hydrant jumped in front of Tiger's Escalade.
Thanks to all who sent what, despite the focus on Finchem with little mention of some of his hard-working lieutenants, lays out the business model for the PGA Tour in often impre$$ive detail. If the PGA Tour was a Jewish Tea Party group, the IRS would have a field day!
A few noteworthy parts in the interest of being able to hyperlink these in the future (the story is in the May 27 Forbes).
Under Finchem the tour has been able to stockpile investment assets that are now almost precisely $1 billion. *(Some $675 million of that money is in player retirement funds, which the tour lists as both an asset and a liability. Another $73 million is in cash.)
So when the perfect storm appeared, Finchem was negotiating from strength. He was able to assure nervous broadcasters that the game would be a risk-free investment. In a worst-case scenario the tour could use that money to fund its tournaments and keep the game on TV. “Even in the worst of the recession, we never missed a beat financially with the guarantees the tour gave us,” says CBS’s McManus.
The model stuff...
Here’s the model that continues to this day: A corporation–say, AT&T–signs up with the tour as a title sponsor of a tournament, usually paying between $8 million and $13 million for the honor (events that are televised only on the Golf Channel and do not have the final two rounds on either CBS or NBC pay a little less; a handful of sponsors pay more). Nearly half of that money goes directly to the event’s broadcaster, in the form of presold ads. The tour guarantees that between 60% and 65% of the broadcaster’s ads will be accounted for and traditionally delivers up to 85%. The remaining ad time is easy enough to fill: Unlike other sports, many viewers of tour events actually play the game, which gives endemic advertisers–like ball, clothing and club manufacturers–strong incentive to buy spots.
The rest of the title sponsorship money goes to a local tournament organizer, which is a nonprofit entity (the tour itself runs 16 events). These local groups use that money to put on the tournament–mainly with volunteers–and pay a share of the purse (the tour chips in as well). Revenues are generated through ticket sales, hospitality and local advertising. Any leftover money, after expenses, is donated to local charities.
Love this from the Shark...who is also quoted wanting to audit the tour in a sidebar for the story.
In 1999 the tour, along with four of the world’s other large professional golf tours, started what’s known as the World Golf Championships, a series of now four tournaments for only the top players in the world, with purses of close to $9 million. It was basically Norman’s idea. “It still irritates me, big time,” says Norman. “He cast me as a guy who was trying to ruin the game of golf, then he does this.”
And it seems Tim will be taking retirement in 2016...
Finchem expects to retire that year, and the Olympic debut provides him with a closing chapter. “My team here is mature and ready,” he says. His retirement challenge, he says, will be hiking to the summit of the 50-plus 14,000-foot mountains in Colorado. “I’ve done 16 so far,” says a man who knows a thing or two about peaks and valleys.