"Some of the industry sectors that gravitate to our platform have imploded, some of them are struggling and some are actually doing OK."
I've always thought it would be fun to see what happens when Tim Finchem goes into doublespeak mode in front of non-golf folks. Well, courtesy of reader Kevin, my dream came true last week when it seems the Commish sat down with some editorial types at the San Francisco Chronicle. The poor bastards In attendance were Chronicle Editor Ward Bushee, Deputy
Managing Editor Stephen Proctor, Business Editor Al Saracevic, Sports
Editor Glenn Schwarz, reporter Ron Kroichick and editorial assistant
Brace yourselves...we're going to get some oldies-but-goodies and a couple of new, convoluted thoughts.
Q: The economic downturn definitely poses some issues for the PGA Tour and the golf industry. Recently, you discussed sponsorships with companies like Wachovia and Morgan Stanley, which find themselves in the middle of the mess on Wall Street. How is that impacting the PGA and is that a serious concern for you?
A: It's certainly a concern. It's too early to tell about the impact, though. Some of the industry sectors that gravitate to our platform have imploded, some of them are struggling and some are actually doing OK.I just feel privileged to be watching a master at work. Some of the industry sectors that gravitate to our platform have imploded. Poetry I tell you.
Thus far, the ones that are doing OK and the ones that are reorganizing and merging tend to be on our list (of partners). The ones that have imploded are not on our list. We sort of dodged the bullet thus far.
That said, there is an awful lot of stress on some of our key industry sectors - financial services and autos, etc. We'll see how that plays out over the next couple of years.It's not like GM will go belly...oh wait, I better not write that.
A lot of these companies are enlightened sponsors.Translation: big suckers!
By that, I mean they take advantage of what we tend to refer to as the three major value streams, one of which is branding. Barclays and Deutsche Bank get a lot of mileage out of our demographic.
Secondly, they can take advantage of business-to-business activity on-site during tournaments. Third, and increasingly, companies are taking advantage of the relationship between our charitable focus and its impacts. That's what we call our qualitative branding.Please Tim, we all know about qualitative branding! Why do you insist on talking down to us? Everyone knows about qualitative branding.
From a broader perspective, if you look back over the last 20 years at other downturns, companies challenge their cost structure much more aggressively than they do when times are good. That impacts the way they evaluate sports marketing sponsorships.
We've typically come out of these things better off than we were going in. Now that remains to be seen this time around.
If this thing doesn't last too much longer, I think we can weather the storm without any retrenchment of our overall delivery to players and fans.Whoa Nellie! Say what? I think that may be the all-time classic. I think this is a man who has sat in on one too many FedEx meetings.
Q: You've used that word - "retrenchment" - in a few recent interviews. What do you mean by retrenchment?Got that?
A: Whether it's good news or bad news, at a moment like this, we've grown in output in major areas of our business, which is generating financial benefits to players, raising money for charity and helping to grow the game. The first two are the major focus of the PGA Tour. We've grown every year for years. When I say retrenchment, a dead flat-line (in growth) would not be something we are used to. If we go down, that would be unique.
Q: The PGA Tour has a reserve of money it can call on in tough times. Would you tap that if you did have a decrease in sponsorships?This really a painfully longwinded way of saying, we have a nest egg.
A: It's pretty simple. Through team sports and alliances, a big percentage of our revenue is derived from the communications side - broadcasts, etc. When we do our longer-term arrangements with television, and to some extent new media, we project out of that period so that right now we are in a six-year term with our network partners.
Our strategy is to grow our operating reserve during those years so we can withstand some negativity in the next cycle. We've done that for 20 years and it's worked well. We've grown in all those years. The question now is can we grow that reserve a little bit more aggressively to protect against what we were just talking about, namely retrenchment.
Q: Would you grow that through investment vehicles?
A: We need to try to find more revenue with a reduced cost structure. We don't have a lot of flexibility on the cost-structure side because we like to think we're pretty efficient.That's right, just this year all of the VP's are only leasing 5 series' instead of 7 series'.
Q: In this country, is the demographic getting younger or older in terms of golf play?
A: I think it's flat. I think it's going to be another 10 years before we'll start to see movement. When we talk about overall golf play, you have Baby Boomers coming into the population in post-retirement numbers in the tens of millions. That fuels a lot of growth at that end of the age spectrum. It's good news in the sense that those are people that will have more time to spend and that will help fuel growth in rounds.Didn't know a demo could be flat?
Q: Sounds like the time commitment has really held back participation. I've read some stories where writers talk about dividing a course into three six-hole segments. Someone could then play in 1 1/2 hours if so inclined. Is that a viable option?Maybe if the lugs on the PGA Tour could play in under 5 hours on Thursday and Friday, it would set a nice example? Sorry...
A: I don't know how viable that is. There are a number of factors, one of which is the golf course itself. Is it a golf course that the average player can get around and play? Harding Park is a golf course that you can go out here and you're not going to lose a golf ball. There are golf courses that don't fit that model. They take longer to play.
In Europe, if you go to Scotland and Ireland in the summertime, people go out after dinner and they play alternate shot, they play in two hours, they play nine holes in an hour and 20 minutes. I think the mind-set needs to be changed a little bit in the U.S. so that people understand why you can enjoy the game without the need to post this 18-hole score and compare it to the other 20 times you played last year.
Q: How much did it cost to have Tiger Woods out of action this year with his leg injuries?He's phenomenally impactful, that's for sure.
A: A day or two after the announcement, I stated that we were going to lose television ratings in the weeks that he played last year versus not playing this year, and we did. He brings a lot of soft viewers - people that don't watch our product all the time, but they do watch him.
The good news is it created this window for everybody to see our other players. Today, Anthony Kim and Camilo Villegas are very different in the psyche of our fans than they were when Tiger stepped out, and I guarantee you they could have played exactly the same, but if Tiger was out there, they would have had significantly reduced exposure.
Going forward, we know there's going to be this speculation. Can he play? Is the leg going to hold up? Can he turn on it? Can he win?
You also have a whole different story: How is Tiger going to fare against these guys? They are really good. It's a short-term negative and a long-term positive. I would not have wished this to happen, by any means. Tiger is phenomenally impactful. Given the situation, we were hoping we would get something out of it, and I think we have.