Finchem Memo On Policy Board Actions

No surprises here based on the calculated previous leaks. Just thought you might be out of Lunesta and in need of a sleep aid... 

TO:        PGA TOUR Membership
FROM:    Tim Finchem    
RE:        Policy Board Actions
DATE:    November, 13, 2007

The PGA TOUR Policy Board met on Monday, Nov. 12, and took action on several key items.

But before I share the results of the meeting, I want to take a moment to thank you for your support in helping to make the inaugural FedExCup such a great success. The FedExCup absolutely accomplished what we envisioned it would by “connecting” the season and providing a strong, compelling conclusion with our first-ever PGA TOUR Playoffs for the FedExCup. It delivered significant value to our players, sponsors, television partners, and added something new and attractive to our fans.

Moreover, the four Playoff events delivered record television viewership at a time when sports fans historically have watched the start of the NCAA football season and NFL pre-season and opening games. We certainly saw a change in the tone of coverage as media and fan interest grew through the season and Playoffs, keeping the focus on our sport through mid-September, and ultimately delivering a fitting conclusion.

So again, thank you for helping to make this happen.

The Policy Board’s objective is always to provide the best possible experience for fans, tournaments, sponsors, and, of course, our membership, and to present our sport in the best possible manner. With that as our focus, the Policy Board has approved the following actions:

Policy Board Actions

1) Policy Board Structure
I am very pleased to inform you that Vic Ganzi, President and Chief Executive Officer of Hearst Corporation and a member of the TOUR Policy Board since 1994, has succeeded Dick Ferris as Chairman. As you know, Dick announced in August that he would be retiring at the end of 2007. He has been a tremendous leader in his 14 years as Chairman and has helped guide the PGA TOUR to unparalleled heights as a business. We all owe Dick our appreciation for his outstanding work on our behalf.

As we announced earlier, Edward E. Whitacre, Jr., Chairman Emeritus of AT&T Inc., will be joining the Policy Board as the fourth Independent Director effective January 1. Additionally, we welcome back Brad Faxon and David Toms to the Policy Board, replacing Davis Love III and Joe Durant. This will be Brad’s third term on the Policy Board and David’s second. We also want to thank Davis and Joe for their excellent service as Player Directors.

2) 2008 Schedule
The Policy Board has approved a schedule of 48 official events that will offer $278 million in official prize money. The 2008 schedule will offer 5,672 playing opportunities for members, up from 5,585 in 2007. The 2008 schedule is attached.

As you can see, no changes were made to the first three weeks of the Playoffs. In deference to the 2008 Ryder Cup, the Policy Board has approved THE TOUR Championship presented by Coca-Cola – the fourth and final PGA TOUR Playoff event – being moved back two weeks so that it will be played immediately following the Ryder Cup in 2008. This move provides a one-week gap between the third Playoff event, the BMW Championship, and the Ryder Cup, so as not to adversely affect either the Ryder Cup or THE TOUR Championship. We felt it was important to give those members of both the U.S. and European teams who will be competing in the Playoffs the ability to prepare for the Ryder Cup while also focusing on THE TOUR Championship the following week.

As a consequence of the move, all Fall Series events will be moved back one week. This situation is unique to next year and we do not anticipate the need to alter the Playoffs schedule beyond 2008. The tentative schedules for 2009-2012 have built-in gaps between THE TOUR Championship and the corresponding team event, either The Presidents Cup or Ryder Cup.

3) Potential Changes to the FedExCup
In evaluating the first year of the FedExCup, the Policy Board did not feel the need to make fundamental changes to the overall structure of the competition. Accordingly, no changes have been made in the points distribution in the PGA TOUR Regular Season.

The Policy Board will continue to assess the point structure as it relates to the reseeding and points distribution throughout the Playoffs, in order to consider ways we might create more volatility and keep more players in contention for the FedExCup at THE TOUR Championship presented by Coca-Cola.  We will be seeking more feedback from the PAC and the membership between now and making a final determination on these matters at the February meeting.

4) Tournament Cuts
The Policy Board also approved a change in the regulation pertaining to the 36-hole cut at tournaments.  Currently, the cut following the second round is to the low 70 professionals and ties.  Under the new regulation, the cut will continue to be to the low 70 professionals and ties, unless that results in a weekend field size of more than 78 players.  Under that circumstance, the cut would be made to the number closest to 70.

5) Retirement Plan/Deferred Compensation
The Board has approved a change to the distribution of the $35 million FedExCup bonus pool, whereby it no longer will be 100 percent deferred. Beginning in 2008, $16.5 million in cash will be paid to the top 10 finishers and the remaining $18.5 million will be paid on a tax-deferred basis into the Retirement Plans of the top 150 players. The maximum tax-deferred-payment amount will be $1 million to the winner of the FedExCup, who will also receive $9 million in cash, for a total first place payout of $10 million.

This decision was part of a comprehensive evaluation that was conducted in regard to the payout structure of the FedExCup. This new formula is consistent with the earning projections previously provided to our members under the Retirement Plan.  

6) PGA TOUR Anti-Doping Program
The Policy Board has approved the PGA TOUR’s Anti-Doping Program.  The TOUR’s primary objective is to have a credible program that will aggressively deter the use of any prohibited substance.  The key elements of the program include extensive player outreach and education; a comprehensive list of prohibited substances and methods; therapeutic use exemptions; a testing protocol and procedure; and guidelines governing sanctions and program administration.  A summary of each of these significant elements follows.

Player Outreach and Education
The TOUR’s Anti-Doping Program will be implemented on all three Tours, on a phased-in basis.   On the PGA TOUR, player education and outreach will begin in December 2007 and extend through June 2008, with testing beginning no sooner than July 2008.  The education phase will commence on the Nationwide Tour in mid-2008, with testing to begin in late 2008.  On the Champions Tour, education will begin in January 2009 and testing will be implemented in mid-2009.

PGA TOUR players will receive an Anti-Doping Program Manual in early December 2007.  The manual will contain significant detail about all aspects of the Program.  Additionally, players will have 24-hour-a-day confidential access to medical and program advisors who can respond to any questions relating to specific substances, medications or testing procedures.

The player education process will include weekly player education sessions at tournament sites, beginning in January at the Sony Open in Hawaii.  Medical experts will also be available on a weekly basis for one-on-one meetings with players.  You may also include family members and support staff (managers, trainers, nutritionists, physicians, etc.) in any of the educational sessions offered.  A mandatory player meeting will also be scheduled at the 2008 Buick Invitational, at which time the Program will be covered in comprehensive detail.

Prohibited Substances
As previously announced in September, the PGA TOUR and the other member organizations of the World Golf Foundation have collaborated to create a Model Prohibited Substances and Methods List.

The list includes:
•    Anabolic Agents (e.g., steroids)
•    Hormones and Related Substances (e.g., human growth hormone, testosterone, EPO)
•    Agents with Anti-Estrogenic Activity (to artificially increase testosterone level)
•    Diuretics and Other Masking Agents
•    Stimulants (e.g., Ritalin)
•    Narcotics
•    Cannabinoids
•    Beta Blockers
•    Enhancement of Oxygen Transfer (blood doping)
•    Chemical and Physical Manipulation (tampering with a sample)

The Anti-Doping Program Manuel that will be delivered to players on December 1 will contain a comprehensive list of prohibited substances that fall under the categories listed above, as well as a list of those substances that will not be prohibited under the Program.

Therapeutic Use Exemptions
The TOUR’s Anti-Doping Program includes a process for players to apply to receive a Therapeutic Use Exemption (TUE) to use a banned substance if there is a legitimate medical need as determined by the PGA TOUR’s medical committee.

This TUE medical committee will be created and chaired by the TOUR’s anti-doping medical advisor, Tom Hospel, M.D.  Dr. Hospel is Board Certified in Sports Medicine, has served as the team physician for The Ohio State University, and shares a practice with the Medical Advisor for the NFL Anti-Doping Program.   The TUE medical committee will also include a number of other highly-regarded physicians from various medical disciplines.

Testing Protocol
As with the overall Anti-Doping Program, the PGA TOUR’s primary objective with its testing protocol is to have a credible process that will aggressively and effectively deter the use of any prohibited substance. Under the terms of the program, the TOUR has the authority to test players at any time or place.  All testing will be without prior notice. Testing done at tournament sites may be conducted both on practice/pro-am days and before or after competitive rounds. There are not a stated minimum or maximum number of times a year that an individual player may be tested.  

The TOUR is taking significant steps to ensure that the confidentiality, security and integrity of the entire process is preserved for the membership.  To implement the testing process, the TOUR has engaged the National Center for Drug Free Sport (Drug Free Sport).  Individuals employed by Drug Free Sport are specifically trained to ensure a confidential and secure testing experience for the player and the TOUR.  

Drug Free Sport will assist in the player education program in addition to conducting the actual testing.   Beyond its new relationship with the TOUR, Drug Free Sport also provides drug testing or education services for the NFL, MLB, NBA, NCAA and hundreds of colleges and universities.

Players who have been tested will be notified of the results by the PGA TOUR Program Administrator (see next section).  If it is determined that a player committed a violation of the Anti-Doping Program, the player will be notified of the violation and the sanction.  Players will have an opportunity to appeal a sanction at a hearing to be held by the Commissioner or his designee.

Under the program, the TOUR has the authority to impose a variety of sanctions, which may include: disqualification; ineligibility for up to one year for a first violation, up to five years for a second violation, and up to a lifetime ban for multiple violations; and fines up to $500,000.

In addition, for drugs of abuse (marijuana, certain narcotics, cocaine), the Commissioner will have the discretion to require treatment and rehabilitation in lieu of or in addition to other sanctions.

For any player who fails a test and is issued sanctions, the PGA TOUR will disclose that the player violated the TOUR’s Anti-Doping Program and will report the penalty.

Program Administration
The Program will be handled through the PGA TOUR’s Office of the General Counsel led by Rick Anderson, EVP and Chief Legal Officer.  Allison Keller, Assistant General Counsel—Anti-Doping, will be the Program Administrator.

The PGA TOUR has engaged outside policy and medical experts to assist in the development and implementation of the program, including player education programs and the testing process.  In developing the program, the TOUR has worked closely with Richard Young, one of the world’s foremost anti-doping experts, and the principal draftsman of the World Anti-Doping Agency (WADA) Code.  Mr. Young has served on the WADA Board since 2004.

I realize this is a significant amount of information on several very important areas that impact you and your fellow members. We firmly believe that these actions will enhance the overall position of the PGA TOUR for years to come and we will continue to communicate frequently with you on these key topics.

Again, I want to thank you for all that you do as a member of the PGA TOUR and for helping to make the 2007 season such a great success. I also want to extend the Board’s appreciation for the diligent work and feedback by the PAC on the members’ behalf. Player input is a highly valued component to the overall process of making these significant decisions.

And finally, if you have any questions about this information, please do not hesitate to contact me or our management team.  


Tim Finchem