USGA, The Corporation

Well now that the USGA has officially gone all corporate on us, (treat yourself here and here for great lessons in business 101), this raises a few of those pesky questions that shareholders like to ask.

Because looking at the latest annual report a few things jump out about the uh, "business model" in 2006. And since I can't find a message from Treasurer Missy Crisp explaining the red ink, I guess we'll have to draw some conclusions here.

As Frank Hannigan first reported on this web site (and as the golf publications have not even apparently noticed), the USGA lost an unprecedented $6.1 million in 2006 after netting $2.3 million in '05, so we're looking at an $8.4 million turnaround in the wrong direction. A few of the culprits:

  • There was a $32 million 2006 increase in the cost of running its championships.
  • The $16 million museum project is up to $19.4 million (and counting).
  • There was a $2.3 million increase in the cost of growing the membership program. That's right, $4.6 million was spent last year trying to add members. I seem to remember that David Fay cited Golf Journal's pricey $3.5 million a year price tag as one of the reasons for dropping it, along with the usual nonsense about a 24/7 world, the Internet, yada, yada, yada.

So I'm curious what those of you in the corporate world would make of this? It would seem such massive expenditures and losses would require a change at the top? Or at least, more explicit explanation beyond the usual stuff about platform restructuring or leveraged cross polination and revaluation of liquid assets.

Well, there is this message from the shareholders in the annual report.

In 2002 they reported 720,000 members with $18.2 million in contributions. In 2006 they reported "about" 900,000 members, with revenue of $19.1 million. With a USGA membership costing $25, that should show an increase of around $5 million between in '02 and '06.

So either they are giving away a whole bunch of memberships, or the contributions aren't coming in like they used to.