I had a nice chat with Joe Ogilvie today who takes exception to the criticism of the FedEx Cup's deferred compensation purse structure. I countered that the average fan can follow it more easily with cash on the line, which he understood. But then Joe did some calculating and started dropping figures that sounded something like this from Richard Sandomir's piece in the NY Times while arguing that the deferred compensation will most certainly get the attention of players. From Sandomir's story:
If Woods wins and cashes in at 45, and the $10 million gets an annual return of 8 percent, he would get a $29.4 million parting gift. Mickelson, seven years older, would come away with $18.5 million.
If Vijay Singh, who is No. 6 on the FedEx Cup points list, wins the playoff, then sharply reduces his schedule or retires, he could get his $10 million quickly. He turns 45 in February, one day before Stricker turns 41.
Let’s say a youngster like Hunter Mahan, 25, wins it all. If he collects his deferred prize at 45, and he has received an average return of 8 percent over 20 years, he’ll have $46.6 million in his account. Now let’s let compound interest run wild. If Mahan plays until age 55 and his $10 million earns a smashing 12 percent annual return, he’d have $299.6 million. Such a prospect makes the Champions Tour look like essential estate planning.
So has the Tour made a mistake not better marketing the potential prize take or is simply an impossible concept to market because there are so many variables involved?
While it seems nice that they are "maximizing" the potential take for players due to the wonders of compounding interest, would the FedEx Cup be more fan friendly as a cash bonus pool? And therefore, a more productive exercise for the Tour's sponsors...oh and charity of course.