GOLF/SPECIAL REPORT

DRIVING PGA INC.

The key to success is a novel deal with the TV networks

HAL QUINN April 10 1989
GOLF/SPECIAL REPORT

DRIVING PGA INC.

The key to success is a novel deal with the TV networks

HAL QUINN April 10 1989

DRIVING PGA INC.

GOLF/SPECIAL REPORT

The key to success is a novel deal with the TV networks

The one-storey wood-and-glass building nestled in the stand of pine trees blends unobtrusively with the lush northern Florida setting. The idyllic location—an hour’s drive south of Jacksonville in Ponte Vedra, Fla., amid the posh Sawgrass development—is fitting for the PGA Tour headquarters. The PGA is the governing body of the most tranquil and pastoral of professional sports. But the activity inside the headquarters belies the building’s placid aura. Away from the greens, there is the hot pursuit of greenbacks. The PGA Tour offices are the hub of a rapidly expanding enterprise with revenues of $150 million and annual prize money of $68 million. The key to success has been a novel commercial relationship with the major U.S. television networks and a marriage of convenience between corporate America and professional golf. In smiling understatement, Terry Hanson, the PGA Tour’s vicepresident of communications, explained, “We are a nonprofit organization with highly developed entrepreneurial skills.’’

With a staff of 135 people, the tour organization under commissioner Deane Beman works to return all profits to the players in the form of subsidies, tournament prize money or contributions to the players’ pension fund. Staff members run annual tournaments at 52 PGA

Tour stops and at 42 locations on the Senior Tour— one of pro golf’s latest success stories (page 72). The Texas-based Ladies Professional Golf Association is a separate entity struggling to compete for attention with the male associations (page 68).

The PGA Tour has a growing business portfolio that includes 13 golf courses and resorts in eight states. There also are divisions for designated PGA Tour golf vacation resorts, videotapes, and lucrative U.S. network and ca-

ble television rights and production fees. When Beman became commissioner in 1974, the PGA Tour’s assets were $876,000. At the end of 1988, assets totalled $84 million.

Last year, after generating $68 million in prize money, the PGA Tour contributed $3

million to the PGA Tour Membership Plan and $720,000 to the Seniors’ fund. Profit from the golf clubs exceeded $8.4 million. And the marketing arm of the tour generated more than $13 million in revenue from such companies as Eastman Kodak (the official tour film), Delta (the official airline) and National (the official rental car). PGA Tour Investments Inc., formed in 1982, builds courses with trademark artificial mounds and amphitheatres to create easy viewing areas for spectators. Three more courses

are in the planning stage, and there are plans to build six PGA courses in Japan.

The single-minded and remarkably successful pursuit of riches by the Beman regime initially rankled the PGA Tour’s established stars, including Jack Nicklaus and Arnold Palmer. They criticized the PGA Tour’s incursion into their multimillion-dollar sidelines of golf course design and construction and product endorsements. The established playing stars also disagreed with another Beman invention—the so-called all-exempt tour. That move in 1983 raised the number of players eligible to play in tour tournaments from the top 60 money winners of the previous year to the top 125— £ eliminating pressure-packed I Monday qualifying rounds for i players outside the elite i group. The result was that more than twice the number of players gained a greater sense of security. But it has led to anomalies. Last year, Payne Stewart earned $664,285 and finished 14th on the money list without winning a tournament.

Until the changes at the PGA Tour under Beman, pro golf in America was a brand name affair. In the 1930s, American amateur Bobby Jones became one of the game’s greatest players. The legendary Gene Sarazen, Ben Hogan and Sam Snead followed Jones, and then came Arnold Palmer in the late 1950s and early 1960s. Palmer, with his sunburned good looks and his dramatic, back-from-the-brink play, was the first pro whose career earnings exceeded $1 million on tour and made professional golf a multimillion-dollar spectator and television sport. Jack Nicklaus wrested Palmer’s mantle away and dominated the game for 25 years—sharing the spotlight occasionally with South African Gary Player, Lee Trevino of Dallas and Kansan Tom Watson. Now, with the titans in eclipse, fans are longing for new royalty. Spain’s Seve Ballesteros and Australia’s Greg Norman, Scotland’s Sandy Lyle and the United States’ Curtis Strange frequently answer the call. But most weeks on the PGA Tour, a growing number of almost interchangeable pretenders interrupt the proceedings.

One man who waits in line for the coronation is Strange, a 34-year-old Virginian who last year won the U.S. Open and led the tour money list in three of the past four seasons—including last year when he won his second Canadian Open and nearly $1.4 million in total prize money. Another pretender is the irreverent Mark Calcavecchia, a 28-year-old who lives in West Palm Beach, Fla. Prior to the 1989 season, his eight-year career earnings barely topped Strange’s 1988 income. But he won two of the first five tournaments in 1989 and stood

second going into last weekend’s stop in Houston with more than $514,800. He celebrated his $216,000 win at the Nissan Los Angeles Open this year by buying himself a Porsche 930 Turbo Carerra and his wife, Sheryl, a BMW 750iL. But more than the money or even this week’s Masters, Calcavecchia says that he wants to reclaim U.S. honors in the biennial Ryder Cup matches against the Europeans.

Calcavecchia’s vow is proof of the growing international competitiveness in professional golf and the rise of foreign players on a tour that the Americans once dominated. But the PGA Tour is still the driving force in pro golf. The cornerstone of its success is television revenue, and the foundation is corporate sponsorship. Television ratings of professional golf have never been high. Admitted Hanson: “If the National Football League is a 20, then golf is a four.” To ensure network coverage, despite the ratings, Beman devised the concept of “titled” tournament sponsorships—and effectively reversed the customary relationship with pro sports.

The major U.S. networks pay the National Football League, Major League Baseball and the National Basketball Association huge fees for the rights to televise their games. With high ratings, it is then relatively easy for the net-

works to sell advertising time to corporations, offset costs and make a profit. In golf, to get on network television, tournament organizers must pay an estimated $1.8 million in 1989 and buy approximately half the advertising time of the broadcasts—usually about 32 half-minute spots at an additional cost of about $1.2 million.

If tournament organizers can find a corporation willing to pay the fees, that corporation applies its name—or title—to the tournament to go along with its 32 network commercials. Explained Hanson: “With that underpinning, and half of the ads already sold, the networks love it and they all make money on golf. The

tournament organizers get better exposure and make more money for their local charity.” The relationship also accounts for the fawning interviews with the executives of corporations sponsoring PGA Tour events by network announcers. It is good business: in 1989, 42 tournaments will be televised and the PGA Tour will receive $45 million in rights and production fees from U.S. network and cable television, up from $13 million for 18 tournaments in 1984. Last year, charities in PGA Tour locations collected $21 million.

In addition to videotapes featuring tournament highlights and golf lessons, the PGA Tour has tried to capture a corner of the burgeoning golf vacation market. In 1986, the PGA Tour initiated its Destinations program by which countries, states or provinces are designated official Tour locations. In return for annual fees of as high as $420,000, the official tourist centre receives marketing support in print ads and videotapes, use of the PGA Tour logo and advice on golf course and resort development and maintenance.

The PGA Tour is currently negotiating with British Columbia’s ministry of tourism to add the province—where tourism officials boast that golf can be played up to 220 days a year— to the Destinations list. Explained Gary Stevenson, vice-president of PGA Tour Properties: “It is a very attractive province, and resort courses aren’t developed there. What we are offering the province is assistance in building and designing the courses.” Indeed, the provincial government—in concert with golf course and resort owners and developers—currently is finalizing details of British Columbia’s participation in an agreement with the PGA Tour and, officials say, the province could be a Tour destination by 1990.

One of the PGA Tour’s most handsome destinations is its very own Tournament Players’ Club—and two challenging courses—near the headquarters building in Ponte Vedra. Indeed, the Stadium Course with its island green at the 17th hole received North American exposure last month when it hosted the annual Players Championship. With courses serving as a lure, the Sawgrass development is thriving and the courses are busy. And the PGA Tour? Secure in its contracts for television and product marketing, the Tour is expanding its headquarters. By the end of the year, a second one-storey, woodand-glass 35,000-square-foot building will nestle in the Florida pines. The PGA Tour needs the additional space to accommodate its expanding video library and future plans: video production facilities, a publishing arm and travel service. As well, no doubt there will be other inspirations from Deane Beman and his group of highly skilled entrepreneurs.

HAL QUINN in Ponte Vedra

PGA LEADER BOARD PLAYER EARNINGS* ® Curtis Strange, 34, Kingsmill, Va. $1,377,000 (2) Chip Beck, 32, Fayetteville, N.C. 1,112,000 (3) Joey Sindelar, 31, Horseheads, N.Y. 976,000 (Î) Ken Green, 30, West Palm Beach, Fla. 935,000 (5) Tom Kite, 39, Austin, Tex. 912,000 (6) Mark Calcavecchia, 28, West Palm Beach, Fla. 902,000 (7) Sandy Lyle, 31, Surrey, England 872,000 (O) Ben Crenshaw, 37, Austin, Tex. 836,000 (9) David Frost, 29, Dallas, Tex.** 830,000 (10) Lanny Wadkins, 39, Dallas, Tex. 740,000 Source: PGA Tour Guide (1988 Season) ‘Converted To Canadian Dollars “South African Passport