The PGA Tour, through a series of changes announced this week by its commissioner, is considering spending the money. This is the easy part. But you know that money doesn’t grow on trees or fairways. So the question is this:
How does the PGA Tour plan to obtain silver?
Jay Monahan says it will come from three sources.
But no, the Tour will not give up its non-profit status, the Tour commissioner said.
And no, Monahan said, the Tour won’t go dollar for dollar with LIV Golf, the upstart, controversial, Saudi-backed series — and the impetus for Tour change.
We’ll start with the new ways the established brand will spend. On Wednesday before the Tour Championship, Monahan said 20 players will be defined as “top players” from next year; the scheme in which the Tour defines these players, the Player Impact Program, will receive a scholarship bonus, from $50 million to $100 million, to reward these players; four more tournaments, in addition to the eight announced in June, will qualify as “high events” with prize money of $20 million; all 20 players will play in these events, the Players Championship, Majors and three other tournaments; all fully exempted players will start the season with a $500,000 allowance; and players will receive a $5,000 travel allowance.
So again, how does the Tour allow this? Here is Monahan’s explanation:
“The money comes from three sources,” he said. “First, I would say for 2020, this year we’re in, the Tour is having its best year in PGA Tour history and running well ahead of budget.
“Secondly, as you have heard me speak before, the Tour over the years has been very careful in managing its finances and in building up reserves and has been able to invest in programs that will help the Tour to grow. That’s why they’re there, and that’s why we’ll continue to use them.
“I would say further that our partners, our sponsors and all of our partners who want to be behind and who are behind the direction we are going, want to be part of the continued growth and evolution of the Tour. They recognize that with the changes we’re talking about today, the changes we’ve made before today, and the direction we’re heading in, we’re going to create more value.
“When you create more value, you will get more revenue in the business.”
There’s a lot to unpack there. In reference to the good year, much of the money is likely to come from the Tour’s new media rights deals, which went into effect Jan. 1 and are worth billions through the end of the decade. The reservations, for their part, were not directly addressed on Wednesday, but they were in March; at the Players Championship, Monahan said that account was $225 million, down from $300 million pre-pandemic.
Monahan’s third point – partners and sponsors – is notable. It’s unclear what those conversations were like, but they’ll help fund it nonetheless. For the moment. Which brings us to the bigger question of whether the Tour can engage in an arms race with the multi-billion-dollar Saudi Public Investment Fund, LIV’s backer.
A reporter posed this question to Monahan on Wednesday, “What’s the reaction if LIV, who apparently has unlimited amounts of money, just doubles what she’s offering now, or gets into a bidding war with them? “
“I’ve been pretty consistent throughout this for us, where we’re competing with our product, and our product is our timeline,” Monahan said. “We’ve made some big improvements to that for top players and for all of our members, starting this year and certainly heading into 2023.
“When you look at our timeline, the value of our platform and what players can achieve off of this platform based on their competitive success and the values conveyed by this platform, coupled with some of these financial programs , when you look at As a member of the PGA Tour and look at finances in the future, you can earn a lot – you can have a great career. Your earning potential is extraordinary.
“Again, you do it in a way where you prepare to reach the highest level of the game. You compete for trophies that matter. You compete for history and legacy.
“Look at the program. You go to next year, our fans are going to look at the calendar in January and say, the Sentry Tournament of Champions, the WGC Dell Match Play, the three player-hosted invites. For the first time, I now know that these players will play there; Also, I know these players will be playing additional FedExCup events, 20 events. For me, it’s extremely exciting as a fan, and as we get more enthusiasm from our fans, we grow our business.
“But to answer your question directly, when dealing with a non-economic player, you have to get back to the core of who you are, and whether the core of who you are provides the best competitive access and the best opportunities for players and the pipeline, so how do you make it stronger? And that’s where it all starts. That’s what came out of last week’s meeting. That’s what comes out of all the discussions we have at the CCP and with our Board of Directors.
So, in fewer words, the Tour probably has a limit. And that’s even more true when you consider that Monahan wouldn’t give up its nonprofit status, which would have allowed private investors and investment companies to invest. On this, the commissioner said the Tour could create for-profit affiliates, and one of them is the indoor golf series run by Tiger Woods and Rory McIlroy which was also announced on Wednesday and will start in 2024. .
Of course, you might also be wondering if any of these moves could have happened earlier. In more or less words, Phil Mickelson had thought that before moving to LIV.
Monahan was not asked this week, although in June, after another announcement of changes, he said this: “We intended to raise scholarships for these events in the future, okay ? And that was part of our resource allocation plan. The decision we make at the start of 2023, there’s no doubt that one of the things we’re looking to do is to ensure that our major events are maximized both in terms of consequences and financial investment, and this is an acceleration of that. So, yeah, it’s, it’s something that we’re doing to respond on behalf of our members to the current environment that we find ourselves in.
Jordan Spieth, meanwhile, had that trade on Wednesday.
Journalist: “Why did it take so long? Why did it take this kind of existential threat to come to this?
“I don’t know,” Spieth said. “I’m not sure. I don’t know what else could have caused it or – it’s almost like things went pretty well. The golf was good. Just when Tiger dominated – he ends up getting injured, doesn’t play for a while, he comes back and he wins the Tour Championship and then the Masters.
“You have new media rights deals around the same time. Covid hits, it’s not good for anyone; golf numbers are rising. It was in a good place. It’s almost like it ain’t broke, don’t fix it, and it ain’t broke, and it’s just now that there was maybe – it seems like the time of – a very good time to make some kind of change.
“Also, I think with the reserves and the reserve situation and Covid, having to have them, and then they’re rebuilt by the rebuilding markets and the PGA Tour, a lot of their separate business entities being really successful, they get a situation where they can bump into all of that and keep going in that direction.
“I think the timing made sense, and he was also provoked a bit. To be honest, yeah, I don’t know.
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