Thursday, January 10, 2013

Dollars & Sense - PGA Tour is Thriving

Tiger Woods has not won a major since 2008, but the PGA Tour is thriving financially and in the area of sponsorship stability.  The transition from the years of Woods’ dominance to an era of much more competitive balance was an intriguing one for the Tour with fluctuating television ratings and an overall confusion on how to continue reaching the younger demographics.  Rory McIlroy is a great player and one worthy of grabbing the proverbial torch, but he certainly has a long way to go to reach the golden-Woods standard.

According Michael Smith’s article “Title sponsors in hand, PGA Tour eyes digital international growth” in this week’s Sports Business Journal, the PGA Tour has sold all but one of its tournament title sponsors.  45 of 46 ain’t too bad.  The lone tournament without a title sponsor is the Tampa Bay Championship held from March 14-17 at Innisbrook Resort.  Transition Optical was the previous title sponsor but was the only company out of 11 not to renew their deal.

The most sought after title sponsor ships are those for tournaments that are televised on either CBS or NBC as opposed to the Golf Channel.  Sponsorship for these types of events runs for $6 million to $8 million per year.  Part of this money goes to the television network and part of this money goes directly to the tournament.  Tournament money could potentially go toward paying the exorbitant purses.  The title sponsor-less Tampa Bay Championship has a total purse of $5.5 million with last year’s winner, Luke Donald, taking home $990,000 of it according to the PGA Tour schedule.

Furthermore on the PGA Tour’s stable sponsorship assets is the fact that only Hyundai’s title sponsorship deal expires after the 2013 season.  With FedEx’s recently extended deal, signing on as the sponsor of the old Nationwide Tour, and broadcast deals with CBS and NBC that run reportedly through 2021, the PGA Tour is able to leverage their current deals further and look for a product more global in nature.

Aided by the established World Golf Championship events including the uniqueness of the Accenture Match Play Championship, the PGA Tour has been looking towards global growth for a while.  Now with PGA Tour Canada under their control and a new tour in Latin America, the PGA Tour continues its expansion
Digital media growth is what ultimately caught eye with the article because typically when you think golf, you think older generations and older generations are not particularly digital media savvy.  Here are a few key digital media points that the PGA Tour is doing in the upcoming season:

-          - Streamlined Apps – Currently apps are on a tournament by tournament basis, but with the PGA Tour undertaking a single aggregated platform, apps will have much greater consistent quality.

-         -  Internet Simulcasts – The PGA Tour plans to simulcast CBS, NBC, and Golf Channel broadcasts on their website as an added viewing platform in hopes to add sellable advertising inventory and drive site traffic.

-          - Digital Division Growth – After taking over control of their digital division from Turner Sports, the PGA Tour looks to grow their digital division and expand on Turner’s successes.

(Quick aside on golf television broadcasts: Golf is often criticized by its haters for being slow and boring, even on television.  Personally, I think that assumption is way off base.  Golf broadcast productions always bring the viewer straight to the action.  How often do you see a guy walking the fairway as opposed to hitting a shot in the middle of a round?  Virtually never.  Golf broadcasts have an element of NFL Red Zone to them that was there before the thought of NFL Red Zone was even conceived.)

The PGA Tour is in an incredible position going forward.  In the United States we have seen unrest and instability in our major sports over the past few years.  Golf and the PGA Tour has remained strong.  Just imagine what a dominant American-born player could do for television ratings!

Follow Kevin Rossi on Twitter @kevin_rossi.

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