It's that time of year again -- the annual Rite of Spring at the Augusta National Golf Club. The Masters tournament remains the old money standard of the sports industry, generating over $40 million in annual revenue. Last year, approximately 35,000 lucky ticket holders attended each of the four days of competition, and about 45,000 attended each of the three practice days.
On television, CBS reportedly paid over $5 million for the rights to continue to broadcast the Masters -- the only major TV rights deal negotiated annually.
These revenues are supplemented by international rights deals with the BCC and the Tokyo Broadcasting System, providing up to $10 million in additional fees. As commercials reappear this year, two years after the Martha Burk controversy, more than $6 million in profit should accrue to the Augusta National Golf Club.
Last year, 594 million rounds were played in the United States at approximately 15,827 golf courses. Unbelievably, over 40,000 golf courses can be played worldwide, a golf market estimated at $38 billion. In China, for example, the number of courses is expected to double within two years, and the growth rate in Europe is huge at 30 percent per annum.
As for the PGA Tour, the $850 million television deal has created a relative windfall for the tournaments and its players.
Ten years ago, the prize money on tour averaged $1.4 million per event. This year, the average exceeds $5.25 million per tournament. The top 50 players made over $390 million in prize money and endorsements last year. As recently as 1991, Corey Pavin, the top money winner, collected the same amount for the entire year as Padraig Harrington won during the Honda Classic three weeks ago: $990,000.
Despite Vijay Singh becoming the first golfer to exceed $10 million in winnings last year, golf still ranks behind the top team sports in terms of playing wages. The median NBA salary last year was $2.2 million -- only 24 PGA Tour players earned that. Like a golfer on his caddy, the long-term success of the PGA Tour relies heavily on three other financial advantages.
Golf demographics good for business
According to the National Golf Foundation, there are currently more than 37 million golfers in the United States. The market is growing at a rate of three million new golfers per year, and that demographic is more affluent than ever. SRI International notes the characteristics of the average golfer:
- A 39-year-old male
- An average annual income of over $66,000
- Owns more than $75,000 in stock
- Owns more than $500,000 in life insurance
- Owns 2.5 automobiles
- Surfs the Internet 14 times a week (twice the national average)
- Owns one property; 20 percent own two or more
Though 14 tournaments changed sponsors in 2003 (the beginning of the current four-year cycle), many long-term blue chip replacements were found -- Ford Motor Company at the Doral in Miami; Bank of America at the Colonial in Texas; Buick in Hartford; and 84 Lumber in western Pennsylvania.
Twelve of these sponsors have extended for the 2007-2010 cycle, guaranteeing long-term stability for the next few years.
TV ratings stabilize with longterm deal
The golf industry eagerly awaits the outcome of new television rights negotiations with the PGA Tour.
