Much has happened in the golf business since the beginning of the Masters tournament on April 7th. Tiger Woods' "chip heard around the world" at the sixteenth hole generated over 1 million dollars in advertising equivalent for Nike -- contributed to a 34% increase in television ratings; became the second most TIVOed sports segment in history (behind Janet Jackson's Super Bowl wardrobe malfunction); and earned a place with Brandi Chastain's bra and Terrell Owens' Sharpie as one of modern sport's most memorable moments.
As the United States Open begins this week at Pinehurst, Tiger is the only golfer with a chance to win the coveted Grand Slam. Though Tiger's consecutive cut streak ended at 142 tournaments in Texas 3 weeks ago (and caused a 29% ratings drop at the Byron Nelson Championship that weekend), he is the "favorite" pro male golfer of 56.3% surveyed by TNS Sports. Phil Mickelson is next, at 10.6%.
While Jack Nicklaus announcing his "final" retirement at St. Andrews next month produced a torrent of news coverage, Mother Nature has actually grabbed more golf headlines in 2005. Ten of the first 18 events of this season experienced at least one weather-related suspension. The Wachovia Championship in Charlotte even purchased a $1 million weather insurance policy against lost gate receipts, pro-am revenue, and concessions.
Beyond the weather, three other challenges loom for the golf industry as it celebrates its second major championship of 2005.
CHALLENGE ONE: SUCCESSFULLY COMPLETE A LONG TERM TELEVISION DEAL
The PGA Tour is nearing the end of its record $850 million television contract – a deal which allowed the top 50 professional tour golfers to earn over $390 million dollars in prize money and endorsement fees last year. The rights fees helped fund 62% of PGA Tour prize money. The television networks quickly remind the Tour that the record deal was signed a few months before September 11th and at Tiger Woods' professional zenith. Since then, aggregate golf ratings have dropped 25%.
The Tour responds that ratings have been more consistent over the past eight years than any sport besides NASCAR. It also notes that it generates $50 million of advertising in addition to the $350 million that the networks create each year.
Sponsors love the golf demographics. The average fan makes more than $66,000, and owns more than $500,000 in life insurance. Over 40% of the network's television revenues come from sponsors; such companies as Callaway, Nike, Titleist, and TaylorMade are planning major advertising campaigns around this week's U.S. Open. Still, the PGA tour is looking for new ways to appeal to television. Scheduling modifications may happen – including moving the Tour Championship to early September (before football peaks), and moving the Players Championship to later in the summer, away from the NCAA Basketball Tournament. Look for negotiations to intensify after this week's Major.
CHALLENGE TWO: GROW THE "OTHER" TOURS
The Champions Tour (formerly the PGA Senior Tour) seems to be moving in the right direction. Attendance has increased approximately 10%; over 25 tournament sponsorships have been secured for 2006, and a recent poll found interest in the Champions Tour growing "faster than any sport or league" between 2000-2003 (a 14.1% increase). Adding Tom Watson, Tom Kite, Peter Jacobsen, Craig Stadler, and other popular PGA Tour graduates has enhanced the marketability of the Champions Tour.
As for the LPGA, average prize money has increased from an average of $800,000 to $1.3 million per event – $43 million in total. Nevertheless, outgoing LPGA Commissioner Ty Votaw is attempting to shake up the sport by introducing a playoff style format for the ADT Championship this November in South Florida – culminating with a $1 million shootout between two finalists. Controversy has followed, but the Tour has benefited from the publicity.
While 9.3 million women play golf today, the industry has set a goal of 16.5 million golfers within 5 years. Superstar-in-waiting Michelle Wie has substantially increased interest, and her endorsement value could jump to $20 million annually when she finally turns pro. About 25% of new golfers are female, and 63% of the Women's Golf Association members have gone from beginners to averaging 26 rounds per year.
CHALLENGE THREE: INCREASE GRASS ROOTS PARTICIPATION
