SBJ/September 3 - 9, 2001/Marketingsponsorship

Beyond big-bucks TV deal lies delicate balance that holds golf’s future

Beyond big-bucks TV deal lies delicate balance that holds golf’s future

PGA Tour Commissioner Tim Finchem and his staff pulled off a great accomplishment with the recently announced 2003-06 television package. Against a flat economy, at a time when many U.S. advertising and marketing budgets are retreating, Finchem doubled the PGA Tour TV rights income to a reported $850 million over four years. He also ensured that, to defend their investment, the new TV partners will promote the PGA Tour telecasts and its players as never before.

The PGA Tour's money is as good as in the bank. It's the tour's broadcast partners — ABC, CBS, NBC, USA Network and ESPN (The Golf Channel remains involved as the broadcast home of whatever the former Buy.com developmental tour is going to become) — that are on the hook.

And this deal has risks. Will the ratings justify the increased investment? Could the new TV package hurt player lineups at tournaments and tournament sponsors? Could this ultimately drive down the all-important TV ratings?

Let's assume that the economy will rebound in the near future and that men's pro golf TV ratings will remain high enough to attract wealthy advertisers. Even then, to ensure a profit on their investment, the broadcasters must dramatically raise the current spot-advertising costs.

Who's going to pay the higher rates? The current spectrum of men's pro-golf advertisers (golf equipment companies, management consulting firms, software publishers, investment brokerages and car companies) will not all make the trip.

One key to tapping into new ad revenue is, of course, Tiger Woods. When he is winning, TV ratings double. Viewers flocking to those broadcasts are in the consumer mainstream more so than the relatively upscale core viewers who watch PGA Tour events weekly no matter who's winning.

If the Tiger effect continues to drive viewership, it's possible that consumer brands that wouldn't otherwise buy golf time will buy spots from the new broadcast partners to reach the new mass consumers. This also will create new sponsorship opportunities (and revenue streams) for the players because some advertisers and sponsors will choose to activate their PGA Tour TV investment through player endorsements.

There are inherent risks in depending heavily on Woods. He will bring along new advertisers and boosted ratings as long as he shows up. But what if he develops a more international schedule or reduces his calendar? Suppose he is injured or organizes the long-rumored "Tiger Tour," featuring several of the world's best-known golfers in an international series of their own, with an independent TV package, or he somehow becomes less attractive to the viewing public.

The good news for the players (and maybe bad news for the tournaments) is that a big share of the TV revenue will boost tournament purses. For 2003 and beyond, typical tour event purses may double from the current levels, to $6 million to $7 million for each event. Non-marquee event winners may be able to bag more than $1 million on a good weekend. The winner's share of the big events will top $2 million.

That's great for the players, but it could ultimately cost the tournaments the attendance of marquee names. With new personal-sponsorship money, huge event purses and record equipment sponsor deals, many big-name players will cut back their competition schedules. International golfers may help fill the bill, but the overall star value of many events will be reduced. This, in turn, may lessen the interest of sponsors in supporting PGA Tour events that don't feature the big names. The pressure to provide bigger purses also could drive up ticket prices. All of the above could lead to smaller live attendance, less public interest and, ultimately, smaller TV viewership.

The PGA Tour's prime charter is to make money for its players. Finchem got the job done. The new TV package is a boon for men's pro golf — as long as the PGA Tour, the TV networks and the athletes keep in mind the delicate balance of interests that serve sponsors, advertisers, fans, the golf industry and the game itself.

Mel Poole (mp@sponsorlogic.com) is president of Sponsor Logic, a consulting management and events agency.

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