Upcoming Conferences and Events
May 31 - Jun 1
SBJ/April 4-10, 2011/People and Pop Culture
Champions: Deane Beman, PGA Tour's turning point
As commissioner, his vision and iron will created the modern PGA Tour and pro golf's buisness model
Published April 4, 2011, Page 36
WANT MORE GREAT STORIES LIKE THIS?
CLICK ON ONE OF THESE BUTTONS
Beman ran the tour from 1974 to 1994 and helped develop the model for title sponsorships.
The silence is broken only when the club strikes the ball and digs through the turf. Deane Beman strikes a solitary outline in the distance, where only he, Vijay Singh and a few distinguished PGA Tour members are permitted to practice.
It’s a familiar pose for Beman, who in his 20 years as commissioner of the PGA Tour, staked his legacy to myriad positions that were often unpopular and sometimes portrayed him as the antagonist to golfing luminaries Jack Nicklaus and Arnold Palmer.
But when you’re an elite golfer, as Beman was before he became commissioner, you’ve got one thing that separates you from the rest: conviction. Better to have the wrong club and believe in it than the right club and doubt.
Beman, one of the best amateur golfers of his day and a four-time winner as a pro, ran the PGA Tour the same way he played golf, with a conviction and an iron will to forge ahead with the tour’s business even when he might have been faced with a stiff headwind.
“Before Deane came along, the PGA Tour was a couple of big-name players and a hot dog stand at the turn,” said player and TV analyst Peter Jacobsen. “Under Deane, the purses grew and corporate sponsors came in. A lot of people thought Deane was doing too much to support the tour and not enough to support the players, but history proved that Deane made the right decisions.”
Beman competed on the tour before he ever became its commissioner, and he’s still a scratch golfer who plays nearly every day.
Under Beman, the Nationwide and Champions tours were born, providing the PGA Tour with events that showcased its future, present and past. It was Beman’s initiative to start the Players Championship and end the season with the Tour Championship.
Perhaps the greatest testament to his two decades on the job is that he’s been out of office for 17 years, and the business of the PGA Tour looks very much like the day he exited in 1994.
“Deane had the courage to do things differently,” said Gary Stevenson, who joined the tour as vice president of marketing in 1987 and later founded the agency OnSport. “He had the right vision and he wouldn’t compromise. Even the guys who got sideways with him would agree that he’s just tenacious. Deane simply imposed his will.”
BRINGING CHANGE AS COMMISSIONER
That Beman made himself into a great golfer still stumps many of his contemporaries. He didn’t hit the ball very far and he didn’t cut the most athletic figure striding down the fairway. But thanks to a razor-sharp short game and a deft putting touch, the ball somehow found its way into the cup in fewer strokes than most of his competitors. A distinguished amateur career included a pair of U.S. Amateur victories and a triumph in the British Amateur.
He was doing just fine as a pro, but when Joe Dey resigned as commissioner in 1974, Beman was drawn to the job. He saw potential in a tour that struggled to generate much of a TV audience and whose rights, frankly, weren’t worth very much.
“Golf was pretty small when I came in,” Beman said. “Bowling had more events on TV than golf. We’re talking about a fairly minor sport that had a few big stars.”
When the commissioner’s job became available, Beman began telling some of his friends on the tour that he wanted to be commissioner. Jim Colbert, a player at the time, knew that Beman had been an insurance executive while he played as an amateur and that he had a good business sense, so he decided to back him.
Colbert, a solid player, was popular with his peers and he became an influential supporter of Beman’s through the years during multiple terms on the player advisory board. That relationship paid dividends years later.
Beman’s single interview to become commissioner lasted about an hour. He met with the tour’s board in Atlanta at the headquarters of Coca-Cola, where Paul Austin, the tour’s chairman and Coke’s CEO, led the interviews.
Beman prepared a 10-page soft-cover booklet that explained his business background and the opportunities that existed at the tour.
Essentially, it was time to stop running the tour like a bunch of tournament promoters and start running it like a business. Beman’s pitch worked with the policy board, which was made up of mostly business dignitaries, but it was uncomfortable for several of the tour’s stakeholders, who weren’t sure the tour should be moving into new businesses like real estate and golf course design.
“If you’re any kind of an established entity, change is not welcome,” Beman said. “It’s just not welcome. Risk-taking is not welcome. Innovation is not embraced. It’s just the way it is. But without change and innovation, it’s very difficult to grow.
“I don’t think I fully understood it at first, but I became aware of it pretty quickly. Most people didn’t want change, but it didn’t impede my desire to take the tour forward.”
BIG BEAR CHALLENGE
In the PGA Tour, Beman saw the potential for a major sports property. Developing that potential was why he wanted the job as commissioner in the first place.
But other than a few stars — like Nicklaus, Palmer, Tom Watson, Johnny Miller and Lee Trevino — the tour lacked many of the important elements usually associated with a premier property. TV was a splintered mess in the 1970s, and even in that underperforming condition, it still was responsible for 80 percent of the tour’s revenue. There was little sponsorship money coming in and virtually no diversity of revenue streams.
Even so, as Beman said, change was not always embraced — even as he moved the tour into a better economic position. By the early 1980s, Beman had established a sales and marketing division that was bringing in corporate sponsorships. He also, in 1980, had built the first of the Tournament Players Clubs, at Sawgrass, and he proceeded to establish plans for five more courses in the years that followed, creating a franchise of TPC courses that would become a huge money-making division of the tour.
The game’s elite players, however, sought their own sponsorship revenue and golf course design opportunities. The tour had, in essence, become their competition, or so they believed.
Beman’s efforts to expand the tour ran into its most significant roadblock in 1983, when Palmer and Nicklaus co-signed a letter of complaint to the tour’s policy board. The tour, at the time, was doing quite well, a little too well for some of the players’ tastes. They worried that the tour’s improving business was taking sponsorship and course design money away from the players, who act as independent contractors.
The tour represents the tournaments as well as the golfers, which makes the commissioner the union chief and management all at once.
“It’s a job that’s designed for conflict,” Stevenson said.
The letter of complaint called the tour’s business growth and expansion “unauthorized” and questioned its legitimacy.
“It was a huge point in the evolution of the tour and for Deane,” Colbert said. “The last sentence of the letter said that the tour had 10 days to respond, or else. It was a total threat. Deane would have been out. They were out to take over management of the tour.”
Beman’s TPC courses became a success, but he had to fight to get them built.
The letter of complaint charged Beman with moving the tour into areas where it wasn’t authorized. The tour had overstepped its bounds by jumping into marketing, real estate and club management.
When Colbert heard about the uprising, he went to Jacksonville to meet with Beman and review the tour’s charter, which detailed that the tour could go into any business it wanted as long as it drove revenue back into the tour. In fact, the charter had been signed by Nicklaus.
The next day, Colbert went to see Nicklaus, who was due in Washington, D.C., to check on a design project. Colbert flew in Nicklaus’ private jet with the golfing legend from Florida to D.C., and flatly told him that he was wrong. Colbert said that the tour’s charter gave Beman every right to increase revenue, and he convinced the Golden Bear that this was not the time to show his teeth.
“I knew that if it got out that Jack and Arnie had signed that document, both sides were going to be backed into a corner and it was going to be a big fight,” Colbert said. “The players had it good. We were playing for more money than ever, but this was a real threat. I mean, Jack could have taken 40 or 50 guys and started his own tour. But Jack decided to withdraw the letter and he admitted that he’d made a mistake.”
Requests to speak with Nicklaus for this story were declined.
“Back then, Deane had to simply impose his will to move the tour forward,” Stevenson said. “That had to be a pretty doggone lonely position at times.”
In Beman’s mind, he had been charged with improving the health of the tour and he had done just that, from TV to sponsorships to business development.
BUILDING A BUSINESS MODEL
In Beman’s 20 years as commissioner, he increased purses from $8.2 million a year to $56.4 million. The tour’s total assets leaped from $400,000 to more than $500 million by the time he stepped aside.
Beman saw the future of golf and acted on it. “There was no give-up in the guy.”
Ratings generally were poor and the tournaments were expensive to produce, in part because there wasn’t a fixed venue like there was in other major sports.
“Networks lived and died with ratings and that made it difficult for us to compete because we’re a target-audience sport as opposed to a mass-audience sport,” Beman said. “Our ratings compared to a lot of other sports were low. It was also expensive to telecast. Back in the ’70s, you could do a football game for $25,000 or so, but to do a golf tournament, to lay all the cable, put cameras all over the last four or five holes, and the additional personnel required, it was probably $250,000. You’ve got a real challenge. So we had to build a model that would insulate the tour from TV ratings.”
One of Beman’s most important moves in the 1970s was to hire a TV coordinator, Steve Reid, to consolidate the tour’s broadcast deals. It marked the beginning of the tour’s relationship with CBS as the tour’s primary TV home, and broadcast revenue eventually tripled, Reid said, once the tour began selling the entire package of events.
Along the way, the model for title sponsorships was conceived, calling for half of that lead sponsorship money to go to the broadcaster to cover expenses and part of the advertising, and half to go to the tournament to fund growing purses.
The creation of the title sponsorships started out as a way for the tour to mitigate the cost of its TV partners. When Beman first went to potential sponsors, he was asking them to underwrite the cost to produce a tournament. If networks had their production costs covered, it took a lot of the risk out of broadcasting a tournament.
The problem was that networks wouldn’t recognize the sponsors on the air.
“They wouldn’t allow the announcers or the cameramen to show the corporate involvement,” Beman said. “Over time, we convinced the networks that this was costing everybody.”
Through the 1980s, the tour formalized the title sponsorship model. Half of the seven-figure fee went to cover the production costs of broadcasting the tournament and a significant share of the advertising inventory, while the other half contributed to the purses.
“The balance of the ad inventory was all profit for the networks with none of the risk,” Beman said. “And the corporate sponsors were spending $3 million to $4 million and getting $15 million to $20 million in advertising value. The players were winning because the purses were growing, the networks were winning, and the sponsor was the biggest winner.
“It became the engine that now drives all sports, but we were the ones that put it together. We convinced the networks to embrace the sponsors, and the great thing was that we were able to shift the conversation with the networks away from ratings to talking about profits.”
Neal Pilson, the former CBS Sports president, called the PGA Tour one of the first true partners among the major sports properties.
“A lot of sports tell the networks that you’re on your own for revenue,” Pilson said. “Deane worked hard and committed to getting the sponsorship and advertising revenues to support the rights fees we were paying. Deane was working for both the tour and the networks. This was his model.”
A GROWING PIE
Beman could be a stubborn son of a gun. Remember, he’s an elite golfer by trade, and with that comes conviction. If a golfer isn’t committed to the shot, there’s not much of a chance that he’ll put a good swing on it.
Beman’s routine, even today, is meticulous. At 72 and still a scratch golfer, Beman plays nearly every day. His practice sessions begin with the wedges, and he works his way through every club in the bag. He must hit five quality shots in a row with a club before he moves to the next club.
The Northern Virginia native who grew up in Maryland took that same single-minded focus to his job as commissioner. It was enough to drive some associates nuts.
To this day, talking about Beman sends Reid into a fit of anger and frustration. That conviction, that commitment to the shot, often came across as bullheaded in the board room. Reid and Beman eventually quit speaking over the management of PGA Tour Entertainment.
Reid said nothing typified Beman’s determination like the development of the TPC Sawgrass and other TPC courses. Back then, few men in golf were as respected as Don January, Reid said, and January was dead-set against the tour moving into course building and management.
“Deane didn’t give a shit about anything else,” said Reid, who hasn’t spoken to Beman in close to 20 years. “Deane’s going to do what Deane wants to do. He took some unpopular stances, hell yes. Don January fought Deane on those TPC courses all the way, but in the end Deane was successful because of his persistence and his intelligence. There was no give-up in the guy.
“He focused on his target and never lost sight of it and nothing ever got in the way of his goal. Nothing. Nothing!”
What the players didn’t understand back in the ’80s was that Beman wasn’t robbing them of their chance to make more money; he was enhancing it. The more attractive the tour became to TV and sponsors, the more the purses grew, and the more brands wanted golfers as spokesmen.
Nicklaus’ piece of the pie didn’t shrink. The whole pie grew larger because of Beman’s initiative and drive. The golfers who tried to drive Beman out profited as new sponsors were attracted to the game.
“What Deane did was invent sports marketing without even knowing it,” said Kevin O’Malley, the former CBS Sports and Turner Sports executive. “Using the fact that CEOs liked to play golf and hang around the tour, Deane concocted a formula that broadened the scope of the tour in a very strategic way. Without Deane, the tour as we know it would not exist.”
There remains a tinge of “I was right” in Beman’s voice now.
“Most players were not that interested in the politics until something affected them directly,” he said. “Then they’re all experts.
“One trait every tour veteran has is that they’re quick studies. Before you hit a golf shot, you have to assess all of the information very quickly. You’ve got to make a decision and completely believe in it. Then you live with it and don’t change your mind.”