This year’s version of the Charles Schwab Challenge, scheduled for June 11-14, will have a totally different vibe as fans are kept away.getty images
The PGA Tour’s plans to restart next month with no fans and no hospitality upends its tournament business model and affects charitable donations tied to the events.
Tournaments have been busy crafting everything from added digital branding to virtual pro-ams to maintain at least a small portion of that revenue. They’ve also been working with sponsors to still make donations to some of the many charities that their tournaments support.
The first four tour events begin with the Charles Schwab Challenge set for June 11-14, followed by the RBC Heritage, the Travelers Championship, and then the Rocket Mortgage Classic ending July 5.
A PGA Tour event generally draws on hospitality, sponsorship, tickets and pro-ams to drive revenue. On-course TV signage is reserved for title sponsors.
Typically, the Schwab Challenge generates between $5 million and $6 million from its hospitality and two pro-am offerings, two of an event’s major revenue streams. The Wednesday pro-am includes 52 groups with each foursome priced at $32,000, generating nearly $2 million. The Monday pro-am includes 28 groups priced at $13,000 per foursome for an additional $364,000. The remaining $3 million to $4 million is generated by the suite and other on-course hospitality products.
Not this year, however, as the pandemic changes the economic equation. In an effort to maintain at least a portion of lost revenue, tournament executive director Michael Tothe has created a replacement slate of offerings including digital and social media branding. He also plans to hold a pro-am sometime in the fall at host Colonial Country Club.
“The model is for us to sell the hospitality, and that revenue stream is gone,” Tothe said. “In this COVID environment, it is what we have to deal with but we have seen a lot of companies support the tournament and they want to keep some dollars in the tournament. We want to retain about 10% of our corporate hospitality sales.”
Last year, the tournament gave $14 million to charity, a figure that will be affected by the loss of revenue, though sponsors are expected to still contribute some level of donations. “I don’t have any feel for the charity number,” Tothe said. “It will be impacted slightly but people give when they need to.”
By now, there would be a rush to finish the hospitality build-out at The Travelers Championship set for late June near Hartford, Conn. Instead, tournament executives are working with the tour as they consider offering revenue-saving options such as a virtual pro-am that would replace the real Wednesday pro-am that generates at least $1 million. Organizers would not disclose how much revenue hospitality it typically generates for the event.
No plans are complete, but tournament director Nathan Grube is considering offering participants some type of virtual pro-am that could include a teleconference between each pro-am group and their assigned PGA pro along with autographed merchandise.
“It is being fleshed out and players are supportive,” Grube said, adding that he is considering offering a Zoom call where the three amateurs can get time with the pro in place of the actual pro-am.
“Getting to spend time and access to the players is the core essence of a pro-am, and there are so many ideas on the table now,” Grube said. “It is, how do we capture that essence into a virtual format?”
Last year, the tournament contributed $2.2 million to charity and Grube is hoping to get close to matching that figure this year through sponsor donations and other forms of giving.
“We are laying out for our partners that 2020 is unique, and they know we have charitable partners and that proceeds go to charity,” he said. “We are calling every partner to make a donation, roll over their investment or get a refund. There is still a significant number going to charity.”
Organizers of the Rocket Mortgage Classic are following a similar strategy.
“For ticket buyers, we are providing them flexible offerings to donate, defer or receive a refund,” said Jason Langwell, executive director of the Rocket Mortgage Classic. “Those who donate get a number of benefits, including locking in their 2020 Rocket Mortgage Classic ticket price for two years, discounts on select tournament merchandise and discounts on select concessions options at the 2021 Rocket Mortgage Classic.”
The tournament in 2019 generated more than $1 million in charity in its first year on the PGA Tour schedule.
“For our corporate sponsors, we are getting creative and in the process of finalizing virtual offerings during tournament week for sponsors and the community to benefit from during tournament week,” he said. “We’re also looking for ways to create alternate events and RMC experiences in the fall that can create value for sponsors and our community. We’re also working with our title sponsor, Rocket Mortgage, to create other unique giving strategies that could be featured in-broadcast.”
Last year, the PGA Tour generated more than $200 million in overall in charitable contributions. That number will be less this year with a slate of tournaments already canceled and the next four events taking place without hospitality or fans, but the tour is looking to drive donations in local markets.
At least one title sponsor, Zurich, which sponsors the Zurich Classic in New Orleans that was canceled due to the pandemic, still honored its charitable contribution by matching last year’s donation of more than $1.5 million given to local charities.
“There is no doubt about the impact,” said Tom Alter, vice president of editorial development for the tour. “We look for ways even when revenue is not coming to at least shine the light on stories in the local markets.”
