Why Golf Is Fine and the Chicken Littles Are Wrong

It's the end of the world as we know it.
It's the end of the world as we know it.

I'm sitting in my basement, watching the final round of the PGA Championship.   As of 3:30pm ET, the leaderboard looks like this (with age to the right):

Martin Kaymer                      25

Nick Watney                          29

Jim Furyk                               40

Dustin Johnson                   26

Bubba Watson                     31          

And I am supposed to believe golf is in trouble?

A tournament, a tournament, a tournament of lies. Offer me solutions, offer me alternatives
and I decline.

Between the current worldwide economic downturn, Tiger Woods' fall from grace, and the end of the current US network television contracts, there have been no shortage of golf is in trouble articles and commentaries.  The distilled argument is with less disposable money in the world and Tiger's diminished standing , the cash spigot has been turned off and we are in store for Armageddon (tournaments disappearing, television ratings plunging, etc.).  They are kind of right, what golf is most likely experiencing is the end of the Tiger bubble.

One fact the Chicken Littles don't talk about is the PGA has had a recent money contraction, in 2005, the last time the television contracts were renegotiated.  Also known as when ABC/ESPN left covering the PGA Tour.

Year                                                     2000                                       2004                                     2009

100 on PGA Money List                   Woody Austin                       Hunter Mahan                     Ted Purdy

Money                                                 $485,589                              $813.089                              $838,707

Money (adjusted for inflation)                 $608,054                              $928,060                              $845,249

Both 2000 and 2004 were years before new television contracts.  The 2001 contract had the leverage of a taint-free Tiger.  Notice three things:

• The explosion of money between 2000 and 2004
• The step back in adjusted money between 2004 and 2009
• The 39% increase in adjusted money between 2000 and 2009

The Tiger Bubble also affected purses

Year                                               2000                                       2004                                       2009

John Deere Classic purse              $2,600,000                           $3,800,000                           $4,300,000

Adjusted John Deere purse              $3,280,160                           $4,374,180                           $4,305,332

Again, the cash explosion happened after 2000 and has either stabilized or reverted to 2004 levels.

If you assume television money is going down (which I do) and that purses will follow in kind, it would take a 25% drop in both to fall to 2000 adjusted numbers.  And no one was going broke playing golf in 2000.

While a possible 25% drop in cash is bad for the suits in Ponte Vedra and PGA pros, it is good news for the rest of us and golf in general

• Top players playing more. If purses are going down (not to mention sponsorship money drying up, which is already happening), it will be harder for top players to play 22 domestic tournaments if they want to keep the lifestyles they are accustomed to.
• More varied sponsors. If the cost of doing business is going down, I guarantee you will see sponsors outside the automotive and financial services vein. Look no further than the LPGA; when Mike Whan took control he was able to bring sponsors back that left during the previous administration by (most likely) lowering the cost of doing business. Sponsorship works; the Greenbrier and Turning Stone Resorts signed on to promote their respective casinos and both seem to be very happy with the results. I wouldn't be surprised if a collection of Wisconsin sponsors get together to bring PGA Tour golf back to the state. More companies will want to target the golf fan demographic.

It is the golf fan demo that will ‘save' golf.  Irrelevant of how many First Tee commercials air, the well-to-do golf fan with disposable income will always be a target for advertisers, either to sponsor tournaments or by ads during television coverage.  There may not be oceans of money in professional golf now that it seems the Tiger Bubble has burst, but the rivers of cash that will remain are strong enough to carry the game.

It's the end of the world as we know it.
It's the end of the world as we know it.
It's the end of the world as we know it and I feel fine.