If you are old enough to remember “Trickle Down Economics,” well, you are pretty old.
According to a report filed by Golf Channel’s Rex Hoggard, the PGA Tour players held their first meeting of the year during the Farmers Insurance Open, and there were questions about the U.S. Open purse compared to the money the USGA receives from Fox Sports from their $1.2 billion television rights contract.
Sure enough, the next week at their annual meeting, the USGA announced an increase in the total purse for the 2017 U.S. Open to $12 million.
That’s $1.5 million more than the PGA Championship, $2 million more than the Masters and $3.55 million more than the Champion Golfer of the Year will receive for winning the Open Championship, if we’re using last year’s numbers. He does get that cool wine jug thingy, although the Masters champ gets a one-of-a-kind sports jacket.
How can PGA Tour professionals complain about the purse sizes, when first-place checks are routinely north of $1 million?
Last year the 125th man in the FedEx Cup ranking, Retief Goosen earned $745,000 in prize money. A record 107 tour pros made at least $1 million for the year. Dustin Johnson topped the 2015-16 PGA Tour money list with $9.36 million in total earnings.
In 41 events on the 2016-17 PGA Tour schedule total purses total $320.3 million, but let’s not forget the four FedEx Cup events that add another $35 million in bonus money for the top 120 players that make the playoffs. And, then there is the additional $35 million FedEx Cup bonus pool that is divided among the top 150 players at the end of the season, of which, the FedEx Cup champion receives a cool trophy and $10 million, including $9 million in cash.
I am not a math genius — thank goodness my smartphone calculator didn’t blowout a microchip — but that all totals a little over $390 million, available to the 200 or so touring professionals on the PGA Tour.
All of this does not include endorsement deals, which will increase a player’s annual income by double, triple or more. And, I will not even try to calculate the annual income someone like Phil Mickelson or Tiger Woods will receive from the PGA Tour’s amazing retirement plan. Suffice it to say, it is a significant number.
The current pay structure is very good for the players on the PGA Tour, but the problem is that as total revenue to the organizing bodies, especially the USGA have increased, the percentage of that revenue paid out to the players has decreased significantly.
In the case of the U.S. Open, Fox is currently in the third year of its broadcast rights agreement. Under the previous contract with NBC, the USGA received $37 million annually. The purse for the 2014 U.S. Open, the final one under the NBC deal, was $9 million, thus the players received 24.3 percent of total revenue. Now that Fox is paying $100 million per year, the new $12 million purse, which equates to 12 percent of total revenue, is a lot less than what they were receiving.
Someone, who is really good at figuring out percentages, probably an agent, noticed this discrepancy and the players are beginning to believe that someone else is getting rich off of their hard work.
They are not too happy about it. They envision their healthy cash flow slowing to a trickle. If you can call $390 million a trickle.
If anyone has a beef here it should be the LPGA Tour. The new total purse for the U.S. Women’s Open is $5 million. It is the largest on the women’s tour, but it’s less than half of what the men receive. Who figures out this stuff?
I can’t wait for equal pay for women advocates to realize the shocking difference. The USGA and the LPGA are going to get a ton of free publicity in media across the land. The kind of PR the USGA could probably do without. They think they have problems now by holding the 2017 U.S. Women’s Open at Trump Bedminster? Just wait.
Back to the PGA Tour, are the players are beginning to wonder if purse sizes shouldn’t be raised across the board, including week-to-week?
With new television agreements on the horizon, the tour players may want to take a softer tack on this topic. With new digital delivery options and various alternatives to network broadcasts, as well declining viewership numbers across network platforms, the new TV deals will most certainly not resemble the old ones. That could mean sizable cuts in future purse sizes.
The way live golf, or any live sports competition, reaches fans in the future is going to change. How the PGA Tour and other professional golf promoters respond to maximize their revenues and create the dollars for acceptable purses for the players is an open and very good question.
This is not the last we will hear on this subject. The upcoming changes to network sports broadcasts — golf, in particular — is one of the most intriguing topics in all of sports today.