The business of professional golf remains robust, especially when it comes to the PGA Tour and the LPGA, the two circuits based in the United States. Title sponsorships, corporate entertaining, licensing deals and player endorsements are extremely strong, and in 2016 golf was responsible for more than $80 billion worth of economic activity, a 22% five-year increase. The recreational game, however, is still fighting its way out of a nearly two-decade economic slump, but new numbers released April 24 paint a brighter picture.
The PGA Tour made it through the Great Recession with barely a scratch, even though financial services and automotive – two areas hit hard during the downturn – are key business partners. But even in bad times, the PGA Tour’s corporate partners realized golf offers unique opportunities. First, there is essentially a Super Bowl party every week at a PGA Tour event. The pro-am and corporate hospitality facilities offer an experience unique in all of sports marketing. You can play golf with Phil Mickelson but you are never going to play basketball with Lebron James.
Secondly, golf provides a loyal and lucrative demographic. The people who play and watch golf make business decisions, use financial services corporations and buy upscale cars and watches. Also, since the PGA Tour requires title sponsors to purchase a certain amount of advertising in the television broadcast of events other than its own, about two-thirds of the ad time is sold for the networks by the tour, making the broadcast a virtually can’t-miss venture.
The LPGA had a rockier road to travel. It bottomed out in 2010 when its schedule dipped to 23 events, the lowest point since 1972. But that was the year Mike Whan took over as commissioner and he has righted the ship. The LPGA now has 34 events with a global presence, stopping in France, Britain, Australia, China, Korea, Japan, Taiwan, Malaysia, Canada and Mexico as well as the United States.
The next major economic crossroads for the PGA Tour and the LPGA comes when their TV contracts expire. The LPGA’s 10-year deal with Golf Channel – a one-sided relationship in which the LPGA pays the entire production cost, passing along half of that to the title sponsors – expires in 2019. The PGA Tour’s contracts with Golf Channel, NBC and CBS expire in 2021. Where the tours go next will be fascinating to watch.
Even though the rights-fee bubble is straining – just ask ESPN – live sports programming remains the most valuable property in the entertainment industry. In 2013, at the height of the competition between ESPN, Fox Sports, and NBC’s all-sports-channel, Fox paid the U.S. Golf Association $1.1 billion for the rights to its events for 12 years, outbidding NBC and ESPN, who had the previous TV deal.