UK golf health, PGA Tour's for-profit journey and Tiger's newest business venture

Welcome to the first in a new series of weekly newsletters at The Wedge.

Feb 06, 2024

This is a little experiment at The Wedge. On top of the longform essays, which I’ll continue to publish once or twice a month, I’ll be offering a weekly wrap every Tuesday on the stories that have been catching the eye from money and business in the great game of golf.

This week:

The changing face of the PGA Tour’s non-profit/for-profit status
The UK economy and golf club memberships
Tiger Woods’s commercial journey

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1. The end of the PGA Tour’s non-profit status

Way back in the first part of Golf’s New World Order, the book-length essay series on the PGA Tour and LIV Golf upheaval, we went through the history of the Tour’s nonprofit status, which had laid the foundation for so much of the Tour’s success over the past half century.

That move was pushed through by Deane Beman, who served as Commissioner of the PGA Tour for 20 years from 1974.

To quote that article:

Sawgrass, the Players Championship, the PGA Tour being known as the PGA Tour, the PGA Champions Tour for the over-50s and the Korn Ferry Tour for the game’s poorest and hungriest rising stars … all these are part of Beman’s legacy.

perhaps the most important thing he brought about was to change the legal status of the PGA from for-profit corporation to nonprofit organization.

It happened early in his tenure (Beman was just 30 when he started in the job) and it laid the foundations for the incredible success of the Tour over the next half century.

And, you guessed it, such a move took more of Beman’s glorious manoeuvrings.

Again, on [the] Fairways of Life [podcast]:

“I became Commissioner on January 1st, 1974 [but] I really didn’t become Commissioner until March. I was in Washington and the offices were in New York. I commuted three days a week and read everything in the office.
One of the first things I read was the book on incorporation. The PGA Tour was a Delaware for-profit corporation, and of course the PGA Tour is just a pass-through—we accumulate things and pass through to the players. Some of the money stayed with the sponsors locally. A lot of it went to promoters who ran the tournaments. So I looked at that.
I was in the life and group pensions business and I did the first deferred comp programme for nonprofits, so I understood 501(c)6, 501(c), those kinds of corporations. So I asked our attorney in New York, ‘Why aren't we a 501(c)6 like the NFL was. All sports are nonprofit associations, why are we a profit-maker?’
The attorney in New York said, ‘Okay son, you go and run tournaments, let us take care of the big stuff’.
I went back to Washington and talked to a tax attorney I used, and asked why can’t we be a nonprofit, and he said no reason at all. But he said the problem is you’ve been paying taxes for five years and no local agent is going to say okay [to it]. They’re gonna want to keep your revenue.
You’re gonna have to go to court, file, it’s gonna take a couple of years and cost you a couple of hundred thousand bucks but you’ll ultimately win.
I told the board I was going to do that and they approved it. I’m on a flight to Phoenix reading the papers that are gonna be filed.
I got off the airplane and put a quarter in the slot—we didn’t have iPhones back then—and called the attorney. I said I’d read it all. [Then] I asked what would happen if somebody decided to have a new tour and go in competition with us.
He said they’d be able to do it, no problem at all.
I said go ahead and do that. You put papers in for a rival organization, make it nonprofit, put your secretary and yourself on as board of directors.
Once you get it approved we’ll just transfer it over. He said, ‘We can do that.’
So he filed the papers with some phoney name.
In 30 days we got approval without even an interview. And once we did that we transferred the board over to that.
So instead of spending $250,000 [and taking years] I think we spent $2,500 and got it done in a couple of days.

While the PGA Tour will remain a nonprofit organization in name, it will effectively be a nonprofit organization in name only.

Because the new for-profit entity — which had been promised for the first time when news of the putative agreement with Saudi Arabia’s Public Investment Fund (PIF) broke last June — has now been established with financial backing of up to $3 billion from the so-called Strategic Sports Group (SSG).

The SSG is a consortium of billionaires and billionaire hedge funds, all with deep roots in sports investing and ownership.

It’s led by Fenway Sports Group (the owners of the baseball’s Boston Red Sox and soccer’s Liverpool FC) and also includes Arthur Blank (billionaire owner of Home Depot and the Atlanta Falcons), Steve Cohen (billionaire owner of the New York Mets), Mark Attanasio (billionaire owner of the Milwaukee Brewers), Wyc Grousbeck (billionaire owner of the Boston Celtics)... you get the drift.

The SSG’s investment is in new vehicle called PGA Tour Enterprises, which has been conferred ownership of almost all of the PGA Tour’s revenue-generating assets.

The cash inflow for the Tour won’t stop there, because it’s expected that a deal with the PIF will be agreed before long. That would finally bring LIV Golf and the PGA Tour under the one commercial umbrella, with some of the world’s richest financial backers from the US and the Middle East.

While the PIF’s investment strategy is both long-term and political — their priority is Saudi Arabia’s place in the world post-2030 — one assumes that the SSG’s is shorter term and 100% financial.

So it will be mighty interesting to see how this continues to play out.

2. Golf in the UK — and an economic recovery?

A new report last month revealed that the health of Golf Clubs in the UK seems to have taken a turn for the better in recent years.

At least, that’s what we might summarize from the data on the presence of joining fees and wait lists for prospective members.

The survey by Golfshake, an app and online community for regular golfers and event organisers, of 4000 Golf Club members across the UK suggested that the fallout from the Global Financial Crisis (GFC) has taken years to play out, but that a corner has finally been turned.

While almost a half of members who had joined their club before 2013 had paid a joining fee, that number collapses in the next decade as clubs were forced to drop all barriers to entry in order to entice new members in the door.

Likewise, the presence of waitlists for prospects — which was a common occurrence in the pre-GFC years — also fell of a cliff (dropping from 21% of new member to just 6% in the period from 2013-18).

Both data points have now turned a corner, all of which suggests two things:

That UK Golf Clubs are collectively in a better financial position now than they have been for the past decade
That the post-Brexit UK economy might not be as big a basket case as it is sometimes painted to be in politically-leaning media outlets. After all, for many golfers, being able to keep a membership going is the ultimate evidence of having a nice buffer of spare cash in the bank.

What about your experiences with joining fees, wait-lists or membership price hikes? Let us know in the comments!

Tiger moves on from Nike, ready to launch new clothing venture

Last month Tiger Woods announced that his commercial partnership with Nike had come to an end.

This was a big deal in the world of pro sports endorsements — Nike and Tiger have been synonymous since 1996, the legendary Nike boss Phil Knight and his executive team spotting Tiger’s appeal long before he had won his first Major at the 1997 Masters.

The most impactful moment was nothing stage-managed or PR-handled, but the chip-in at the 16th on Sunday in the 2005 Masters. Ad men and marketing directors love it when their logo is the star of the show.

The partnership has been a fruitful one, even through Tiger’s all too public meltdown and personal struggles, although by many accounts Rory McIlroy in recent years has eclipsed him in the Nike golf family.

Tiger’s famous TW logo was replaced back in 2016 with a perhaps more ambitious, albeit not as instantly recognizable, design under the Tiger Woods Ventures moniker.

Image via Logo-Designer.co

The new TGL venture, the Monday night simulator show in which Tiger is joint-ventured by McIlroy and the PGA Tour, had been slated to begin this month, but that plan has been delayed for a year amid the ongoing boardroom-level discussions.

Jon Rahm had agreed to take part but his participation was effectively postponed by his move to LIV Golf in December, and the ongoing negotiations between the PGA Tour, SSG (whose list of sports owners were also expected to be heavily involved as team owners in TGL) and the PIF have caused at least 12-month delay to the TGL.

What is happening, however, is Tiger’s new sports apparel venture.

A press conference has been arranged for Pacific Palisades in Los Angeles next Monday (February 12th), the home of the Riviera Country Club where Tiger is the host of the Genesis Invitational.

The big question for many people will be:

Is Tiger signing on with another major global sports brand, or will he take advantage of new direct-to-consumer (DTC) trends and technologies and go it alone?

All — or at least more — will be revealed next Monday.