Ty Votaws Annual iState of the LPGAi Address

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LESLIE KING: We have with us Commissioner Ty Votaw who is getting ready to starts his third year as Commissioner of the LPGA. Before we get started just two small reminders, one, we may very well be part of the rolling blackouts that are going through California. If that does happen we will have a transcript of everything that happens here. So for those of you on the phone, should we lose you due to technology, we will have a record of that available. Also for those who are here actually in Rancho Mirage when you have a question after Commissioner Votaw has had a few moments just to give you an overview of where we are with the LPGA, we need for you to ask questions through microphones that we have so the folks at home, if you will, people calling in can hear the questions also.

COMMISSIONER VOTAW: Thank you all for joining us here today for the 2001 LPGA State of the Tour Address. I started my tenure as Commissioner at this event in 1999 and it seems like yesterday that my first week as Commissioner was being started. The past two years have been extremely exciting for the LPGA. We celebrated in 2000 our 50th anniversary, that was a year long celebration of all the great players who founded the LPGA and made the LPGA great. We are very fortunate today have one of our founders in the room with us Shirley Spork who I am always honored to be in the same room with from here in Palm Springs.
 
Last year provided us an enormous momentum for bringing us into 2001. And in looking back somewhat to 2000 and what types of things took place to provide us with that momentum, certainly you have to start with the year that Karrie Webb had seven victories; two major Championships; 1.8 million in prize money; Player-of-the-Year; money title obviously, Vare Trophy for low scoring average. All the things that made her a record-setting -- made 2000 a record-setting year for her, but there are also a number of other things that took place. Certainly Annika Sorenstam with five victories; second in money; a couple of head-to-head battles with Karrie all year long, for all the various awards at the end of the year, I think was a great momentum coming into this year that you saw, I think, validate all of Annika's hard work in trying to get back to the top of the LPGA Tour. That was seen last week with an exclamation point with her 59, first woman ever to shoot a 59 in a professional golf match, set or tied a total of six records on her way to winning the Standard Register PING; winning two weeks in a row; obviously a lot of momentum for her coming in, but also a very compelling storyline for just what kind of competitive mix is on the LPGA Tour right now.
 
If you look over the past three years we have had three very exciting players distinguish themselves. In 1998 Se Ri Pak took the world by storm by winning two major Championships in her rookie year. The past two years Karrie Webb, 1999 and 2000 Karrie Webb dominated the LPGA Tour and now I think you see Annika Sorenstam who has worked very hard to come back to the top provide, I think, a very compelling three-person race at the top currently and they are all players who are in their 20s. They are all players who are at the top of their game and I think will be at the top of their game for many, many years to come. That has made us very excited about this year. In terms of other indices of success that I think we can point to - I am here to tell that I think the LPGA is in by far the best shape it has ever been in its 51 years of history. And there are some numbers I will share with you. I completely acknowledge that the end of my opening remarks I can be accused of being a polyana in terms of where I think the LPGA is. But I think the numbers bear out just how strong the LPGA is from a financial point of view and from a competitive point of view like I just pointed out.
 
This year's scheduled features 41 tournaments with total prize money in excess of 43.5 million dollars. First time in our history that the LPGA has had the opportunity to average at least $1 million in total prize money for its official events. We had 23 tournaments on our schedule with at least a million dollars in prize money, up from 12 that we had in 2000. The Tour as I mentioned earlier has never been more competitive and I think the fact that the prize money is increased by more than 13 percent from 2000 to 2001 is an indication of what the marketplace is saying about the competitive environment on the LPGA Tour. In 1999 we set a goal of having an average purse of at least a million dollars for our official events by the year 2002, and we are very pleased to be able to say that we have reached that average purse mark of a million dollars or more one year early in 2001. We also set a goal of having all of our official events be at least $1 million minimum purses by the year 2003 and the fact that we now have 23 tournaments on our schedule at a million dollars or more up from 12, as I said, we are well on our way to achieving that goal as well. I think in looking at where we are this year currently on the LPGA Tour, we have had I believe seven tournaments and six different winners from I think four different countries.
 
And I think I mentioned today in an article that was written in U.S.A. TODAY that while no American has won on the LPGA Tour this year, the record should also reflect that no one from Australia, England or Japan has won either. I think that the fact that we have had seven events, six different winners from four different countries really does reflect the international flavor that the LPGA Tour has come to represent. I think in terms of some storylines this year we have a number of very compelling storylines. This week Karrie Webb defends one of her two major championships in 2001. The second being the U.S. women's Open at Pine Needles in North Carolina. That the last time we played there -- had the U.S. women's Open there Annika Sorenstam was the winner. And so coming into this week Karrie starting off her defense of this event will also lead into her defense of the U.S. women's Open the end of May, first of June. And I think having the history there with Annika and the fact that Karrie is defending is going to be a very nice thing for all of you to write about and to cover.
 
We have another development this year relative to our players. We have three players who are going after a career Grand Slam this year, which would be Karrie, Laura Davies and Meg Mallon. All of them had the opportunity, if Laura wins and Meg win this week they will complete their career Grand Slam. If Karrie wins the McDonald's LPGA Championship she completes her Grand Slam. Only four players in our history have ever done that - Louise Suggs, Mickey Wright, Pat Bradley and Juli Inkster. We are very excited to see that storyline develop as well. We announced last week that Patty Sheehan would be the Captain for the U.S. solheim Cup team in 2002. We are very excited about that captaincy on the part of Patty. I think the Solheim Cup is a further reflection of how international this Tour has become and what an international storyline the Solheim Cup has become. We are very excited about returning to the United States in 2002 at Interlachen where we hope that we can have as compelling a matchup as we had in 2000 at Loch Lomond. With 23 or 22 of the 24 players at the Solheim Cup being LPGA Tour members, all 12 of the U.S. team obviously and 10 of the 12 European, I don't know if there is, from the LPGA's perspective, any real loser at the Solheim Cup because no matter who wins, those players play week-in and week-out on the LPGA Tour which I think is a further validation of the LPGA as a World Tour.
 
This year we have got 20 different countries represented on our Tour; close to 80 players from 20 different countries. Our newest major this year the Women's Weedibix British Women's Open, an international event without question, that we are very excited about having it as our fourth major. We also have the ability to say that all four of our major Championships this year will have purses of at least 1.5 million dollars. And all of them for the first time will be on broadcast network television. ABC Sports for Nabisco and The Weedibix Women's British Open; NBC for the U.S. women's Open and CBS for McDonald's marking the first time that we can say that all four have been on broadcast network TV in a given year. All the conversation that we have had about the international flavor does talk in terms of: Well, where is the American contingent of players and are we going to see an American win on the LPGA Tour this year. I think the answer is absolutely yes.
 
And what people need to understand or remember is that the Americans have won 7 of the 12 past major Championships over the past three years, with Karrie Webb and Se Ri Pak winning the other five over those three years. Right now 12 Americans are in the Top 20 of our money list, 18 of the Top-30. No other country has more than three or four represented on the money list. So I don't think that the depths of American women's golf has been greatly exaggerated. Juli Inkster is hoping to become the first person to win the LPGA Championship for three years in a row. We have got some players, 30 something players in the forms of Meg Mallon, Brandie Burton, Michelle McGann, Pat Hurst who are still in the hunt. Dottie Pepper is only 6 points away from the LPGA Tour Hall of Fame. And she is very excited about that. We also have a very exciting crop of young U.S. players that includes Kelly Kuehne, Dorothy Delasin, Cristie Kerr and a young player named Laura Diaz who I think over the past two years has distinguished herself. She finished 64th on the money list in 1999. 33rd on the money list last year and this year I think she stands at No. 11 on the money list and I'd think we are going to see big things from Laura Diaz.
 
One of the things we worked very hard at in the year, over the past year was increasing our presence both on television and on the Internet in the form of LPGA.COM. Whenever I would get into an elevator or have a conversation with a player last year they would ask me probably one of two questions or both depending on how long the elevator ride was. One was: When are we going to get the purses up to greater and greater levels and the fact that we have the purses where we are now that conversation has tended to stop. The second question was: When are we going to improve LPGA.COM. We worked very hard -- one of the goals I gave the staff was that I didn't want to get into any other elevators this year with that question being asked and we were able to relaunch LPGA.COM in January to, I think, what has been rave reviews on just how interactive it is; how fan-friendly it is; how much more informative and dynamic and cutting edge it has become and we are very excited about that. That, combined with our new Tour-wide electronic scoring system that includes real time scoring and statistics, an extensive intranet system and video display boards on site at each of our tournaments to make the fan experience that much more compelling. We are also very excited about continuing our television coverage this year. Over 250 hours of television coverage, once again, which is more than any other women's professional sport. We have 35 events on television that are going to be balanced evenly between broadcast network, ESPN and ESPN2, and the Golf Channel. And we will be announcing our full television schedule the first part of next week. We will have a couple of other television partners that we will be announcing at that time. A very important part of our television schedule this year is the continuation and the expansion of the State Farm Series on ESPN and ESPN2. We have had that series grow from seven events to eight events, to ten events and now this year there will be a record 12 number of events on ESPN and ESPN2 that feature a bonus of $250,000 and that that series culminates at the State Farm Classic in Springfield, Illinois later this summer over Labor Day weekend. We think all of these things will increase our presence in the marketplace and make the LPGA much more relevant to its fans and also as the fans, who follow the LPGA Tour, are able to get closer to our players; get closer to the information that they crave, it will provide even more evidence of just how much the LPGA's players and the product of the LPGA as an organization provides a point of differentiation between us and other professional sports.
 
You have heard me say this in the past. I think our players represent the very best in what professional sports has to offer in terms of accessibility of the athletes with the fans; the approachability, accommodation of sponsors and fans and hopefully the media. I think we have a group of athletes that are very appreciative of where they are in their lives and how they have gotten here and who they have to thank; whether it be the fans, whether it be the volunteers, whether it be the sponsors and whether it be the media. I think that point of differentiation is going to be something that we will continue to focus on in this organization as we move forward.
 
One of the things that we are also -- that sets us apart that increases our relevance in the marketplace on a day-to-day basis is the growing success of the LPGA Teachers and Club Professional Division, 1,100 member strong, close to 1,200 members. It's the largest group of women golf professionals in any one organization in the world. Their educational and research projects have been hailed as leading edge in the industry. We will start next year -- I am sorry, this year the second stage of a brain study that was initiated last year in Chicago. That project is being overseen by Director of Education Betsy Clark -- LPGA TCP Division Director of Education and Research, Betsy Clark, and we think that those things are going to be extremely important to how we all know how we learn and play the game of golf. We also have very important programs relating to bringing disabled golfers into the game of golf, and we have been, I think, lauded by not only our own organization, people in our own organization, but people outside the organization the TCP Division is the leader in teaching teachers how to teach the game of golf and if we want to grow this game, and if we want to fly the LPGA flag on driving ranges and in pro shops and in teaching schools around the country, our Teaching and Club Professional Division will be a part of that. One of the features on LPGA.COM that I think is very much followed and very much -- we are getting great reviews on is the tips from the country's top teachers that you can get animated golf lessons and chats with top teaching professionals in the LPGA TCP Division on LPGA.COM. The LPGA wouldn't be where it is today without charity and we are very pleased to be able to say that in 2001 LPGA tournaments and their fans or their volunteers have raised over $117 million since 1981 and this year we initiated a very important international charity project called the Drive for Life Program for World Vision; which nearly 100 players this year will try to raise in their performance on the golf course close to $320,000 for the area called Ruvu Remiti in Tanzania a country and a place that is in dire need of medical supplies, food, it's very economically depressed and our players as part of the World Vision Project being the official LPGA International charity project for this year is our way of trying to give back to the very needy people of Ruvu Remiti.
 
One of the most exciting elements I think that we are continuing to focus on in 2001 is the refocusing and restructuring in strategic planning of the overall organization that will continue throughout 2001 in a number of very key ways. But I think one of the things that is an evidence of the strategic planning and is part of our success going forward is the level and the quality and the multi-level types of integrated sponsorships that we are now receiving in the marketplace and two great examples of that would be Multigrain Cheerios and the program they initiated in the year 2000 where three LPGA players are featured on cereal boxes throughout the country - Lorie Kane, Janice Moodie and Cristie Kerr are those three players. But that relationship with Multigrain Cheerios goes far beyond just putting players on cereal boxes although that is an important part of it, there is an official cereal component for the LPGA. There is an on-site program that benefits all of our tournaments. And there is also a charity overlay where $250,000 is being raised for the American Heart Association in conjunction with this sponsorship. We also have some exciting news to talk about. This weekend one of the corporate partners of the LPGA, Michelob Lite is debuting a new 30-second commercial featuring Annika Sorenstam. It will premier this week during the NCAA Men's Basketball Championship on CBS. the Michelob Lite spot called 'Divot'; when you see it you will know why it is called divot will air during the Regional Finals. This is the second ad -- this is the second ad that Michelob Lite is featuring Annika. Last year there was a 30-second spot called 'Air Mail.' That, as many as you saw, was a very funny, very entertaining 30-second commercial, but the very -- the great thing about that spot is that Anheuser-Busch ran it not in golf telecast but in non-golf telecast and spent about $3 million in placing that spot in programming like the NBA Playoffs; like the Tonight Show; like Saturday Night Live and the X files and again non-golf programming which gave the LPGA an enormous amount of presence in the market place and really helped Annika's presence in the market place as well and certainly, given her performance the past several weeks and this year, the debut of the divot ad on Sunday during the NCAA Championship is going to be further presencing, if you will, of the LPGA and LPGA brand and Annika on the part of Anheuser-Busch. Those are the kinds of programs that we want to do more of. As you know, Anheuser-Busch also sponsors the LPGA event in St. Louis, they are the official beer of the LPGA. Those type of corporate sponsorships where it is not just an official category; it is multi-level integrated with players' involvement, tournament involvement, and association and increasing charity involvement.
 
Those are the types of things that we are going to do more and more of and focus more on quality of our partnerships rather than in quantity of our partnerships. Earlier this year and I will conclude with this and then take whatever questions you may have -- earlier this year the LPGA announced a number of actions relative to a restructuring of the organization and the initiation of some strategic planning that we are undertaking. We took a hard look at the association over the past 12 to 18 months, how we are structured organizationally; how we are staffed; who we are; what we are; what our focus should be about going forward and we think that the process that we have undertaken to make those examinations will provide us with a new engine that ensures future growth and success for the association. We have -- many times the LPGA has been afraid of or resistant to change. I think what the process we have just gone through over the past 12 to 18 months has made us all realize that we have to embrace change. We have to not be afraid of change and if we are going to do business under the status quo, we will not create a differentiation in the marketplace; we will not create a relevance in the market place that we need to do in order for the brand image of the LPGA to continue to improve. We have increasingly much more international impact on our Tour because of the international presence of players that impact our revenues. We are examining ways, as part of the strategic planning, to impact how our television rights fees in International markets can be enhanced; how our merchandizing international licensing can be enhanced and recently you will find foreign language, LPGA.COM rights being initiated on our part which again is a focus or is a reflection of our international focus.
 
We also did some restructuring of the employment of the personnel at the LPGA. We have under three senior vice presidents and two vice-presidents put four business groups together within the LPGA; whether it be business development on the corporate marketing side; whether it be business affairs on the television side, whether it be business operations on the technology side and certainly our clear focus on enhancing the quality of our tournament offerings, all of these things that we have done from a restructuring of the employment base and from recognition of these -- these are the core businesses that we are in, whether it be tournaments, television, corporate marketing, or technology that we are going to position ourselves for future growth going down the road. We initiated a brand values assessment in the year 2000. It is ongoing now. That will be -- Phase II will involve amongst other things a new advertising campaign for the LPGA that will debut in the summer of this year. And the findings that we have had in going through this brand values assessment that the marketplace believes the LPGA is primed and has great potential for future growth. In fact, the marketplace believes that in terms of absolute growth we have greater growth potential relative to where we are now than perhaps even the PGA TOUR. We say that -- we have learned that the LPGA needs again, as I said, to embrace change; not be afraid of it. That we should celebrate the successes that the association has enjoyed and continues to enjoy but also proactively verbalize what our future goals are, so that when we reach them we will have something to celebrate. We also want people to know that the LPGA's universe is not just golf. It is larger than that. It's extending the entire entertainment spectrum and also incorporating all the things that again differentiate us in the marketplace relative to our product and who our athletes are. Not only are we in the process of developing that, but I think our new strategic plan as I have said, we think that our new ad campaign will embody many of these values that we have learned about in this brand values assessment. We are looking forward to sharing that new advertising campaign with you all sometime this summer. Again, as I said at the beginning, I maybe accused of being a polyana in how I think the LPGA is positioned for future growth, but maybe I am guilty as charged because I believe that we are positioned for future growth in a very dynamic and very real way and we are very excited about our 51st year and the next 50 years for the organization.
 
LESLIE KING: As we open it up for questions, a little bit of housekeeping, we are going to answer questions from media that are here, actually in Rancho Mirage; then we will go if there are any additional questions for those who are calling in. And if anyone would like a photo or some imaging on the new Annika ad we can arrange for you to get copies of that. Let me know and we can facilitate that for you.
 
Q. Seems like with golf the rich are getting richer and the poor are getting poorer. Is there anything that you can get do as an organization to now -- to somehow step into -- you know, there is just a disparity between what the PGA TOUR is playing for and what the LPGA is playing for. I mean, can you address that?

COMMISSIONER VOTAW: Sure. There is a disparity between the salaries of the NFL, the NBA and Major League Baseball and what PGA TOUR players are making as well. I think the answer is that the PGA TOUR and the LPGA Tour in terms of pure comparisons are different economic models. Such that while the disparity of purses is certainly something that is apparent, there is a disparity because of reasons that in many ways are completely outside the control of the LPGA. And that speaks to the difference in economic models. For example, on the PGA TOUR a $500,000 purse increase only costs the tournament about half of that $500,000. The rest comes from the PGA TOUR television rights fees. If you asked -- the way I have looked at it, is if there is a difference between what corporate America spends on the PGA TOUR and what it spends on the LPGA Tour the difference is not that substantial. The real difference is what the broadcast networks pay to the PGA TOUR in terms of rights fees and which the PGA TOUR then supplements purses for their players which is certainly something if I had those rights fees I would do for our players. But we don't have the benefit of television rights fees and many other sports in this country don't have the benefit of television rights fees; only the -- what I would call the male mainstream sports tend to have those and that's what really makes the differentiation between the purses so apparent. The LPGA sponsors for a broadcast network event when you want to compare an apples to apples comparison of a broadcast network event on the PGA TOUR versus a broadcast network event on the LPGA Tour, LPGA sponsors pay 100% of the television costs, time and production. They pay 100% of the purse and 100% of the operational cost associated with running the event. PGA TOUR corporate sponsors may pay for the operational cost associated with the event. They pay no production cost. They pay some advertising cost and they only pay about half of the purse. That is not a comparison that I think is an intellectually honest comparison when you look at it in those terms.
 
LESLIE KING: You might also want to talk about where we fit in with women's sports which is a little bit more of a comparison --

COMMISSIONER VOTAW: Well, yeah, I have said in the past, if you want to make a fair comparison, compare us to ourselves or compare us to other women's sports. I think in that context we are an unqualified success. I think the fact that we are a 50 -- over a 50 year old organization that has had success without the help of a men's organization in some way, shape or form, or a men's sport, clearly makes us, I think, the category leader in women's sports. Now you -- we could have debates about are the top players in tennis making more money than the top players on the LPGA Tour; the answer is absolutely yes. But go down the money list and look at where No. 50 on their Tour is versus where No. 50 is on our Tour go down -- look at their television exposure on a worldwide basis, in terms of television hours, certainly on television basis in this country, we are certainly the leader. I think what I'd like to say -- what I do say and I think I am fairly correct in that we provide more economic opportunity for more women athletes than any other sport in this country or on a worldwide basis which again further makes us the leader. I think if you compare us on those indices, either to ourselves or to other women's sports, we are the unqualified leader in that respect.
 
Q. Is it a goal to be able to turn the table on rights fees and be able to actually have some revenue that is a revenue stream, could that be done?

COMMISSIONER VOTAW: In 1991 when I came to the LPGA every event that was on television was a time by production fee situation. Today only our broadcast networks are in that category, our events on ESPN and ESPN@ are a shared risk. They take risk; we take risk. We share the production costs and we move forward. Golf Channel telecast is a pure rights fee situation and a delivered production on their part. So we are receiving rights fees from our-- from Golf Channel. We are sharing some risk with respect to our ESPN and ESPN2. The other thing that is very compelling for us is that in terms of revenue from outside this country relative to TV we are receiving rights fees in countries like Korea, Australia, like Sweden, and the UK and Japan. That is a reflection on the international makeup of our Tour. Five years ago if international television revenues made up 25% of our television revenues, today they make up over 50% of our total television revenues. And that is not in an environment where the domestic is going down. The domestic is slightly increased. It is just not increasing at the same rate as the international. So what we are seeing is that the pie is getting bigger and international revenue sources from TV are getting to be a bigger and bigger part of that pie.
 
Q. I know that Karrie Webb is going to be competing against some marquis PGA TOUR players throughout the year. Will you guys benefit at all from that production?

COMMISSIONER VOTAW: Well, to the extent that -- not financially, we are not involved in that. That is a promoter's project that we are not involved with. In terms of benefit, I suppose when that happens the same number of eyes will be watching the PGA TOUR players are watching LPGA Tour players, so in that context it might be helpful. Similarly to the events that we have like the Wendy's 3 Tour Challenge or the Hyundai Team matches where our players are playing along side PGA TOUR players like we had for many years in the JC Penny's mixed team event, those are all positives but they are more anecdotal in terms of impact than they are really heavy impact on this organization.
 
Q. (Inaudible) Are you satisfied with the scheduling of where the tournament is?

COMMISSIONER VOTAW: I don't think we have ever been satisfied ever since they moved THE PLAYERS Championship to our week which has been the case for the past 11 years. But once they did that it removed at this time of year with the NCAA basketball tournament being on CBS and THE PLAYERS Championships being on NBC and ABC having golf telecasts in either week either before or after us in a given year, it has boxed us into this week. This week works very, very well for Nabisco and its corporate vendors that they entertain here on site for the entire week and that has been a huge part of this events's success. I am told that the PGA TOUR is looking at moving THE PLAYERS Championship to perhaps the first week of May starting in 03. We look every year at the possibilities of being able to move this event off this weekend, off of THE PLAYERS Championship which is a current situation until the new TV contract comes up at the end of 02. And every year we seemed to be boxed into this week. It is a reality we live with. It is not ideal. It is not something that we relish, but we also think that the people who attend this event; the people that do watch it on TV see fantastic golf in a wonderful setting and it has been at the same location, the same golf course for the past 30 years which no other LPGA tournament can talk about. So I think it is a real tradition for us to be here and we are very thrilled to be here once again. The other positive I would say in terms of our four majors this year is that we are not up against in our other majors, what I would call marquis PGA TOUR events, although people at the Memorial may take exception to that when we have the U.S. women's Open opposite the Memorial, but it is not a situation where we have the U.S. Women's Open opposite the British Open. They are all on standalone weekends and I think that is going to present a huge opportunity for us for fans to watch our players at marquis events like that.
 
LESLIE KING: Let's see if there are any questions from those who are calling in. Thank you very much. We appreciate it.

COMMISSIONER VOTAW: Thank you very much.
 
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