It’s no secret that the PGA Tour is flush with cash.
According to the most recent available tax filings in 2016, the circuit had total assets of $2.589 billion and is fresh off re-signing FedEx to a 10-year agreement to sponsor the season-long race, doubling the bonus pool from $35 million to $70 million – with $15 million to the winner – this season.
What some may not know, however, is the financial health of the vast majority of the circuit’s 46 tournaments. While the Tour itself has been on a clear upward trajectory since the mid-1990s, with the average purse this year at $7.8 million, the individual events, which are the backbone of the circuit, have been more susceptible to changes in markets and the overall economy.
In 2014, the average deal term on Tour for title sponsorships was five years. That average now is six-and-half years.
“We have 10 agreements that are now 10 or more [years] and we have another six that are between seven and nine. We have a significant number of five- and six-year agreements. The vast majority of the agreements we are in now are in the five- to 10-year range,” Tour commissioner Jay Monahan said last week at the Wells Fargo Championship.
Monahan was at Quail Hollow Club for the announcement that Wells Fargo had agreed to a five-year extension to sponsor the Charlotte, N.C., stop through 2024. This is notable because there had been some uncertainty in the community over the tournament’s future after 2019. Last week’s move by Wells Fargo to carry on at Quail Hollow now leaves just one event, the BMW Championship, in the final year of a title sponsorship, while the Honda Classic, which is the longest-running continuous tournament sponsor on Tour, is up next year.
But those events and their sponsorship concerns are largely outliers on the current schedule. Along with the list of title sponsors with 10-year agreements, there are 16 sponsors with terms of seven or more years.
“Going back in time and look at different announcements through the years, three- and four-year agreements were more common,” Monahan said. “It’s been a big point of focus for us.”
Just this year Dell Technologies (four-year extension through 2023) and Waste Management (a 10-year agreement replacing the current deal through 2030) have extended their commitments. The 10-year deals – which includes stops at Pebble Beach, San Antonio, Cromwell, Conn., and Greensboro, N.C. – are particularly helpful for host organizations. Not only does it give events security, it also helps to create continuity within the community.
“Given the strength of the product and the importance of the sponsor on the host organization, which is trying to activate in the community, having long-term commitments allows the host organization to plan, get out in the community and get multi-year agreements,” Monahan said. “It’s not just the title commitment, that leads to a lot of on-the-ground commitments that help the tournament.”
Longer-term agreements also allow the Tour to negotiate from a strengthened position, which wasn’t the case just 10 years ago as the Tour, along with every other professional sports league, struggled along with the economy.
“What you find is that more and more long-term deals lead to fewer deals coming up each year and so when you’re out in the marketplace you can be very thoughtful about who you are talking to and spend time to cultivate the market,” Monahan said.
Even the fall portion of the Tour’s schedule, which now accounts for nearly a quarter of all events, has mostly four- to 10-year agreements in place despite its position on the calendar going head-to-head with the NFL and college football and relatively weaker fields.
That’s a dramatic improvement over the late 2000s when the world economic crisis particularly impacted the financial services and automotive industries, which have long been the core of the circuit’s corporate sponsorships.
“We had no idea that it would be as bad as it was,” Tim Finchem, who preceded Monahan as commissioner, told Forbes in 2009. “But we knew we wanted to be stronger coming out of it than we were going in.”
At the time, the Forbes report noted, “Five of those [corporate] sponsors have gone bankrupt. Another four teeter on the brink. Two lucrative tournaments have been dropped from the schedule and more may follow.” Adding to those concerns was the November 2009 scandal that drove Tiger Woods temporarily away from the game.
Now, 10 years removed from those dark days, the Tour – and particularly its 46 tournaments – have emerged as Finchem predicted. Stronger.