Take a Page From Baseball
Maybe it’s time to put golf tournaments up for bid and let the PGA Tour and players reap the benefits
By Michael Bamberger
I don’t have, at all, a good business sense, but I have a wise old friend who does: Fay Vincent, who was the commissioner of baseball from 1989 to ’92. I called Fay the other day to try out a business idea for the PGA Tour that I figured had to be bad, given that I am its author.
“You have told me that the owners in baseball don’t really make money from owning and operating their teams, but that they make money when they sell their teams,” I said to Fay.
“That’s correct,” Fay said. Fay uses correct when others might use right.
It was through Fay that I learned about the Greater Fool Theory. The owners of the Tribune Company, for instance, bought the Chicago Cubs in 1981 for $20.5 million and sold the team to the Ricketts family in 2009 for $845 million. There were a lot of years, in the ’80s and ’90s through 2009, where the Tribune owners lost money on the Cubs. But $20.5 million to $845 million is some return on a 28-year investment. And now the team is worth billions.
This Wikipedia definition is telling: “In finance, the greater fool theory suggests that one can sometimes make money through the purchase of overvalued assets—items with a purchase price drastically exceeding the intrinsic value—if those assets can later be resold at an even higher price.”
You see the Greater Fool Theory at work on a regular basis in Major League Baseball, and in the NBA and the NFL and the NHL. But you don’t see it on the PGA Tour.
So I floated this idea to my wise, old business-minded friend: Could the PGA Tour’s 36 or so individual main-season events be viewed as franchises in much the same way that Major League Baseball has 30 individually owned teams?
In other words, the Pebble Beach tournament, a staple of the PGA Tour, could become a franchise. Hilton Head, Hartford, Colonial, L.A., Honolulu, Quad Cities, Bay Hill, Phoenix, Palm Springs, dozens of others, the same. Each tournament—that is, each franchise—would have its own owner.
The corporate names associated with these tournaments are dropped here intentionally. That’s because those names come and go. The various corporations that are attached to the PGA Tour are renters, not owners. The Tour’s old San Diego stop is now the Farmers Insurance Open. But before that it was the Buick Invitational and before that it was the Shearson Lehman Brothers Open. That’s not a diss, just an observation.
Companies, for as long as it suits their needs, connect their names to various tournaments in the name of marketing and philanthropy and status. But the starting point for the viability of these tournaments, and this has been true forever, are their locales. That is, their hometowns and local interest in local golf tournaments.
That’s why players have said for many decades now, “You playing Hartford?” And not, “You playing the Travelers Championship?” Or, “You playing the Buick Championship?” Or, “You playing the Canon Greater Hartford Open?” Hartford is Hartford. Hartford is Hartford because the good people of Hartford like to come out and watch the best players play golf. Everything else, from network TV deals to player shoe deals, comes from that.
So, to continue my “NewCo” pitch:
Let’s say the PGA Tour drops its nonprofit status and develops a business model by which it becomes a holding company—a holding company with a stake—for each PGA Tour event. The Tour then sells each tournament to an ownership group. The sale takes place in an open market, in an auction.
For example, the Los Angeles Open is for sale. The bidding will start at $100 million. Genesis, the car manufacturer and current sponsor of the event, is in bidding. So is (let’s pretend) Magic Johnson’s investment group. Disney is bidding, too. The L.A. Open is sold, that money goes to the PGA Tour, and ultimately to the players, because they own the PGA Tour. They earn shares in the PGA Tour over time, as other employee-owned companies do.
In this example, let’s say Disney buys the L.A. Open for $200 million. Disney is now responsible for putting on the best tournament it can, competing with other tournaments for players by way of the purse, the venue, the tournament hotel and all the other things that make one tournament stand out over another. Similar to other professional sports, the PGA Tour and the tournament owners would co-manage the TV contracts, by the way, and that’s a big by-the-way.
So Disney, as the owner of the L.A. Open, now has an incentive to make the player experience and the fan experience, those watching in person and on TV, as great as possible. Maybe after a decade Disney wants to get out of the tournament business. Fine, it’s a free market. It sells for $1 billion. It keeps the majority of that sale price, but a real part of it goes to the PGA Tour and ultimately to its players.
Such a system wouldn’t be radically different from what exists now. The main difference is that the Tour would no longer be in the begging business, trying to get tournament sponsors to increase their purses, or stay with the Tour at all. The PGA Tour would look more like MLB, the NFL, the NBA, the NHL. There would be a marketplace for ownership of PGA Tour events.
You want to own a PGA Tour stop? Top the other bids. You want out? Find a greater fool. If you want your event to be the New York Yankees of golf tournaments, that’s up to you. If you want it to be the Miami Marlins of golf events, you can do that, too. But don’t expect Jon Rahm to show up if you’re offering 2021 money.
“I like it,” Fay said. I was half-shocked. He was, after all, an SEC lawyer, a top executive at Coca-Cola, a board member at Time Inc.
“You’d have to work out federal approval, you’d have to have regulations by which one tournament cannot be within, say, 100 miles of another tournament,” Fay said. “But you could have such a market.”
One of the appealing things about such an ownership system is that it brings more potential investors into golf. Tech billionaires, entertainment mega-stars, retired superstars, plus Fortune 100 companies. Also, such a system aligns with what the PGA Tour has always represented, a ruthlessly efficient meritocracy. You want to play on the PGA Tour? Shoot the numbers. You want to own a PGA Tour event? Write the winning check. In the process, some events might wither and die. Well, maybe they should.
Fay and I talked about the upcoming World Series, the Texas Rangers versus the Arizona Diamondbacks. That’s nobody’s idea of a dream matchup, a must-watch World Series. But every game in Arlington, and every game in Phoenix, will be a frenzied sellout. That’s because hometown people always care about what happens in their hometowns.
All politics is local, the old House Speaker Tip O’Neill used to say. All sports is local, too. Any sporting event can become must-watch-TV if everything aligns correctly. In golf, the Masters proves that year after year. Doral used to do it, but it lost its way. In recent years, Charlotte (aka Quail Hollow, aka the Wells Fargo) raised its game.
The players are motivated by their competitive natures and their desire to make money through their unique talents. Golf tournament owners could do the same. The competitive nature of the owners and their desire to make money through their unique business acumen could make the PGA Tour healthy all over again.
Yes, the threat of LIV Golf to the PGA Tour is the underpinning here. That’s OK. Competition is good.
Michael Bamberger welcomes your comments at [email protected]
Michael Bamberger was briefly a caddie on the PGA and European Tours, invented a golf club (the E-Club) that Lee Trevino used in his final British Open, spent 22 years as a writer at Sports Illustrated and joined the Firepit Collective in May 2022.
email: [email protected]