Business & Economics of the PGA Tour

The Professional Golfers' Association (PGA) is one of the better-known sports organizations in the nation, and it is singly responsible for professional golf tournaments and exhibitions today. The PGA itself is a nonprofit organization, although it owns several for-profit subsidiaries, and the tour that it sponsors every year travels around the country bringing golfers, fans and associated personnel to resort locations. The arrival of the tour can be an economic boon for a community, and the opportunity to sponsor a PGA event can be sought after by well-known corporations. However, the organization has had difficulty attracting and retaining sponsors in recent years, and its lucrative television contract may be a contributing factor. This research considers the economic factors affecting the internal operation of the PGA as well as the external effects that the PGA brings about to the larger community.

The PGA Tour is a nonprofit event that attracts sponsors interested in funding a particular event--or simply contributing to the overall tour--in exchange for prominent display of their corporate logos. The level of sponsorship dictates the level of publicity the sponsors receive. For example, companies who underwrite significant portions of entire events have stops on the tour named for them. Thus, the tour has featured the Xerox Phoenix Open and the Canon Greater Hartford Open in

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tends well beyond economic downturns, however. The PGA signed a deal with major television sport outlets--ESPN, USA Networks, the Golf Channel as well as the three broadcast networks--in 2001 that was designed to boost viewership for televised golf tournaments. Exciting players such as Tiger Woods have broadened the potential audience for golf. The agreement with the television stations brought an additional $850 million to the PGA tour. However, the PGA tour, in exchange, requires its title sponsors to spend heavily advertising on the networks where "their" event is being shown. This guarantees the television stations revenue and helped to drive up the price for the television rights to the golf events. Sponsors, perhaps understandably, have been reluctant to commit a significant portion of their sponsorship money to television advertisements that are required of them, but which may not be a fit for their marketing mix. As a result, there have been difficulties keeping sponsors in light of the new television agreement (Foust & Grow 133). Internally, the tour has also contended with changes in the way that money is awarded. Until the mid-1970s, the top 20 players would typically divide 90 percent of the prize money with th
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Approximate Word count = 1642
Approximate Pages = 7 (250 words per page)