Appearance Fees Just One Aspect of Golf Business

Many golf fans are astonished by the winnings a golfer can accumulate in a year playing a game they love. What is less obvious is the amount of money the golf industry makes behind the scenes.

The big story right now is Tiger Woods collecting a cool $3 million for playing in the Australian Open later this year. This week he defended his position in accepting the fee, by saying it is only the PGA Tour in the USA that does not pay engagement fees.

Golf tournaments have been suffering financially even before the economic downturn, and getting top stars to join the field is how they bring in audience to buy tickets, eat & drink onsite, and purchase souvenirs. Not to mention getting the big corporate sponsors with their business entertainment VIP receptions & seating. Clearly the international tournaments have figured out that the pros respond to cash and decided fees were the only solution. If a star increases revenue and the local economy benefits, the rationale is that the investment pays off.

And we all know that there are fans who will only tune in when Tiger is playing. Although to us die-hards, the excitement of real competition is great to watch, no matter the name.

In addition to appearance fees, Tour players get much of their gear from the equipment manufacturers. If there is an endorsement contract in place, you may see more of that company's gear in a player's bag. This goes for many golf and non-golf related products. The signage on hats, shirts, bags - are body tattoos next? - are, of course, also paid endorsements. The higher the player's draw, the higher the payment.

Of even more concern is the disintegration of the distinction between editorial and paid advertising in the golf press. It is harder than ever to get coverage of golf product news for companies that are not paid advertisers. I have been told this directly by a number of name magazines, even one with the PGA name attached!

The PGA is often criticized for being stodgy, so perhaps they will catch up soon with payments to the top players for showing up at an event. In the meantime, economic reality runs the world. I am not sure it is a good thing for any sport.