Gi Business Editor Richard Gillis
examines eight awkward questions
the people who run the Ryder Cup
would prefer we didn’t ask
The last Ryder Cup on this side of the Atlantic,
at the K Club in 2006, generated revenue of
some £50 million, of which just over £10 million
was declared as profit. The European
Tour retains 60% of the income when the
tournament is played in Europe, with the remainder
split between the UK and European
Professional Golfers’ Associations.
It wasn’t always like this. For the majority of its existence, the
Ryder Cup was a cost, not a money-earner: it wasn’t until Europe
started winning, under Tony Jacklin’s captaincy, at The Belfry in
1985, that the event broke even, returning its first profit of
around £300,000. The previous ‘home’ event, at Walton Heath
in 1981, made a £50,000 loss, as did every other event running
back to...well, to the very first match.
There is a considerable difference in the revenue split between
the European and American golf tours, a source of irritation
to the Europeans. The PGA of America owns the
rights to the ‘American years’, and the European Tour controls
commercial rights on this side of the Atlantic. The PGA
of America benefits from being able to sell the property into
its own huge domestic market and keep most of the profits.
The money is divided on a ratio of 5:1 in favour of the
The event at Oakland Hills in 2004, at the peak of the banking
and sponsorship boom, made an estimated $70 million in
revenues for the Americans. By comparison, the US Open garners
$50 million and the Masters about $45 million, though
both must pay players’ purses. So, in commercial terms, the
Ryder Cup is the European Tour’s ‘major’, but one that only
comes around every four years.
Where does the money come from?
The main source of income is the European Tour’s television
rights deal with Sky, which began in the 1990s and was resigned
in 2006 to run through to the 2012 Cup at Medinah.
This is the single most important contract to the financial
health of the game in Europe. The TV rights to the cup are bundled
in with those of the European Tour as a whole. Other income
streams include sponsorship, licensed merchandise,
digital and radio rights and corporate hospitality. Tickets and
hospitality are part of the packages bought by sponsors such
as BMW, Emirates and Mastercard. In addition, the European
Tour sells separate corporate hospitality packages to third party
agents, who sell them on for anything between £800 to
£10,000 a head or more. The money generated helps prop up
the less profitable events on Tour. But even with this cash cow,
some famous events have slipped off the schedules, notably
the British Masters, the European Open and the English Open.
Is it getting too corporate?
The number of corporate guests at Celtic Manor will be a point
of tension, given that tickets are in such demand from genuine
golf fans (although tickets were still available this year well into
August – surely a sign of the times). Of the 40,000 tickets sold
for each day at The K Club in 2006, 7,500 went to the corporate
sector, roughly 20% or 1 in 5. According to a sponsorship expert, each of these corporate tickets is worth around 10 times more
to the European Tour than an ‘ordinary’ ticket, the bulk of which
are issued by ballot to the public.
When questioned, a spokesman for one leading sports
agency told Gi: “Why not make it 50% – the demand from business
is there, so why wouldn’t you?”
When a governing body gets this equation wrong, it’s a public
relations disaster – witness the empty seats at the recent World
Cup semi-final as an example, when sponsors guests didn’t turn
up. Ironically, the market for corporate hospitality has nose-dived,
particularly among golf’s big financial supporters, such as the
banks and car makers. As a result, the number of corporate tickets
is likely to be less this time around and the word around the
sponsorship market is that the European Tour has struggled to
sell its full quota of hospitality boxes this year.
Should the players get paid?
The boom in the Tours’ fortunes created by the Ryder Cup has been
noted by the players and their agents, some of whom have questioned
why they are not getting a cut. When it was revealed how
much money the PGA of America made from the Ryder Cup at
Brooklinein1999, it caused considerable unrest in the locker rooms.
The players, most notably Tiger Woods, demanded answers.
Mark O’ Meara,Woods’ best friend, acted as unofficial spokesman,
raising the issue of player payment. At a press conference, O’Meara turned to the attendant journalists and said: “You
should come and donate your salary to a charity that week, too.
You guys don’t mind doing that, do you? Either that or they
shouldn’t charge the spectators to come and watch.”
A compromise was reached whereby the PGA of America donates
$200,000 per player, with half going to charity and the
other half to a college development programme in each American
player’s name. But Hunter Mahan stoked the issue again
ahead of Valhalla last time out, likening the American team to
‘slaves’. “At some point the players might say, ‘You know what?
We’re not doing this anymore, because this is ridiculous’,” said
Mahan. “Mickelson and Tiger – their time is worth money. Is it an
honour to play?Yes, it is. But time is valuable.This is a business.”
The spat was informative, revealing an area of conflict between
players and the tours, bumping into the broader issue of
how much promotional work is done by the players on behalf
of the sponsors.At the pre-event dinner ahead of the BMW PGA
at Wentworth, Dunhill chief Johann Rupert criticised the players
and their agents for failing to support the European Tour’s
Does the captain get paid?
Not directly,but it’s still a very lucrative job.The official line is that
the captain is paid ‘all reasonable expenses’ incurred while carrying
out his duties. But since Tony Jacklin transformed the role in the early1980s, the job of European captain has grown into one of
the highest profile in sport. Along with this profile come many
business opportunities, and recent skippers have taken full advantage.
During his time at the helm, Nick Faldo became brand
ambassador for adidas/Taylormade, luxury car maker Maybach
and signed deals for newspaper and magazine columns. The European
Tour viewed this money as a leak and has tightened the
amount of commercial deals Colin Montgomerie is able to do as
captain. But it remains a great platform to take to market after the
event, raising his course design fees,media deals,etc, further down
the road. Jacklin told Gi “There’s at least a million in it now” if it’s
worked right, adding that he received no more than £50,000 “and
a crate of Johnnie Walker whisky” for his troubles.
Why is it not live on free-to-air television?
Money. The European Tour, along with governing bodies for
cricket, football and rugby union, successfully lobbied government
to prevent them being forced to sell the biggest events to
terrestrial television. They were worried that this would reduce
the rights fees they could earn. But this is seen as a short-sighted
strategy by many, including the English Golf Union, who complained
to the DCMS: “This lack of exposure directly impacts on
new people taking up sport. It is clear that when golf appears on
television about the time of the Open Championship it creates
an influx of new players to municipal courses and golf clubs
and par-3 courses. I understand Wimbledon has a similar effect
on tennis. The loss of the Ryder Cup from free-to-air had a damaging
effect. It is high-intensity, edge-of-the-seat golf; the best
advert for the game. Viewing figures on Sky are woeful and golf
loses a vital audience.”
The viewing figures for the 2006 Ryder Cup peaked at 4.6
million in the US, 1.1 million in the UK and 600,000 in Ireland,
the host country. This represented a fall on previously reported
figures, and well below the billion viewers that the Irish government
touted when seeking to justify using taxpayers money
to support the event. Similar figures are being touted this time
around. The Welsh Assembly is quoting a study suggesting the
cup has a potential audience of two billion people.
By contrast, the R&A has just extended its deal with the BBC
for the Open Championship for a further five years. Peter Dawson
admitted that Sky offered more, but as the money made
from the Open would go to develop the game’s grass roots, he
says “it’s hardly consistent, is it, to then show the Open to a restricted
Food for thought there.
Why is it not played at the best courses in the country?
The selection of the venue has become a big money-maker for
the European Tour. Celtic Manor’s owner, Sir Terry Matthews,
has invested around £50 million in bringing the Cup to Wales,
a figure that includes committing to sponsoring the Celtic
Manor Wales Open for ten years, building the course and developing
the hotel facilities in time for one week in October. The
Ryder Cup creates “publicity we couldn’t buy” says Gareth Rees-
Jones, head of marketing at Celtic Manor, who points to a 58%
rise in green fee income at the hotel’s three courses as evidence
that golfers “want to say they have played the course”.
But the longer-term benefits of hosting the event are uncertain.
Accounts for The K Club in 2007 showed losses of €5.5
million and green fees at the course have fallen from (a totally
ridiculous) €400 in the summer before the Ryder Cup down to
€90 earlier this year. It feels like a long time since Tiger Woods
stayed at the €3,800-a-night Viceroy suite and Bill Clinton was
seen eyeing up a €1.2million duplex (now going for €380,000),
while Lehman Brothers bankers coughed up €900 a head on the
12-minute helicopter ride from Dublin to the K’s own helipad.
Where will it be played in the future?
Despite the experience of the K Club, there is a queue of countries
keen to host the event in 2018 (after Gleneagles in 2014). France,
Germany,Spain,Portugal and Netherlands are in the frame. France
and Germany are favourites. “Golf is not a major sport in France,”
says Christophe Muniesa, executive director of FFG, hoping a Paris based Cup would
raise the 410,000 registered golfers in France to
700,000 by 2020. An agreement to levy a charge of three euros a
year on every registered golfer in France is aimed at raising the
necessary funds in what has turned into a high-stakes game.
The budget for the French bid is €700,000 says Mr Muniesa,
a figure he calls “the price of transparency”.
He adds: “We are
very comfortable with the new bidding process because before
there was no process and so we didn’t get the chance to bid.” In
addition, the government of each country is expected to support
the bid and help provide a fund for infrastructural and event
costs. The total bill is expected to be in the region of €18million.
The greatest threat may come from the German bid,which is
led by former Ryder Cup captain Bernhard Langer and backed
by private money, most notably that of car maker Audi, which
has committed to paying for a new course to be built. The
biggest obstacle to a German win is whether the European Tour,
which is heavily supported by BMW, would allow its prized asset
to be played at an Audi- branded course. Like many things to do
with the modern Ryder Cup, the golf is just part of it.
Reproduced with kind permission of Golf International Magazine
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