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The ‘Tiger Bubble’ has lost much air the past 10 years


This news story was published on January 13, 2012.
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By Michael K. Bohn, McClatchy-Tribune News Service –

As the 2012 PGA Tour season tees off this month, golf fans wonder which Tiger will show up this year. Will he be the erratic player who has struggled recently with aches of the body and soul? Or perhaps, as his many followers hope, Tiger will again be the transformational athlete who ignited an explosion of money and media attention on the tour 15 years ago.

Sadly, though, no matter how Woods plays this year, the rapid growth he stimulated in the professional golf industry has slowed. In fact, the “Tiger Bubble,” has gone the way of other semi-irrational economic flurries of the 21st century. Moreover, and to the surprise of some, the Bubble lost steam several years ago.

The Bubble didn’t pop on Nov. 27, 2009 when Tiger Woods wrecked his Cadillac SUV. It didn’t collapse in reaction to revelations about his personal life the following month, or because of his uneven play and injuries in 2010 and 2011. The Bubble had already descended to more sustainable heights in early 2005.

The Tiger Bubble, a term Johnathan Mahler coined in the New York Times Magazine in 2010, got its first sizable puff of energy on Aug. 25, 1996. That’s when the 20-year-old golfer won his third straight U.S. Amateur Championship. NBC TV broadcast Woods’ final match and the network’s ratings and viewership numbers swamped those of CBS, which simultaneously carried the professional World Series of Golf featuring Greg Norman and Phil Mickelson.

After Woods turned pro and won his first PGA Tour tournament in Oct. 1996, the Bubble lifted off. Winning the 1997 Masters by 12 strokes sent the Bubble into orbit. Its rapid ascent set a trajectory for much larger bubbles to follow — think dot-com and housing.

The Tiger phenomenon immediately drew vast monies and attention to the tour. The total annual prize money on the PGA Tour tripled in the Bubble’s eight-year period of rapid expansion. In inflation-adjusted 2004 dollars, the number surged from $79.4 million in 1996 to $239.6 million in 2004. That Bubble lifted all tour players to bigger paydays. Only nine of them won at least $1 million in official winnings in 1996, but 77 earned that hefty sum in 2004.

Yet since 2005, PGA Tour prize money growth has slowed, and lately, totals have even dipped. Pgatour.com lists a planned total purse of $278.5 million for its 2012 tournaments, down 3 percent from 2004 in terms of 2011 dollars. Yet for the pre-wreck and pre-divorce period 2005-2009, Tiger annually averaged 6.2 wins and $9.5 million in prize money. Woods kept dominating, but what happened to the Bubble?

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Tour prize money growth slowed, stopped and then dipped, a trend that poked holes in the Bubble. Since tournament purse totals move up and down with variances in net TV money flow to the tour, the Bubble sagged when TV ratings flattened in 2004. Consequently, that year also marks the point when the networks started losing money on their 2003-2006 contract with the tour.

The PGA Tour of the mid-1990s was a healthy but relatively ho-hum affair. Arnold Palmer and Lee Trevino had taken their entertaining charisma to the Senior Tour, just as Jack Nicklaus had transferred his enormous talent. The regular tour putt-putted along with less colorful players.

“The Senior Tour was more popular in 1996,” recalled Jerry Potter, a retired USA Today golf writer. “The Senior Tour, now called the Champions Tour, was growing with all of the recognizable and TV-friendly players. The regular tour was stagnant.”

The period was a lull between stars on the PGA Tour. It has always benefited from cycles of individual brilliance that translated into media attention and prize money. Walter Hagen and Gene Sarazen led the way early, followed by Byron Nelson, Ben Hogan and Sam Snead. Palmer made pro golf a TV sport, and along with the two other members of the 1960s Big Three — Nicklaus and Gary Player — changed the game. Lee Trevino proved that a wisecracking Mexican-American could be a star.

Along came Tiger. At the right time.

Lean, fit and powerful, Woods matched the American stereotype of a professional athlete. In a period when mostly golfers watched TV golf, and the players were indistinguishable from the viewers, Tiger broke the mold. His power game appealed to non-golf fans and his fist pumps and yells echoed the familiar gusto in the NFL and NBA. The beer and chips crowd could identify with Tiger when he spit and shouted F-bombs.

Beyond the broadening of the fan base, Woods’ strength and club head speed, coupled with precise iron shots and a splendid short game wrought changes in the sport.

“Before Tiger, the PGA Tour was a waltz,” Potter said recently. “Tiger wasn’t into waltzing. His show was a break dance.”

And there was that thousand-watt smile, and teary embraces with his doting father that seemed drawn from a movie script. Bingo.

To its great good fortune, the PGA Tour had scheduled negotiations for a new TV contract following the 1997 Masters. The extraordinary TV rating that CBS achieved on the final round of Tiger’s breakout win, gave tour commissioner Tim Finchem huge leverage with the networks. The $575 million deal for 1997-2002, almost doubling the previous $300 million contract, fueled the first half of the Bubble.

Television networks eagerly signed up not only because of Woods’ appeal but also for the lucrative golf demographics. Golf viewers, especially well-heeled “baby boomers,” usually have money to spend on brands beyond Bud Light and Chevy trucks. So the Tiger Bubble became a perfect storm of TV money, eager advertisers and sponsors, and a star who could win about every third or fourth time he teed it up.

The TV money sent tour purses rocketing skyward. Other sources contribute to prize money, but the long pole in the money tent comes from rights sales to the networks.

Woods kept delivering the goods to the TV advertisers. His 2001 Masters victory gave him the “Tiger Slam,” simultaneously holding the trophies for all four of professional golf’s major championships — the final three in 2000 plus the Masters. The attendant froth shaped another enormous TV deal — $850 million for the period 2003-2006. Up, up and away went the Bubble.

Through shrewd planning by Deane Beman, Finchem’s predecessor, the PGA Tour business model was able to absorb the torrent of TV cash. Beman had made the tour a 501(c)(3) tax-exempt, charitable organization, as well as insisting that all tournament organizers do the same. This allows net proceeds, after expenses such as prize money, to flow to charities instead of tax collectors. Further, the charity angle provides moral high ground for the tour when it fights antitrust actions and criticism aimed at overpaid millionaires enjoying a walk in the park every week.

The Bubble also has allowed the tour to charge tournament title sponsors seven-figure fees. Part of that sum has gone to the purse, but some monies have been set aside for guaranteed TV advertising buys for the tournament week. This lessened the broadcaster’s risk and helped underwrite the major expense of televising a golf tournament. This model remains in place, and the 2011 title sponsor fees for most tournaments reached the $7 million-$8 million range, according to Adam Schupak in his 2011 book, “Deane Beman: Golf’s Driving Force.”

By 2005, grumbling among the TV people about losing money on tour broadcasts began to seep out. GolfWorld magazine’s John Hawkins reported in March 2005 that TV ratings had flattened in 2004. “A TV executive confirms that for the first time,” Hawkins wrote, “the networks will lose money televising pro golf over the course of the four-year contract.”

Declining ratings depressed both advertising rates and the net TV revenue stream to the tour. Since purses generally move up and down with TV money flow, the squeeze is reflected in the abrupt slowdown in the growth of annual purse totals.

The number of tournaments each year figures in purse totals as well. From 2000 to 2002, the tour held 49 official events. The number dipped to 47-48 during 2003-2009, and then dropped to 46 in 2010, and 45 in both 2011 and 2012.

To fight the effects of the softening Bubble, the tour created the FedEx Cup Playoffs. Finchem announced the scheme in November 2005, with a planned start in 2007. Another shrewd move, the playoffs also cut an overly long season and reduced the formidable challenge of keeping TV viewers tuned in during football season.

The reported decline in post-Bubble TV profits narrowed the bidders for the 2007-2012 TV package. Only NBC, CBS and one cable network, The Golf Channel, remained in the hunt.

The tour announced its new deal in January 2006, but refused to reveal the amount of money involved. Sources said that the contracts involved only minimal increases in rights fees. Hawkins, who again had good insight into the process, reported an important change. Sources also say the tour will cut its subsidy of purses from 62 percent to the low- to mid-50 percent range. This meant that sponsors would have to pony up more to sustain the high purses or cut charitable donations.

All of this formed the backdrop for Tiger’s first prolonged absence after winning the 2008 U.S. Open on a broken leg and bum knee. He rebounded with a great season in 2009. But his spotty play in 2010 and 2011, resulting from injuries, swing changes and scandal shock, added to the negative economic forces of the Great Recession that began in earnest in 2008. The combined effects resulted in the recent downward trend in purse totals in the accompanying graph.

Soft bubbles and tepid purse growth notwithstanding, Tiger remains a powerful force in professional golf. His drawing power continues, even during his time of personal woes and injuries. TV ratings since 2008 have, on a basic level, confirmed a long-standing fact that more people watch PGA Tour events in which he plays than not.

For example, Tiger won the 2008 Buick Invitational, but did not play in 2009, when final day TV ratings fell 52 percent. Conversely, he missed The Memorial in 2008, won it in 2009 and the ratings jumped 100 percent.

But ratings figures also expose a more subtle trend, one that fits with the weakened Tiger Bubble. Viewers’ interest in Tiger wanes when he isn’t in contention. A tie for 44th ain’t movin’ the needle.

In 2010, sportswriter and commentator Michael Wilbon summed up viewers’ preferences. “They want to see Tiger up there, dominant, at least in contention. When he’s not, people don’t care.”

On Sept. 1, 2011, commissioner Finchem announced a new nine-year TV rights package with NBC and CBS starting in 2013. The tour is six years into a 15-year deal with The Golf Channel, so all three are committed through 2021.

Neither Finchem nor executives from NBC and CBS disclosed the contract values that day. Finchem only admitted, “Our rights are increasing.” However, he and the TV folks talked repeatedly at the press conference about “underpinning.” For example, Finchem spoke of the “significant underpinning support that the tour guarantees and delivers to the broadcast networks.”

The pinning under the networks is the cash that title sponsors provide for tournament operations, prize money and guaranteed advertising commitments. As John Hawkins reported in 2006, the tour reduced by 8-10 percent its pass-through of TV money to tournament purses during the 2006-2012 TV deal. If more money goes to guaranteed ads in the new contract, less will be available for purses and charitable contributions.

Tiger’s future on the PGA Tour remains a sports bar topic, and CBS Sports Chairman Sean McManus acknowledged Woods’ uncertain future. “In our business plan, we did not assume any golfer was going to be as dominant as Tiger had been in the past.”

Woods’ fans are heartened, however, by his good showing in the President’s Cup, and his win in his own 501(c)(3) tournament in the Silly Season, the Chevron World Challenge on Dec. 4 last. Perhaps he’s ready to pump some air into the tired old Bubble.

———

This chart shows examples of final-round TV ratings associated with Tiger’s finish:

Tournament 2008 2009 2010 2011

WGC-Bridgestone DNP, 3.0 rating Won, 4.3 T78, 2.1 T37, 2.6

PGA Champ. DNP, 3.0 2nd, 7.5 T28, 5.0 MC, 4.3

BMW Champ. Won, 2.3 T15, 1.3

DNP-Did not play MC-Missed cut

Sources: 1986-2010 data, PGA Tour. 2011, GolfWorld. Inflation adjustment by BLS/CPI.

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