A decade into the Golf Digest 50 all-encompassing money list, we continue to see trends that started when the golf endorsement market suffered the twin shocks of the Great Recession and the self-destruction of its icon, Tiger Woods. Money is flowing to the top, players are being asked to do more things and commit more time in exchange for endorsement dollars, and more American players are chasing prize money in more parts of the world, especially Asia, where the PGA Tour will have two official events this year.
The strongest segment of the golf economy remains the PGA Tour, which began 2013 with 36 of the top 40 players in the world as members. And because of the FedEx Cup and the $35 million in bonuses it has thrown into the pot, the security of a television deal that runs through 2021 and new title sponsors, life at the top—and even for the rank-and-file—shows few scars from the hard times.
In the 10 years of the GD 50, the value of off-course opportunities, including endorsement deals, appearance fees and other forms of non-competition compensation, have increased at an even more rapid pace than on-course earnings, where the growth is still robust. In 2003, the total on-course earnings of the GD 50 was $127.7 million; in 2012 it was $188.9 million. The total off-course compensation of the GD 50 a decade ago was $261.6 million; today it's $410.9 million.
Though 14 players have been on the GD 50 every year—Woods, Fred Couples, Ernie Els, Jim Furyk, Sergio Garcia, Retief Goosen, Padraig Harrington, Davis Love III, Phil Mickelson, Colin Montgomerie, Jack Nicklaus, Greg Norman, Arnold Palmer and Gary Player—a total of 121 players have appeared in the ranking.
Throw in some guys like Luke Donald, Justin Rose, Lee Westwood, Zach Johnson, Matt Kuchar and now Rory McIlroy and you have a rather regular top 20 to 30. But agents are saying that innovative marketing by corporations with increased use of social media, gimmicky demonstrations and exhibitions and expanded corporate entertaining mean their players are investing more time for their dollars.
Woods topped the first GD 50 ranking with $83.7 million in total compensation and leads this year with $86.1 million, but that's after peaking at $122.7 million in 2007, two years before his scandal cost him half a dozen endorsements. Woods, who bottomed out at $64.1 million in 2011, jumped up $22 million for 2012 in part because be won three times and finished the year No. 3 in the World Golf Ranking, activating some bonuses. He also added a couple more deals, signed a new course-construction project and played in Asia for appearance fees and in corporate outings.
McIlroy, who moved to No. 5 at $22.6 million—including $15.6 million in on-course earnings—starts 2013 with a rich new deal with Nike. Though some reports have placed the value of that contract as high as $250 million for 10 years—which would put the 23-year-old two-time major champion in the Woods pay bracket at Nike—several sources in a position to know told Golf Digest it was closer to $70 million for six years.
"On a commercial level, the global reach of the Nike brand and the company's unique creative approach to sports marketing will bring Rory to a wider global audience," said McIlroy's agent, Conor Ridge of Horizon Sports Management. "Nike's investment in Rory will not only build his own brand across the world but will heighten his visibility and profile to the advantage of all of Rory's other corporate partners." Ridge did not comment on the value or length of McIlroy's deal with Nike, and Nike Golf declined to comment.
"Nike is clearly thinking, We're going to have the two best players in the world now in Tiger and Rory. We're going to have the best visibility," one industry insider, speaking on the condition of anonymity, told Golf Digest. "Nike is betting that Rory is going to be that guy for the next 10 years. He plays an international schedule and will help their exposure in Europe, South Africa and the Middle East. When you have billions in sales like they do, they can pay him $10 million, $12 million a year, and if it turns out to be a mistake, they can afford that."
The poor economy and the Woods scandal, which one agent says has led to a wider use of morals clauses in contracts, has forced companies to be more creative and players and agents to be more flexible. "We're working harder and the players are working harder to give more off the golf course to provide the return on the value of the investment the companies are making," says Clarke Jones of IMG, which has 14 clients on the GD 50.
The Woods scandal "coincided with a poor economic environment, but the PGA Tour still grew because it has a great business model with the underpinning of charity and delivering a low-risk model to CBS and NBC and Golf Channel," Jones says.
Even mid-tier professional golfers benefit from endorsements, in part because of the wide variety of ways they can be used in marketing.
"You've got three categories of endorsers," says Steve Loy of Lagardère Unlimited, which represents Phil Mickelson and Keegan Bradley, among others. "There are those who can sell products, those who can be very hospitable and entertaining for company clients, and then when you have one that can sell product and be a good host, you've got a marquee. Marketing would tell you that they look for a four-to-one return on investments," Loy says. "In Phil's case it has been analyzed, and I'm proud to say it's almost double that."
"They really do find a way to quantify it," says Casey Alexander, the director of research at Gilford Securities. Players' Q Scores (a measurement of familiarity and appeal), media impressions for broadcast and print exposure, the value of in-person appearances and TV and print shoots for ads determine the return on investment. "And finally you add the exposures that simply can't be paid for, or subtract the ones you wouldn't want to have," Alexander says. "Tiger's chip shot at Augusta, where the ball logo freezes on screen before it drops is a positive one, or Tiger's Thanksgiving nightmare is a negative."
Some players who lack star stature are great in social settings, or they have a strong value in their state or region. "They can be local heroes," says Chuck Presto, vice president of global sports marketing for TaylorMade. "You don't have to be Tiger Woods or Sergio Garcia to have value if you're in the right area."
But the days of just slapping a logo on a player and handing him a check are over.
"We're certainly asking the athletes to do more for us," Presto says. "Back in the day, we would do these deals, ask the guys to show up, play a minimum of 20 tournaments a year, and we'd ask them to do a photo shoot, maybe we'd ask them to do a customer dinner, and that was about it."
Part of the way commissioner Tim Finchem and his staff help sponsors is by providing players for corporate entertaining during the tournament week, sometimes in exchange for skipping the pro-am.
"One of the truest forms of change is that the PGA Tour is really asking its players to do more as it relates to sponsor-value programs, which I think is a very smart thing to do," Jones says. "There are maybe a dozen of them a week who give added value to sponsors at tournaments. I started 21 years ago, and that was to be compensated for, that kind of activity."
Mid-level players or newcomers also can bring added value to endorsement partners. They can connect with a younger market, and they're less expensive. "We don't have the luxury of spending the most on tour, so we're definitely approaching the marketing of pros differently," says Harry Arnett, senior vice president, marketing at Callaway Golf. "We're trying to build a staff of guys who are young, energetic, exciting and want to work with us to help engage the consumer in ways they haven't been engaged in the past. In some ways, this is as important as how well they play. When we can find young players who have a ton of game and are interested in creating this dynamic relationship with consumers and engaging in it actively, then those are the guys we build our programs around."
Arnett cites Andres Gonzales and Luke List as young players who are energetically engaged in social media. "The dialogue is fresh, timely and gives golfers behind-the-scenes access that didn't exist previously," Arnett says. "The digital and social media aspect of marketing has changed tremendously," says Mark Steinberg of Excel Sports Management, which includes Woods and Matt Kuchar among its clients. "Asking guys to integrate tweets and Facebook with business partners and their products, that's really an area that has developed quite a bit."
Top players also are more likely to be held to the strict terms on the contract. "We typically ask for three days as sort of a minimum," Presto says. "Depending on the size of the contracts, we've got some that are up to 10 and 12 days, and we're using all the days now. It was not uncommon five, six years ago—maybe even three or four years ago—where we'd have five or six days with an athlete, and we'd use only three or four of them."
When it comes to assessing the risk/reward of signing a player to an endorsement deal, there is no foolproof plan. "It's really hard to pinpoint specifically where the value is coming from," says TaylorMade's Presto, "but we know a couple of things. In the case of metalwoods, we know that when we dominated the tour in the '80s we dominated metalwood sales commercially. We know that when we let Callaway take over the tour in the '90s, they dominated metalwoods commercially. But when we got aggressive again in the year 2000 and started dominating the tour to date, we've dominated the market commercially. It works for balls as well. It does not work that way with irons."
For players, the opportunities are greater, the demands are greater, and the rewards are greater. The big names will be able to pick and choose, but all will be sharing in a financial pie that just keeps growing.
1. Tiger Woods
2012 RANK: 1 | ON COURSE: $9,124,386 | OFF COURSE: $77,000,000 | TOTAL: $86,124,386
2. Phil Mickelson
2012 RANK: 2 | ON COURSE: $5,335,267 | OFF COURSE: $40,000,000 | TOTAL: $45,335,267
3. Arnold Palmer
2012 RANK: 3 | ON COURSE: $40,000 | OFF COURSE: $36,000,000 | TOTAL: $36,040,000
4. Jack Nicklaus
2012 RANK: 4 | ON COURSE: $47,000 | OFF COURSE: $28,000,000 | TOTAL: $28,047,000
5. Rory McIlroy
2012 RANK: 11 | ON COURSE: $15,582,782 | OFF COURSE: $7,000,000 | TOTAL: $22,582,782
6. Ernie Els
2012 RANK: 7 | ON COURSE: $4,610,625 | OFF COURSE: $14,000,000 | TOTAL: $18,610,625
7. Brandt Snedeker
2012 RANK: 45 | ON COURSE: $15,427,444 | OFF COURSE: $2,000,000 | TOTAL: $17,427,444
8. Greg Norman
2012 RANK: 5 | ON COURSE: $78,710 | OFF COURSE: $17,000,000 | TOTAL: $17,078,710
9. Luke Donald
2012 RANK: 6 | ON COURSE: $6,787,901 | OFF COURSE: $7,500,000 | TOTAL: $14,287,901
10. Gary Player
2012 RANK: 8 | ON COURSE: $12,000 | OFF COURSE: $14,000,000 | TOTAL: $14,012,000
11. Lee Westwood
2012 RANK: 12 | ON COURSE: $5,866,484 | OFF COURSE: $7,500,000 | TOTAL: $14,012,000
12. Sergio Garcia
2012 RANK: 9 | ON COURSE: $3,342,248 | OFF COURSE: $10,000,000 | TOTAL: $13,342,248
13. Justin Rose
2012 RANK: 27 | ON COURSE: $9,413,407 | OFF COURSE: $3,750,000 | TOTAL: $13,163,407
14. Louis Oosthuizen
2012 RANK: NR* | ON COURSE: $7,294,695 | OFF COURSE: $2,500,000 | TOTAL: $9,794,695
15. Ryo Ishikawa
2012 RANK: 19 | ON COURSE: $1,636,143 | OFF COURSE: $8,000,000 | TOTAL: $9,636,143
16. Jim Furyk
2012 RANK: 22 | ON COURSE: $4,075,472 | OFF COURSE: $5,550,000 | TOTAL: $9,625,472
17. Graeme McDowell
2012 RANK: 21 | ON COURSE: $4,601,827 | OFF COURSE: $4,500,000 | TOTAL: $9,101,827
18. Bubba Watson
2012 RANK: 40 | ON COURSE: $5,512,036 | OFF COURSE: $3,500,000 | TOTAL: $9,012,036
19. Adam Scott
2012 RANK: 14 | ON COURSE: $3,800,286 | OFF COURSE: $5,000,000 | TOTAL: $8,800,286
20. Dustin Johnson
2012 RANK: 17 | ON COURSE: $4,269,527 | OFF COURSE: $4,500,000 | TOTAL: $8,769,527
21. Padraig Harrington
2012 RANK: 18 | ON COURSE: $2,725,612 | OFF COURSE: $6,000,000 | TOTAL: $8,725,612
22. Davis Love III
2012 RANK: 24 | ON COURSE: $1,523,919 | OFF COURSE: $7,000,000 | TOTAL: $8,523,919
23. Keegan Bradley
2012 RANK: 26 | ON COURSE: $5,003,646 | OFF COURSE: $3,500,000 | TOTAL: $8,503,646
24. Hunter Mahan
2012 RANK: 28 | ON COURSE: $4,852,043 | OFF COURSE: $3,500,000 | TOTAL: $8,352,043
25. Matt Kuchar
2012 RANK: 15 | ON COURSE: $4,631,428 | OFF COURSE: $3,500,000 | TOTAL: $8,131,428
26. Ian Poulter
2012 RANK: 38 | ON COURSE: $4,452,452 | OFF COURSE: $3,500,000 | TOTAL: $7,952,452
27. Zach Johnson
2012 RANK: 39 | ON COURSE: $5,057,244 | OFF COURSE: $2,500,000 | TOTAL: $7,557,244
28. Fred Couples
2012 RANK: 33 | ON COURSE: $1,735,794 | OFF COURSE: $5,750,000 | TOTAL: $7,485,794
29. Nick Watney
2012 RANK: 23 | ON COURSE: $4,923,575 | OFF COURSE: $2,500,000 | TOTAL: $7,423,575
30. Jason Dufner
2012 RANK: NR* | ON COURSE: $5,899,586 | OFF COURSE: $1,500,000 | TOTAL: $7,399,586
31. Nick Faldo
2012 RANK: 34 | ON COURSE: $41,000 | OFF COURSE: $7,250,000 | TOTAL: $7,291,000
32. K.J. Choi
2012 RANK: 13 | ON COURSE: $1,055,492 | OFF COURSE: $6,000,000 | TOTAL: $7,055,492
33. Webb Simpson
2012 RANK: 16 | ON COURSE: $4,441,758 | OFF COURSE: $2,500,000 | TOTAL: $6,941,758
34. Steve Stricker
2012 RANK: 29 | ON COURSE: $3,892,521 | OFF COURSE: $2,500,000 | TOTAL: $6,392,521
35. Tom Watson
2012 RANK: 25 | ON COURSE: $195,739 | OFF COURSE: $6,000,000 | TOTAL: $6,195,739
36. Colin Montgomerie
2012 RANK: 35 | ON COURSE: $176,895 | OFF COURSE: $6,000,000 | TOTAL: $6,176,895
37. Retief Goosen
2012 RANK: 42 | ON COURSE: $1,399,410 | OFF COURSE: $4,650,000 | TOTAL: $6,049,410
38. Rickie Fowler
2012 RANK: NR* | ON COURSE: $3,510,459 | OFF COURSE: $2,500,000 | TOTAL: $6,010,459
39. Charl Schwartzel
2012 RANK: 30 | ON COURSE: $3,545,328 | OFF COURSE: $2,450,000 | TOTAL: $5,995,328
40. Camilo Villegas
2012 RANK: 36 | ON COURSE: $553,359 | OFF COURSE: $5,000,000 | TOTAL: $5,553,359
41. Bo Van Pelt
2012 RANK: NR* | ON COURSE: $3,971,380 | OFF COURSE: $1,500,000 | TOTAL: $5,471,380
42. Carl Pettersson
2012 RANK: NR* | ON COURSE: $4,136,156 | OFF COURSE: $1,250,000 | TOTAL: $5,386,156
43. Ai Miyazato
2012 RANK: NR* | ON COURSE: $1,384,977 | OFF COURSE: $4,000,000 | TOTAL: $5,384,977
44. Paula Creamer
2012 RANK: 50 | ON COURSE: $875,574 | OFF COURSE: $4,500,000 | TOTAL: $5,375,574
45. Bernhard Langer
2012 RANK: NR* | ON COURSE: $2,824,541 | OFF COURSE: $2,500,000 | TOTAL: $5,324,541
46. Darren Clarke
2012 RANK: 20 | ON COURSE: $276,187 | OFF COURSE: $5,000,000 | TOTAL: $5,276,187
47. Branden Grace
2012 RANK: NR* | ON COURSE: $3,522,152 | OFF COURSE: $1,500,000 | TOTAL: $5,022,152
48. Yani Tseng
2012 RANK: 46 | ON COURSE: $1,515,159 | OFF COURSE: $3,500,000 | TOTAL: $5,015,159
49. Miguel A. Jimenez
2012 RANK: 43 | ON COURSE: $900,058 | OFF COURSE: $4,000,000 | TOTAL: $4,900,058
50. Tom Lehman
2012 RANK: NR* | ON COURSE: $3,106,231 | OFF COURSE: $1,750,000 | TOTAL: $4,856,231
NR: Not ranked among the Golf Digest 50 in February 2012.
__SOURCES:__Figures for the list were compiled through Golf Digest interviews with agents, players, executives of companies involved with endorsements, industry analysts and through the official money lists of the professional tours.