Following The Money
When the subject of the FedEx Cup's deferred payment plan came up at the Barclays two weeks ago, Ernie Els couldn't hide his displeasure. "It's not like we're going for $10 million in cash," Els said. "We've got to wait for this cash until we're 65. Big difference."
And maybe an underlying reason why Els withdrew from last week's Deutsche Bank Championship, instead of the one he gave: the start of his childrens' school year in England. (The deferred payment plan may also be one of the "issues" with PGA Tour commissioner Tim Finchem that Phil Mickelson referred to in interviews following his win in Boston.) There have been lots of criticisms of the FedEx Cup playoff system -- some valid, some not -- but the one cited most by players is the form of payment: a retirement fund, instead of a check they can cash and start spending tomorrow.
"My question is, if I win the FedEx Cup, am I $10 million richer in real money?" asked veteran Fred Funk. "This is where I'm confused."
The confusion stems from the tour's business plan of taking $19 million of FedEx money, adding it to their pool of resources (which according to former policy board member Tom Pernice Jr. includes $16 million from the tour's retirement fund) to make a total of $35 million -- with an eye-popping $10 million to the winner. "[The message] the tour wants to get across is that [the playoffs are] more about winning the FedEx Cup than the money," Pernice said. "But they've made it a money issue [by making the prize money] deferred."
And it is the issue players talked about most during the first two events of the playoffs. From K.J. Choi, who wanted to use the money to start a foundation, to Tiger Woods, who said he could be dead by the time he could touch the deferred payment, there has been consternation about the system, debate over control of the money and charges that the "wow" factor of the huge first prize has been diluted.
"I think it would make it even more exciting if we did something like what [the Las Vegas tournament] used to do," Phil Mickelson suggested last month. "Like silver dollars ... or like the World Series of Poker with piles of cash." Funk agreed: "I think for excitement it would be better to have a big old pile of cash on the 18th green, right there to see and have everybody choke over."
Some players -- Davis Love III and Jim Furyk, most notably -- have been outspoken proponents of the deferred payment idea. The griping has come as a surprise to tour officials. Tour executive vice president Ty Votaw explains that the deferred plan went through all the proper channels, from the PAC to the board of directors, which includes both players and four leading businessmen. Votaw also noted that Woods, Els and Mickelson were asked for their input during the process (although a representative for one of the Big Three told Golf World that the tour received some opposition and not support for the deferred concept).
"Phil's imagery is interesting," Votaw said. "We could still roll out $10 million in a wheelbarrow. The difference is the $10 million is being deposited into an account. An annuity is different. The $10 million starts growing the day it goes in."
As for Pernice's claim that a portion of the $35 million came from the retirement fund, Votaw told Golf World the FedEx payout, which includes $32,000 for last place, was part of the tour's overall budget. "I'm not going to get into sources of revenues, but there's an allocation of resources that takes place, and that takes place every year," he said. "Our job is to create as many economic opportunities as possible for our players."
The New York Times reported last week that the $10 million payout, at a conservative 8 percent gain, could be worth $46.6 million to a young player such as Hunter Mahan by the time he is 45; for Woods, it could be worth $29.4 million, and for Mickelson $18.5 million. Still, tour players are "independent contractors" (as they are fond of saying) and many worry the pension fund will go down in some catastrophic market crash. As Scott Verplank said, he would rather pay the taxes now, take the cash and invest it on his own. "I'll take my $6.5 [million]," Verplank said, "and give it to T. Boone Pickens [to invest] and see where I'm at."
Says former policy-board member Olin Browne, "It's a lot easier to tuck the money in a safe corner rather than hand somebody a check. It stands to have much greater value down the line. In the meantime, nobody's on the hook for the cash. It's in there somewhere. It's on the books. But I don't know … the whole thing seems a little convoluted to me."