WHAT WILL THE PGA TOUR BE LIKE IN 2023?
It's probably changing if it has a dollar sign next to it. The PGA Tour is investing $153 million in prize money increases and the Player Impact Program. The Sentry Tournament of Champions, the WM Phoenix Open, the Players Championship, the World Golf Championships-Dell Match Play, the RBC Heritage, the Wells Fargo Championship, the Travelers Championship, three player invitationals, and three FedEx Cup playoff events will be the primary beneficiaries. The purses for these tournaments will range from $15 million to $25 million. In 2022, the biggest purse outside of the Players and majors was $15 million in FedEx Cup playoff tournaments.
The golfer who finishes 30th in the FedEx Cup standings in 2023 will earn $7 million, including bonus money, according to PGA Tour models and statistics. K.H. Lee made $3.85 million in that position last year. The 70th-place finisher is expected to win $3.5 million, up from $2.15 million won by Matt Jones last year. These are 82 and 62 percent rises, respectively.
At the top? Scheffler played 25 tournaments and won four times in 2022, good for $14 million. His wins in Phoenix and at Bay Hill alone would have paid him a combined $3.5 million more in 2023. A comparable season in 2023 would pay him in the neighborhood of $25 million—or the going rate for a mid-range NFL quarterback or a No. 2 starter in Major League Baseball. Dustin Johnson by comparison earned $35.6 million in tournament prize money playing for LIV in 2022. Another part of the cash infusion is going to directly counter one of the LIV perks that has gotten a lot of positive buzz: Covering travel expenses for members of a player’s entourage. Any rookie or player returning from a three-year absence will receive $500,000 in upfront cash for expenses that will count as an advance on season earnings. All players who don’t earn $500,000 will get reimbursed for the difference at the end of the season. Any nonexempt player who makes the field in an event and misses the cut will earn $5,000—which will help defray travel and caddie costs.
The new schedule works with the two most prominent bonus programs on the PGA Tour: The FedEx Cup playoffs and the Player Impact Program. The FedEx Cup is the season-ending string of three events that determines the season champion—and the winner of an $18-million bonus. The PIP debuted in 2021 and is designed to provide bonus cash to the players who move the tour’s attention and financial needles the most. The players who finished in the top 20 of the previous year’s PIP are obligated to play in all the elevated events for which they are eligible (with one opt out)—or they lose 75 percent of the bonus cash. The PIP program is remaining a $100-million split among the 20 most recognizable players, but it will be scored differently. Social-media presence used to give some players a leg up (like Phil Mickelson, who finished second to Woods in 2021), but the new criteria will focus on Web searches, media mentions and consumer awareness in random surveys. “It’s for the people who are selling the tickets and the ones that NBC, CBS and all the networks want to make the TV deals for,” says Justin Thomas. Woods earned $15 million in PIP money in a season in which he played just nine competitive rounds. McIlroy finished second and earned $12 million, and Spieth collected $9 million for finishing third. The upshot? If you’re a popular, successful player, you’re in line to play in a lot of big-money events that will give you more chances to earn money, fame and glory.
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IS PHIL MICKELSON STATE THAT THE PGA TOUR IS SITTING ON A “SLUSH FUND” AND KEEPING IT FROM PLAYERS TRUE?
WATCH Phil Mickelson shoot a flop shot over a guy standing 2 yards away.
Not really. Mickelson tweeted a list of figures he said was from the tour’s Form 990 in 2018—the tax return non-profits have to submit to the IRS. His list implied the tour has $1.6 billion in stocks and $700 million in cash on hand. The tour does have $1.48 billion in investments, but the vast majority of that—$1.18 billion—is part of the tour’s lucrative player-pension program. Revenue from those investments will pay current and future players who qualify for what many consider the best retirement plan in sports. The tour pays into a deferred compensation plan for each cut a player makes, with a percentage of any end-of-season FedEx Cup bonus money. A player fully vests in the plan by making 150 cuts in his career and is 50 percent vested after 75 made cuts. In 2021, 500 players had more than $500,000 in their accounts, and 114 had more than $3 million. McIlroy earned $18 million for winning the 2022 FedEx Cup, $1 million of which went into his pension account. It isn’t unreasonable to estimate that dozens of current players will retire with tens of millions available to them at age 50, or when they stop competing full-time in PGA Tour or PGA Tour Champions events.
WHERE IS ALL THIS NEW MONEY COMING FROM?
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Indirectly and eventually? The fans. The PGA Tour is a $1.5-billion business that earns the majority of its revenue from five categories—tournament revenue ($660 million), domestic and international media rights ($634 million), Tournament Players Clubs ($142 million), corporate licensing ($65 million) and investments ($21 million). Tournament revenue entails sponsorship deals with the brands you see listed before or after the names of a tournament—like the WM Phoenix Open or the Arnold Palmer Invitational presented by Mastercard—and ticket sales. Media rights are the deals the tour cuts with networks to broadcast tournaments on television. The Tournament Players Clubs are the more than 30 public and private courses worldwide under the TPC umbrella—ranging from TPC Sawgrass (home of the Players Championship) to TPC Dorado Beach in Puerto Rico. Corporate licensing is revenue the tour makes for selling the right to use its logo (or player imagery) on anything from shirts to trading cards. Investment income is how the tour’s funds are performing in the market, just like your 401(k). In 2022, the tour paid $685 million to players in the form of purses, bonuses, health insurance and various other perks. It also transferred $153 million collected from sponsors to players in endorsement money. It spent $716 million to run its operations—$212 million for tournament expenses, $183 million on staff salaries and $132 million for the TPC network. The infusion of new bonus money produced a $32-million shortfall for 2022—which the tour covered with money from its $225-million “rainy day” reserve fund. In 2023, the tour will need to find a way to cover the $153 million in new player payouts. As a 501(c) (6) non-profit, non-stock corporation, it can’t take on other forms of outside investment. That means it will need to make more money from its existing revenue sources. Some will come in the form of annual escalators—payment bumps—in its existing media deals with CBS, NBC and ESPN, which run through 2030. (Editor’s note: Golf Digest is owned by Warner Bros. Discovery, which holds global media rights to the PGA Tour outside the United States.) The difference can be made up largely through advertising, but it’s possible the networks could pass on some costs to viewers in the form of more expensive carriage agreements with cable providers and streaming fees.
The $153 million question: Breaking down the PGA Tour’s response to LIV
Jon Rahm would be bigger than most if the LIV Golf brain trust set targets on its most coveted defectors. Rahm would bring cachet—and the remaining years of major exemptions that come from his 2021 U.S. Open victory—as an international star who supports the PGA Tour and the DP World Tour, a Ryder Cup mainstay, and an under-30 major champion with two decades of competitive runway remaining.
2023 American Express odds: Will Zalatoris, Tony Finau among best bets at PGA West
Rahm is curt and direct, however, when he says he’s not for sale: “If money was on my mind, I probably might have gone to LIV, right? If money’s your goal, that’s clearly the path to go down. Every decision I make is based on becoming the best player I can become.”
Players like Rahm, Rory McIlroy, Tiger Woods and Scottie Scheffler also have been outspoken about their support for the PGA Tour’s competitive framework and legacy over LIV’s open checkbook.
Thanks to an unprecedented infusion of cash into the PGA Tour ecosystem for 2023, they won’t exactly be dealing with financial hardship by staying loyal. The PGA Tour’s new compensation program—designed in direct response to the continued threat of LIV poaching PGA Tour stars— splashes more than $150 million into play this year. Most of it will end up in the hands of the most established stars who support the premier events. This is what the new program looks like—and how it will change the complexion of tournament golf.
A LOT OF PLAYERS ARE WINNING. ARE THERE ANY LOSERS?
For the players at the top of the pyramid, it’s an enormous payday, but the picture gets cloudier for the “middle class.” Remember the Matt Jones example? The number 70 is important because after that spot the math changes—to a potentially dramatic degree. Instead of the top 125 making the playoffs and guaranteeing status for the next year, only 70 will qualify. That leaves more than 50 players to fight it out with roughly the next 100 guys on the money list plus potential risers from the Korn Ferry Tour and college players who could come through in a new direct-to-the-tour program. That “middle class” will fill the non-elevated events and get spot starts in the big-money tournaments—leaving them at a disadvantage trying to climb back into the top 70. When PGA Tour commissioner Jay Monahan announced the change in June, he characterized it as one of the biggest on a roster full of bombshell revelations— but one that would ensure competitive fields and compelling storylines in the non-elevated events. “To say everybody supports this move would be an exaggeration, but it’s the right move for the business, and it’s the right move for our players and fans,” Monahan said. “Every single member who carries a PGA Tour card has the ability to be the No. 1 player in the world. It’s less about where you are today and more about where the ultimate opportunity is.”
PGA Tour Policy Board member James Hahn cast the only dissenting vote on the new structure, saying the stipends were small change in comparison to the benefits a small group of elite players will get under the new guidelines. Hahn said sarcasti- cally, “Seems like a good compromise for both the top and bottom—$100 million for the top 20 players on the PIP and $5,000 for non-exempt players on tour.”
Sources: .golfdigest.com & gettyimages.com