PGA Tour: Playing Under Pressure - [Business Breakdowns, EP. 60]

Jun 8, 2022

Join Neil Schuster, co-founder of the golf media business No Laying Up, as he dives into the business side of the PGA Tour. Discover the fascinating concept of the 'Tiger Tax' and its effects on player earnings. Schuster explains how the Tour transitioned into a nonprofit and explores its revenue generation strategies. The discussion also touches on the rise of competing leagues like LIV Golf and the ongoing challenges of engaging modern audiences, including exciting collaborations with streaming platforms. Perfect for golf fans and business enthusiasts alike!

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INSIGHT

PGA Tour's Core Value

The PGA Tour's core value comes from owning players' media rights, which they sell to broadcasters.
This model allows the Tour to market players and secure lucrative deals, but top players might feel undervalued.

ANECDOTE

The Tiger Tax

Tiger Woods' arrival on the PGA Tour significantly increased sponsor money, fan interest, and ratings.
This "Tiger Tax" led to larger purses and prize money for all players, though some argue he remains underpaid relative to his contributions.

INSIGHT

PGA Tour Origins

The PGA Tour, originally part of the PGA of America, split due to top players' frustration over subsidizing club professionals.
This schism led to the creation of the Tournament Players Division in 1968, focused on touring professionals.

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This is Dom Cooke and today we are breaking down the PGA Tour. Alongside the four standalone majors, the PGA Tour is the pinnacle of professional golf. It’s where the best players in the world earn their living and tee it up for their place in golfing history. To break down the business behind the stars and action you see on the PGA Tour, I’m joined by Neil Schuster, co-founder of golf media business No Laying Up.

Editor’s note: this conversation was recorded before the field for this week’s inaugural LIV golf invitational event was announced.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.

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Show Notes

[00:02:27] - [First question] - What the PGA Tour is, it’s size today, and how it generates revenue

[00:06:04] - Defining what the Tiger Tax is and its implications

[00:08:04] - When the PGA Tour was founded and the key moments leading up to today

[00:15:40] - Deane Beman: Golf’s Driving Force; Changing the format of the Tour into a non-profit

[00:17:24] - Being a member run organization and player influence over the board

[00:18:23] - Overview of the business structure and model of the PGA Tour

[00:22:27] - Reasons for the 72 hole stroke-play format

[00:24:43] - The distribution of over a billion dollars of revenue

[00:27:59] - Why their capital allocation is unique and their incentive programs

[00:31:37] - Unique pension structures of their deferred compensation plan

[00:34:30] - The Champions Tour as a secondary way to make a living after the PGA tour

[00:36:07] - Rival SGL and PGL tours and how they are trying to disrupt the PGA tour

[00:44:42] - Having a legacy name advantage to bring players and capital in

[00:47:47] - Relying on growing viewership, ratings, and new sponsors over time

[00:52:48] - Paths to becoming a more successful tour amidst the new startup tours

[00:55:07] - Netflix’s partnership with the PGA Tour to try and bring in new viewers

[00:56:54] - The most surprising lessons about the PGA Tour he’s learned