Golf Video Channel » Lexus http://golfvideochannel.com Golf Instruction Videos Articles and News Tue, 07 Sep 2010 09:17:45 +0000 http://wordpress.org/?v=2.8.4 en hourly 1 How Much Money Does the Open Make? http://golfvideochannel.com/how-much-money-does-the-open-make/ http://golfvideochannel.com/how-much-money-does-the-open-make/#comments Tue, 10 Jun 2008 19:53:00 +0000 Ryan Ballengee tag:blogger.com,1999:blog-3757252870842393813.post-2593416217400070666 Jon Show at the Sports Business Journal.

Total revenue for the tournament should be close to $100 million, including estimates of $20 million in ticket sales, $15 million in corporate hospitality, $15 million in merchandise and $5 million in food and beverage.

That also includes approximately $40 million from domestic and international television revenue. Many of those arrangements include rights to air parts of other USGA tournaments, such as the Women’s and Senior Opens, but media industry sources estimated 95 percent of the value of those deals is attributable to the U.S. Open.

Expenses should be about $50 million based on Opens held at comparable courses.

That leads to a profitability projection of about $50 million. And that pretty much fuels the USGA for the rest of the year. To put that into perspective with an earlier post, Torrey Pines and associated organizations will get about 12% of the total profit as a separate series of payments.

According to Show, it also makes the Open the most profitable major as far as anyone can tell. It pulls in double what the PGA Championship does.

The piece then goes on to talk about the enormous revenue in hospitality and corporate tents thanks to the expansive Torrey grounds. Since they're not using the North Course (the easy one) to play, they can use it to shove the media there and luxurious tents for people with money to spend.

Torrey’s expansive layout and existing on-site accommodations have also translated to near-record level hospitality sales.

Hospitality generally brings in between $10 million and $15 million each year depending on how the geography is utilized. This year, the USGA expects total hospitality sales to be among the highest in recent U.S. Opens due primarily to two on-site hotels.

Options at the course range from all-inclusive $6,200 tables to specialty packages in the low-to-mid six figures. Space at the five-diamond-rated Lodge at Torrey Pines allowed the USGA to sell about $2.5 million in packages, including a $575,000 option that was the most expensive in Open history.

Not to say that this may have been a good reason to vote for Torrey, but to cash in on unused space seems like something the USGA would want to consider especially since costs are so high for running the Open. And considering that many people - insiders and outsiders to Torrey - thought this place would never be able to host an Open architecturally speaking, due to its size and other factors, the corporate tent availability had to have sweetened the deal. They need the cash now because if you consider future Open sites, they will be taking a hit soon:
Despite the direct effect a host course has on the success of a U.S. Open, USGA officials said profitability is not the ultimate decider on awarding sites. A look at future tournaments supports that statement. Next year’s U.S. Open at Bethpage will again challenge revenue records, but the USGA will sacrifice millions in 2013 due to size restrictions at Merion Golf Club in Ardmore, Pa.
Later in the piece, though, there is a semi-contradictory quote to the sentiment:
USGA Deputy Executive Director Mike Butz, who has been involved in planning U.S. Opens since 1981, said, “The philosophy used to be to select a site and then the staff figured out how to make it work. That’s still pretty much true, but we really have to be careful to look at the finances because it can swing millions of dollars one way or the other based on the costs to run it.”
Show also talks about how much that corporate sponsorship is really helping the bottom line of the Open by creating diverse revenue streams:
The addition of USGA corporate partners has helped reduce expenses such as courtesy cars for players, but the bottom line of an Open is not hugely affected by the addition of corporate sponsorship because the USGA does not include that revenue when determining the profitability of an individual event.
You really cannot account for RBS, IBM, or AmEx in the Open's bottom line. The services and revenue they provide to the USGA are geared toward general operations that may just happen to impact the Open. So, let's just consider Lexus. According to Adam Schupak's Beyond the Crossroad piece earlier in the year:
Lexus provided cars for the equivalent of nearly 13,000 days as the official vehicle of the U.S. Open and three other championships – a savings of more than $2 million the USGA spent on vehicles for contestants the previous year.
Basically, probably less than $1M in savings for the Open in particular.

Very interesting piece and a good read if you want to avoid my commentary and judge for yourself.]]> Jon Show at the Sports Business Journal.

Total revenue for the tournament should be close to $100 million, including estimates of $20 million in ticket sales, $15 million in corporate hospitality, $15 million in merchandise and $5 million in food and beverage.

That also includes approximately $40 million from domestic and international television revenue. Many of those arrangements include rights to air parts of other USGA tournaments, such as the Women’s and Senior Opens, but media industry sources estimated 95 percent of the value of those deals is attributable to the U.S. Open.

Expenses should be about $50 million based on Opens held at comparable courses.

That leads to a profitability projection of about $50 million. And that pretty much fuels the USGA for the rest of the year. To put that into perspective with an earlier post, Torrey Pines and associated organizations will get about 12% of the total profit as a separate series of payments.

According to Show, it also makes the Open the most profitable major as far as anyone can tell. It pulls in double what the PGA Championship does.

The piece then goes on to talk about the enormous revenue in hospitality and corporate tents thanks to the expansive Torrey grounds. Since they're not using the North Course (the easy one) to play, they can use it to shove the media there and luxurious tents for people with money to spend.

Torrey’s expansive layout and existing on-site accommodations have also translated to near-record level hospitality sales.

Hospitality generally brings in between $10 million and $15 million each year depending on how the geography is utilized. This year, the USGA expects total hospitality sales to be among the highest in recent U.S. Opens due primarily to two on-site hotels.

Options at the course range from all-inclusive $6,200 tables to specialty packages in the low-to-mid six figures. Space at the five-diamond-rated Lodge at Torrey Pines allowed the USGA to sell about $2.5 million in packages, including a $575,000 option that was the most expensive in Open history.

Not to say that this may have been a good reason to vote for Torrey, but to cash in on unused space seems like something the USGA would want to consider especially since costs are so high for running the Open. And considering that many people - insiders and outsiders to Torrey - thought this place would never be able to host an Open architecturally speaking, due to its size and other factors, the corporate tent availability had to have sweetened the deal. They need the cash now because if you consider future Open sites, they will be taking a hit soon:
Despite the direct effect a host course has on the success of a U.S. Open, USGA officials said profitability is not the ultimate decider on awarding sites. A look at future tournaments supports that statement. Next year’s U.S. Open at Bethpage will again challenge revenue records, but the USGA will sacrifice millions in 2013 due to size restrictions at Merion Golf Club in Ardmore, Pa.
Later in the piece, though, there is a semi-contradictory quote to the sentiment:
USGA Deputy Executive Director Mike Butz, who has been involved in planning U.S. Opens since 1981, said, “The philosophy used to be to select a site and then the staff figured out how to make it work. That’s still pretty much true, but we really have to be careful to look at the finances because it can swing millions of dollars one way or the other based on the costs to run it.”
Show also talks about how much that corporate sponsorship is really helping the bottom line of the Open by creating diverse revenue streams:
The addition of USGA corporate partners has helped reduce expenses such as courtesy cars for players, but the bottom line of an Open is not hugely affected by the addition of corporate sponsorship because the USGA does not include that revenue when determining the profitability of an individual event.
You really cannot account for RBS, IBM, or AmEx in the Open's bottom line. The services and revenue they provide to the USGA are geared toward general operations that may just happen to impact the Open. So, let's just consider Lexus. According to Adam Schupak's Beyond the Crossroad piece earlier in the year:
Lexus provided cars for the equivalent of nearly 13,000 days as the official vehicle of the U.S. Open and three other championships – a savings of more than $2 million the USGA spent on vehicles for contestants the previous year.
Basically, probably less than $1M in savings for the Open in particular.

Very interesting piece and a good read if you want to avoid my commentary and judge for yourself.]]> http://golfvideochannel.com/how-much-money-does-the-open-make/feed/ 0 USGA Adds 4th Corporate Sponsor…This is Getting Ridiculous http://golfvideochannel.com/usga-adds-4th-corporate-sponsorthis-is-getting-ridiculous/ http://golfvideochannel.com/usga-adds-4th-corporate-sponsorthis-is-getting-ridiculous/#comments Thu, 15 May 2008 16:04:00 +0000 Ryan Ballengee tag:blogger.com,1999:blog-3757252870842393813.post-8979834797987105637 RBS becomes the latest sponsor to join up with the USGA, as was announced yesterday. Doug Ferguson has the story for the AP.
The U.S. Golf Association announced a four-year deal Wednesday with the Royal Bank of Scotland, the fourth corporate partnership it has signed in 18 months after going 113 years without one.

"We were looking for real top companies that shared a cultural vision with the USGA and really understood the game of golf, which is what we're all about," Pete Bevacqua, chief business officer of the USGA, said during a conference call. "To join forces with a company like RBS, it's just a real treat for us."

Financial terms of the agreement were not released, although two officials aware of the negotiations said it was about $3 million a year. RBS has long been involved with the Royal & Ancient at the British Open, and recently signed on with the PGA of America. It also has a licensing agreement to use the Masters brand in advertising for BBC coverage.

RBS is everywhere lately. The funny thing is that they do not sponsor tournaments, just organizations. They get love now from all of the major championships. It is an interesting strategy.

Still, the problem here is that the USGA has again engaged in business-like behaviors when that is not the stated mission of the organization. As Ferguson mentions, this is the fourth alliance created in the last 18 months. To review:

The USGA did not have any corporate partners until it signed American Express in November of 2006. Since then, the USGA has added Lexus, IBM and now RBS. The companies all are listed on the USGA's web site as corporate partners.
To the USGA's credit, it has not taken this corporate stuff TOO far...yet.

American Express had a corporate tent for its members last year at the U.S. Open, and it allowed 82 of them to pay $900 to play Oakmont and tag along with Tiger Woods - who endorsed Amex at the time - as he played a practice round.

Lexus became the official courtesy car at USGA championship, while IBM is taking over the information systems at USGA events. The USGA was not specific about the role RBS will have at its biggest tournaments, saying that RBS will support "new media platforms" and contribute to the USGA's "For the Good of the Game" program that takes golf to new audiences.

I was definitely not thrilled about the AmEx outing. I thought that was a bit much. All the USGA got out of that was AmEx's mailing list. That does not seem like an even transaction, especially when it does not really give much benefit at all to members of the USGA - a member-driven organization. They are there for the good of the game and the people that play it, not for themselves.

Lexus made sense, and they pretty much have stayed out of the way. IBM should have been running the information systems to start, although Cisco was not bad at all. Now, we have RBS.

The sponsorships seem logical to the untrained eye. That's the problem. It isn't that these sponsorships don't help the USGA in some fashion - money, membership, website, etc. The problem is that the USGA is a non-profit that is not necessarily working in the keen interest of its membership in as transparent of a fashion as they are selling stake in the organization.]]> RBS becomes the latest sponsor to join up with the USGA, as was announced yesterday. Doug Ferguson has the story for the AP.
The U.S. Golf Association announced a four-year deal Wednesday with the Royal Bank of Scotland, the fourth corporate partnership it has signed in 18 months after going 113 years without one.

"We were looking for real top companies that shared a cultural vision with the USGA and really understood the game of golf, which is what we're all about," Pete Bevacqua, chief business officer of the USGA, said during a conference call. "To join forces with a company like RBS, it's just a real treat for us."

Financial terms of the agreement were not released, although two officials aware of the negotiations said it was about $3 million a year. RBS has long been involved with the Royal & Ancient at the British Open, and recently signed on with the PGA of America. It also has a licensing agreement to use the Masters brand in advertising for BBC coverage.

RBS is everywhere lately. The funny thing is that they do not sponsor tournaments, just organizations. They get love now from all of the major championships. It is an interesting strategy.

Still, the problem here is that the USGA has again engaged in business-like behaviors when that is not the stated mission of the organization. As Ferguson mentions, this is the fourth alliance created in the last 18 months. To review:

The USGA did not have any corporate partners until it signed American Express in November of 2006. Since then, the USGA has added Lexus, IBM and now RBS. The companies all are listed on the USGA's web site as corporate partners.
To the USGA's credit, it has not taken this corporate stuff TOO far...yet.

American Express had a corporate tent for its members last year at the U.S. Open, and it allowed 82 of them to pay $900 to play Oakmont and tag along with Tiger Woods - who endorsed Amex at the time - as he played a practice round.

Lexus became the official courtesy car at USGA championship, while IBM is taking over the information systems at USGA events. The USGA was not specific about the role RBS will have at its biggest tournaments, saying that RBS will support "new media platforms" and contribute to the USGA's "For the Good of the Game" program that takes golf to new audiences.

I was definitely not thrilled about the AmEx outing. I thought that was a bit much. All the USGA got out of that was AmEx's mailing list. That does not seem like an even transaction, especially when it does not really give much benefit at all to members of the USGA - a member-driven organization. They are there for the good of the game and the people that play it, not for themselves.

Lexus made sense, and they pretty much have stayed out of the way. IBM should have been running the information systems to start, although Cisco was not bad at all. Now, we have RBS.

The sponsorships seem logical to the untrained eye. That's the problem. It isn't that these sponsorships don't help the USGA in some fashion - money, membership, website, etc. The problem is that the USGA is a non-profit that is not necessarily working in the keen interest of its membership in as transparent of a fashion as they are selling stake in the organization.]]> http://golfvideochannel.com/usga-adds-4th-corporate-sponsorthis-is-getting-ridiculous/feed/ 0