PGA Tour: Is It Time To Reconsider Appearance Fees?

Want to know why the likes of Rory McIlroy, Lee Westwood and Martin Kaymer decided to stay in Europe rather than join the PGA Tour in 2011?

Well, it’s not because of the weather.

It’s not because they enjoy the long trips to the Middle East, Asia and America.

And it’s not because they’re disinterested in the highly lucrative FedEx Cup playoffs where $10 million is awarded to the winner.  

It all comes down to guaranteed cash.

European Tour events are allowed to pay appearance fees which they almost comically classify as “promotional services fees."  PGA Tour events, on the other hand, are unable to pay “promotional services fees." 

Why does Tiger Woods play in Asia and Australia late in the season when it’s no secret that he’d really only like to play four events per year if he could (the major championships)?

It all comes down to cold hard cash.

Woods’ appearance fee is $3 million and there are tournaments in Asia and Australia willing to shell out that kind of money for Woods’ presence, and for good reason.  A study done by the Australian Government estimated that Woods’ presence at the 2010 Australian Masters brought a return of $30 million to the local economy.

Why will Phil Mickelson and Steve Stricker be in Abu Dhabi in two weeks and not at the Bob Hope Classic in California?

Well, the Abu Dhabi HSBC Golf Championship will be paying them hefty “promotional services fees,” while the Bob Hope Classic doesn’t even break the $1 million mark for the winner’s share.

The idea of appearance fees is by means a new concept in golf.

Young Tom Morris stopped playing challenge matches in the late 1860s unless he was paid to show up in addition to the winners share he’d be given if he won the match.

Jack Nicklaus, Arnold Palmer and Gary Player would make appearances in obscure locations around the world, collect their massive appearance fees and then head back to the PGA Tour.

Seve Ballesteros boycotted the European Tour in the late 1980s because European Tour events were handing out appearance fees to international players but were not allowed to pay appearance fees to members of their own tour.

Ballesteros’ unrelenting stance on the matter ultimately led to European Tour’s initiation of the “promotional service fee” which both European and international players would be eligible to receive.

Now, you may be asking yourself “is a $6 million purse not enough to get these guys out of bed in the morning?”

You’d certainly think that a $6 million purse with the opportunity to win $1.2 million on any given week would be enough to get most guys out of bed in the morning.

However, there are two issues at hand:

1)  The top players in the world make far more off the golf course through sponsorship and endorsement deals, than they do on the golf course.

2)  It’s a matter of principle for some players.  For example, if Tiger Woods shows up at the John Deere Classic and misses the cut, he doesn’t get paid a cent, yet he would have likely brought in millions of dollars for the tournament and local economy by his presence at the event, which some believe he should be fairly compensated for.

Almost all other athletes are given a salary and are then awarded additional bonuses for greater achievements.  

Could you imagine if Peyton Manning or Alex Rodriguez were only paid when they won?  What about the stadiums they are filling every night and the massive amounts of revenue that flows in from those packed stadiums?

And that’s exactly why guys like Manning and A-Rod get paid the big bucks to simply show up.

The purses on the PGA Tour might be higher than the European Tour, and depth of the PGA Tour’s talent might be greater than that of the European Tour.

However, when it comes to the top players in the world, the PGA Tour is facing a crisis that is unlikely to wane anytime soon.

The European Tour is able to lure the top players in the world to tournaments through appearance fees whereas the PGA Tour is unable to offer this same enticement, thus putting PGA Tour events at a disadvantage on the world golf stage.

As we all know, golfers follow two things—the sun and the money…with the latter of the two being their top priority.

As the global economy begins to flatten and the PGA Tour continues to struggle with sponsorship deals and television contracts, the purses at tournaments around the world are also likely to flatten.

So let me ask you—if you are the top ranked player in the world, would you rather play for a $750,000 first place prize at a PGA Tour event with no appearance fee, or a $500,000 first place prize in Europe with a $1.5 million appearance fee?

Whether it’s called a promotional services fee or even a salary, the PGA Tour may need to start paying for talent, particularly as sponsors continue to jump ship and the Tour’s next television contract is likely to be a fraction of the immensely lucrative deal they currently enjoy.  

Times they are a changing, and unless the PGA Tour wants to lose its place at the head of the table, they might just need to re-evaluate their stance on appearance fees.