So was this tge dust up of PGA and Trump Tournament?
Crossing the Rubicon – With Members of the PGA TourNow for Something a Little Different
Jun 4
One of us, (Shipwreckedcrew) is an attorney who, among other things, plays a role in professional sports athlete representation. The other (F.X. Regan), is a retired FBI agent and private investigator who at one time a security consultant to the PGA Tour. Together we look at some of the drama and legal aspects associated with a recently announced start-up professional golf league.
The PGA Tour is a somewhat unique entity in professional sports. It is classified by the IRS as a not-for-profit corporation so at the end of each year it carries little excess cash on its books. The Tour is an “association” – it is made up of member players who must meet qualifications set by the Tour to join and participate in PGA Tour events. These qualifications include winning a certain amount of money in golf’s “minor leagues”, or winning promotion through its regular qualification school events. But to remain a member of the Tour from year to year a player must win a certain amount of money during the year to keep their “Tour Cards” that allow them to enter Tour events.
Notably, Tour members are not employees of the PGA Tour – they are classified as independent contractors. Their Tour Card entitles them to tournament entries, and little more.
The PGA Tour collects revenue mostly from three streams of income; the television rights to broadcast events that it sells; tournament sponsorships such as the “AT&T” Pebble Beach Pro-Am; and other promotion and advertising opportunities sold to corporate America. In most PGA Tour-sponsored tournaments, a majority of the purse money is derived from the tournament sponsor. Sticking with the AT&T Pebble Beach tournament as an example, this year’s winner received $1.5M, while the final player to make the cut at number 65, received approximately $19,000.
Players who don’t make the “cut” after the first two rounds of a tournament receive nothing. Further, Tour players are responsible for all their travel and lodging expenses. Between its revenue streams, the PGA Tour brings in a significant amount of money. The TV rights alone are worth approximately $80 million per year, and Disney pays another $75 million for the digital rights. Players receive none of this revenue other than what they win in prize money. In a 2021 memo to Tour members, Commissioner Jay Monahan said that fifty-five percent of Tour revenue would be directed back to the players – meaning forty-five percent is spent by the PGA on itself and what it gives to outside charities. In part due to controversy over finances discussed below, the Tour created a “Player Impact Program” in 2021, paying out $40 million to ten players who “impacted” the game regardless of performance. Predictably, Tiger Woods, arguably the most famous golfer of all time, received the top monetary award despite the fact that he did not play due to injury.
The Tour recently opened its new Headquarters in Ponte Vedra Beach, FL which cost $65 million to construct. Commissioner Monahan’s salary is reportedly $3.5 million, and his predecessor Tim Finchem’s earned as much as $9 million. The Tour reportedly owns at least one jet for Executive travel. No Tour event is allowed to turn a profit, and all revenue after expenses revert to charities.
The NFL is also a not-for-profit corporation. But unlike the PGA Tour, the NFL has a membership consisting of the 32 owners of team franchises who agree to be guided by its self-imposed rules that are administered by the Commissioner – the owners are the Commissioner’s boss.
The owners assume all financial risk with respect to their own team’s operations, and their players are among the salaried employees of each franchise. Owners pool and shared TV and ticket revenue, but there are many other revenue streams (parking and concessions for example) they individually control. Each player has an employment contract with their team, but those contracts must comply with all collectively bargained terms agreed upon between the Players’ Association and the League.
In exchange for being paid employees with contractual rights, players agree to forgo certain rights they might otherwise have like playing in a second league while they are under contract.
It’s not a perfect comparison, but the highest-paid NFL player in 2022 will be Aaron Rodgers of the Green Bay Packers who will receive $50 million in guaranteed salary. Last year’s top money winner on the PGA Tour was Jon Rham who won $7.7 million in prize money. Rodgers’s contract is for three years, the second and third years are guaranteed as well. Rham is not guaranteed anything in 2022 or any other year.
https://shipwreckedcrew.substack.com/p/crossing-the-rubicon-with-members?s=w