No Laying Up - Golf Podcast - 879 - Golf Sponsorships 101: Why Brands Sponsor Golf Events and Players

Episode Date: August 7, 2024

Despite a lot of changes in the professional golf ecosystem, money continues to pour into the sport at the highest level. Why is that? What do brands get out of sponsoring events (big and small), and players (famous or not). We dive into what makes golf an appealing audience despite declining ratings, the decision to sponsor an individual player, using a title sponsorship as a vehicle for other business interests, the increased value around major championships, the unrivaled appeal of the Masters, and a lot more. If you enjoyed this episode, consider joining The Nest: No Laying Up’s community of avid golfers. Nest members help us maintain our light commercial interruptions (3 minutes of ads per 90 minutes of content) and receive access to exclusive content, discounts in the pro shop, and an annual member gift. It’s a $90 annual membership, and you can sign up or learn more at nolayingup.com/join Thank you to Titleist and the new GT Driver Lineup, ONE Protein Bars, and Rhoback. Learn more about your ad choices. Visit megaphone.fm/adchoices

Be the right club. Be the right club today. That's better than most. How about in? That is better than most. Better than most. Expect anything different? Ladies and gentlemen, welcome back to a special edition of the No Laying Up podcast. Today's episode is going to be a bit different.

It's sort of a deep dive, but it's also sort of just an intro to sports marketing class, if you'll allow me. I'll explain my thinking here and why I think this is actually an interesting and important topic. We've all learned a lot about how the world of professional golf works in the last several years. It's of course a lot more fun to talk about the golf shots, the great collapses, the drama, the memes, all that stuff. But at times this decade all that has felt a little bit unimportant,

you know, as a foreign government has attempted and largely succeeded in taking the men's golf world hostage with its Titanic Sovereign Wealth Fund. And as we all know, the kingdom of Saudi Arabia through live golf has challenged the PGA Tours business model by offering lucrative contracts to attract top players and highlighting potential vulnerabilities in the PGA Tours financial and operational structure. And this competition pressured the PGA Tour to increase player compensation in the near term and innovate its offerings to retain its talent and sponsor interest. They went to sponsors, asked for more money for a product that was undoubtedly worse than what these sponsors had originally signed up for. And on paper, to those of us fortunate enough to

be internet commenters and podcasters, it seemed like a really bad bargain for a lot of these sponsors. It was not a surprise to see several sponsors, some of whom were long-time partners of the tour, decide it was no longer within the company's best interest to keep spending money with the PGA Tour. But definitely not all sponsors felt this way. Several of them when asked whether or not they were willing to up their sponsorship, they said yes. They ponied up over $20 million to be able to put their name next to a lot of the best players in the world. And a lot of us were left wondering why? Like what is so valuable about a partnership with the PGA Tour? A journey to figuring out why things are the way they are in pro golf can meander a lot of different directions.

But I found that almost all of them end up at the same final boss. Follow the money, as they say, and you'll end up with an answer that sounds something like that's what the sponsor wants. People that are paying dollars for PGA Tour events, for golf events in general drive a lot of why the product looks the way that it does today and I wanted to spend a little time unpacking a little bit of that. Some examples are obvious.

For instance, golf television ratings have not been great for a pretty significant period of time. Why? Golf can be hard to watch on television sometimes. Why? Because there are so many commercials. Why are there too many commercials? Well, companies are spending a

ton of money to sponsor these events. They want their products shown on television. Broadcast partners have paid massive rights fees to the PGA Tour. They want to turn a profit on their investment. In turn, the PGA Tour helps broker commercial sales to the rights holders to run commercials directly on their telecast. Why are they charging so much? Well, to support the large purses being paid to the players of the tour. Why do the purses have to be so big? Well to support the large purses being paid to the players of the tour.

Why do the purses have to be so big? Well in large part because a competitor's Sovereign Well Fund will pay them heaps of money if the tour will not. So on and so on. We've talked a lot about sponsors exemptions in the last year. Why aren't some of these sponsors exemptions in these signature events going to the best up-and-coming players? Well the answer is in the name. Sponsor exemption means that the brand putting up the money for the tournament gets to decide who fills out the final spots in their tournament. And yes a name like Webb Simpson might make more sense to accomplish the goal of that sponsor instead of a player that a casual fan might not recognize when they swing by the hospitality tent to meet a bunch of said sponsors top clients. I certainly would not consider this

to be the fun side of professional golf, but I actually had a good bit of fun preparing for this episode. I interviewed around, I'd say a dozen people involved in what I would call the business side of pro golf, whether that be someone whose company sponsors the tour, someone that helps broker sponsorship deals, agents, consultants, et cetera.

It's a massive world. It's really interesting to talk to some of these people. And 99.9% of you listening to this would not know the names of the people that I interviewed. And pretty much all of them would like to keep it that way. I know that sounds way, way, way more dramatic than it actually is. What we're talking about today isn't anything close

to nuclear trade secrets or really anything that needs to be secretive. But it was much easier to have a candid conversation with real life examples from people that, you know, didn't want their name and voice out there publicly giving examples from maybe their specific brand, their clients, their competitors, or the agency they're representing.

There's just legitimately no upside for them for any on record conversation. Any actual on record conversation I would have been able to have would have been a lot more dull corporate speak than some of the stuff that I was able to get, but I also don't wanna just sit here and read back their quotes or the conversations we've had.

So what we've done is, you know, a little bit funky, but play along with us here. What we've done is combine everyone I interviewed for this podcast into one character for the sake of this podcast. Just consider this person to simply be an expert on how things work in pro golf. That character, again, for this podcast,

we're gonna call Denny Cash. You'll recognize the voice as our very own DJ Piehowski. Hello there, sir. Mr. Amalgamation of all the people I've interviewed for this podcast. Chris, thanks for having me on your program. Longtime listener, first time caller. What an incredible career you've had across many, many, many different parts of the golf industry. I'm just blessed, man. I'm just blessed. I'm lucky to be in the right place at the right time and surrounded by great people. Who's your favorite player out on the PGA tour? Oh, Chris. I mean, I like them all, man. I like them all. These guys are such good guys and ambassadors for our sport.

Sure. This may be a bit weird, but just treat DJ or should I say Denny Cash as some sort of an all-knowing industry expert. I mean, I'm not a big fan of the PGA tour. I'm not a big fan of the PGA tour. good guys and ambassadors for our sport. Sure this may be a bit weird but just treat DJ or should I say Denny Cash as some sort of an all-knowing industry expert and he's going to teach us a bit about how this world works. We're going to call this guy Denny Cash. He moves money in the golf industry. So stupid. So Denny, why do companies sponsor PGA Tour events or golf events in general? Yeah, Chris, I think when a brand and a company advertise a product or service, they have a lot of different ways to do it. They have traditional 30-second advertising spots, they have social media, they can do

campaigns, connect with people. I think sponsorship as a discipline is the idea that you just really want to align a product, a brand, et etc. with a specific audience. And the idea is that that audience is so passionate about whatever we're talking about, sports teams, athletes, music, arts, culture, etc. Quite frankly, studies have shown over the years that consumers will be more apt to use that brand's product or service over their competitors because of that alignment with said sport. I can use a lot of different examples for this, but the one that I like is old style beers sold in Chicago.

Think about how many Cubs fans still will buy old style beers just because of their association with the beloved Cubs. I think that's a good example of what we're talking about. Another great example of what we're talking about is NASCAR. Think about how passionate people were about Jeff Gordon. Those people are Pepsi drinkers. They are not Coke drinkers because they like Jeff Gordon. On the flip side of that, people would go so far as to have the

Calvin and Hobbes logo pissing all over the Chevy logo. I think that's the epitome of what this type of sponsorship is. It's a brand saying, I want this audience. It's part of the overall mix of how they're going to advertise and how they're going to market their brand sponsorship. So that's the answer on sponsorship is just connecting with an audience. Now golf is one of the few sports truly that appeals broadly in the United States and also has global appeal. And if you really think about it,

there's just not that many sports that do that. F1 racing, possibly coming into the U S you know, everyone's talking about soccer coming in. Soccer's been here for a long time. It is the global sport. Rugby doesn't translate into the U.S. very well. And then American football and NHL hockey outside of the U.S. and Canada don't really have the same reach globally. So golf is this global audience. It skews affluent. It aligns with so many things in the world of a certain lifestyle. A golfer is someone who drives a nice car. They have a nice watch. They do all of these different things. And so there's just this nice audience that brand marketers want and that's golf. Just to put some numbers behind this

and I'll try to present this in the least confusing way possible, but if you're an American with a net worth greater than $1 million, the PGA TOUR index against the US population as a whole is 163. Again, for simplicity sake, the average on this scale is 100.

Essentially this means that the correlation between millionaires, the average on this scale is 100. Essentially, this means that the correlation between millionaires and PGA TOUR viewers is massive. And again, before we get lost in explaining the index here, for comparative purpose, the NFL ranks at 121, the NBA is at 108, the MLB ranks at 131, all much, much smaller than the TOUR's rating of 163. Golf fans and golf viewers have higher credit card spend, they're more educated, business decision makers and business owners tend to play golf, they tend to watch it on TV, they read about golf,

they're country club members, they play golf frequently or they play golf occasionally and so on. We can spend a lot more time on the details here but the conclusion is simple, the nature of the golf audience helps drive sponsorship. And speaking of brand alignment, I'm gonna give you an example here as it relates to No Laying Up.

Titleist is a massive golf brand. Their offerings include drivers, irons, wedges, putters, golf balls, hats, gloves, you name it. They sponsor a lot of professional golfers and they also happen to sponsor a little golf podcast called No Laying Up. They determine their brand message aligned greatly with our mission to inform and entertain a community of avid golfers worldwide. They sell value

in us not just promoting their offerings but experiencing them. They brought our entire team out to get fit into the proper equipment. They continue to keep us maintained and fit into the proper equipment. We've done golf ball fittings, we've done iron fittings, driver fittings. They've given us access to their tour pros that they sponsor for content on our channels. They've done iron fittings, driver fittings. They've given us access to their tour pros that they sponsor for content on our channels. They've done so much for us on our content that, you know, isn't specifically an ad. They see value in us using their equipment on all of our golf

videos, of being able to speak about our experiences we've had with their products and how it's led to enjoyment of the game and the consistency that we're creating content being constant. And we greatly appreciate their partnership and whether or not you realized that you just heard an ad and now back to our regularly scheduled programming. And then I would say that PJ tour is the most consistent way to sponsor golf really in the United States. And it has that global appeal due to the players that play and

a few of the places that they go. In my opinion, the success of the PJ tour is on Saturdays and Sundays. They are on between three and six PM. It's either going to be on CBS or NBC. We know that. We know they're going to be playing in those hours. They have a built up reputation of owning those hours on Sundays and they provide a constant week in week out offering for a brand. I think brands will do a lot of one-off events. They might do the US Open golf, US Open tennis, Bonnaroo, things like that. Some brands do that really well, but a lot of brands want a consistent message

in their sponsorship. Really, I think every brand would like a sponsorship with those 365 days a year built in. So to me, that's where the PGA Tour has become the answer in sponsorship for a lot of brands and some of the reasons why. Some of this is just a marketing 101 lesson, but I find this stuff very interesting.

Like how do companies measure a return on this, right? How do you come up with a dollar amount of what all this is gonna cost? How does the seller come up with, you know, what is this gonna cost? How does a buyer justify the cost and how do they measure successive campaigns up against it? Sometimes when I'm watching,

I'm wondering why companies are spending the money that they do, but I'm curious if you can color in between the lines here. Yeah, I think the easiest and the simple answer is markets. It's a world of markets out there, Chris, you know this. Why is one house on one side of the street worth a million dollars and there's a house on the other side of the street worth $800,000?

The market dictates that. One house is bigger, one house has a more updated kitchen. I think the market determines the price more than the person who owns the home. As an example, Verizon pays the NFL about $150 million a year to be the official telecom partner of the NFL. The NFL is the leader in impressions and all of the marketing things which speak to measurement, which we'll get to telecommunications. Verizon's category is traditionally the one that has the most money to spend. There's a little bit of a chicken and an egg. Why is it that valuable?

Well, everyone wants to be the official technology company because everyone has tech. And then auto is competitive because everyone has cars, soft drinks, then beer. Those are all very valuable categories as opposed to if I came up with a really cool young kid's soccer sock that holds the Shed and Guards just a little bit better. And I wanted to be the official soccer sock of MLS. I'm going to pay less than Anheuser-Busch does just because of, you know, that category isn't as mature. There's not as many players spending in there. So the actual idea is, you know, what does it cost to me? It's just market-based, same thing as the house.

To this point, we've mostly talked about brands specifically spending money on actual PGA tour events, but another massive part of the golf industry and for income for PGA tour players is individual sponsorship. Some brands sponsor events, some brands sponsor players, and some do both. What are those brands looking for out of a player? What are these deals include? What does that cost and how do all of these relationships work? So in my world, I have to be aware of what some people pay and what brands pay.

The key, I think, to being really successful in my business to know exactly what American Express pays for the USGA partnership and what AT&T pays to partner with Pebble Beach. It helps to know that years ago, Barclays paid Phil Mickelson $8 million for that hat position that everybody knows, which was the number that I had always heard. And then really there was no player that got more than that because you removed Tiger and Nike and all of those things. But as far as the actual logo of a hack, you know, Mickelson got $8 million, which meant everyone was after him because the amount of time that that logo got on TV was going to be so much more than everybody else.

So that's just the market at work there. You also have a monster question in there, which is measurement, return on investments. It's way more of an art than a science. There are people out there that are judged every day on how well they can provide return on investment, how well they can measure return on investment. It's kind of a story. It's a narrative more than a number. There's millions of companies or millions of people like me trying to just sort out

how that art can be science and how to prove the worth of these spends. I think some of those are easy to do. Some of them are extremely difficult. I think in golf, we get into the extremely difficult. The purest marketers in the world you always hear about are the folks at Kraft. That company is the Goldman Sachs Trading Desk, the Harvard MBAs that get into marketing. Having Kraft on your resume, it sounds trite, but it is so important and such a big job. But the person who manages Kraft Macaroni and Cheese, who owns that brand within Kraft, they are judged on sales. They will tell you that spending $2 million on a top

quarter page ad of Walmart's once a week, four page physical pamphlet that still gets handed out to pay $2 million on that, there's an ROI and they can figure that out. That is the ability to say Kraft macaroni and cheese is two for one this week in Walmart and that $2 million spend that they pay Walmart and they can go ahead and say, Hey, I increased my sales by doing two for one because the amount of people that get more out of that or the margin, you know, Hey, we normally sell $3 million of Kraft macaroni and cheese within Walmart during the week, we just got up to $6.4 million in sales.

So that $2 million spend actually netted out $3.5 million in increased sales or whatever that's return on investment. You know, you know this. So now you'll say, well, what is that brand on a player's chest? What do they actually do for my business? Let's take Patrick Cantlay. What is the return on investment for his hat deal? He has two prominent sponsors, right? He has Apollo on the front of his hat.

He has DeWalt tools on the right. My favorite. He has Apollo on the front of the hat. That is a much more valuable position just because that is what the research shows as far as logo placement. Now we're talking about logo recognition and the amount of time on network television, cable television. We're talking about how many times a year your logo is seen

by people, an impression of your logo. And what's interesting is how do you measure the return on investment as a brand? I think Apollo measures it much, much differently than Dewalt Tools because Dewalt is a little easier to explain. They sell tools, right? They have a line of tools. They want people who need a hammer or a wrench or something, a guy like me to walk in and see that name DeWalt and say, Hey, that's a quality tool. I know that one. I'm aware of that one. So DeWalt really wants their brand mark and their name out there. And they're going to measure the

side of Patrick's hat. And that's how a company will do this. Take the travelers a few weeks ago. They have an analysis of how long the DeWalt logo was shown on cable TV, network TV, how many seconds it was on, how clearly it was on. It might only be the first three seconds as Patrick is talking to his caddy. And then he turns and it flips and all of a sudden Apollo is getting all the coverage. But what we'll get at the end of the week is a report that'll say, you know, they had three minutes and 33 seconds of cable exposure. They had one minute and 23 seconds of network exposure on their logo. Then they'll go ahead and say, well,

what would it cost to buy a minute and a half of commercial time on that CBS coverage? You know, those things went for 500 grand probably. So we're looking at about a million and a half dollars of logo exposure on that broadcast alone. But, and this is probably obvious, logo placement is not the same as a commercial. It's not actually speaking to the brand's message. And this is where it gets really, you know, as I said, more art than science. But they'll measure that and then they'll look at that with everything else. They'll try to discuss how impactful their television advertising was, how impactful, you know, buy two tools for the price of one in the Home Depot circular was, to use my example from earlier,

and the Patrick Cantlay sponsorship. And they'll basically have an efficiency of each of those. And it's kind of up to their CMO to look at those three ideas, those three strategies that they sold into their senior management and sort out what worked better than the other things. So then they'll be judged on all that, whether that's once a quarter, once a month, once a week, some brands, there's daily dashboards now, they have figured out internal ways to get all of these numbers and how they wanna look at their campaigns,

delivering Forex on what they pay versus what they get. And so Patrick will get judged by DeWalt Tools and they'll see how well it's working. So this is where a golfer can provide value that a 30-second advertising spot cannot, right? You can look at what your most successful 30 second ad is, and you can measure all of that. But the difference is that Patrick Cantlay can go out with a company's

three biggest corporate customers on a golf course and lock up another $5 million worth of business, maybe because Katie Holmes all of a sudden buys all of their tools from DeWalt. Right. They can take Patrick Cantlay, the CEO of Katie Holmes. They can go play onelay, the CEO of Katie Homes, they can go play one round of golf because they get a day or two with Patrick for corporate things built into that logo deal. So all of these considerations are part of a marketing spend mix. And that's some of the value that Cantlay can provide in that way. Now, what's interesting is you go 90 degrees on his hat and you look at the Apollo logo. And that is a totally different story. And that's a

totally different lever for brands to pull. Why is Apollo advertising? It's not like my dad is all of a sudden going to say, oh my gosh, I need to take all of my treasury bills and I want to start buying them through Apollo. That's not how this works. They are very, very unique, a very high-end financial management firm of the highest regard with massive amounts of money. They do not care about an individual teacher investing.

They care about the California teacher's pension investing with them. But to me, when I see Apollo on Patrick Cantlay's hat, I know there's probably four days in which Patrick is going to go play golf with Apollo and they're doing it with whomever. Maybe they're, maybe they're bringing him to play golf with the head of the California teacher's pension union because they want to have that ridiculous amount of money to invest on a monthly and yearly basis. Apollo is going to judge Patrick's hat way differently than DeWalt's. It may be one senior person at Apollo that thinks it's good for their company. And quite frankly, a lot of

it comes down to clout. Every business and brand has someone who really, whether it's their CEO or whether it's someone who's just so keyed in on sales, they're the golden person of a company who makes a lot of those decisions. And they're going to say, this is important. I need this. And they're like, we've got to take care of employee number one. So the person with the clout is the one making that decision most of the time, proving that valuable. There's an art to proving it. Everybody wants to be successful. Everybody wants their ideas to work.

There's a lot of different ways to, to paint that picture. There's a lot of different paint brushes to use to make that picture. And I think using Patrick Cantley's hat, there's just two very different styles that all point to the same ending. Speaking of brands, all protein bars generally taste the same, but not one bars. One made protein bars that are actually delicious with Reese's and Hershey's only one Reese's peanut butter lovers protein bar is made with Reese's peanut butter. Only one Hershey's cookie and cream protein bar is made with Hershey's. Only one Reese's Peanut Butter Lover's Protein Bar is made with Reese's Peanut Butter. Only one Hershey's Cookie and Cream Protein Bar is made with Hershey's Cookie Bits. Each co-branded bar delivers 18 grams of protein and 3 grams of sugar. One also has other delicious

flavors like birthday cake, maple glazed donut, and blueberry cobbler which contain 20 grams of protein and 1 gram of sugar. One bar is the perfect protein bar to get you through your busy day whether you need a quick pickup between meetings or need some fuel to power you through your workout. One bars are the perfect treat. Find all one bars at a retailer near you or on amazon.com. Back to the pod. So what makes a buyer or sponsor of some kind, however you want to classify it, what makes them uneasy? What makes them suspicious? What makes them unhappy? I think to me, character issues are always going to be the one. I think the ultimate example is brands that can get skittish.

You know, what is my brand reputation? How will aligning with this brand reflect my brand? A lot of brands are skittish about sponsoring an individual athlete because an athlete is a human being and a human being can have too many drinks and get behind the wheel of a car when they're not playing. A human being can get on social media and say things that are controversial. If a brand is selling to a hundred people, those 100 people, some vote left, some vote right, some feel very strongly about a particular issue, some feel the opposite or don't care. And they

want to be in the safe vanilla zone at all times. And so the associations with individuals can be an issue and brands get very skittish about that association. And so a brand needs to get into a partnership with UFC knowing that the face of UFC is a guy named Dana White and Dana White's a Republican. He's a friend of Donald Trump. Every once in a while, he's going to make a statement that if you're a brand, you got to be ready for this. Maybe you're okay with that. Man, maybe you're a brand that really dominates sales in very red states. And this is all totally okay. Maybe you're a brand that is just very edgy and controversial and it doesn't matter, but you've got to know that going in.

What's always going to make these brands most skittish is any kind of narrative that can take place with any person, league, team, et cetera. No one liked to see this, but partners of the Baltimore Ravens, especially did not like to see when the Ravens were really struggling with the Ray Rice incident.

It did not reflect well, even though he wasn't wearing a Ravens uniform that day, he was a player on the Ravens were really struggling with the Ray Rice incident. It did not reflect well, even though he wasn't wearing a Ravens uniform that day, he was a player on the Ravens. They didn't have a partnership with Ray Rice, they had a partnership with the Ravens, but they just did not like it. And I think that connection is pretty understandable. Again, part of the reason we're doing this pod,

we spend way too much time on our airwaves complaining about commercials in golf, like television commercials Can you explain the cost structure of television commercials specifically the PGA tour like what they cost kind of how the tour Structures those buys and how we've ended up kind of where we are in terms of what it's like to watch golf on television Yeah, the unbelievable success of the PGA tour and getting multi-year massive television rights deals really from the US is because the US is the most mature television market in the world. So when the DP World Tour and the players are screaming about this tour needs to be more global, you know, they're right in that golf is played all

over the world. They are right about that. Some of the best players come from all over the world, but it is still a US game as far as commercialization and the potential revenue that a media deal is coming from. And I know I'm starting to sound like a dinosaur here. The streamers are global, but there really is a massive US audience. I'm sure you've talked about Rick Anderson on your podcast. He's a very quiet, modest guy, but he's probably the most important person in the last 25 years at the PJ Tour because this commissioner, the last commissioner, they counted on Rick every six or seven years to go to New York, spend six months, hammer out the best possible media deals he could get. He's the guy running a lot of that.

Rick goes to those networks and he sits with ESPN and Fox and NBC and CBS, really just those four. He entertains a few upstarts, but those four are the behemoths. And he basically says to them, we really need our broadcast to be every week. Let's work through it. And different than the NHL guy, different than the NBA guy, he can say, Oh, by the way, I already have 75% of your television inventory sold because of my title sponsorship setup. Networks love golf for two reasons. They love the audience. It's old, it's white,

it's affluent. Some brands are saying it's the wrong place. But believe me, when I tell you it is still a very important audience that the networks know that they're getting with the PGA Tour. But what they're also getting is the idea that they are three quarters of the way done with their sales process because AT&T and Travelers and all of these companies and people have signed a deal with the PGA Tour for a rights fee for a weekly event and they already bought X amount of television spots as part of that deal. It's worth pointing out here that yes, we've expressed a lot of angst

towards a lot of these networks at the commercial load. And we've done our best to pause at times and say like, hey, wait a second here. Like a lot of this blame, part of this blame, some of this blame, who knows how much is on the PGA tour. When you hear this explanation, it's fair to say, it's a lot of it. The way they have structured their sponsorship agreements

force the hands of some of these sponsors into owning these commercial spots, using these commercial spots. And the details here really explain a lot of why golf looks the way it does on television. And truthfully with that, plus all of the official marketing partners of the tour who have to spend a certain amount of money

on the broadcast, Rick can go and say, oh, by the way, between title sponsors every week and my 100 or so official marketing partners, BB Go and ServPros and all of those people, they're going to have to spend, they're going to call you and they'll be in breach of contract with me. If they don't at the end of the year, show me an affidavit that says I bought $3 million on NBC. Oh, and by the way, I'm going to call Molly Solomon at the end of the year and her team at NBC.

And I'm going to confirm that ServPro or whoever spend that money. So the negotiation every seven or eight years is one in which the PJ Tour has a very strong position. Now we've all talked about ratings declining. We'll get to that, but to your question, how are those spots valued? So AT&T is a great example. AT&T telecommunications, one of the more mature marketers in the world. They and Verizon and T-Mobile, they compete like Coke and Pepsi in the world of marketing because their services are pretty similar. AT&T spends on television advertising massively throughout the year. They spend, I don't know

the actual number, probably over a billion dollars. So they are very, very mature as far as they know the market. They have a team at AT&T. They have a complete New York City based agency of really savvy media buyers that are buying television media on something called CPM cost per thousand. How much does it cost for my brand message to be seen by a thousand people? Quick example of that cost per thousand. American Ninja Warrior was on last night on NBC and AT&T had an advertisement for 30 seconds on American Ninja Warrior. It's part of a massive buy with NBC in that 30 seconds last night on American Ninja Warrior for the sake of conversation, let's say cost $100,000. And for that $100,000,

let's say they got 1.4 million people to see their ad because that's the Nielsen rating of American Ninja Warrior is a 1.4. Bad example because they're not at the Super Bowl, but let's just say AT&T was and they go ahead and spend $7 million on a Super Bowl 30-second spot. Why is it more than American Ninja Warrior? Well, because 140 million people are going to see their ads watching the Super Bowl. So they know what television costs. They know what it costs at certain times of day. They know what it costs relative to different properties. They know what it costs on a live sporting event versus a taped entertainment program. They have a model by which they feel they're getting the right value.

Again, this is another example of a market and it's a market that works best based on what people are paying. So when the AT&T sponsorship person says, hey, the big guy, the CEO wants to be involved in golf. He needs one week on Pebble Beach to entertain the biggest partners possible. We're going to do this deal with the PGA Tour. The sponsorship person is like, hey, media person, come to this meeting with me because the PGA Tour is going to present what it costs and they're going to give me deal with the PGA tour. The sponsorship person is like, Hey, media person, come to this meeting with me because the PGA tour is going to present what it costs and

they're going to give me a big number, but we're going to work on that and actually say, okay, what is, what's it actually going to cost to do the AT&T Pebble Beach? And then, oh, by the way, all the 32nd spots that are in this contract, you know, 24 on Thursday, 24 on Friday on the golf channel, and then 12 on Saturday, 12 on Sunday on CBS in February from three to 6 PM, a live sporting event, the PJ Tour is telling me that that's going to cost $20 million all in. So on the sponsorship guy, I can tell you I'm getting, let's say $10 million of value for AT&T. The tickets I can give to employees, the spots I can give to my C-suite in the actual tournament.

So I need my media person to tell me if the other $10 million that the PJ Tour is saying is a take it or leave it, is that television inventory that you're getting? Is that going to be worth it? And that media person, that sponsorship person at AT&T are going to have to shake hands and say, this is a good deal for our company. And that media person may say these words, hey, that's way more than I'm used to paying, but I understand that this is not on an island. This is not just a media buy. It's a media buy that gets us something different. And so that gets Mr. Stanky and let's just say the person who buys every cell phone for the military in Brazil

to play together in a Pro-Am and just randomly naming something here, but that media person will be like, look, it's a little high, but I can stomach this because of what it is. And they sign off on it, whether the TV value is appropriate or not. So then just as a side note, there's a little game every day that goes on. And as the ratings have been getting killed, this happens across the board. The media person at Fox, at CBS,

the Monday morning, they're going to get a call from the media buyer at AT&T and say, hey, man, Saturday was a rain out. You showed last year's coverage and the ratings going to be one quarter of what it was. I need to make good. And the CBS person is going to be like, well, you're right. Thank you. I'll tell you what, NFL draft preview show. How about you take four spots in that? You and I will work together on whether that's an appropriate value. So we're going to go ahead and do a make good there. And that happens a lot too. But that's how the value of television within a PGH Whore deal comes together from the people who buy media usually. But some of these brands may have never bought a TV spot in their life, but it's packaged in there as pre-sold inventory. So there, I mean, there

are a lot of brands out there who make TV ads specifically for the PGA tour just because they have those spots and they have to fulfill that obligation because it's money they're paying anyway. So they might as well use it. I've said this a few times. I'm kind of wondering what your reaction is to this, but the PGA tour to me is, is a commerce center. There's just so much business that surrounds these events and the tour that can, you know, be beneficial to companies beyond what gets thrown in front of television viewers, right? It's not just a media product. Like for example,

take FedEx, they spend a gajillion dollars sponsoring the tour, but they're not measuring success by, you know, how many viewers at home use FedEx over they spend a gajillion dollars sponsoring the tour, but they're not measuring success by, you know, how many viewers at home use FedEx over UPS. Talking to you specifically about this has greatly helped my understanding of why companies line up to keep spending with the PGA tour. Can you expand on that in any way? Yeah, I will.

Let's use FedEx as the example, as far as how they get value from this deal, and then I'll come back and answer your question. Again, this is just one small example, but because we've already talked about a lot of the TV value of this conversation, let's also say FedEx can use their sponsorship of the PGA Tour to make sure that their FedEx store owners feel valued,

to make sure that they see the value in being part of the FedEx team. So there's someone in Memphis for FedEx who's essentially running this thing. And let's say there's a guy in Hartford for FedEx who owns the FedEx store three miles from Cromwell, Connecticut, who gets a call in April from that person in Memphis saying, Hey, Daniel, looking forward to seeing you this year. Hey, you've got eight tickets every day. It's your job to get these to your eight most important people.

And by the way, Daniel says thank you. But he also comes with a big caveat, which is, Hey, Daniel, we're going to track your invites. Who are you bringing to these? What do they represent to your business? And we're going to track who these people are because next year when I call, I'm going to want to see how last year's tickets did, especially if you're inviting the same person. And then Daniel's job is to tell the FedEx people, look, it's going to be me on Saturday

and Sunday. I'm going to have seven people there with me on Saturday and seven people on Sunday. Saturday is going to be my seven best customers. These are the seven companies in Hartford, Connecticut area that legitimately come to me once a week because you didn't know this, but a guy making soap outside of Hartford has a thriving business and he's shipping it all with Daniel. But then on Sunday, I'm going to take my seven best prospects such as, hey man, Pratt Whitney just opened a facility near me.

They've been using UPS forever, but I'm really trying to get with the chief purchasing officer of Pratt Whitney is the potential $5 million a year for me of which you get to take 33% down in Memphis. So that's the way FedEx divvies their tickets up and measures them. And I think that's why the PJ tour works better for FedEx because they're a company that has a store in so many cities and the PJ tour visits cities all over the country. So in contrast, if you sponsor the New York Yankees, even though the New York Yankees play 81 away games, you get tickets to Yankee Stadium. That doesn't really help you if you're a national business. A national brand will sponsor the Yankees because it's New York, but the PJ Tour

moves around. So franchise-based companies, companies with national footprints, with constituents in major different cities, they love the PGA tour for that reason. The second part of your question, I think is a little bit higher level. You're kind of asking, you know, what's the ballroom look like on a Tuesday night at a PGA tour event where people assume that everyone's got a glass of wine and are laughing about the travails of everyday America. Well, you're probably more right than wrong on that one, but I will give you an example, uh, let's takeard. MasterCard sponsors the Arnold Palmer

Invitational presented by MasterCard. They've been doing that forever. When they first did it, they were already in golf, but they wanted to do it to associate their brand with Arnold Palmer. That very quickly proved its worth. I think a lot of people think MasterCard is a credit card company. I pay them and then they pay my restaurant bill. That's not really how it works because MasterCard is actually just the issuer

and they're the payment processor. That's not really how it works because MasterCard is actually just the issuer and they're the payment processor. Your card comes from a bank. So MasterCard's most important customers are different banks and they want Citi to issue MasterCard, not Visa, let's say. They want RBC to issue MasterCard, not Visa. So good story, MasterCard could not get to Capital One as they were an upcoming bank in Richmond.

So they're really starting to issue a lot of cards. And from what I'm told, the vice chairman of MasterCard knew that the CEO of Capital One, his name is Richard Fairbanks. Richard Fairbanks was a golfer. And the vice chairman of MasterCard invited him to Bay Hill to play the Wednesday Pro Am. And MasterCard has a pre-pick at the Pro Am. They had four of them.

They could pick the pros before it went to every sponsor. And with the vice chairman, Richard Fairbanks, Richard Fairbanks son, they played around a golf with Tiger Woods back in 2006, 2007, Tigers at his absolute peak. And that started the relationship between Capital One, then issuing a MasterCard somewhere down the road that has been a massive boon for MasterCard's revenue. Now it might be a bad example because I think Capital One has since switched back, but at the time it was a massive thing and it all came from a partnership with the PJ Tour event. So this idea that business leaders

can get business done with their events and use PJ Tour players as the catalyst to make it happen is something that happens. It happens a lot. That's just one example out of about a thousand. Another story. So as Workday was coming up, their biggest competitors, SAP, they are at the time they're coming up, you know, a really a storage solution for company data. The difference between SAP and Workday is Workday was the first one to be in the cloud and SAP kind of had the old school traditional server farm, you know, the physical location.

And so Anil Bursari, the CEO of Workday, his play to the market was, I'm more efficient and quite frankly, a cheaper answer to SAP because I'm a technology forward company. I'm using the cloud and people doubted that the cloud was safe and Anil was making headways and saying, it's just as safe. It's just different. And his famous story is that his first massive deal, he had it. He had the chief purchasing officer. He had the chief technology officer. They were on this thing. It was about to happen. He was going to have this big company make

the switch. And then he found out that SAP took the CEO of said company here to go play golf with Ernie Ells. And after a round of golf with Ernie Ells, that CEO told his chief technology officer, we're going to re-up with SAP. And so Anil says, I'm doing everything I can to win on the business front and the product front. And I have the right answer and Workday has proven to be the right answer. And he's like, I'm never losing because of a golfer again. And that's why Workday started sponsoring this team of golfers so that Anil could drop a golfer into any business conversation he needed to match the thing that hurt.

So obviously a lot has changed in recent years. It has us, you know, questioning how brands are spending their money in golf, specifically like what they care about. Like does field strength, size of fields, does all that stuff matter? You know, are things shifting on that front? Signature events versus regular events, all that stuff. How does that how does that all play to the equation? Yeah, I think it matters in two places. It matters in the Wednesday Pro-Am. And then the last thing that we're going to do overall revenue. Those 14 people are going to have a sheet of paper and they're

going to say, Hey guys, this is going to be really fun at 6pm on the dots. They're just going to do a random lottery and we are group number 10 and we get, when our number comes up, we get to pick a player. So let's have fun with this. All right. Obviously the best player in the world, Scotty Scheffler, if we can get him, we'll get him, man. This Ludwig Ober guy, he looks like an amazing player. It's just a straight up draft. You pick the best player who's on the board. Chris, I know I don't need to explain this to you. So I think it's probably pretty obvious how this works. I mean, the people who are coming in to play these Pro-Ams are probably, they're probably golf fans, but they're not golf journalists. You know, they still want to play with big names. They've heard

whispers out, Webb Simpson and Billy Horschel. Those are those are two great guys to play with, you know, and they're going to want to have somebody whose name they recognize, somebody who they've watched on TV, somebody who they have the ability to ask specific questions to, right? You don't want to have somebody that you just found out their name on the first tee. And so this is no offense to Ben Griffin, but I don't know the difference between Ben Griffin and Davis Thompson. Davis Thompson, I know you're a great player. You just won on the PGA tour, but that is going to take a long time for people to get to know your name and to be familiar with you. I mean, straight up, Matt Kuchar is

going to win in this draft order 10 times out of 10 over a lot of these guys that, you know, people don't recognize their names. That's just how it works. Even if Davis Thompson might be one of the best up and coming players on the PGA Tour, and he might go on to win 10 times on the PGA Tour, but right now it's a really hard sell. So at least when we're talking about the Pro-Am, let's talk about everything we've just been talking about

for the last 30 minutes and doing business at the golf course and using these recognizable players to win business and be the difference maker in a lot of these business conversations. Now, frankly, you're losing one of the biggest bullets in that gun when you're suddenly pairing all of these important people with, let's face it, some more anonymous tour players, even though they might be incredible ball strikers. It's just not the same wow factor that the PGA Tour was selling 10, 15 years ago. I know this might sound silly and it's probably not something

that the people at home are thinking about with regards to the PJ tour. But when you ask me why do companies spend this money on the PJ tour, at least a not insignificant part is that they spend that money because of that Tuesday night and because of who those players are and to kind of create a feeling at that draft and have the excitement to be paired with players that they know and recognize and want to meet. So that's the Pro-Am. But back to your question, of course, better players are also going to produce better ratings

on TV, which shows you that, you know, that television advertising unit example that I use, the media person is going to want to be able to say, Hey, Joe, I told you we were overpaying a little bit, but man, Jordan Spieth and Justin Thomas went into a playoff and it was great. And man, you went from a 3.0 to a 5.6. And I got to be honest with you, we underpaid for those units. That's like, everyone is high-fiving on a Monday at a brand like Travelers for that. But the dilution of these fields and these weeks where the PJ tour is trying to tell

us that this is going to be exciting and young and young and up and coming. I think that's the PJ Tour trying to do the PJ Tours brand messaging, but I think that's totally and completely absent of what corporate America and the PJ Tours own salespeople are trying to sell and why people are involved. I think that's a huge, huge chasm right now in the conversation. It's kind of like climbing Mount Everest and getting over the crevasse. I don't know who is gonna get stuck in that, but someone will, and that is a dangerous place

to be in my opinion. So not only does the PGA Tour face challenges on the shifting valuation of its own product, but also its air quotes here, competitors who also happen to be their partners, they've strengthened their product as a result of the changing tides in the golf landscape. And one industry person told me that, quote, majors are worth 10X what they were three years ago, end quote. And I don't think that was meant to be taken literally, but, you know, as the cost of

sponsoring majors did not go up by a factor of 10, but comparatively, many brands are considering it more worthwhile to spend their money with the events that have all of the best players competing in them. They have a guaranteed audience because of their standing of the game and the tradition that comes with major championships, and these sponsors know they can get their customers to come to these events, and there's an air of exclusivity that comes with these events that just doesn't

exist at a signature event on the PGA Tour. One agent told me when it comes to the Masters, Soli, you have no idea, no ideal. The Masters is in a totally different league compared to any other golf event. You almost don't group it amongst golf events. You group the Masters amongst the Super Bowl,

the World Cup, pick like seven or eight of the most exclusive events in the world. That's where the Masters falls. Like all the CEOs are there, the private aircraft that come in. They have two other airports at Augusta where they store the private aircraft because there's not enough room to store them all on the fields in the Augusta Airport. They land and they go and fly 15 minutes away and store the aircraft at other airports. That's how many private aircraft are coming in. That happens at no other events other than those big events we just mentioned. He told me one of the signature sponsors of the Masters probably spends somewhere between

50 and 60 million dollars annually on the Masters. He's also heard someone at a brand that does sponsor the Masters say if they had to eliminate all of their sponsorships, every single one of them, they could only keep one they would likely keep the Masters. And a lot of this goes again to the exclusivity factor that the Masters has built into it. It's again not that hard to get a ticket to the Travelers Championship but Masters tickets are tough and getting a Berkman's experience is not something that's just handed out to people on the street. It's handed out to a lot of the corporate partners of that event.

That's why these companies will rent upwards of 80 houses around Augusta. Yes, that's an exact number, almost exact number that I've heard for one of the brands that sponsors the Masters. Yes, they have rented 80 houses in the city of Augusta during Masters week to be able to host whoever they want to bring in, partners of their business, whatnot. But that's the scale we're talking about around the Masters specifically and some of these bigger events. And compared to a PGA Tour event, like titling a PGA Tour event can cost anywhere from $12 million to $25 million on the PGA Tour. But if you're a partner of, say, the USGA, that can be a $5 to $7

million partnership. If you're a partner of the Ryder Cup, when you sponsor the Ryder Cup, you got to spend $5 million in IP and rights and $5 million in media. So that's a $10 million spend over a two-year period. Again, if you're sponsoring the Ryder Cup, do it over a home and away, that's $20 million. And you're getting hospitality at a much more desirable sporting event than a PGA Tour event. It's a unique event, whereas the PGA Tour is happening every single week. The Ryder Cup as a standalone is just a much more valuable property. And they're still getting the access to this same exact audience that we talked about earlier. But also from what we've talked about earlier, tying this all back in, it all goes back to what is a brand trying to accomplish? The consistent

nature of the PGA Tour, yes, it dilutes a lot of things along the way, but for brands that want a consistent message year round and a lot of different cities and yada yada yada the PGA tour might make more sense. You can see that easily. As we move towards wrapping up here I'm not left with a warm and fuzzy feeling as to where the golf world is trending and I'm not left thinking that things are about to get better for golf fans. There are a few things I want to highlight here as things that I would consider to be

the most important lessons learned in going through this exercise which is longterm listeners this show will have heard me say this many times. But you didn't hear a whole lot about fans in any of the conversation today. That's kind of how I've viewed the PGA Tour for quite some time. If sponsors are happy, the money keeps pouring in. If money's pouring in, players are happy. If ratings dip, oh well, we'll just add some more commercials. And the PGA Tour is fortunate enough to enjoy a relatively high built-in ratings floor, thanks to the older audience that flips on the golf out of habit and knows it's gonna be on NBC,

knows it's gonna be on CBS, all the things that we've discussed earlier on. And we've mentioned this a lot in passing over the last few years, but probably haven't emphasized enough just how little wiggle room or incentive there is for the PGA Tour to change in the way that we'd like to see it change.

And I'm gonna replay a part from our conversation with Denny Cash here that really defines the entire situation for me as to why golf looks the way it does. And different than the NHL guy, different than the NBA guy, he can say, oh, by the way, I already have 75% of your television inventory sold

because of my title sponsorship setup. Networks love golf for two reasons. They love the audience. It's old, it's white, it's affluent. Some brands are saying it's the wrong place, but believe me, when I tell you it is still a very important audience that the networks know that they're getting with the PGA Tour. But what they're also getting is the idea that they are three quarters of the way done with their sales process because AT&T and Travelers and all of these companies and people have signed a deal with the PGA Tour for a rights fee for a weekly event. And they already bought X amount of television

spots as part of that deal. And truthfully with that, plus all of the official marketing partners of the tour who have to spend a certain amount of money on the broadcast, Rick can go and say, oh, by the way, between title sponsors every week and my 100 or so official marketing partners, BB Go and Serve Pros and all of those people, they're going to have to spend, they're going to call you and they'll be in breach of contract with me. If they don't, at the end of the year, show me an affidavit that says, I bought $3 million on NBC. This is the whole thing for me. The media rights deals are the behemoth for the PGA tour. They extend out almost a decade

and they get that sale with the hook of helping these networks fill the massive ad inventory. And the tour just frankly doesn't care enough about the fan at home to unravel all that because they're mostly concerned about meeting the needs of the title sponsors, the official marketing partners, the network partners, and the players. Those are the main constituents and what these title sponsors and OMPs get out of PGA Tour sponsorship, of course varies from company to company. But as we've broken down TV ratings are just a portion of the pie.

And in a lot of scenarios, hospitality for a few key clients ends up ruling the day for that sponsor. So a lot of factors that have driven people away from watching pro golf on television, but I truly think that the number of commercials is one of them. But you can see here,

TV just ends up being a portion of the pie for a lot of these sponsors. And in a lot of scenarios, hospitality is what the sponsor wants to prioritize. But we have seen some cracks in the foundation on this front as well. Many people we spoke to in this process and over the last several years have noted how poorly the PGA Tour has handled the last few years and phone calls where the tour was asking for more money didn't necessarily come with an extra consideration or even the professionalism

you might expect when you're asking for more millions of dollars. Despite losing a fair amount of their most interesting characters, the tour was essentially quoting Marlowe Stanfield from The Wire saying, the price of the brick going up. PGA Tour has also taken on a massive investment from the strategic sports group and we're all waiting for the next shoe to drop with the anticipated investment from the Saudi Arabian Public Investment Fund. We could of course be living in an entirely different professional golf world in the near future,

but the PGA Taurus structure seems pretty difficult to unwind. Again, this is pretty much a cursory overview of the entire situation. In an effort to not let this episode bury me for months and months, we're gonna forgo talking about a whole bunch of stuff, such as the PGA Taurus 501C6 structure, how the for-profit

model might change some things, how player ownership in their tour may affect things, what the future of PGA Tour enterprises is, what some sort of merger or an agreement with PIF and LIV might actually do to things, and a whole host of other factors that are some sort of combination of I don't have time to get into those things and frankly I'm not sure I understand all of them enough to be an educator on the subjects. Where do things go from here? The PGA Tour I think anyone would say has not handled the Saudi threat well but that's not the only threat they face.

The golfing public at large is not thrilled with how the men's professional game is trending. An informal and very unscientific poll that I ran on Twitter today showed that about 75% of fans consider themselves to be dissatisfied with the men's professional game as a whole. Many blame Liv, blame the PGA Tour, whoever's fault it is, isn't the important part. What is important is there are different ways to take in golf in 2024 that do not include professional golf.

YouTube has turned out to be an incredibly popular place where golf fans can go to scratch their golf itch. It's got limited to no commercials, beautiful golf courses are featured, mic'd up players and personalities, they're well edited, it's free, it's on demand. Those are just a few of the offerings you'll find at your disposal on YouTube that you will not find in PGA TORGolf on television. Since golf has been on television since the 1950s, there just has not been a competitor like YouTube who says that if you are watching golf it has to be the best golfers in the world it has to be professional golfers people are clearly

taking a different route asking people to find the golf sit through 18 minutes of commercials per hour perhaps not even knowing some of the guys you're watching just isn't the most appealing thing to an increasingly busy target audience the options on YouTube are numerous for many types of golf fans UK golf fans in particular are long familiar with personalities like Rick Shields, Peter Finch, me and my younger golf fans, especially in the US, have been a huge driver behind the success of channels like Good Good and Grant Horvat.

Us here at No Lying Up, we once considered ourselves to be young, but a lot of millennial golf fans may enjoy our content, the fried egg, barstool, fat Perez, you name it, there are so many options. And where golf fans will flock, so will the brands. And we start the whole cycle over again from where we began the show. A brand like Robac, they know that their products are going to be well represented in our videos and seen by hundreds of thousands of people. We wear their products on the course, on our podcast

videos, around the house, around town. Their offerings are extensive from polos to hoodies to vests, shorts, pants, joggers, workout shorts, bathing suits, like the things that golfers will enjoy or the people in my age bracket will enjoy. There's a massive overlap with what Roeback creates. People that enjoy our content will be more likely to shop with the brands that are represented in our videos. We pulled over 4,200 of our followers and asked if they've ever bought something because of a no laying up podcast ad or video sponsor and 68.9% of them answered yes. So look for a brand that's maybe looking to go more direct to consumer, working with a YouTube or podcast brand might be more efficient than marketing on television. To an audience that on average is over 60 years old. And yes, this is also an ad.

You can go to roback.com for a generous 20% off your first order through the end of this week. That's R-H-O-B-A-C-K.com for 20% off polos, hoodies, q-zips and more. Again, there's a lot of rabbit holes we could go down from here, but we're gonna wrap this up before we spiral out of control. Special thanks to everyone who volunteered their time for the content within this episode and thank you to everyone for tuning in. I'll be very curious to hear your feedback on this episode if you'd like to hear more stuff like this in the future. As always, cheers and crack on. That is better than most. Better than most!