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The Business of Sports

U.S. Golfers Taking Another Minor Role in the Majors?

The last couple of weeks, the U.S. suffered the kind of tabloid treatment familiar to many a beleaguered international celebrity, from Charlie Sheen and Lindsay Lohan to Dominique Strauss-Kahn and Wayne Rooney. The country’s credit rating was downgraded; its stock market plunged. And as the U.S. fell from grace, the global community took a guarded new look at the longtime world economic power, eyeing it as warily as the parents of a stammering teenager left at home for a holiday weekend.

Tiger Woods can relate.

Woods, his aura diminished just as badly as that of the U.S. of A., officially returned to major championship golf competition on Thursday, Aug. 11, when he teed off at 8:35 a.m. in the opening round of the 93rd PGA Championship at the Atlanta Athletic Club in Johns Creek, Ga. Woods, a four-time PGA champion, plays the first two rounds of the final major of the year with 1997 PGA champion and 2012 U.S. Ryder Cup captain Davis Love III and 2008 PGA champion Padraig Harrington of Ireland. Love scored a respectable -2 on his first day, while Harrington posted a +3. Those scores, however, look more than respectable when compared with Woods’: a +7 that puts him 14 strokes behind first-round leader Steve Stricker and virtually guarantees he won’t make the cut for the weekend, further eroding the confidence of his sponsors and fans.

The pairings for the first two rounds, announced last week by the PGA of America, also feature the traditional grouping of the winners of the first three major golf championships of the year, defending PGA champion Martin Kaymer of Germany in a group that includes the last two PGA champions, and the pairing of the top two finishers in the 2001 PGA Championship that was contested at the Atlanta Athletic Club. For those attempting to follow along at home, the last seven major championships have been captured by a first-time winner; a foreign-born player has won the PGA Championship the last three years in a row (Harrington in 2008, Y.E. Yang of South Korea in 2009, and Kaymer last year); and Phil Mickelson is the last American to win a major golf championship (the 2010 Masters).

The last time that no American won a major championship in a calendar year was 1994.

The 2011 PGA Championship features the strongest field in golf and is considered one of the largest sporting events in the world, with 100 of the top 102 ranked players in the world in the field. Equally as strong, the Atlanta Athletic Club, perhaps most famous as the place where the legendary Bobby Jones learned how to play golf, this week becomes only the fifth club to host the PGA for a third time. The club hosted the tournament in 2001 and 1981, and also hosted the U.S. Open in 1976.

“The course is in magnificent condition, and it’s quite long and demanding off the tee,” says Adam Scott, winner of last week’s WGC-Bridgestone Invitational in Ohio. “I think driving the golf ball this week is certainly going to be the only way to create opportunity for birdies. You must be in the fairway. … It’s a very demanding golf course.”

A purse of $7.5 million was shared among players who competed in the 92nd PGA Championship last year at Whistling Straits in Wisconsin, and this year’s take is expected to exceed that amount. Kaymer, last year’s winner, received $1,350,000 and had his name engraved on the Wanamaker Trophy, which is permanently enshrined at the PGA of America national office in Palm Beach Gardens, Fla.

The tournament is lucrative for the golf-crazy state of Georgia, and for the 20 PGA club pros qualified to compete in the event as well. In March 2009, the most recent period for which such numbers are available, the size of Georgia’s direct golf economy was about $2.4 billion, according to state economic development studies. Georgia’s golf industry in 2009 generated a total economic impact of $5.1 billion, supporting nearly 57,000 jobs with $1.5 billion of wage income and an additional $1 billion in tourism.

In March, Georgia’s House of Representatives and Senate each presented resolutions proclaiming 2011 as the “Year of Golf in Georgia,” citing golf’s numerous contributions to the state and its direct bearing on jobs, commerce, economic development, and tax revenues for a large number of Georgia’s communities and industries.

While hosting the Masters each year certainly can’t hurt, “job creation is at the top of the list of all governors,” said Joe Steranka, PGA of America chief executive officer, at a Georgia state representative event on Tuesday. “The challenge is to leverage golf’s assets. What we do know is that golf is in the DNA of this state. When you have someone like a Bobby Jones, you are off to a great start.” The PGA also estimates that 3,300 volunteers are on site at Atlanta Athletic Club and its environs this week, representing 47 states and five countries.

Twenty PGA club professionals from around the U.S. are competing this week, based on their finish at the PGA Professional National Championship in late June. Just making the cut will mean a considerable payday for this group, since on average a head club pro earns $64,000 annually and an assistant club pro $38,000, according to Sports Illustrated‘s July 4 report on jobs in golf.

Together, CBS (CBS) and Time Warner’s (TWX) TNT will combine to broadcast 28 hours of live coverage. CBS, which earned a 2.9 overnight Nielsen rating for the final round of Scott’s four-shot win at the WGC-Bridgestone Invitational, up 26 percent from last year, will broadcast 10 hours on Saturday and Sunday. TNT is broadcasting 12 hours on Thursday and Friday and six on Saturday and Sunday. All told, the PGA Championship will be broadcast to 203 countries and territories, reaching about 453 million households.

Tiger at the Tail End of the 2011 Majors

Woods is the last American to win the PGA Championship—he did so in 2007. Around that time, about the peak of his popularity, Woods was earning an estimated $100 million annually from endorsements and marketing deals alone and was rumored to turn down 100 offers per day from prospective sponsors. These days he’s happy to have any new names on his website and bag, such as that of Japanese concern Kowa, which signed him in June to promote their heat rub used to relieve muscle and joint pain.

Last week it was announced that Woods and watchmaker Tag Heuer have ended their sponsorship deal, and it was confirmed by Woods’ agent Mark Steinberg of Excel Sports Management. While Woods still has Kowa and major sponsors including Nike (NKE), EA Sports (ERTS), NetJets, TLC, and Upper Deck in his portfolio, Tag is the latest blue chip defection from the Woods camp, following on the heels of Accenture (ACN), AT&T (T), and Gatorade. The Tag Heuer contract was reportedly worth more than $10 million, bringing Woods’ estimated total tab of lost sponsorships to $25 million.

Of course, the Tag decampment and his dismal +7 on Thursday aren’t Tiger’s only trip into Headlineville this week. Following Scott’s win in Ohio on Sunday, CBS’s David Feherty conducted an interview with Woods’ former caddie Steve Williams, who now carries Scott’s bag. Williams, who caddied for Tiger for 13 years, called Scott’s victory the “best win I’ve ever had.” (Woods, Williams, and Scott seem to have made amends this week, possibly the only light balm to Woods’ very sore wounds.)

Golf Cars

While Woods’ automotive sponsor of choice thus far has been General Motors’ (GM) Buick division—until they parted ways two years ago, that is—foreign automotive manufacturers, including BMW (BMWA:GR), Honda (HMC), and Toyota/Lexus (TM), have long played a greater role in backing the world’s golfers and tournaments. Since 2008, Mercedes-Benz has made a major push into the sport, sponsoring three of golf’s four majors—the Masters, the British Open, and the PGA Championship. The Daimler (DAI) division has also not been shy about adding the U.S. Open to its portfolio once Lexus’ sponsorship deal expires in 2015.

Luxury car makers are an obvious match for golf’s high net worth fan base. All told, consultancy group Sport & Markt estimates the value of global golf sponsorship by car manufacturers at $87 million. Golf’s new generation of younger players, including Rory McIlroy, Rickie Fowler, and 19-year-old Japanese sensation Ryo Ishikawa, will only heighten the automotive companies’ interest in getting the next generation of golf fans behind their respective wheels.

At the PGA Championship, Mercedes-Benz again presents the PGA Performance Center, a 6,000-square-foot space with interactive competitions for patrons. Its hole-in-one contest is popular: A long line snaked around the practice green Thursday morning as patrons waited their turn to try and win a new 2012 model sedan.

Mercedes also supplies the courtesy cars for this year’s event—golfers of all ages and nationalities, start your engines.

Rick Horrow is a leading expert in the business of sports. As chief executive officer of Horrow Sports Ventures, he has been the architect of 103 deals worth more than $13 billion in sports and urban infrastructure projects. He is also the sports business analyst for CNN, Fox Sports, and the Fox Business Channel. Karla Swatek is vice-president of Horrow Sports Ventures and co-author of Beyond the Box Score: An Insider's Guide to the $750 Billion Business of Sports (2010). Horrow is also the host of Sportfolio, a new program on Bloomberg TV that airs Wednesday nights at 9 pm ET.

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