Backing A Tour Pro
Who hasn't dreamed of being a professional golfer -- raking in hundreds of thousands of dollars on manicured courses in warm, sunny weather, playing a game we love? But when we know that dream will never become a reality, sponsoring a prospective tour player might be the next-best thing. There are hundreds, perhaps thousands, of young players -- the kid of a club member, a top-ranked amateur, or an assistant in the golf shop -- who have the potential for success on a professional tour. There are even more friends and acquaintances who are eager to help them along. Casual conversations in the grillroom can turn into serious discussions about financial backing, and club members have been known to construct sponsorship packages right then and there.
Some say these deals seldom work, that one side is usually unhappy. The player might do better just to borrow money from a bank. But is a bank going to provide a loan for an unproven young man or woman to play professional golf? Probably not, and that's why investors, or financial backers, have a place.
Some agreements are lucrative for the player. Others can be a stranglehold. Rarely are they windfalls for the backers. There are good stories and bad aplenty, anywhere there is a prospect for the PGA Tour or Nationwide Tour or Hooters Tour or LPGA Tour or even the Champions Tour. If you are thinking about sponsoring a player at your club, be careful. Even if you're backing the "Can't Miss Kid," you likely won't get rich, and a profit should not be your motive.
Sponsorship arrangements vary greatly, from one of the first players-for-hire, Dan Sikes, who had 50 people backing him in the 1960s, to the original sure bet, Arnold Palmer, with only one sponsor, who wanted nothing monetarily in return.
How a deal is structured
Last year, Joe Ogilvie had his first million-dollar season on the PGA Tour. When Joe was not long out of Duke University, his father, Norm, an attorney in Lancaster, Ohio, offered to give Joe the money to play golf or take him down to the bank and co-sign a loan. Joe instead decided to go with financial backers on a developmental tour.
"In 1998, we sold $2,000 shares, 23 of them, to raise $46,000," Joe says. "They were all friends of the family. My dad put the contract together and did the financials on it. The day we signed the papers we were fully funded, and I won the next week."
As part of the contract, Ogilvie promised to compete in as many Nike Tour (predecessor to the Nationwide Tour) events as he was physically and mentally able. He won the Monterrey Open in March and the Greensboro Open in June, and earned $157,812, which assured him a place on the PGA Tour the next year. Of the first $46,000 that Ogilvie won, the backers got 90 percent and he got 10 percent. For the next $46,000, there was a 50/50 split. From $92,000 to $130,000, Ogilvie got 75 percent. He kept all the money over $130,000.
Of the $157,812 in prize money won, Ogilvie received $83,912 and the backers got $73,900 for their 23 shares that cost $2,000 each, a return of $3,213 per share. "They beat the market, that's for sure," Ogilvie says. Before describing Joe's deal, Norm Ogilvie was clear on this caveat: "Any contract must comply with the security laws of the state in which it happens and the rules and regulations of the Securities and Exchange Commission."
Other young players, including Zach Johnson, Chad Campbell, Michael Clark, and Todd Hamilton, also have had financial support on their way up. "It started out as a business that developed into a friendship," says Johnson, who won a record $495,000 on the Nationwide Tour in 2003 and earned his way onto the PGA Tour. His gallery at the 2004 BellSouth Classic, there to witness a victory in his rookie year, included 10 backers from Iowa who had supported him from early on, some seeing him play professional golf for the first time.
Most sponsorship deals call for advance payments for expenses on an agreed timetable, and income splits are often 50/50. If a player falls short of repaying his advance, the unpaid balance will usually carry over to the next year, but if the player fails and quits playing tournament golf, there usually is no obligation for repayment.
"Contracts could be structured in any one of a thousand ways," says Tom Bertsch, a financial manager for IMG, which represents many tour players. "It all depends. You might have some good-natured guys who couldn't care less whether they lose $25,000. Other guys are looking for a return and, if you're a player, those are the type of guys and contracts that you really need to look at closely."
Tell that to Roger Maltbie. In his rookie year, 1975, Maltbie, now an NBC golf commentator, received $18,000 from hometown investors in San Jose for expenses, the first of a three-year sponsorship. "The relationship was terrific when things were very small," he says. Then Maltbie won twice and was chosen PGA Tour Rookie of the Year. He began to receive off-course opportunities. He started examining the contract more closely. His investors were to take half of everything. Maltbie didn't think that was right and also wanted a larger expense advance.
Maltbie won the first Memorial Tournament in May 1976. A while after that, over a game of gin rummy, he was discussing revising the deal with the managing partner of his sponsors. The conversation became intense. "The guy looked at me as squarely as he could," Maltbie recalls, "and he said, 'You're nothing but a racehorse. We've got a deal, and I expect you to live by it.' "
That struck a nerve, and Maltbie didn't hesitate to respond: "You know, I appreciate the opportunity you've given me, but what if that racehorse sits down? How much are you going to make then?" After July, Maltbie played in only two tournaments the rest of the year and was released from his contract. "In hindsight it was probably the biggest mistake I ever made," he says. "The bottom line was, I lost my edge." He was a top-25 money-winner only once again in his career.
Sponsorship for the older set
The concept of financial backers for professional golfers is as old as the post-World War II circuit, which was organized by the PGA of America. Today the PGA Tour runs the show. Dan Sikes might not have been the first to have financial backers, but he was the best-known in the early years. Says Doc Giffin, who was the tour's press secretary at the time before becoming assistant to Arnold Palmer: "The genesis of it was in the '50s, the early '60s, when we started getting players who were not club pros playing for a living. It was when we started getting the guys out of college."
Sikes had graduated from law school at the University of Florida when he arrived on the tour in the '60s. Fifty business and professional men in Jacksonville formed a profit-sharing corporation to back him, calling it "Dan's Friends Inc."
In contrast, Palmer did not have formal backing. He started out in 1955 with a cash gift of less than $5,000 from Harry Saxman, whose family owned Latrobe Steel and Latrobe Country Club, where Palmer's father, Deacon, was employed as greenkeeper and club professional. Saxman's only payback was outings with Palmer, including what would be considered the trip of a lifetime, to the 1960 British Open at St. Andrews with Arnie, his wife, Winnie, and Deacon.
Then there is the curious case of Jerry McGee, who played in 13 events on the Champions Tour last year. He met his financial backer in 1966 while he was an assistant pro in Danville, Pa. He won four tournaments in the 1970s. After the deal was over, the investor took McGee to court, asking for more than $100,000, the equivalent of prize money that would have put McGee in the yearly top 20 back then. When McGee won on all 12 counts, which cost him $20,000 to defend, the man said to McGee while still in court, "I hope there are no hard feelings."
Now 61 and a cancer survivor, McGee says he still receives an occasional telephone call from the backer. "Just like nothing ever happened," he says. "And to this day I still thank him for giving me the opportunity. I don't know if I would have played the tour without him."
Today on the Champions Tour there is a new kid in town: the "Beer Man," as Mark Johnson is known, because he drove a Budweiser truck for 18 years before turning to professional golf. He began to prepare for the senior tour six years ago. Now 51, Johnson led the Champions Tour qualifying school last autumn and already has a victory this year.
Johnson had an initial five-year sponsorship during which he played the Buy.com Tour, the Canadian Tour, and various minor-league tours. He has now signed on for another five years. His sponsors are his former employer, H. Olson Distributing in Barstow, Calif., which has kept him on the payroll and provides insurance, and six individuals. These sponsors are paid percentages after Johnson reaches certain thresholds. Like Ogilvie's deal, as Johnson makes more money, his backers' percentages decrease.
How much do tour pros need?
Players once required investors well into their PGA Tour careers. That is no longer true. Minor circuits such as the Hooters Tour are where players start out with financial backers. Many if not most players will also need backing for the next steppingstone: the Nationwide Tour. For women, there is the Futures Tour before going on to the LPGA Tour. While you can figure it costs a minimum of $150,000 a year to play the PGA Tour, $100,000 for the Champions Tour, $75,000 for the LPGA Tour (where players often stay in private homes), and $55,000 for the Nationwide Tour, on the Hooters Tour, it's considerably less. A season consists of about 22 events primarily in the Southeast, with entry fees of $850 per week. Figure the total expense -- travel, meals, motels, caddies -- for a 22-week season at $35,000. This is staying at Motel 6, not the Ritz, by the way, and eating at, well, Hooters.
That's where an investor comes in, and if a player is really lucky, it is someone like Frank Fuhrer. A prominent name in business and sports in Pittsburgh, Fuhrer is an experienced financial backer. "I've probably helped a dozen golfers over the years," Fuhrer said. "I do it for one reason, and one reason only: I just try to help them. I'm sure there are some people who do it from more of a business standpoint. These golfers came to me, and to be honest, I didn't want to turn them down. I gave them varying amounts of money, probably as little as $5,000 to as much as $50,000."
Fuhrer is not sure he has their gratitude. "Most of the time when they owe you money, they're not real friendly with you anymore," he says. But Fuhrer continues to lend. "I'm doing less of it though. They don't even recognize you after they get your money, a year or two later. You can't get an accounting from some of them. But I don't like to blame a future kid for one that did something in the past."
Now that's the kind of backer any young player would love to have.
By Bev Norwood