American invasion on the European Tour

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As difficult as it may be to believe when observing today’s golfing landscape, just a few years ago it seemed as if the European Tour was about to challenge the pre-eminence of PGA Tour commissioner Tim Finchem and his all-powerful Tour. Some would argue that it is now in danger of being subsumed by them.

Towards the end of 2007, the European Tour and its chief executive, George O’Grady, believed they had struck gold in the shape of Leisurecorp, a Dubai-based sponsor with pockets so deep that anything seemed possible. In announcing what was to become the lucrative Race to Dubai, O’Grady could barely conceal his delight. His Tour had played second fiddle to Finchem’s for far too long (in spite of Ryder Cup success) but was now about to embark on an expansion programme seemingly with no bounds. The mantra? ‘Tomorrow the World’. These were heady days, but they were to be short-lived.

Beginning in 2009, the Race to Dubai was to climax with a $10million limited-field tournament, the Dubai World Championship, plus a $10m bonus pool to be shared among the season’s leading 15 players on the European Tour. There was talk that some of America’s top players would be tempted to join the Tour – and there is little doubt that the Dubai money (even more had been promised) had let loose the imagination.

“It will have all the potential for us to be as big as we want to be,” said O’Grady when announcing to great fanfare the European Tour’s new partnership with Leisurecorp, a government-owned real estate company with huge global ambitions. “I admire the PGA Tour and I admire what they’ve done. But we have such good opportunities around the world and, now that we’ve brought a great partner on board, I think we’re on our way.” In other words, a World Tour in all but name.

Fast-forward six recession-hit years and how different things look today. O’Grady had poked a tiger (Finchem, not Woods) with a stick and found that this particular big cat had very real claws. Today, the European Tour is trying to maintain a decent foothold in the professional game, while the PGA Tour is positioning itself as the sport’s most dominant force. After calming the nerves of his corporate clients in the US by steering a safe course through the carnage of the banking crisis in 2008, Finchem has since gone on to establish tours in South America, Canada and, much to the chagrin of his European rivals, China.

American Invasion

There is no denying that Finchem has earned every cent of his reported $5.5million salary as commissioner of the PGA Tour. The economic downturn could easily have threatened the wellbeing of a tour that relied heavily on sponsors drawn from the financial services sector and the car industry – and yet rather than allowing itself to contract, the PGA Tour expanded its horizons. “We had no idea that it would be as bad as it was,” Finchem said of the recession, “but we knew we wanted to be stronger coming out of it than we were going in.”

It did not help that Woods, his greatest asset, fell from grace at the end of 2009 and took extended leave from the tour in 2010, first because of the scandal surrounding his personal life, then through injury. Yet all the while, Finchem was working his magic. Not only did he negotiate an enhanced nine-year extension of the tour’s broadcasting deals with CBS and NBC, said to be worth around $500 million a year, but he succeeded in getting FedEx to bankroll the hugely lucrative end-of-season play-offs for another five years.

With the home front secured, Finchem was ready to extend his reach. First came the formation in 2011 of the PGA Tour Latinoamerica, effectively a buyout of the Tour de las Americas; second, a year later, was the purchase of the Canadian Tour, now the PGA Tour Canada; third was the establishment of the PGA Tour China, which had a 12-tournament schedule in its 2014 inaugural year. All three feed into the Web.com Tour, which offers a direct route to the main tour.

EUROPEAN DOWNTURN

So, what of the European Tour, which has put so much effort into helping develop golf in China through long-established tournaments such as the Volvo China Open, the BMW Masters and the HSBC Champions? After briefly parking its tanks on Finchem’s front lawn, it was the European Tour, however, which suffered most in the recession.

Before the first Race to Dubai had even been run in 2009, the prize money for the final event, as well as the bonus pool for the top 15 players, was reduced by 25 per cent. Not too worrying for millionaire golfers, one might argue, but disastrous in PR terms. In 2012, the bonus was cut even further, to 50 per cent of the original figure. Around this time, according to Forbes magazine, the PGA Tour was generating record income of around $1.1 billion a year. One tour was simply humbling the other.

O’Grady got stung on two fronts. First, Dubai’s economy nearly collapsed because of its reliance on a booming real estate sector; second, the Eurozone crisis led to sponsors dropping out in mainland Europe. In Spain alone the number of events fell in one year from seven to just one. To his credit, the European Tour’s chief executive has managed to keep his Dubai paymasters onside (initially, they were bailed out by Abu Dhabi, their closest neighbours) and things are looking rosier, if nowhere near as rosy as they once did.

It is at times such as these that you wonder about the long-term goal of the PGA Tour. It is hard not to conclude that total dominance is the name of the game as far as Finchem is concerned, to keep control and to squash opposition. What next, PGA Tour Asia? PGA Tour Japan? PGA Tour Europe? Or even, finally, the PGA World Tour?

American Invasion

For a brief period – at a time when Finchem had shortened his tour’s season at the considerable behest of Woods and Phil Mickelson, who then set off with their wheelbarrows for European Tour events in China and Singapore – things were looking up for the Europeans. To have the world’s best two players in the field raised the profile of the tournaments and, much to the annoyance of stay-at-home Americans, increased the world ranking points on offer to European Tour players, whose seasons still had more than two months to run.

Finchem has since helped to close this particular loophole by bringing the HSBC Champions tournament – arguably one of the jewels in the European Tour’s crown – under the World Golf Championships banner and running it on behalf of the federation of PGA tours. At the same time, like a dog in a manger, he has set up the CIMB Classic in Malaysia, which is played in the same week as the BMW Masters in Shanghai, and, of course, he now has a developmental tour running in China.

So, where does this leave the European Tour? In the summer of 2013, there were suggestions in some sections of the press that the PGA Tour was planning to launch an audacious takeover bid that would allow them to tap into potentially lucrative markets in Asia and the Far East. There is rarely smoke without fire, but O’Grady and his right-hand man were quick to dismiss the rumours.

“The notion that the PGA Tour is somehow bidding to buy the European Tour is incorrect,” said Keith Waters, the European Tour’s chief operating officer, in a statement.

“The European Tour has collaborated with the PGA Tour and all other members of the International Federation of PGA Tours on many ventures since we worked on the formation of the World Golf Championships in 1999,” added O’Grady. “This collaboration will continue. When many of our leading members are also members of the PGA Tour, it is vital that we continue to work together to ensure the progression of tournament golf throughout the world.

“We are delighted that our members continue to fly the flag for the European Tour around the world, which not only gives them the opportunity to progress their individual careers but ourselves the chance to explore opportunities to our mutual benefit.”

Finchem described the reports as “inaccurate”, but did say collaboration between the two bodies could increase revenue for the sport. “As I have stated publicly on several occasions, the integration of professional golf can create additional value for our players, sponsors and fans,” he said.

These are critical times for the European Tour, which is desperate to get back on an even keel. Change is afoot, first with the appointment of businessman David Williams as its new chairman and second with the decision of O’Grady to stand down as chief executive as soon as a replacement can be found.

It was O’Grady’s misfortune the recession struck when it did. It is unlikely that anybody could have brought in new sponsors in mainland Europe at such a time, but at least those that truly mattered stayed on board – among them, the likes of BMW and HSBC. The tour weathered the storm but now it is Williams’ job to strengthen it, to keep the PGA Tour at bay.

A former senior executive with Whitbread, Diageo and PepsiCo, among others, Williams certainly talks a good game: “I’ll be looking to ensure that the tour is structured in a way which enables it to further increase its expansion and appeal across the globe,” he said, “as well as working with the players and our business partners to promote long-term sustainable growth.”

And therein lies the rub. Whereas the European Tour once had a relatively free run at China and the rest of Asia, now the behemoth that is the PGA Tour has staked its own claim in what was once virgin golfing territory. So if the expansion envisaged by Williams does not materialise, the day may yet come when the European Tour comes under the PGA Tour’s umbrella.

LOOKING TO THE FUTURE

What would it mean if the European Tour became the PGA Tour Europe?
It is too well established and has too much strength in depth to be considered a ‘feeder’ tour for its American counterpart. That said, it could allow a more even two-way flow of players depending, perhaps, on their world rankings. It could allow, say, the top 50 to play wherever they want without having to be a specific member of one or other of the tours.

Among the benefits, the number of events could be guaranteed, the size of prize funds, potentially, could be increased, and financial stability would be assured. On the downside, the PGA Tour would finally have access to the considerable Ryder Cup income and could also dictate the playing schedule.

Without doubt there would be pros and cons in having the PGA Tour running the whole show.

In conclusion there is little doubt that competition in the form of the Race to Dubai, the European Tour’s expansion into the Middle East and China, and a devastating recession has brought out the best (and worst) in Finchem and the PGA Tour. But having got the taste for worldwide expansion is there any holding them back? Only time will tell.

American Invasion

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