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By Steve Eubanks
In the midst of the most profound economic upheaval since the Second World War, when storied businesses with decades-old reputations teeter on the brink of collapse due to the effects of the coronavirus, it should come as no surprise that many golf institutions are near freefall. But few people if any, especially in America, would have thought the European Tour was in trouble. That, however, appears to be the case.
Through a series of interviews, both on and off the record, Global Golf Post has confirmed that the European Tour is in a financial crunch that, according to our sources, ranges from “concerning” to “dire.” That situation, as difficult as it is for many to comprehend, has accelerated discussions between the PGA Tour and the European Tour for what kindly could be termed a “partnership,” linguistic jujitsu for an agreement that would include, if not a capital infusion, at least a safety net.
Numerous sources with knowledge of the discussions have told GGP that what began as a hypothetical idea transformed into something far more intense and detailed once the spread of COVID-19 stopped golf in its spikes. Talks accelerated when Raine Group, a financial advisory firm and a partner in the proposed Premier Golf League, retained David Levy, former president of WarnerMedia Sports. And while none of the principals would comment (and several of the tours’ representatives portrayed the situation as little more than “friendly discussions” with nothing specific on the horizon, near or long term), men’s professional golf in Europe will look much different in the future. The question is will it or will it not include some kind of One World arrangement.
... what began as a hypothetical idea transformed into something far more intense and detailed once the spread of COVID-19 stopped golf in its spikes.
European Tour chief executive Keith Pelley has said as much. In a letter to his members, Pelley has stated that many perks will be cut back. Player lounges and courtesy cars won’t be as plentiful in a post-COVID-19 world. And while those luxuries seem jarringly opulent when those who are not sick or dying live in fear of losing their livelihoods, sources tell GGP that this was the happiest face Pelley could paint on the situation.
It is a stunning revelation, especially for casual golf fans who see the European Tour through the lens of television and social media. For those people, European golf is hip and cool. Ad campaigns included everything from closest-to-the-pin competitions off the sides of cliffs to the “Little Billy” spots starring child actor Billy Jenkins (The Crown, Cursed) that were short films. Remember the “mannequin challenge,” a social-media craze for which people shot videos of themselves frozen as if posed like mannequins? The version posted by the European Tour, which included all its biggest stars, was considered one of the best, not just in sports but on the entire internet.
Then there were the events themselves. Gone were the days when players bunked three to a room and shared train rides between obscure stops. A quick glance down the schedule saw sponsors like BMW, Rolex, Porsche, Omega and Dubai Duty Free, as well as HSBC, the Commercial Bank of Qatar and the city of Abu Dhabi. With that sort of backing, and with a membership that, for the first time since the days of Faldo, Seve, Langer and Lyle boasts worldwide star power – Rory McIlroy, Jon Rahm and Tommy Fleetwood are as recognizable as anyone in the sport not named Tiger Woods – it seems unimaginable that the European Tour is in trouble.
However, GGP has learned that the European Tour’s growth and marketing efforts were, in fact, a dual-edged sword. While the social media and ad campaigns received awards and universal acclaim, art isn’t cheap. Talent and production for those spots cost a staggering sum. The relaunch of the European Tour website alone cost close to £1 million. Other expensive propositions such the GolfSixes, a 32-player team event with an innovative format, generated a lot of golf claps but not a lot of black ink to the bottom line.
Almost all of those who spoke to GGP commended Pelley for his creativity and vision. But the revenue side of the ledger has struggled to keep up with expenses. The Ryder Cup is the tour’s cash cow, and it delivers only once every four years when the Europeans host. Budgets for the European Tour are built in four-year cycles with the coffers nearly empty by the time the matches rotate back to Europe.
A single-source revenue stream, especially one on a four-year cycle that is subject to external economic vagaries, will always be volatile.
European golf has other issues baked into the cake, problems that marketing and star power simply will not solve. Golf as a television product is far less lucrative in Europe than it is in the United States. When you’re playing from Nairobi to New Delhi and Kuala Lumpur to Kilkenny, time zones and production costs can make golf a difficult sell for viewers as well as advertisers. Unlike the PGA Tour, which just inked an impressive multimedia deal for which multiple conglomerates bid for various rights, the European Tour's broadcast and digital rights have proven to be far less valuable.
Also, a number of event sponsors are European governments, which are beholden to citizens who are in no mood to see tax revenues spent on golf while unemployment skyrockets. In those circumstances, it becomes easy to see how the game got to this point.
The unanswered question is: Where does it go from here? Our sources had no crystal balls. But they all agreed on one thing: The men’s professional game will not look the same after this pandemic. And there is a high likelihood that, in the near future, whether it is a PGA Tour-European Tour partnership or some other arrangement, we will all be looking at a new world order in the game.
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