The Masters has a very unusual sponsorship model and way of funding itself when compared to other competitions on the PGA Tour. Richard Barrett discusses.
“If the Masters offered no money at all, I would be here trying just as hard.” Ben Hogan
The US Masters is the pinnacle of the golfing world; the illustrious green jackets, the incredibly well-kept fairways, and the old school, secretive nature of its members. In essence, the famed tournament at Augusta National is a hand-carved wooden driver in a world of tungsten-injected titanium irons.
Much of the goings on and the organisation of the golfing calendar’s premium tournament is shrouded in secrecy. A former sportscaster with CBS, Pat Summerall, said: “We could not make any references to money or how much the prize was. We couldn’t talk about how one gets to be a member or refer to membership at all, and we couldn’t mention the brand of shoes or clothes a player was wearing.”
This veiled, almost gagged, nature is not unusual to those who have experienced Augusta. The club has an extremely traditional, archaic way of dealing with their sponsors. This can be seen through the competition’s old-fashioned style of securing its production deals.
At present, CBS produces the Masters broadcast. ESPN (and Sky) feature coverage with their own on-air personalities but CBS still own sole production rights. It is reported that no written contract is drafted, but deals are agreed based on a handshake with a number of enforced guidelines. The terms of this gentleman’s agreement are not public, further strengthening the lure and attraction associated with golf’s first Major.
In total, the competition has five hand-picked sponsors. Three major sponsors; IBM, AT&T, and recently Mercedes-Benz (recently replaced Exxon-Mobil), and two other sponsors; Rolex and UPS (replaced Mercedes following the car brand’s move up the food chain).
Augusta acts as a broker between sponsors. Associates of the famous club speak to CBS, and ask how much it will cost for the broadcaster to broadcast/produce the tournament and make a small profit. Augusta then speaks to its team of sponsors and tells them to foot the bill in return for a total of four minutes advertising per hour, split between the brands. This is a significantly lower (roughly half) amount of air time than the average brands would usually receive.
It is believed that the three main brands pay $6-8 million each. CBS do not get to sell advertising time on the open market, merely using The Masters to boost ratings.
In addition, there are far less visual marketing opportunities for sponsors due to a strict no camera, no on-course banners policy. One will not see advertising banners around the green, and players are advised to refrain from signing autographs.
It is hard to determine how much cash Augusta National would generate if it were to follow the more traditional commercial-led model of its fellow tournaments on the golf calendar. The Masters is golf’s most-watched event.
Despite the ticketing system involving patron badges that are handed down from generation-to-generation, tickets still find themselves on the black market and sell for an average of $1000. With 40,000 attendees per day, Augusta, if it were to partake in some sort of monumental u-turn where financial gain is designated as their premium goal, could generate roughly $160 million per annum.
Another $50 million could be generated during the practice rounds from Monday to Wednesday.
It is also estimated that Augusta would make in excess of $30 million if they were to sell the TV rights in an orthodox manner. This is the sum NBC previously paid for the rights to the US Open before they were recently eclipsed by FOX, who pay $100 million per annum for the rights, in addition to other USGA tournaments.
Tradition is everything at Augusta National; they refuse to sell merchandise for 51 weeks of the year and even their on-course sandwiches and beers are competitively priced. Augusta National is a club built on respect and it values other principles above financial gain.
But why is it that Augusta National behaves in this way? Who runs the club and do we know much about their membership and finances?
Augusta is an exclusive club, with membership strictly by invitation only. Potential members must be nominated by an existing member and new initiations take place when someone quits, which is rare, or dies. Famous members include billionaires Bill Gates and Warren Buffett.
It is estimated that membership costs are significantly less than $100,000 dollars, which is extremely cheap for one of America’s top courses, meaning Augusta could also charge excessive amounts but refuse to do so.
Despite the tight-lipped, almost taciturn, nature of the financial side of the Masters, brands love to be associated with the prestige that comes with the sport’s top tournament. This is particularly interesting as branding is very restricted, and sponsors see little return, while experiencing a short amount of air time. It is hard for brands to see a return on their investment, but some are working on innovative ways to gain more value.
An example of this is IBM’s development of the official US Masters’ website and apps. A minute IBM logo is placed in the top right hand corner of each digital display and this appears to satisfy the Fortune 500 company.
Although it is difficult to be certain as to whether this sponsorship model will continue for the long term future, the pressures of the 21st century have yet to intrude. Augusta is built around tradition, respect and graciousness. Selling out would compromise all three.
The Club Chairmen control everything and it’s hard to envision someone that would upset the status quo earning a place in the club’s hierarchy.
There have been a lot of changes in recent years, but all were slow to develop. The idea of financial gain supplanting the values that exist at Augusta is something that this writer cannot foresee. One thing he can see however is Jason Day trying on that famous green jacket next Sunday.
Richard Barrett, Pundit Arena.