Guaranteed Money on the PGA Tour
A $500,000 guarantee and $5,000 travel stipend add financial stability.
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Hey Golfers —
A few months ago, I wrote about how the lack of a financial guarantee on the PGA Tour is a threat to growth.
In August, the PGA Tour announced several changes. Among those changes — two address the financial guarantee issue.
Earnings Assurance Program
Travel Stipend Program
The Earnings Assurance Program guarantees fully exempt PGA Tour members $500,000.
Here is how it works:
At the end of the PGA Tour season — the program will fund any gap between comprehensive earnings and the $500,000 minimum for any fully exempt PGA Tour member who plays at least 15 events.
PGA Tour Rookies and players earning their way back to the PGA Tour have the option to take an advance on the $500,000 and have it deposited in their bank account before the season starts. Earnings will go against the $500,000 until it is surpassed.
The Travel Stipend Program provides non-exempt PGA Tour members $5,000 for every cut missed.
Here is how it works:
Non-exempt PGA Tour member is defined as members in the 126-150 category and below.
Here is an example: last season, Greg Chalmers was playing below the 126-150 category. He played in ten events and missed five cuts. He would have been paid $25,000 under the new Travel Stipend Program. Last season Doug Ghim was playing inside the 125 category. He played in 29 events and missed 13 cuts. He would have been paid $0 for his missed cuts under the new Travel Stipend Program.
How much will these two programs cost the PGA Tour?
According to Jay Monahan, the Earnings Assurance Program will cost between $2 - $3 million. I don’t doubt the PGA Tour’s analysis — but I wanted to dig a little deeper.
Around 200 players are considered fully exempt for a PGA Tour season. It was difficult to find a comprehensive list of fully exempt players. So I started with the Top 125 from the 2021 season.
Of those Top 125 players from the 2021 season, only eight made less than $500,000 in the 2022 season, and six of those eight played in at least 15 events. The PGA Tour would have paid out $1,250,000 in this scenario last year.
Here is a quick example:
Brandon Hagy was fully exempt and played in 31 events — making him eligible for the Earnings Assurance Program if he needed it. In 2022, he made $261,000. The PGA Tour would have paid him $239,000 to meet the $500,000 minimum.
Several players that did not finish in the Top 125 in the 2021 season are still considered fully exempt for the 2022 season — it is tough to find an aggregate list of fully exempt players that did not finish inside the Top 125 in the 2021 season.
So let’s look at a couple of numbers:
In the 2022 PGA Tour season — 84 players made less than $500,000.
Of those 84 players — 42 played in at least 15 events.
The non-exempt category is players that finished 126-150 and below in the prior season. Let’s estimate that 50 players play under the non-exempt category and play an average of 10 events per year, each with five missed cuts.
In total — that is 250 missed cuts at $5,000 for each missed cut which results in $1,250,000 for the Travel Stipend Program.
The PGA Tour also announced it is ending the Play 15 Bonus. The Play 15 Bonus was a $50,000 bonus to any player that played in 15 PGA Tour events in a season.
Last season, 247 players cashed checks on the PGA Tour. Of those 247 players, 201 played in at least 15 events. Resulting in a $10,050,000 aggregate bonus payout.
If we take the high end of the $500,000 guarantee cost to the PGA Tour of $3,000,000 and the $1,250,000 cost Travel Stipend Program, it results in $4,125,000.
If I am way off with the Travel Stipend Program and we double it to $2,500,000, that gives us $5,250,000 in the aggregate cost of the two new programs.
With the PGA Tour killing the Play 15 Bonus and adding the two new programs — the PGA Tour will likely spend less money. Yet, the two new programs are far more impactful to players.
I have previously compared the PGA Tour guarantee to the NFL, NBA, MLB, and NHL. And while some of the comparisons are fair, some are not. For starters — those are all team sports, and the league revenues are much higher than the PGA Tour’s $1.5 billion revenue.
The NBA rookie minimum guarantee is $925,000 if the player plays a whole season. The NBA also did $10 billion in revenue last season — over six times more than the PGA Tour.
But in comparison to professional Tennis — the PGA Tour is far superior. Tennis typically pays out 15% of revenues in prize money, while the PGA Tour pays out north of 50% in revenues in prize money and benefits.
Tennis also doesn’t financially guarantee its players any money.
Compared to other sports — the PGA Tour Earnings Assurance Program and Travel Stipend program are attractive modifications for players. And as professional golf continues to evolve — I believe we are just seeing the beginning.
Have yourself a great Monday. Talk to you next week!
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Just wondering, does that $500,000 guarantee apply to full status Korn Ferry Tour players? I thought I read somewhere were they are included as well? thank you..