AS THE GAME OF GOLF GETS BACK ON COURSE, THERE ARE SERIOUS FINANCIAL RAMIFICATIONS FROM THE POSTPONEMENT OF THE 2020 RYDER CUP UNTIL SEPTEMBER NEXT YEAR.
As Covid-19 spread around the world, aided and abetted by global transportation that had become the very symbol of international sport, elite golfers could be playing in Japan one week, China the next before criss-crossing to South East Asia, India, South Africa, the Middle East … and all that before the European Tour had set foot on the continent from which it – nominally at least – takes its name.
Of course, by comparison with the untold suffering and despair caused by Coronavirus to individuals, families and communities the world over, the not inconsiderable impacts on professional golf are largely irrelevant. Don’t expect to see any member of the leading professional tours queuing up at food banks or applying for unemployment assistance any time soon.
Individual tours have handled the Covid-19 in keeping with the political and scientific advice within their jurisdiction. The PGA Tour and LPGA Tour, both initially hit hard have weathered the storm relatively well in light of the Trump administration’s laissez-faire approach to the, ‘Invisible enemy’. The weekly ‘dollar-fest’ of the PGA Tour is back up and running, albeit with no fans on course, the three stateside, Majors deferred until the fall, unlike Europe’s Major, the Open Championship, which was cancelled altogether.
But perhaps the most curious of Coronavirus outcomes has been that of the European Tour. Already on the back foot having lost the Hong Kong Open due to civil unrest, the Wentworth outfit went on to lose 15 more tournaments, and counting – from Kenya to India, Malaysia and China, Sweden, Spain, Germany, France and Portugal, US$50 million plus wiped-off the circuit’s prize funds almost at a stroke, death by a thousand cuts.
And what has replaced those events – including the prestigious Rolex Series Irish Open – scarcely offers rich pickings; an emasculated Austrian Open followed by a six-event ‘UK Swing’ comprising four events in England, two in Wales, all bar one – the British Masters – offering US$1.1 million prize pots.
Of course, Wentworth bosses will be claiming – with some justification – that six, low budget UK-based events is better than nothing. And salvaging both the Scottish Open and its flagship BMW PGA Championship, both held over until October, has sent out a strong signal.
But, without question, the most seismic decision affecting the European Tour has now finally been taken, and it’s not good news for the game of golf in general and the Wentworth-based outfit in particular.
The 43rd Ryder Cup, due to be played at Whistling Straits GC in Wisconsin from on September 25-27 but now postponed by 12 months – causing each and every subsequent staging on the biennial transatlantic showdown to be pushed forward by a year – was, in many ways, totemic to golf’s Covid-19 recovery plan. Ironically a sporting health indicator compromised by an actual health emergency, its disappearance from an already ravaged 2020 international golf schedule was described by one experienced and closely-connected observer as “a hammer blow”.
Last week, Ryder Cup director Guy Kinnings had his worst fears confirmed and, and at his first time of asking.
He said: “The Ryder Cup is rightly celebrated as one of the world’s greatest sporting occasions, made special and totally unique in our sport by the fervent atmosphere created by the passionate spectators of both sides,” adding, “While that point is significant, it is not as important as the health of the spectators which, in these difficult times, is always the main consideration.
“We considered all options including playing with a limited attendance but all our stakeholders agreed this would dilute the magic of this great occasion.”
The deferral of the Ryder Cup will undoubtedly cast doubt on the European Tour’s ability to remain independent, the clear and present danger of being either taken over by the PGA Tour, or vulnerable to a hostile approach from the Premier Golf League which, like Coronavirus, has certainly not gone away, or potentially fall prey to one of the increasing number of private equity actors such as CVC Capital Partners, picking at the carcasses of underperforming sports properties.
An ‘away’ Ryder Cup such as Whistling Straits is not as lucrative for the Wentworth-based circuit as one staged on European soil; the PGA of America is said to take a 5:1 share of profits when the event is on US soil. But when the event is held in Europe, the European Tour is entitled to 60% of the profits, amounting to just under £25 million (US$31 million) from Paris 2018.
According to its official accounts, the European Tour Group, including Ryder Cup Europe, its majority-owned trading vehicle for all matters Ryder Cup, reported a loss of £10.37 million (approx. US$13.1 million) in 2017, when Ryder Cup revenues would have been at a four-year low, compared to a profit of £11.6 million (Approx. US$14.66 million / €12.95 million) in 2018, when the rewards of the Ryder Cup in France would be included.
And, whilst not exactly awash with liquidity, the European Tour sits on substantial cash reserves, £22.7 million (approx. US$28.7 million) in 2018 – down £1.9 million (approx. US$2.4 million) on the previous year. It is likely those cash reserves will have been significantly eroded once 2019/2020 official accounts are filed, reflecting the loss of bread-and-butter tournament income and an ever-increasing reliance on internal funding for tournaments.
Hefty fixed costs, not the least of which is a wage bill for its 270-odd employees – estimated at between £15 to £20 million (approx. US$19 million to US$25.3 million) annually – won’t help either, job losses in a slimmed down organisation a distinct possibility.
But, for the avoidance of doubt, the European Tour is not going under anytime soon. However, for an organisation planning for its Golden Jubilee in 2022, these are treacherous times, its senior leadership trying to navigate a steady course towards calmer waters and the deferment of the ‘Crown Jewels’. What is essentially a cash flow issue rather than one of solvency is the last thing the European Tour needed.
And the loss of tournaments – some of which it would not be unreasonable to speculate may never return – together with a sports sponsorship market already in decline before Covid-19 came along, the commercial future of golf in general and the European Tour in particular looks far from rosy. Many economists suggest the 2008 financial crisis was modest compared to a deep and lasting recession following in the footsteps of the pandemic
Add into a gradual but inexorable decline in numbers playing and watching golf over recent years and the inevitable transatlantic migration of the European Tour’s top talent, things down Wentworth way may well get somewhat worse before they see a chink of light at the end of a very long, dark tunnel – one lengthened considerably by Whistling Straits 2020 falling foul of the virus.
The postponement the 43rd Ryder Cup could represent the genesis of a ‘perfect storm’ from which it would take time, investment, imagination and a large slice of luck if the European Tour was to emerge intact and unscathed.
Watch this space, and hold onto your hats – there could be trying, turbulent and tempestuous times ahead.
