Cash is king: How the USGA could reshape the game

Editor’s note: This story originally appeared in the June 8, 2015 issue of Golfweek.

Money is power, and as Voltaire put it, with great power comes great responsibility. Such is the position facing the U.S. Golf Association as it enters a new era of prosperity. Thanks to its lucrative new TV contract with Fox and other international partners, the USGA reportedly will plow nearly $100 million annually for the next 12 years into its coffers. But it won’t be stockpiled into a war chest to stave off potential litigation or for a rainy-day fund.

“Whatever we got from Fox, however you want to do the math, we’re not harvesting money,” USGA president Tom O’Toole Jr. Said. “We’re spending it. We’re putting at least $150 million a year back into the game by governance or supporting it.”

The USGA’s Sarah Hirshland, senior managing director of business affairs, says the increase in revenue will be closer to $35 million annually. When told that the difference between her figure and the dollar amounts previously reported was more than a rounding error, she replied, “Feel free to correct the inaccuracies,” and said the association, exempt from federal tax under Section 501(c)(3) of the Internal Revenue Code, was projecting a 20 percent revenue growth over fiscal 2014.

So just how are those dollars being reinvested into the game? The USGA says it began drafting its first strategic plan while it negotiated media rights to its championships in 2013. Money is distributed into four buckets: championships, governance, health of the game and community. Of the $150 million that O’Toole said is invested in the game, approximately 60 percent is allotted to the 14 annual championships that the USGA administers, including the men’s and women’s U.S. Amateur Four-Ball events, which debuted this year.

Fans attending some of those championships will notice video scoreboards and the introduction of Wi-Fi zones, which allow spectators to bring cellphones onsite for the first time. Other significant investments are budgeted to rebuild the GHIN handicap system, develop and field test the USGA’s pace-of-play flagstick monitoring tool, rules-education material and a water-resource-and-consumption app designed for course operators. Funding for many of these initiatives still would have been budgeted without the inflated revenue – the infrastructure behind GHIN, for instance, is terribly outdated – but the TV money has provided the luxury to think bigger.

“We wouldn’t have done anything as much or as well as we are going to do it, and we’re doing it all at once,” Hirshland said. “Normally we wouldn’t be in a position to do that.”

Hirshland points out that the USGA began making incremental investments last year as evidenced by a nearly $10 million deficit in operations, according to its 2014 annual report.

“That’s not a practice we intend to repeat,” she said, “but that was a deliberate decision to start making some investments before certain contracts kicked in.”

Short of taking consumer tips from boxing’s Floyd Mayweather, Golfweek asked a broad spectrum of industry observers: What else could be done with the USGA’s windfall? Here is a selection of the best suggestions. The best part of this advice? It was free.

What would you do?

Golfweek asks several of the game’s ambassadors how they would like the USGA to spend its windfall:

Mickey Wright, LPGA legend

“My first reaction was to use some of it to figure out how to speed up play.”

Arnold Palmer, PGA Tour legend

“Spend it on slowing down the golf ball.”

Annika Sorenstam, LPGA legend

“The USGA will certainly invest the Fox money so it grows over time. I think they should do the same when it comes to golf, taking a sizable portion and earmarking it to grow the game. I’d like to see particular emphasis on junior golf and, even more specifically, junior girls.”

Michael Bonallack, Former R&A secretary

“I think the USGA should continue trying to grow participation in the game by giving young people the opportunity to play. Coupled with this, I believe that there is a need for nine-hole starter courses of average length which will help new players and will not take five hours to play.”

Deane Beman, Former PGA Tour commissioner

“The USGA should do a program to develop future golfers that is not based on just public relations but actually doing something. They could subsidize a caddie program at member clubs and provide scholarships for caddies in the form of golf scholarships. That won’t pay off for 15-20 years, but you’d produce a steady new stream of golfers for the long-term future of the game.”

Duke Butler, Open tournament director

“The USGA should enter into a significant collaboration with the PGA of America to grow participation in the game. If each PGA member could average instructing at least one new player for free in a 30-hour course each month, and that beginner played at least once a month afterwards, all elements of this great sport would prosper. During the instruction, a simplified set of USGA rules emphasizing fast play and fun could be incorporated. The USGA would sponsor the approximate cost of $3,000 per player, which would cover the instruction, purchase of equipment, use of facilities and five free nine-hole rounds. The PGA Tour’s initiative The First Tee is wonderful, but more needs to be done to grow the game to players of all ages.”

Joe Ogilvie, former PGA Tour winner and member of its board

“The best use would be to identify strategic courses around arid climates and start converting 20-35 a year to salt tolerant grass. Boring, but USGA doesn’t own assets and should not own assets. Current funding, plus the endowment they already have should be enough for research on clubs, balls and turf grasses going forward.”

Ted Bishop, former PGA president

“As I watched the State of the Industry address at The Players, Mike Davis intrigued me more than anyone when he spoke about reducing maintainable acreage. I’m a course owner with 300 acres. I would love to have a USGA person help me do that at The Legends GC without sacrificing playability. Field reps who provide free services to courses who cooperate with USGA initiatives would be useful.”

Mike Whan, LPGA commissioner

“We asked them to at least consider a U.S. Senior Women’s Open and to their credit they did that. We’ve already seen an increase in our (U.S. Women’s Open) purse and in their investment in LPGA-USGA Girls Golf. So I don’t know how the money should be divided up but I also feel like we haven’t been left out and it’s great to know some of it is going to the event they put on for us and a good chunk of it is going to the future of women’s golf through programming.”

Greg Norman

“I believe that the USGA continually ask themselves a fundamental question, ‘Where is the best return on investment in golf?’ Well, they already invest back into the game in a big way. No other institution does it. The PGA Tour, a 501(c)6, gives to charities. The USGA gives to golf via four buckets: 1) National Championships 2) Governance 3) Focusing on golf courses. Environmental and economic sustainability and scalability. 4) Engaging golfers. All these will be the benefactor with more dollars from the new partnership with Fox that will continue to protect the future health of the game.”

Donald Trump

“I think Mike Davis and the USGA have a done a fantastic job in reaping this incredible price from Fox. I think it will be a positive thing for the USGA and the championship. One of the things they should do with this fantastic nest egg is be very conservative because the world is going to change and not for the better. Saving it is a positive force. In the old days, it was a good thing to save money. Having money makes it a lot easier to grow the game. That’s the No. 1 thing they want to be doing.”

Dedric Holmes, The First Tee

“Most efforts to expand the game of golf within the U.S. have had little to no impact on participation, rounds played and most other quantitate measures. If golf is to ever reach its potential or at least rebound to its glory years the entire paradigm needs to be redesigned. I would encourage the USGA to create a grant program that invest in individuals and organizations who see a different picture of current affairs than what most see through their rose-tinted lenses.”

Sandy Tatum, former USGA president

“The question of how to deal with technology advances as it pertains to equipment still must be dealt with. Coming up with the right answer is not easy. It’s certainly important enough to take it on. The guardians of the game have a real dilemma in that everybody loves hitting it 280. But the result is the game got bifurcated into the bombers and the rest of us. It has obsoleted many of our architectural treasures. It really is a miserable problem. The game is more important than anything else and preserving it and all of its characteristics is a vital project. It matters hugely, and while I can’t anticipate the response of the equipment makers, I hope they can be persuaded to join in the crusade.”

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