Weekly | The economics behind a phenomenon named Nick Dunlap: How an Amateur Win Reenergized the PGA Tour
LIV's Offensive Continues, but PGA Tour Gains Momentum; PGA Show Highlights Industry's Strength Despite Challenges
Greetings, golf enthusiasts!
The golf industry is abuzz with news. We’ve distilled the most noteworthy bits into a delightful blend, prepared with the utmost care.
Our dedicated team of writers has sifted through over 40 industry publications, more than 35 general news sites, a dozen newsletters, and a selection of top-tier podcasts. Now, everything is right here, so you’ll need just 10 minutes to catch up on the past week’s events.
Once you’ve read through this newsletter, you’ll have gleaned knowledge on these subjects:
How the success of a young amateur has reignited the debate on amateurism in golf and, more importantly, has given a much-needed boost to the PGA Tour in its competition with LIV.
Golf Digest’s hard-hitting editorial analyzing the predicament Jay Monahan finds himself in, even as he is on the verge of signing the anticipated agreement with Fenway Group, independent of LIV.
LIV´s offensive continues: Adrian Meronk, the top European golfer in 2023, is set to join the Saudi tour, and Tyrrell Hatton may not be far behind.
Regarding the state of golf health: At the 2024 PGA Show, which concluded yesterday in Orlando, many industry figures were presented. The question arises: Are we better or worse off than before the pandemic?
Finally, the 2024 PGA Show is highlighted as a buzzing hub of golf innovations and partnerships.
Let´s go!!!
📈The economics behind a phenomenon named Nick Dunlap: How an Amateur Win Reenergized the PGA Tour
💡THE FACTS. Nick Dunlap, a 20-year-old second-year student at the University of Alabama, recently etched his name in the annals of history by clinching the American Express PGA TOUR competition in La Quinta, California. He outshone experienced champions, becoming the first amateur to secure a PGA Tour event in over three decades. Dunlap’s triumph propelled him from the 4,129th spot to the 68th in the global golf rankings, guaranteeing his PGA TOUR membership through 2026 and qualifying him for all major 2024 events, including the Masters and PGA Championship.
While Nick Dunlap isn’t the first amateur to secure a PGA Tour event, Jim Nantz perceives Dunlap’s victory as a significant breakthrough in the sport, dubbing it a “Roger Bannister moment.” The late Sir Roger Bannister was the pioneer to shatter the four-minute mile barrier, accomplishing the feat in 1954. His record time of 3:59.4 stood for a mere 46 days, but he had paved the way. And perhaps that’s what Dunlap might have accomplished. “I think it’s a harbinger. I think there’s going to be a ripple effect,” stated Nantz, the veteran CBS golf anchor, on Tuesday during an exclusive Zoom call with Golf Digest.
💡THE FIRST CONSEQUENCES. In a move that seemed predestined from the moment the final putt landed in his historic win, Nick Dunlap declared on Thursday at a press conference in Tuscaloosa, Ala., his decision to turn professional. “It was the easiest hardest decision I’ve ever had to make, by far,” a tearful Dunlap confessed. This week, he will make his professional debut at Pebble Beach, in a tournament worth $20 million.
However, Dunlap’s amateur status at the commencement of the tournament meant he was ineligible to claim the $1.5 million first-place prize, which was awarded to runner-up Christiaan Bezuidenhout. Despite this, Dunlap was aware that the perks, such as the PGA TOUR membership card, would compensate for the absence of a monetary reward.
💡IS THIS FAIR? Sports business guru Joe Pompliano commented: “It’s not fair that Nick Dunlap didn’t get to keep his prize money. He is an excellent player and has a bright future. But golf is a finicky sport where amateur success doesn’t always translate to professional success, and $1.5 million is life-changing money, especially for a 20-year-old kid who was accepting $10 in NIL money from fans for video shoutouts just days before turning professional.”
Dunlap’s victory had a significant financial impact on the tournament. The final round attracted an average of 534k viewers on the Golf Channel, marking a 37% increase from Jon Rahm’s win the previous year, which had 391k viewers. This was the highest viewership for the event’s final round since Phil Mickelson’s win in 2019, which drew 574k viewers. This year-over-year growth translated into millions of dollars in value for American Express. TV broadcast partners, ticket and sponsorship sales teams, and the PGA Tour all reaped the benefits.
This leaves us with two key takeaways:
Dunlap’s story became a contender for the story of the year in just three weeks of January. However, this would never have been possible in a golf ecosystem like LIV’s, with a closed league, very few options to enter on one’s own merits, and no case of opening participation to 2 or 3 amateurs each week.
Speaking of LIV, the audience figures for Dunlap’s success show that golf audiences are more interested in a compelling story, such as “an amateur is about to win a PGA Tour event,” than any specific player, even those who have reportedly joined LIV Golf for $300 million.
Golf is drama. That’s why the Ryder Cup is one of the most followed sporting events, despite the fact that the players don’t take a penny (not even after Patrick Cantlay’s attempted mutiny and his hat). Despite concerns about the impact of the LIV drama, PGA Tour ratings remained stable last year. The success of golf doesn’t hinge on a new Tiger Woods emerging, but rather on the sport’s collective appeal and the captivating stories it produces.
That being said, Dunlap will never be poor again.
To know if the new phenomenon has financially settled his life, we need to look at similar cases. Two amateur stars who might serve as comparables are Victor Hovland and Bryson DeChambeau, both U.S. Amateur champions who turned pro less than a year after winning the Havemeyer Trophy. Agents who spoke to Golf Digest for 2023 ranking of the highest-paid players placed those two as receiving $3 million to $5 million for clubs and clothes upon turning professional—Hovland in the summer of 2019 and DeChambeau after the 2016 Masters.
🕒 PGA Tour Nears Home Run with Fenway-Led Investment Deal
An investor group, led by the owners of the Boston Red Sox and Liverpool FC, is gearing up to implement their investment in the PGA Tour as early as next week, according to Sportico.com. The group, under the guidance of Fenway Sports Group, has been in talks with the PGA Tour to establish a new profit-oriented entity, PGA Tour Enterprises. The funding for this venture will be less than the previously reported $3+ billion and will only cover the tour’s domestic rights. Players will also have a stake in PGA Tour Enterprises.
This deal is separate from the ongoing merger discussions involving the PGA Tour, the main European tour, and Saudi-backed LIV Golf. The outcome of these discussions remains uncertain.
The injection of substantial capital could provide the PGA Tour with an advantage in the merger discussions and allow it to continue independently, avoiding a merger with a wealthier newcomer that has caused fan polarization and player discord.
The agreement leak comes as the PGA Tour commissioner finds himself in a tight spot. In a highly critical editorial in Golf Digest titled “Jay Monahan can’t win,” Joel Beall points out that the top dog of American golf has two options: The first is to “ally with an alleged kidnapper” (referring to the accusations that Yasir Al-Rumayyan—governor of Saudi Arabia’s Public Investment Fund, de facto head of LIV Golf and potential chairman of the newly-created PGA Tour Enterprises—has been accused of carrying out instructions from Saudi Arabia Crown Prince Mohammed bin Salman with “malicious intent” in a lawsuit filed in Canada). The second is that he won’t and the battle for professional golf continues. Pick your poison, Beall concludes.
LIV Ramps Up the Offensive on the European Battlefield: The LIV team has also intensified its offensive this week at the European battle front. One week prior to the 2024 season opener of LIV Golf, Adrian Meronk, the best European player of 2023, announced his integration into LIV Golf in time for the year’s inaugural event in Mexico. The Times of London also points out LIV Golf’s ongoing pursuit of England’s Tyrrell Hatton, aiming for the second event of LIV Golf in Las Vegas from Feb. 7-11.
Golf Saudi's Intervention Sinks LPGA-LET Merger. Shifting our focus to women’s golf, it has now come to light that Golf Saudi effectively halted the merger between the LPGA Tour and the Ladies European Tour (LET), a development that was regarded as a ‘landmark change’ for the beleaguered European circuit. According to an exclusive information from Golf Week, a thinly veiled Saudi threat to withdraw as the principal LET sponsors and abandon the seven scheduled events, totaling $11 million, forced the cancellation of the historic vote on November 21, leading to the suspension of the ambitious merger plan.
✅Breaking Barriers: The Match Series Welcomes Female Golfers
Capital One’s The Match series, known for its unique entertainment approach, is set to make history with its ninth edition by including female participants for the first time. The event, broadcast live by TNT Sports, will feature Rory McIlroy, Lexi Thompson, Rose Zhang, and Max Homa. The 12-hole event will take place Monday, February 26th under lights at The Park course in West Palm Beach, Florida, with each hole worth a certain amount of charity money. This year’s event supports First Tee, a youth organization aimed at developing children’s social skills through golf.
McIlroy, seeking redemption after a previous defeat, hopes the event’s mixed line-up can “elevate” the women’s game. He praised Thompson and Zhang, embodying the bright present and future of the LPGA Tour. Thompson, a seasoned champion at 28, and Zhang, a promising prospect, are set to showcase their skills on this different platform. Homa, a six-time PGA Tour winner, completes the lineup.
📌 Transgender Golfer Wins, Sparks Debate
Trans golfer Hailey Davidson’s victory at the NXXT Women’s Classic sparked controversy and renewed discussions around transgender golfers. Emma Ballard, editor of Women & Golf, believes it’s time we open up discussions around transgender golfers”. Emma argues against transgender women competing in women’s only sports categories, citing physical advantages. However, she emphasizes that golf prides itself on inclusivity and is not about banning or excluding anyone. The issue requires further discussion and guidance from governing bodies to ensure fairness at all levels. The focus should not be on Davidson, who is merely playing by the rules, but on creating a fair and inclusive environment for all golfers.
More about the industry:
🚀Golf Boom Continues: Industry Sees Record Growth
The PGA Show in Orlando, often referred to as the “thermometer” for the golf industry, was attended by over 1,000 companies and more than 30,000 golf industry professionals from 84 countries. Notably, 12% of the show floor was occupied by companies from outside the US, and 23% of the PGA professionals in America who attended were from the US.
Golf has seen significant growth, with rounds per course reaching their highest levels since the early 1990s, up about 15% compared to 2019. Golf course closures are at their lowest point since before the Great Recession, and new course openings have hit their best mark in 13 years.
Golf equipment sales have risen by about 40% compared to pre-pandemic levels. Golf apparel sales established an all-time high in 2023, with a rise of about 55% compared to 2019, according to Golf Datatech.
It’s worth taking a look at the conclusions drawn by Jarerd Doerfler in Perfect Putt after attending the event. The two major trends, the areas with the greatest potential for growth in the industry, are off-course golf and women’s apparel.
The National Golf Foundation reported a robust 26.6 million on-course golfers in the U.S. in 2023, a 4% increase from 2022, marking a gain of “one million more golfers.” This growth mirrors the “Tiger Slam” era in 2001 and is only the fourth instance in 30 years where golfer gain exceeded 1 million.
Off-course participation, including experiences like Topgolf and Drive Shack, also saw a significant rise, with a total of 45 million participants in 2023, a 10% increase for the second consecutive year. However, consumer spending, which remained strong in 2023, is expected to change in 2024 due to potential economic shifts.
A Golf Datatech survey shows that the average “serious golfer” now spends $1,100 per year on equipment, which is 55% more than those golfers were spending in 2010. One reason for that increase in cost is that more golfers are getting properly fitted for their clubs. For example, about 81% of single-digit handicap players in the survey were fitted for their irons. Golfers are increasingly going to club fitting specialists (25%) to buy clubs, while other means of purchasing equipment, such as going to a sporting goods store (four%), have fallen significantly in the past decade.
From 2020 to 2021, more than a third of courses in the U.S. raised their peak season greens fees by an average of 11% and that trend has continued. In one study of the top 100 golf courses in the UK, summer green fees for 2023 were up 12% compared to the previous year.
🗺️PGA Show 2024: A Buzzing Hub of Golf Innovations and Partnerships
The past week in the golf industry was marked by a flurry of announcements at the 2024 PGA Show in Orlando. Here’s a condensed collection of highlights that caught our attention:
Shell Bay Club: This 7,254-yard layout, designed by Greg Norman, is situated on the site of the former Diplomat Golf Club in Hollywood, Florida. It’s the first to open in Miami in nearly two decades and features a 12-acre practice facility and a nine-hole par-3 course.
PRG’s Expansion: PRG, a leading supplier of high-quality bespoke golf accessories, has acquired the US distribution rights from distributor PRG Americas. As of January 15, Stephen Riley, the founder of PRG and a PGA Professional, will lead the newly formed PRG Golf Inc, which will handle all US sales, both on and off-course.
IAGTO and Golf Genius Collaboration: The International Association of Golf Tour Operators has teamed up with Golf Genius. This partnership will enhance the golf trip experience for tour operators and golfers through Golf Genius’ flagship product - Tournament Management.
Circana’s Acquisition Plan: Circana, formerly known as IRI and The NPD Group, intends to acquire Golf Datatech. Golf Datatech is a leading independent market research firm in the golf industry that provides insights into golf retail sales, inventory, pricing, distribution, and consumer behavior across the U.S., U.K., Sweden, France, and Germany.
TUMI’s Sports Partnerships: International travel and lifestyle brand TUMI has announced multiyear partnerships with the LPGA and PGA TOUR, becoming the “Official Luggage” for both organizations.
Arccos’s New Device: Arccos, the GPS-driven stat-tracking system popular among average golfers, has launched a new device called Link Pro. This device further miniaturizes the stat collection process and is small enough to get lost in a player’s front pocket.
Lexi Thompson’s New Sponsor: Professional golfer Lexi Thompson, who plays on the LPGA Tour, has announced that she will be partnering with Maxfli, a brand previously owned by TaylorMade but sold to Dick’s Sporting Goods in 2008. She will no longer be using Bridgestone golf balls.
Srixon and Arccos’s Partnership: Srixon Sports Europe has partnered with Arccos, a pioneer of automatic shot tracking, big data, and artificial intelligence for golf. Through this partnership, Srixon/Cleveland Golf players in the UK & Europe will receive a free set of Arccos smart sensors.
CapTech’s Role in TGL: CapTech Ventures, Inc. (CapTech) has been announced as an Official Technology Provider for TGL presented by SoFi, a new tech-forward, prime time team golf league developed by Tiger Woods and Rory McIlroy’s TMRW Sports. CapTech has played a key role in developing TGL’s data-driven competition format and fan experience, which will launch in January 2025.
That’s all for today, friends.
We wish you a lovely week.