LPGA changes up plans for its signature event
HAVRE DE GRACE, Md. -- Two years ago at the McDonald's LPGA Championship, Carolyn Bivens was an embattled rookie commissioner whose job appeared to be dangling by a thread. Just months after a media boycott sparked by her effort to have the tour own the rights to photographs taken during competition, three of Bivens' senior executives quit on the eve of this tournament, saying they had lost confidence in the commissioner.In a situation that had as much to do with style as it did substance -- some saw Bivens as combative and aloof while others said she was aggressive and visionary -- the commissioner became increasingly alienated from tournament owners, sponsors, the media and a vocal minority of her players. Still, she pushed on. Bivens was rewarded with a recent three-year contract extension. Friday, Bivens took another bold step toward an evolving and potentially lucrative business plan -- though one not without significant risks -- by announcing significant changes involving the tour's signature event, the LPGA Championship. The most important is that the tour will become the owner of the tournament, which will become simply, succinctly and accurately known as "The LPGA Championship" in 2010 after next year's swan song at Bulle Rock GC. The LPGA Championship will join the ADT Championship as the only events owned by the tour. And it joins the U.S. Women's Open as a major championship not having a title sponsor, helping to restore an identity as the "players championship" undermined when McDonald's pressured the tour to change its "LPGA member-only" rule to allow Michelle Wie into the 2005 tournament as an amateur. "The LPGA has been surviving for 58 years," Bivens told Golf World. "Now is the time to move into the world of major sports." She said that while the tournament will have no title sponsor (other than the LPGA), it will seek presenting sponsors to help with the cost of running the event -- and hope to be part of a television package that will generate revenue. The LPGA Championship will also be moved to August (making it the last of the four majors), will have a purse of $3 million (second only to the $3.1 million paid out this year by the U.S. Women's Open), be played at a yet-to-be-determined course in the northeastern United States and be on network television. Currently, it is on the Golf Channel which, because of its 15-year deal with the PGA Tour, has limited flexibility in its broadcast window for the LPGA. The LPGA Championship is the tour's second-oldest major, beginning in 1955, five years after the U.S. Women's Open. McDonald's has been the title sponsor since 1994, replacing Mazda, which came on board in 1987. Among the northeast venues whispered to be on the radar screen for the LPGA Championship is The Carnegie Abbey Club, an exclusive development on Narragansett Bay in Rhode Island designed by Donald Steel. A plan to rotate the tournament among three courses, including frequent USGA host site Baltusrol GC, was dismissed as unwieldy and inefficient. DuPont, which hosted the championship from 1994-2004 and has undergone an impressive course renovation, may also be back in the mix. With the Ricoh Women's British Open ending the first weekend in August, the LPGA Championship will have to be contested late in the month to give enough time between majors. "The contract with the new venue will be a minimum of five years and the LPGA is open to longer," Bivens told Golf World. No money exchanged hands in the deal putting the tournament in LPGA ownership -- the contract with Bulle Rock is up after the 2009 tournament and McDonald's is on a rolling contract that may be extended in some form. Tournament co-founder Herb Lotman will remain as honorary chairman of the event. Bivens hopes LPGA ownership of its players' championship could make a reality of one of her dreams -- a meaningful pension plan for tour members. "Could the proceeds from the LPGA Championship be the beginning of a real retirement fund?" Bivens asked rhetorically. "Could it grow into an LPGA version of the Masters? Could it contribute two, three, four, five million dollars a year to the pension fund? The business plan we have for 2010 can take this tour to a new level of financial stability." Right now the contribution by the tour to the pension plan is about $450,000 a year, with players getting as little as $150 a month upon retirement and no more than $800 a month, with the majority on the low end. That pales in comparison to the deferred-income plan the PGA Tour has, which promises payouts in the tens of millions of dollars to some individual players. Bivens said the ADT Championship, in the first year of LPGA ownership, "had a high six-figure turnaround" on the investment made by the tour, adding to her hopes the LPGA Championship can become a significant money maker.
Part of the new LPGA business plan is to have premier season-opening and season-closing events. Toward that end, the ADT Championship, currently played in November at Trump International in West Palm Beach with 32 players competing for a $1 million first prize, will be moved to January beginning in 2010. Another tournament will replace its spot on the schedule to cap the tour season in November. The tour hopes to use ownership of the LPGA Championship and the ADT Championship as leverage to sell an 8-12 tournament package to a TV network."We have to get away from time-buys and move onto rights fees," Bivens said about the current financial reality under which the LPGA tournaments purchase television time and then have the responsibility of selling the advertisements. The PGA Tour, on the other hand, receives in excess of $250 million a year from networks and can subsidize nearly two-thirds of the purse at each tournament. The LPGA contracts with ESPN and Golf Channel are up after the 2009 season, another reason next year will be perhaps the most important LPGA season ever. A key part of Bivens' business plan is to take advantage of the vast economic growth and immense passion for golf in Asia. Beginning next year, there will be two Asia swings, hitting Singapore and Thailand in the spring and China, Japan and Korea in the fall. The tour has also indicated it has looked at holding events in Abu Dhabi and in India, which could be on the schedule as early as 2010. Currently, the largest revenue stream for the LPGA is Korean TV money and the second largest is TV money from Japan. While following the money is not a bad financial plan, among the risks in such international expansion is falling off the radar screen of the American media, and that is a risk Bivens is wiling to take. "In a crowded TV schedule it makes sense to go out of the country at certain times of the year," she says. "In formulating a schedule we've looked at Super Bowl week, March Madness, pro and college football, the PGA Tour playoffs. These are times when we can get more attention abroad than we do here." Mid-market U.S. tournaments and mid-level players both have concerns over the new business plan. Costs for tournaments will increase in 2010 with what are now nominal sanction fees rising to a minimum of $100,000 to as high as $130,000 for existing tournaments and higher for new events. With 20 of the 33 tournaments on this year's schedule having purses of less than $2 million, there is also pressure from tour headquarters to increase prize money. "We are 12 to 14 months away from knowing what the full financial demands will be on us," said Jack Benjamin, president of the Corning Classic, one of a significant number of tournaments whose contract is up in 2009. "[But] we have concerns about what is going to happen. Can we continue to do what we have done for the last 35 years, which is make significant contributions to charities in the Corning area?" Benjamin said the cost of putting on a tournament is now about three times the purse and that there is a point at which it would not make economic sense to continue the Corning Classic. "As the tour becomes more and more international it will be interesting to see how it plays out in the marketplace," Benjamin said. "I hope they have thought their plan through and that the business model works. For us, the bigger issue is the cost of doing business."" The concern from players -- especially those not in demand by sponsors of overseas events -- is that the tournaments added abroad are limited-field, no-cut tournaments. Practically, this make sense. It is unrealistic to ask a player to travel to Asia and not get at least a last-place check. But it also means fewer spots in the field for LPGA members at a greater number of events. The tournament in Haikou, China, this October, for example, will have only 53 LPGA members in the field, meaning a significant number of top-100 tour members will have no place to play that week. The purchase of the Duramed Futures Tour raises the interesting prospect of whether the LPGA will move toward a two-tier tour with smaller fields in all events -- except the majors. To make this a possibility the Futures Tour would have to be renamed to something that gets "LPGA" into the title and takes "Futures" out. Purses would also have to be increased to provide a livable income, which is not now the case. Asked if the LPGA plans to assume ownership of any more tournaments, Bivens said: "With the right partners, maybe Phoenix." The Safeway International at Superstition Mountain near Phoenix, one of the best venues and best-run events on tour, said in March Safeway will not be back next year, choosing to focus its LPGA tournament financial commitments on the Safeway Classic in Portland, Ore.
The future of the Phoenix event will be watched with great curiosity. The stop has a great venue, a perfect spot on the schedule the week before the first major of the year -- the Kraft Nabisco Championship -- and is in a golf passionate community. If the event falls from the schedule it will be an ominous indication of the domestic sponsorship situation for the LPGA.Bivens, however, is certain her plan will work. "By 2010, the LPGA will have at least three and maybe five events with purses of $3 million or higher," she says. Currently only the U.S. Women's Open and the Evian Masters are in that league. "For the LPGA this is a huge step forward," Bivens said. Unlike two years ago, the talk here this week is about the future of the LPGA Championship and not about the future of the LPGA commissioner. But just like two years ago, Bivens is undeterred by the risks involved and not slowed by the criticism, feeling the potential rewards for the tour and its members are too great not to take what she sees as necessary chances. Only time holds the accuracy of that evaluation, but then again two years ago it didn't look like Bivens had much time. And now she has at least three years to make her business plan work. Assuming ownership of the LPGA Championship seems to be a great start.
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