How deep are European Tour pockets?
How deep are European Tour pockets? What damage has this coronavirus had on its bank balance? And what effect will it have going forward?
Those are the lingering questions following today’s announcement of the restart of the 2020 European Tour schedule.
“There is no question we are back,” European Tour chief executive Keith Pelley said.
Just not as we know it. Not even close.
Pelley announced a six-tournament “UK Swing” starting with the BetFred British Masters July 22-25 at Close House, and followed by five €1 million, 144-man field tournaments at the Forest of Arden (English Open), Hanbury Manor (English Championship), two tournaments (the Celtic Classic and Wales Open) at Celtic Manor before concluding at The Belfry (UK Championship).
Here’s the rub though, the tour is funding the five events. Along with that €5 million outlay, the tour will pitch in a further £500,000 to be distributed equally between charities local to tournament venues, and charities chosen by the leading 10 players in a mini order of merit which will run across the six events.
The tour did approach select private clubs to enquire about staging events. Such clubs were hardly going to say yes after members had gone eight weeks without access to their golf courses. Besides holding events at venues with on course accommodation makes practical sense right now.
The dynamics of the tour offering financial inducements in the way of charitable donations to hotels operators is a far cry from the days when hotel chains had to pay a fee to stage a European Tour event. Marriott, which owns both Forest of Arden and Hanbury Manor, has had to shell out cash to the tour in the past to stage events. Ditto the Belfry.
Celtic Manor was a long time Euro Tour venue when owner Sir Terry Matthews piled millions into the tour to secure the Ryder Cup. Strange times when the shoe is on the other foot and the tour is now asking these venues for help, isn’t it?
Pelley also revealed he’s had to spend big on making sure every aspect of the coronavirus is considered on health grounds:
“Our medical health strategy alone will cost us for all three tours well north of 2 million.”
You doing the math? That’s seven and a half million before a ball has even been struck.
The Canadian went out of his way to stress that the world’s second biggest circuit is not in dire financial straits, after weeks of talk about just that.
“Is the European Tour bankrupt or running out of money?” Pelley said. “I would say, absolutely not.”
Pelley did admit times were hard:
“We've been affected like millions of businesses the world over, but we've worked hard and been extremely responsible in our financial approach to this global crisis.
“We've had a difficult time like everybody else. This is not an easy financial situation.”
Pelley is able to fund the tour’s restart thanks to the Tournament Development Fund. It was set up in 2017 because:
“The likes of IMG and Lagardère (the French entertainment and sports agency) and other local promoters were no longer prepared to take risks. We used to only operate five events, (but) we started to subsidise 14 events.
“Unfortunately, the promotor model, and we still have some great ones, which had been the staple for the European Tour, was eroding quickly. So the Tournament Development Fund is what has been able to fund these particular events.”
Pelley has used this fund liberally in recent years to launch innovations such as GolfSixes, the Shot Clock Masters, the Hero Challenge, and to subsidise select events to bring them up to Rolex standard.
“Will we need to fund more tournaments going forward?” Pelley asked. “Well, that all depends what transpires over the next couple of months.”
He may well have to. Considering the promoter model was in trouble before the coronavirus, it’s hardly likely to revive after it.
Getting the circuit up and running solves one financial problem for Pelley and the tour. Thirty tournaments on the 2020 schedule have either been cancelled, postponed or are looking for a new date. That’s not good news when there are penalty clauses in the form of rebates with TV networks like Sky Sports because of a lack of live golf.
Pelley’s right: the rest of this year is crucial. Dates following the UK Swing will be announced soon, while the tour has announced the conclusion to the season. It starts October 11 with four Rolex Series events, beginning with the re-scheduled Aberdeen Standard Investments Scottish Open and running to the DP World Tour Championship, Dubai December 10. Restarting the Rolex Series is also crucial to the tour’s bottom line: Pelley wants to keep this five-star sponsor pouring money into Euro Tour coffers.
The final six months of this year are key. Pelley will hope to ride things out and get back to near normal in 2021. Hopefully tour revenues are deep enough to let him achieve that.