The Business of Sports

British Open 2011: It's Not About the Americans Anymore


Excepting the biannual Ryder Cup, the U.K.’s annual Open Championship used to be the best opportunity for American audiences to experience "foreign" golf. Conditions for the Ryder, played in chilly drizzle among castles and moors and witnessed by fans in sweaters and slickers, were typically the antithesis of the American summer, all beaches and backyard barbecues and a whiff of Coppertone in the air.

No more. These days, America’s PGA Tour circuit is but a subset of the year-round golf season, with Golf Channel and the Internet regularly bringing golf fans to Asia, the Middle East, and South Africa. The British Open serves as more of a connection with golf’s roots than as an exotic novelty. Its stars are younger and hipper than "Monty" (Colin Montgomerie) ever was—and they are increasingly, decidedly, not American, led by U.S. Open winner and Northern Ireland citizen Rory McIlroy.

"Undoubtedly it is positive, for both the golf industry as well as individual players, that four of the five top golfers in the world hail from outside the U.S.," says Black Knight International Chief Executive Marc Player (son of Gary). "Most golf sponsors are international companies, and most equipment manufacturers have a significant, if not a majority, of their sales outside the U.S. The growth of the game is in Asia, India, and the Middle East. More and more, the top players are global players, and they know the importance of participating on all tours around the world. And sponsors want international coverage and exposure for their brands."

Whether McIlroy or another golfer takes it home this year, the British Open’s famed Claret Jug will runneth over. The prize fund for the Open Championship will reach $8.09 million for this week’s event at Royal St. George’s in Sandwich, England, marking the first time the prize money has hit the £5 million mark. The sum is an increase of $320,000 from last year’s tournament.

More lucrative news on the Open Championship tee: MasterCard (MC), already a corporate partner with the PGA and European Tours, has announced that it will become a patron sponsor of the British Open. MasterCard joins HSBC, Mercedes-Benz (DAI), Nikon (NINOF:OTC), Rolex, and Doosan as the British Open’s patron sponsors. The deal resumes a long association between the credit-card company and the Royal & Ancient.

Golf Youthquake Boosts Spending Among Young Consumers

Talk about a global growth market.

With Rory McIlroy joining Germany’s Martin Kaymer and South Africa’s Charl Schwartzel and Louis Oosthuizen, all four of golf’s current Grand Slam title holders are global citizens age 28 or younger. As NBC’s Johnny Miller said of the four major winners in their 20s, "There’s a new dawn, a new era in golf, and it’s pretty darn exciting."

The rise of golf’s young guns, such as McIlroy and Americans Rickie Fowler and Dustin Johnson, seems to be paying off for manufacturers. Last month, American Express (AXP) released a report that revealed the 18-29 age group increased its spending on golf 27 percent from 2007 to 2011. All other demographic groups, however, decreased their spending during this period.

The data are included in the new U.S. Business & Consumer Golf Spending report from AmEx. The biggest decline in consumption came from seniors 66 and older, who cut their golf spending 21 percent, on average. The 46-66 and 30-45 groups each decreased spending by 19 percent.

Among the other findings from the golf spending report: retail spending on golf equipment and apparel appears to have bounced back from the recession, with a 10 percent increase this year over last. Some states—including Iowa and South Dakota, not exactly golf meccas—saw spending at golf courses increase last year, while golf-centric California, Florida, and Texas suffered declines. And overall, businesses have reduced their budgets for golf-related hospitality and company outings 25 percent to 35 percent since 2007, although businesses of all sizes appear to have increased golf spending in the past four quarters.

Atop golf’s retail trends, Fowler’s popularity among fans comes in part by "taking nontraditional golf brands such as Puma and Red Bull and bringing them into the golfing fold, creating a portfolio uniquely his own." As PGA Tour journeyman Bill Haas said recently, Fowler "is great for the young kids. … I’ve never seen so many kids wearing that flat-billed Puma hat, so obviously they’re doing something right."

Let Rory be Rory … Wearing Oakleys and Audemars Piguet

Ever since Rory McIlroy’s resounding win at the U.S. Open some weeks ago, the sports world—realms of competition and business alike—have been abuzz about the young Northern Irishman’s possible role as golf’s "next Tiger." Near-desperate for a hero after Tiger Woods’ scandal-filled 2010 and debilitating series of injuries in 2011, golf is quick to appoint McIlroy as its next would-be king and will be royally deflated if McIlroy fails to win the Open Championship this week.

Amid the sensible cries of "Let Rory be Rory," the Marketing Arm’s Davie Brown Index nonetheless shows that McIlroy’s dominating U.S. Open victory, and subsequent DBI score of 55.73, "makes him the third-highest-ranked golfer" behind Woods (79.85) and Phil Mickelson (68.86)—catnip to the Tiger-trained eyes of brands looking for a new golf partner. Says Marketing Arm Group Account Director Matt Delzell: "He’s confident without being cocky, something that’s rare among young, superstar athletes. … He seems to win and lose with class and poise."

And it doesn’t seem to matter to American golf fans, nor American corporations, that McIlroy hails from Irish sod. "It’s no matter that we’ve been searching for the next great American star," says the Los Angeles Daily News’ Jill Painter. "We’ve found a freckle-faced, lovable kid with curly hair, a sweet smile, and unbelievable game."

If he keeps his freckled nose clean and continues to win, McIlroy, who is represented by the golf world’s new super agent, International Sport Management’s Chubby Chandler, could find he has access to a sponsorship roster on a par with that of Woods or Mickelson. Before his U.S. Open victory, McIlroy listed sponsorship deals with four primary companies, in the relatively small sphere of $10 million annually. His current portfolio includes Titleist, Dubai hotel chain Jumeirah, and luxury watchmaker Audemars Piguet. "He’s the image sponsors want for the young end of the luxury market. He’s the leader of the young guns influencing the game today," enthuses Kevin Adler, president and chief solutions officer of international sports marketing agency Engage Marketing.

The McIlroy sponsorship partner best positioned to reap fully the benefits of the relationship may well be Orange County (Calif.) sportswear leader Oakley, which is looking to be known as more than a trendy designer of sunglasses. McIlroy just signed with Oakley in December, and Dany Berghoff, vice-president for business development at 21 Sports & Entertainment Marketing Group, recently told the Los Angeles Times that the benefits Oakley realizes from the deal "will depend on McIlroy sustaining his success and how often he plays in the United States." A long-term relationship with the surging McIlroy will allow the company to promote its apparel lines, tailor made for athletes who play golf as well as surf, mountain bike, and/or participate in motorsports.

"Everybody knows us as a sunglass company," Oakley CEO Colin Baden adds. "We want to get to be known for what we do in our other categories, specifically golf apparel. And Rory is just an incredible pace car for our company to do that and deliver that message to the world."

McIlroy, however, has ducked the question of exactly how much of his time he will devote to playing in the U.S. While the PGA Tour continues to try to coax him to rejoining the American tour in 2012, McIlroy remains resistant to doing so, as well as to participating in the PGA Tour’s season-ending Playoffs for the FedExCup.

"It seems like all my best golf I play is stateside, so I don’t know," McIlroy said of his plans. "I really enjoy my life back home, and that’s one of the main reasons I didn’t join the PGA Tour this year. I’m sort of caught in between. I don’t really know what to do."

Chimes in agent Chandler on the PGA Tour’s requirement of playing in at least 15 tournaments a year: "They need Rory more than he needs them. I don’t think he will struggle to get places to play. … We’ve seen people burn out. We’re not going to let that happen with him."

While it remains to be seen whether McIlroy is a one-Major wonder—although we’d bet a good pint of Irish beer any day that the lad will win his share—no one is quite yet putting Woods down for the count. If Tiger is able to get healthy and stay that way, a Tiger-Rory rivalry would no doubt ignite all demographics that closely follow golf, as well as the casual fans the world over. And the global potential for that rivalry only gets more interesting when you remember that in 2016, a mere five years away, golf returns to the most international stage for sport, the Summer Olympic Games in Rio de Janeiro.

Rick_horrow
Rick Horrow is a leading expert in the business of sports. As chief executive officer of Horrow Sports Ventures, he has been the architect of 103 deals worth more than $13 billion in sports and urban infrastructure projects. He is also the sports business analyst for CNN, Fox Sports, and the Fox Business Channel. Karla Swatek is vice-president of Horrow Sports Ventures and co-author of Beyond the Box Score: An Insider's Guide to the $750 Billion Business of Sports (2010). Horrow is also the host of Sportfolio, a new program on Bloomberg TV that airs Wednesday nights at 9 pm ET.

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