The Pellucid Perspective - December 2015 - (Page 5)

Golf industry marketinG The one that no one saw coming: The GPAPA By Jim koppenhaver o ne of the funniest TV ads I've seen in a while is the Comcast spot which pokes fun at the AT&T/Direct TV merger and their new bundled services offering. The "punch line" is: "From the people that brought you underwhelming Internet speeds, and the people who brought you temperamental satellite television - introducing - underwhelming Internet speeds and temperamental satellite television - in one. Welcome to the moment no one's been waiting for." Such was my reaction when scanning my November issue of Street & Smith's Sports Business journal and I came across a quarter page article announcing the Golf Professionals of America Players Association (GPAPA). I admit I had to do a double-take there. In the alphabet soup of associations in the golf industry it seems unlikely you could come up with a combination of the letters "p", "g" and "a" that isn't already taken (but they did). That brought three questions to mind: 1) "What is it?" 2) "I wonder what the PGA of America or the PGA TOUR think about this?" and 3) "Could it work?" To the first question, Ron Furman, one of the founders of the association pretty clearly outlined their charter, saying "The PGA of America's mission is to grow the game of golf, and it does not have the ability to really develop the individual economic benefit for its club professionals. The club pros have never had anyone on an individual basis to bring their value to the market." Quick check of the mission statement by the PGA of America suggests that Ron got part of it right: "The mission of the Professional Golfers Association of America is to promote the enjoyment and involvement in the game of golf and to contribute to its growth by providing services to golf professionals and the golf industry." While I would suggest that providing for the economic well-being of its members should be somewhere in any trade group's mission, let's just say for argument's sake that "providing services to golf professionals" vaguely captures that notion. (Note to PGA of America: It's incredibly difficult to find the mission statement on your website. Amidst all of the PR and things that you're trying to sell, I might suggest that having the mission statement front-and-center would be a worthwhile enhancement). Back to the GPAPA, Mr. Furman (formerly NFL, Golf Channel, Westwood One) is joined in the founder group by Robert Horvath (former CEO RAPP marketing agency), Christopher Sauvigne (current CEO, Sauvigne & Co. accounting firm) and Marc Hiatrides (current executive of Four Tier Financial Group) so we've got a sports organization/entertainment guy, a marketing guy, and two financial guys, an interesting mix of skills for a new golf trade association. The basic concept behind it is creating what it calls the "brand ambassador model." In simple terms, the group is planning to enlist membership from a large enough swath of PGA professionals to create critical mass and leverage among (national) sponsors who would pay for being promoted by the club professionals who "activate" the marketing programs at their facility. Interesting... Part of the slippery slope they'll have to navigate is whose "turf " they're potentially encroaching upon and how to stay out of the way of the existing, entrenched associations. Surprisingly, the PGA of America's response quoted in John Lombardo's article was non-committal, which suggests they're taking a "waitand-see" approach to this experiment. (Quite possibly their strategy may be to let someone else take the risk and then, if successful, come in and buy the asset such as they did with the Junior Golf League, although the stakes are much higher and more politically charged here). Jeff Price, Chief Commercial Officer of the PGA of America, is quoted in Lombardo's article stating, "In addition, we wish any company well that is helping individual members grow their own revenue." This may be particularly challenging given that the PGA of America's membership is disproportionately weighted to the private club segment where the views of the Board of Directors and the members will more likely come into play. In the SBJ article, Furman also addresses the potential elephant in the room of whether this could be a future unionization play, saying, "We are more a group of people coming together for a bigger marketing platform." As with any trade association, dues are the primary initial income stream (ranging from $300-$600 annually as quoted in the article) and the economic benefit for the members is that they'll receive a portion of the sponsor fees collected (not clear if on individual effort or team participation) which, in a perfect world, would meet or exceed their membership "investment." So, what's right with the proposed model? The one positive aspect is that the financial arrangement appears to be fairly welldefined. The GPAPA gets 15-20% of the sponsorship revenue as their administration fee with the balance going to the members. (It appears however that the membership fees will go 100% to the GPAPA which, if they get 1,000 members initially would be roughly $500K annually by my calculations). This is significantly different than the current golf industry association model which, arguably, has little or no "financial sharing." Business colleague Stuart Lindsay has often pointed out this fact that golf associations which trade on the equity of frontline stakeholders don't fairly (at all?) compensate those stakeholders for their contribution. Some interesting examples from other sports would be the ongoing debate over the NCAA and the huge sums of money generated from college players which don't flow back to the core contributors. On the other side of the spectrum, I've been a member of USAA for over 30 years (dating back to be- The Pellucid PersPecTive 5

Table of Contents for the Digital Edition of The Pellucid Perspective - December 2015

Winds of change blowing at NGCOA?
The one that no one saw coming: The GPAPA
Naughty and nice – Best wishes for the New Year
CaddieMaster joins the Troon family
November golf weather impact: Off the Charts! Better East than West
Columbus, OH: Fiesta for OSU football, golf not so much
Single? No posting allowed

The Pellucid Perspective - December 2015