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November 7, 2006

Tim Finchem

Jerry Jurgensen

DAVE LANCER: Thank you. Appreciate everybody being here today. I'm Dave Lancer PR director for the Nationwide Tour. We exciting announcement today about the future of the Tour, with the two participants that are sitting up here with me. We'll start here with the Nationwide Tour Championship by introducing Commissioner Finchem who can talk about the new contract extension here with the Nationwide Corporation. Tim?
COMMISSIONER TIM FINCHEM: Thank you, Dave. Good afternoon, everyone. I'm delighted to be here with Jerry Jurgensen from Nationwide to announce an extension of the commitment of Nationwide to this tour through the year 2012.
Let me just say that looking backward, I think all of us recognize that over the last four years, this has been a great relationship. The involvement of Nationwide has led to a continuity of positioning within this Tour, which is very positive and has resulted in a situation where the presentation of this tour is in many ways on par with the PGA TOUR and the competition clearly is on a par with the PGA TOUR.
But more importantly today, we're just talking about the future and to now, and to know that Nationwide is our partner through the next six years is a very positive development. It means that the Nationwide Tour will continue to be able to utilize a platform of continuity of sponsorship. The brand relationship will continue to enhance. I think the value of that relationship has grown each and every year as more and more fans recognize the role of Nationwide and come to appreciate what the Nationwide Tour means in the world of golf. And it also means stability.
I think the things we have to look forward to during these next years of this partnership are first and foremost the continuation of a seamless relationship between the PGA TOUR and the Nationwide Tour with quality of players being very difficult to discern any difference between the two.
Enhanced television. The developments with the Golf Channel in terms of the quality of that both from a distribution standpoint and a production quality standpoint are very, very positive. So when we add the additional programming for the PGA TOUR and bring so many more eyeballs to that service, we're going to see and enhance the value for all of our sponsors on the Nationwide Tour. And I think around the country today, there are sponsors of the individual tournaments on the Nationwide Tour, who should be very, very pleased.
So we are delighted with this development. We're pleased that Jerry and his executive team have placed the confidence in the future of this tour that they have and recognizing where it's going, and we're just very pleased that we'll be able to move down that road together, and, Jerry, continue to build that value. Thank you.
JERRY JURGENSEN: Thanks a lot, Tim. From the Nationwide Tour perspective, it's been a tremendous four years and we're looking forward to the next six. We got into this at a very good time, a great time in terms of this tour, the players; the quality of players as Tim said coming on to the Nationwide Tour since the time we first got involved have gone on to do tremendous things on the PGA TOUR. We thought that that would be the case. We went into this also because we thought it was a great opportunity to increase brand awareness for Nationwide, not just with golf fans, but really with the country as a whole.
We've seen our brand awareness with golf fans increase 23 points in the last four years, alongside the PGA TOUR, and now as 79 percent, very favorable reaction from golf fans. And part of our strategy was to really align with the Tour and be able to take our brand message into markets that Nationwide has not historically operated in. So principally, these would be markets west the Mississippi River, and I think the sport has done tremendous things for us in that regard.
It also was an alignment in my view of two brands that really stand for a lot of the same values, particularly the value of giving back to communities. So it's been a real honor to participate with the PGA TOUR in their Reach For a Billion, and we're really proud that the Nationwide Tour has been a great corporate sponsor in terms of providing money to those efforts. Particularly The First Tee has been a wonderful program that we worked very hard on and have been really interested to see all of the Nationwide Tour players that have volunteered their time to help us with clinics and various markets that we have operated in.
So I'm looking really forward to the next five years or so on this, and I think it will be a great partnership.

Q. I was wondering if you might be able to elaborate a little bit on some of the things that you think that the continuity will provide and some of the things it may allow you to do because you have this continuity and there's no transition.
COMMISSIONER TIM FINCHEM: Well, I think the first thing is that it has to do with stability. Before the Nationwide Tour relationship, we had a fair amount of, probably an unacceptable level of turnover at events. And with the Nationwide brand relationship and that continuity and positions, the landscape in the marketplace has really changed, and I think what you've seen is a gravitation to this tour of bigger, more market-savvy companies, marketing-savvy companies that understand golf and recognize that the Nationwide Tour has become a platform that is reaching a lot of people. And that kind of sponsorship flow has resulted in more stability, so we have the opportunity to build better events. And better events mean more value to Nationwide and a continuation of what Jerry referred to in terms of a growing recognition among the, say, 110 to 120 million PGA TOUR fans around the country that recognize what this tour is all about.
So that has mainly to do with the platform. The players who play it clearly over the last several years have demonstrated that they can play at the level of the PGA TOUR when you consider that almost 200 tournaments now have been won on the PGA TOUR by alumnus's of this tour, 60 percent plus of the players on the PGA TOUR now are alums of this tour.
So the competition is there. It's just a question of communicating it through the proper platform, and I think a combination of this extension with what's happening with the Golf Channel will continue to move us in that direction.

Q. Just wanted to find out if with this new affiliation, have you looked in any type of goal for increased purses, a number of increased television events and so forth that you want to try to have on this tour?
JERRY JURGENSEN: Well, it's been our goal to work the purses up, and I think we've actually done that in the first leg of this. And it would be our objective, again, to try and build strong, local presenting sponsors that would enable us to offer more purses.
You know, right now, I think it's a great opportunity for players as they are chasing their dream to actually be able to come out here, and if they do well, they can make a living. So they are not only getting a chance to, you know, realize their dream of playing on the PGA TOUR, but they also have a little financial stability and that of course is very much connected to the purses.
The purses will go in concert with how strong the events are, and that takes good, local presenting sponsors and it takes strong tournament organizations in each of the cities we're playing in. We provide a lot of volunteers and things of that nature to the tournament, so the idea would be to keep moving forward, basically in the same trajectory I think that we've been on for the last four years. That's what we'd like to see.
COMMISSIONER TIM FINCHEM: If I can just add to that, you know, we started this tour, and purses for the year were $3 million, they are 17 million now. I think that clearly the purses will move past the $20 million mark in the foreseeable future and continue to grow. And we're not seeing the effect yet of what I've described earlier as a much stronger sponsor base, and we'll start to see that the next couple of years.
You also mentioned television. We anticipate a consistent level of television, but it is something that will be evaluated every couple of years.

Q. Over and above the obvious benefits that you derive in the branding, what, if any kind of personal experience with the good that's gone on out here that you might tell us about?
JERRY JURGENSEN: Well, it's been a great venue for our agents and a wonderful opportunity for agents to entertain clients around the country. You know, for whatever reason, golf is a pretty popular sport in our industry. So the opportunity to have these kinds of forums and reward our agents with opportunities to play in the Pro-Ams has really been important to them.
The other side of that is, you know, how well we get treated by the players. I think that really goes to a very deep, genuine appreciation that they have for the kind of continuity and stability in sponsorship that Tim referenced. They realize that if it were not for corporate sponsors, they would not have a sport. So they express their appreciation, and I am grateful for, you know, for how nice they are and what a great time they provide our agents and producers. So that's really along with the brand awareness, that's really the more personal benefit I think we derive.

Q. We're pretty much closing out the season, as a look back, all three of the tours that you direct and your organization runs seem to be on their best financial footing with no real troubles ahead. Do you think that's an accurate assessment, and if so, how do you attribute that, the way pro golf is going now?
COMMISSIONER TIM FINCHEM: Well, I think Jerry put his finger on it a few minutes ago, which is the value in the marketplace is generated from the quality of the events on the Tours and the extent of the focus by the fans on the particular events. And we're pleased that as you look to next year, for example, I think that as you go down the list on the PGA TOUR, week after week after week, it's going to be better. On the Nationwide Tour, you've seen a great significant, really, sea change in the quality of events in the last three or four years. We're expecting a great finish to this season here in Houston this week.
It's a function of a lot of different things. I think it has to do with the general popularity of the sport, but the sponsorship support allows things to happen to build the quality of events; and the stronger the events, the more sponsorship is forthcoming. People believe around the country in the charitable focus of the PGA TOUR generally, and all three tours, because all three tours are organized for a charitable purpose. I think in today's world, that is a unique feature in sports entertainment, and I think one that continues to drive sponsorship interest as well. Sponsors like to be involved with athletes of the quality of these TOUR players, and they like to be involved in an enterprise that generates positive results for charity.
So all of those things add up to allowing us to continue to grow, and I do think we're in a great place. But as I said the other day, I think that the best days are ahead on every Tour, and we're really looking forward to the next few years, because we have -- you know, we made a lot of progress, but there's an awful lot of things that can be done to continue to improve and to drive value to Jerry and his team and to our other sponsors, as well, and we intend to do that.
So as long as we continue to have a good working relationship with the players and the sponsors working together; and Jerry made a good point a second ago, which is that for the players, you know, Nationwide has been around long enough that they do develop this allegiance, and that has a couple of different benefits.
Jerry mentioned that the guys are good in the Pro-Ams and handle customers well. But I think they really step it up and they go out of their way when they see a company like Nationwide that really has made a long-term commitment, and they see these guys are smart guys. Our athletes are smart fellows and they understand these things. They know that that kind of commitment going forward for this kind of term, really does generate value.
It all continues to add up, all the different pieces, and I appreciate the question.
JERRY JURGENSEN: From our perspective, we appreciate what this sport stands for in terms of the values that are demonstrated in terms of the competition, the values of honesty and integrity. We also appreciate the way that these athletes handle themselves off the field, as well, and it's just a great thing to be aligned with, I think, from a values point of view.
So the sport has great inherent life values that it teaches every day, and the players demonstrate their own personal set of values both on and off the course. We have an opportunity to be involved in a lot of sports marketing situations, and I don't think any of them are as closely aligned from a value point of view as golf is with the same values that our company stands for.

Q. You referenced the level of play, and blurring the line between the Nationwide Tour and the PGA TOUR and the growing recognition of this tour. The significance of the Tour has also increased quite a bit, and it seems to increase every time the number of graduating spots from this Tour goes up. Almost every barometer, this is a greater indicator for success, a year out here, as opposed to Q-School. How fast and how high will we see that number reach?
COMMISSIONER TIM FINCHEM: Well, I think it's in two parts. You know, I can't speak for our Board, but there is a recommendation next week to increase spots on this tour from 20 to 25, and that's a continuation really of the direction that we've been going since the early days when there were five spots. And so it continues to shift the balance a little bit with the qualifying school as an access point.
The longer term, the longer term may be impacted to some extent on what happens with the development of the FedExCup and the schedule play out that we'll see in the next year or two. I anticipate the Board will approve the increase next week, we'll see; I can't speak for them. But then we'll be carefully watching players' schedules and movement of players over the next year or two. But I would say earliest, year and a half to two years, we'll have a more long-range plan as relates to where this Tour is going on that front.

Q. How important is it from your company's perspective and meeting your goals that that number increases?
JERRY JURGENSEN: Well, I think from the beginning, we have been interested in anything which increases the stature of this tour and I think two things, you know, fundamentally do that. No. 1 is, the role that this Tour plays as an entry point to the PGA TOUR. So we were very pleased when we first got involved to see it go from 15 to 20. If the Tour Policy Board approves this to go from 20 to 25, that's great.
I think it needs to be something, frankly, that happens over a period of time and not maybe the way it's going right now. The reason I say that, is I think it's important that we continue to watch how these players perform when they get to the PGA TOUR. You know, this year, I think 11 of last year's class are in the Top-125, which I think is a pretty darned good performance. It's better than Q-School, so that's a strong indicator it's going in the right direction.
Again, we have a situation here where from my perspective, there are a great number of good players and it's getting more competitive. And the quality of this product to a corporate sponsor and whether it's the PGA TOUR, the Nationwide Tour or the Champions Tour, the value of this from a sports marketing point of view is directly commensurate to the quality of play that goes on.
So what I'm really in favor of are systems and approaches, which increase the competitiveness of all three of those tours. And I really view professional golf on a continuum, so the Nationwide Tour, the PGA TOUR and the Champions Tour; I really don't see them as three siloed brands. I actually see them as a continuum.
So on that basis, if the numbers continue to play out the way they have, the quality of play continues to pick up on the Tour as it has, we see Nationwide Tour graduates go out and accomplish things that the Zach Johnsons have accomplished and others, whether it's Ryder Cup competition or whatever. All of those things in my mind feed back and say, this is something that the golf fan in America needs to increasingly pay attention to.
And to the extent that more spots on the PGA TOUR become available by what they demonstrate they can do on this tour, that just increases the value of the brand and the marketplace from my perspective. But I think it needs to be measured, and I think the way the Tour is handling it is appropriate.

Q. Just wondering if you can comment on how not necessarily the quality, but the visibility of individual title sponsors has evolved with the Tour on a tournament level over the past few years, and maybe comment on some of the markets the Tour may be headed to in the future?
COMMISSIONER TIM FINCHEM: Well, I'll answer the first part, which is that it's only been a few years since we had individual title sponsors for the events. So it's a fairly new phenomenon on this tour.
But in that brief period of time, we've begun to see a lot of quality companies step up, you know, for the same basic reasons that Jerry has articulated earlier in the call and also that we see from other sponsors. You just look down the list and you see a real change in terms of how that's evolving, and we expect that will intensify now going forward.
In terms of where we're playing, we announced our newest announcement in the Washington, D.C. market in the Maryland suburbs of Washington, the eighth largest market in the country and we're delighted to be there. We'll evaluate it as we go forward. We have a loyalty to our existing events that we have to balance with the opportunity to build bigger events. So we keep our eye on both things.
And also, right now I think it's important to know that this is an international tour, as well, and we play in South America and we play in Australia and New Zealand. So you know, what might develop in that regard is to be determined. But right now, we like the balance that we have, and we certainly like the direction of sponsorship.

Q. I'm wondering if with all of this, you have any sort of wish list of some sort of innovations that you want to try with regards to the Nationwide Tour the next three years out, or is a lot of what you do down the line still kind of contingent on how stuff from the FedExCup shapes out?
COMMISSIONER TIM FINCHEM: I'd say in terms of the structure of the Tour, we're in good shape now, but we will evaluate things as the FedExCup becomes part of the fabric of what we're doing and after we get a sense of players' schedules that relates to that.
In terms of the presentation of the competition on this tour, you know, I think Jerry has mentioned we want to focus our fans on the fact that there's an awful lot of back and forth between the PGA TOUR and the Nationwide Tour today that's accelerated in recent years, and it has to do with how many good players there are and their ability to play at this level. You know, just about any player on this Tour can compete on the PGA TOUR. The only reason he isn't there right this minute is because he hasn't played at exactly the right level at exactly the right time.
But as Jerry pointed out, a significant percentage of players who receive their card are now staying on the PGA TOUR, and that's why that percentage of players over there is escalating, and we want to get fans to recognize what that really means in terms of the quality of the player and so they can follow those players.
Then I would say the third thing is television, continuing to improve the utilization of television and perhaps using television on this Tour to do some innovations that might graduate to some of the other tours, as well, something that we may focus more on in the next year or so.
DAVE LANCER: We thank everyone for coming today.

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