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January 19, 2010

C.E. Andrews

Tim Finchem

Zach Johnson

Davis Love III

JOEL SCHUCHMANN: Good morning to those joining us on today's PGA TOUR teleconference. We appreciate your time today for a special announcement. We'll have several speakers on the call today, and then we will open it up for questions that will be coordinated by the operator. At this time I'd like to introduce PGA TOUR Commissioner Tim Finchem.
COMMISSIONER TIM FINCHEM: Thanks, Joel. Good morning, everyone. This morning we'll delighted to announce the final piece to our 2010 schedule by announcing that we will have a new event at Sea Island. On October 7th to the 10th this year, the McGladrey Classic will debut on those dates. It is a result of a three-year commitment by RSM McGladrey to sponsor this Fall Series event. McGladrey is a leading accounting, tax and business consulting firm, I think globally the seventh largest in the world in that industry sector, so a company that can take advantage of our global television distribution.
I think in terms of this new $4 million purse event, I'll just briefly say that we are very excited about it. We've been working on this concept for about, I don't know, a year and a half. It brings together obviously a quality title sponsor in RSM McGladrey led by a management team that really understands how to get value out of the business-to-business platform that's being generated here.
Secondly, it connects us with one of the great golf sites in America at Sea Island, Georgia. It has a long history of competitive golf at some very fine golf courses. This championship will be played on the Seaside Course at Sea Island.
It also partners us all with a local host organization that is, I think, quite compelling. The host organization will be Davis Love III's foundation. Davis will serve as the tournament chairman. His brother Mark Love will be the executive director. Zach Johnson, who now resides at Sea Island and has represented McGladrey for the last few years, will be actively involved as a member of the tournament board, as well.
So for all those reasons, I think you would agree we've got an exciting combination of stakeholders in this event that we think will do a great job for economic development in that part of Georgia and also charitable activity, as well.
I would just finally conclude by saying that yesterday's announcement as it relates to San Diego and today's announcement for the Fall Series really caps off announcements for this year. We are done. We have a full schedule. The upshot of that schedule is that the total playing opportunities for our players are consistent with the last couple years. Our prize money this year will be up slightly over 2009, and based on these announcements and also the final performance we're seeing in our first quarter events, we see our charity numbers now rebounding back into that $116, $118 area for 2010.
Having said all of that, I'm delighted to pass this on to the president and CEO of RSM McGladrey, C.E. Andrews, and let me say as I introduce him that C.E. and his entire management team have looked very carefully over an extended period of time at opportunities on the PGA TOUR, and this commitment at this particular time I think is a reinforcement of the fact that the PGA TOUR continues to provide real value. And based on what we know from this management team's expertise and review, we are looking forward to what we think is going to be a very long-term relationship. And with that, let me turn it over to C.E. Andrews.
C.E. ANDREWS: Let me just make a few comments really on behalf of our 7,000 employees. We really are thrilled to step up and serve as a title sponsor of this newest PGA TOUR event, which will be called the McGladrey Classic. Is really is one of the nation's leading accounting, tax and business consulting firms. McGladrey has shown through this newest announcement our commitment to get involved. If you aren't aware already, we have a multiyear player sponsorship with Zach Johnson, Natalie Gulbis and Chris DiMarco, whom we call Team McGladrey, so we are very heavily into golf to begin with as part of our branding sponsorship. Now partnering with the PGA TOUR with a three-year title sponsorship agreement, this gives us what we believe is even a greater opportunity to enhance the relationship with our clients, and it also is going to greatly strengthen for us our brand name with prospective clients.
We find it particularly attractive to be on the ground floor of a brand new event so that we can help make this event what we want, what we want it to be, and we want it to be a spectacular event and a key event in the Fall Series, and we are confident that that will happen.
We know that our clients and prospects through our research very much enjoy playing and watching golf, and by partnering with the PGA TOUR, that enables us to really connect all of these individuals in a meaningful way while we are building greater awareness of what we're about, our services and the McGladrey brand worldwide. We believe that it is a very, very efficient marketing investment for us. And of course the real power in any relationship comes through understanding, and our employees across the nation use that philosophy every day to create long-lasting partnerships with our clients really that are based on trust and integrity, and that's what our business is about.
Actually this fall we recently, to complement this, we've launched our "Power of Being Understood," which is a national advertising campaign, and what it does is illustrate how understanding in relationships, whether they're on the golf course or in the business world, actually leads to winning teams. And we use this relationship between our Team McGladrey members and their caddies to illustrate that being fully understood, our clients and us fully understanding our client needs, we're better equipped to help them succeed.
One very important facet of this sponsorship of any event like this and for us particularly that is often overlooked is the ability to give back to the community and to give back to philanthropic organizations.
We really found it attractive here to be teaming up with Davis Love and his foundation, which will serve as the host organization, and that's going to help McGladrey further strengthen its support of one of our key charities, which is Special Olympics. We're glad to see that we were able to make Special Olympics, that partnership continue, and be a part of this with us. And through our golf activities last year, our organization and our clients actually raised over $175,000 for Special Olympics through golf-related events just this past year, and we look forward to being able to continue that as a part of this, as well.
So we see the McGladrey Classic, and we believe it promises to be an exciting new tradition for McGladrey, and when I say that, for our employees as well as our clients as well as our prospects, and this is going to be, we believe, really an exciting new event during the PGA TOUR Fall Series.
As the newest sponsor, we look forward to building and enhancing this great partnership with the McGladrey Classic and can't wait to get started on it. With that, I'll turn it back over to Joel.
JOEL SCHUCHMANN: Thank you, Mr. Andrews. Joining us now is 20-time PGA TOUR champion Davis Love III. Davis, at this time we'd welcome your comments. I'm sure you've been looking forward to this event coming to fruition, and today is the day.
DAVIS LOVE III: Thanks, Joel, and thanks, Tim and C.E., for being part of this announcement today and being a part of, as Tim said, a long, long process of getting to this point. This is something we have been personally involved with behind the scenes for a long time, and as most people are aware, the St. Simons/Sea Island area has been home for Mark and me and our families for a long time, and we're extremely happy to support the community that means so much to us. Probably more important than the prestige of serving as a host organization for a PGA TOUR event, which in itself is huge and a big responsibility and one we take very seriously, is the impact we can have our community's charities. It's no secret that this economy has crippled towns that depend on tourism. And with McGladrey's title sponsorship and Sea Island's status as a magnet making this possible, the St. Simons/Sea Island community as a whole will benefit. We're extremely lucky to have them both as well as the support of the PGA TOUR itself. As it's been said before, McGladrey has shown a passion for golf with their great Team McGladrey with Zach and Chris and Natalie and the relationship they've had with the PGA of America. They're a sponsor that really knows the value of involvement at the grass-roots level of the game and have a passion to support and grow the game.
As we've always said, golf is a game of honor, and one of the aspects of this sport that I've always been most proud of as a board member and as a TOUR player is how much our TOUR, thanks to sponsors like McGladrey, gives back to their communities and really to the whole country and to the game. And Special Olympics plus many local regional and national family and children's charities will greatly benefit from this tournament, and that's what we're most proud to be a small part of.
I'm really thankful to my brother Mark, who's put a lot of work behind the scenes, to Tim and his whole staff who have worked overtime. I've seen it as a board member and working on this tournament. They work 24/7 to get all these deals that have been announced in the last few days. And also thanks to the media for putting up with me trying to put off this announcement and not spill the beans.
It's just a thrill for us to have a tournament at Sea Island on our home golf course, a place that I grew up, coming to from Atlanta Country Club as a kid and have lived and represented. And thanks to the Jones family at Sea Island for really supporting us and being patient with us, as well, getting this deal done.
We're excited to work with McGladrey and really excited to work even closer with Zach, our newest neighbor. He lives about four or five houses down from Mark, so Mark can go down and get advice from him any time. I think Zach wants to make a few comments, and I'm hopefully going to go snowboarding here pretty soon. I'm in the middle of nowhere in Canada. I apologize for the snowmobile that just went by a few minutes ago.
ZACH JOHNSON: Thank you, Davis. Yes, I am beyond excited about this event. It was very difficult keeping my mouth shut about it. There's been some rumblings about it. But I'm excited that the day is here, the announcement is here.
I first want to thank Tim Finchem and all of his staff at the PGA TOUR. Once again, I'm on the board, much like Davis. It's only my first time instead of my 17th like Davis. But I certainly know exactly what goes into this, getting the hands-on experience, and it is very in depth, very broad, and I appreciate all their effort and time and just overall efforts to get this done.
Next I'd certainly like to thank Mr. Andrews. C.E., thank you for your dedication and your diligence in working this event out. I know everybody at McGladrey is excited being a part of that team. I'm even more excited because it's in my backyard. But I've been very fortunate to have a great partnership with McGladrey over the past four years or so, and representing them on and off the golf course has been a privilege. They've been a part of my team through a lot the last four years, and I certainly attribute a lot of my success to that relationship.
That relationship is a team, as C.E. mentioned. We've got myself, DiMarco and Natalie, and that team has also become like another family. So I'm very honored to represent them and honored even more so to have them be a part of the PGA TOUR now.
You know, I think McGladrey, what's cool about this is just how they parallel the PGA TOUR and how they're committed just to being great stewards of giving back to many organizations, specifically the Special Olympics. Their willingness and the dedication is very parallel to the PGA TOUR, and they make that very apparent in everything that they do. I think it's a great deal that this is a new event, an inception of a new event, and having it at such a unique facility like Sea Island, St. Simons, is going to make them extremely happy for a number of reasons; the entertainment side of it, showcasing a great golf course and being able to entertain clients and even their own, I think it's second to none.
Starting that off from square one, as Mr. Andrews mentioned, is an awesome, awesome venture, because they can kind of do what they want. I'm certainly going to try to help in that regard and help them build their brand and build this tournament to be the best tournament it can be.
I'd also like to thank Davis, certainly, for jumping on board on this. I know this is his backyard. This is where he grew up, and I know his heart is here. Certainly having the Davis Love name on it, it's kind of synonymous with the area, and given all he's done for the game of golf, I think it's only appropriate that he host this event.
Mark, I know I'm going to see him a lot more often. I hope he doesn't mind that, but he's going to do an awesome job. I know exactly where he stands on this, and I know he's as excited as Davis, and having those two brothers carry this event from day one is a pretty awesome treat. I'm looking forward to that.
Outside of that, I mean, certainly, I think, as Davis mentioned, what it comes down to is just we're able to give a lot of money, raise a lot of charitable money for a lot of people in need, and that's really what it comes down to in these events. Having the Davis Love Foundation synonymous with the event and certainly the Special Olympics and all of McGladrey's charitable arms, I just -- it warms my heart knowing we're doing this for the right reasons, and I think all of our peers are going to enjoy the Sea Island experience, and I can't wait for October.
JOEL SCHUCHMANN: At this time we'll open it up to questions.

Q. Davis, congratulations on this. I'm wondering whether you think that your involvement along with Zach's in a high-profile way in the tournament might spur the TOUR to involve players and their foundations, other players and their foundations, in similar kind of high profile ways with TOUR events.
DAVIS LOVE III: I think it will. I'm following along with leaders like and Palmer and Jack Nicklaus and Byron Nelson lending his name in Dallas and then Tiger stepping in. Having played in several of his events and watched them grow, and what he's done for charity, obviously we want to follow along with that.
And then in other sports, friends of mine like Jimmie Johnson, the things he's doing in racing with his foundation, Kyle Petty. We're trying to follow along with leaders before us, and hopefully as more and more players do this in their local communities, maybe this is a great format for more tournaments down the road.
When we announced that billion-dollar mark of charitable donations a few years ago at the TOUR Championship, we started thinking, how much is created by Zach Johnsons and the Natalie Gulbises in their hometown that doesn't get counted in that billion dollars, and it's amazing how much golf does give to charity. So hopefully the next generation will follow along like I did and try to keep giving back to the game that's given us so much.

Q. Tim, what's the status of Sea Island financially? Obviously that's not in most of our bailiwicks as writers. There's been some pretty grim stories coming out of there about layoffs and issues with lenders and multimillion dollar debts. Did that give pause to staging the event there on that particular place?
COMMISSIONER TIM FINCHEM: No, it didn't give pause. I'll just give you the bottom line. Of course in this downturn, a number of facilities around the country have been impacted negatively. But the reports that have been out there that relate to those issues, there are no issues as it relates to the tournament. The tournament will be conducted on time, on schedule, in cooperation with the facility owners. There is no reason for it -- we've looked at this very carefully. We have no reason to believe that there's any interruption in our ability to stage a tournament at a quality level.

Q. Could you just talk a little bit about the challenge the golfers can expect from the seaside course out at Sea Island?
DAVIS LOVE III: Well, the seaside course was redone by Tom Fazio. It was an old Colt and Alison nine holes that was kind of a classic design, and Tom turned another nine holes into kind of matching that style. So even though it's a seaside links course, it's a little bit of the Tom Fazio style with some Colt and Alison influences. If the wind blows, it's very tough. If the wind doesn't blow and the greens are soft, the PGA TOUR players will have their way with any golf course. We've seen it with the tournaments that have been there before, the Warburg Cup and the SEC Championships and several USGA events that if the wind doesn't blow, you can make some birdies. If it does blow, it's very, very tough.
It's a wide-open golf course, and until Zach and I and his team actually rode around and looked at it, okay, here's where we're going to have the tournament, I started thinking, wow, this is wide open and there's more pretty views than most other courses we play on TOUR. This course is going to be an awesome for a tournament, and the staff that we've brought in to set the golf course up is just amazed at how pretty it is. A lot of people really haven't seen it. Is it the hardest course on TOUR? No. But that doesn't make it the best, just being hard.
I think it'll be a challenging -- we're going to hope for some fast greens, and the greens roll off a lot, and there will be a lot of variety of shots around the greens, putting up the hills and chipping up the hills. I think it's a fun golf course to play, and you can shoot 65 one day and it could seem easy, and you could shoot 72 the next day and it could seem very, very hard.

Q. Commissioner, I have to break off the road here and ask, there's obviously a loophole in the new grooves restrictions. Is taking advantage of that loophole an insult to the honor of golf? Is something going to have to be changed on that?
COMMISSIONER TIM FINCHEM: By loophole, you're referring to the Ping i2 pre-1990 golf club?

Q. Yes.
COMMISSIONER TIM FINCHEM: It is a bit of a loophole, but last year we looked carefully at this, and our experts did not view this distinction of any significance. So rather than part ways with the USGA in terms of what they would have to do at the U.S. Open, at that time we elected to stay the course. We just the other day reviewed the data again. We just don't see any competitive advantage, any material competitive advantage to a player by going back and getting a club that was made pre-1990.
But we'll continue to evaluate it. But at this point in time, no, we don't see any erosion of competitive balance because of that particular situation.

Q. There's a suggestion that is being advocated by people in America, by sponsors and people associated with sponsors that perhaps the PGA TOUR should, and I'm quoting here, temporarily do away with conflicting event releases that grant permission to TOUR members to play overseas, and with some of your TOUR members playing in Abu Dhabi this week, I'm wondering whether you think that suggestion is likely to fly.
COMMISSIONER TIM FINCHEM: Well, I'm not much aware of a groundswell on that issue. The conflicting event releases we feel we've had in place now for 15, 20 years seem to be fine. You have the odd occasion where it raises a question, but on balance, we do not have a very significant of players at all seeking conflicting event releases.
It's something we look at all the time. We look at it annually. We evaluate when we get a good number in any particular week. But at this time I don't see any change to the guidelines, but it's something we'll continue to keep under consideration.
DAVIS LOVE III: Can I add one thing as a Sea Island board member just as a comment to a few questions ago about Sea Island? They have had a lot of staff cuts; they are in a tough economy in the resort business, but I will point out that they have still been receiving five-star, five-diamond awards, business going on as usual, and nobody can forecast the future, but the Jones family and all the management team there have assured Mark and I that they are going to do everything they can to be ready for this tournament.
We know living right there on the island, the way things have been the last couple years, they're doing an incredibly good job in a tough environment. We're really excited about playing at Seaside, hosting the McGladrey Classic, add the Sea Island resorts, and the Jones family is very excited about it, as well.
I'm going to sign off because you guys can probably hear a whole bunch of noise in the background. Thanks, everybody, for your support; thanks to the TOUR; thanks to McGladrey and thanks to the media for signing in, and I will be available for one-on-ones through Joel. Just get in touch with him, and I can help you out.

Q. Tim, there have been a lot of kind of doom-and-gloom articles, media coverage, about with Tiger away, TV ratings are going to take a big hit, and that that's -- I was just wondering if you might be able to explain why that's kind of a short-sighted view.
COMMISSIONER TIM FINCHEM: Well, I've answered this question before, but I think that there's a misperception about our business model for one thing. People think because Tiger spikes ratings, which he does, and spikes interest, which he certainly does, that if he's not playing, it just doesn't work. And I've actually been answering the same question not since November but really for the last 13 years, because we've averaged about 47 tournaments a year on the PGA TOUR. In those years Tiger has averaged playing about 17. That leaves 30 events. And those events have grown in the last 13 years exponentially. They've actually grown at a higher percentage basis than the events that Tiger basically plays in.
Why is that? Because we have a huge fan base. 86 million Americans have played the game or are playing the game. 132, 135 million people tuned into some of our telecasts last year. We average -- our cum audience in any given week without Tiger, 24 to 26 million viewers. So companies like RSM McGladrey look at that, and they see value. They see the value of our audience. We index higher at the upper income and decision makers and opinion leaders than any other sport. They see value in the size of the audience, they see value in the quality of the audience, they see value in the business-to-business platform that a PGA TOUR event provides.
So sponsorship is, generally speaking, over the last 13 years, 100 percent at full value and price point. So you start with that. And then the communities where we play benefit significantly from an economic development standpoint and a charity standpoint. In fact, the five biggest charity generators on the PGA TOUR the last five years were tournaments where Tiger didn't play. So there's real value week to week.
That's not to diminish the falloff from Tiger not playing. You want the No. 1 player not just in the sport, arguably the No. 1 athlete in the world who's competitive, to play, and when he does, it lifts all boats; it creates more interest, more focus.
But week in and week out, the PGA TOUR provides value, and as C.E. indicated earlier, in this case we've got a great venue, a great group of players involved already, a great golf course, a great time of year to play. If you're smart, you can put together a tournament that really generates value for all the stakeholders. And that's been our experience.
So that's the real world. We just had Tiger out for eight months in '08, and we had our all-time record charity year at $125 million. Everybody just needs to keep it in balance. We want our No. 1 player back. I think he's going to be huge when he comes back. But he's doing the right thing right now in dealing with his issues as he said he wanted to.
In the meantime, we're moving forward, and we're going to have a great year.
C.E. ANDREWS: Let me just comment, from our standpoint, this is all part of a much bigger -- it's a component of our overall marketing and branding direction in what we do, and we've been doing it for some time, and this is an evolution of that. I think for us, as Tim said, our research tells us that our clients, the sea-suite-type clients and prospects, that this is the best venue -- golf is the best sport for us to align with, and not just best sport, but if you really want to reach that audience, more of them participate in this in some fashion, either playing, watching, whatever, than any other sport or any other activity that we could find. So it matches up so well with the audiences that we're trying to reach, first of all.
Secondly, we have -- this is one component of a much bigger package of things as we mentioned. Of course Zach is a member of our Team McGladrey. We have three excellent golfers that we sponsor, and they're great ambassadors for us, so that works for us year-round.
We like the package of this particular tournament. We're going to be able to include throughout the year things that we'll do in our offices around the country, at other TPC courses and things. We'll build enthusiasm and client and prospect interaction. It all builds for us, and then it builds throughout the year, and then it will culminate with the tournament in early October, which we think is just very well-positioned for our business.
Our business has peak activity where we're all busy in the January through April time frame, and this falls at a time that gives us capacity to do these types of things. So we just think it's tailor made, and we really like the location, the venue, and we very much like the folks that we now have a relationship with in Davis, and of course we were already with Zach, but Zach is committed to this tournament. And they will be, I think, a magnet for bringing others to it, as well. We think this has the makings of something really outstanding for us, and we believe we'll get plenty of value in the direction that we're after out of this event.
The other thing, and we talk about the charitable aspect, that's part of our DNA as an organization, very much so. I think I mentioned in my remarks, for example, we have through our golf platform raised a lot of money for Special Olympics that we specifically direct at the special Olympic golf initiatives. Last year through, the process we went through even before this TOUR event, we raised over $175,000 from that from our folks, our people in the organization, as well as our clients, prospects and whatnot.
So it's part of the complete package. We think it's -- again, it'll be extremely successful, and we're particularly delighted to be on the foundation of it to go into a new tournament and help be part of the process of the architecture, if you will, of it, and what we really can make it.

Q. Mr. Andrews, this has been talked about for about a year and a half. I was curious what took so long to get to this point.
C.E. ANDREWS: Well, fair question. I haven't been here a year and a half so I didn't participate in that discussion. I've only been here a little over six months, so I got involved in the process the last six months. I would say this: We have had other pieces, if you will, of our golf platform over the years. We were at a situation where one of those commitments we had was rolling off, and we were looking -- we have been looking for some time to replace that but not to duplicate it, but to replace it in a way that lines up with where we're headed and the objectives that we had.
And honestly, and I talked to our team just yesterday about this, the timing of this from our standpoint, we couldn't have constructed it better. It is just flowing; as we kind of move out of kind of our previous arrangement, it lines up with our new arrangement. It's perfect from the way our business aligns, et cetera. So I think the timing is perfect.
It's like most things, especially if you're starting a new tournament. Those things, whether it's a sponsorship or the other elements, I'm sure they don't come together quickly. All those things take a lot of time, and all I will say, regardless of the reason, the timing has turned out to be perfect for us. If we started talking about it a year and a half ago, I'm glad we didn't get to the finish line until now because it's teed up perfectly.

Q. In the past couple days you've nailed down a title sponsorship for San Diego and now this. Why wasn't a title sponsorship able to be secured for the Hope, and how do you feel about the ability to get one for 2011, and what's the tournament's future next year if a title sponsor is not able to be secured?
COMMISSIONER TIM FINCHEM: Well, the reason primarily with respect to both San Diego and Hope was the lateness of coming out of the bankruptcy situations in the case of Chrysler and GM. We didn't come out of bankruptcy until well into last year. We weren't in a position to go to the market with those sponsorships until after we were out of bankruptcy. It's a down economy, so things take longer. Everybody studies everything and sees predecessor, and the team spend a lot of time studying this one. It takes a while. That's the fundamental reason.
Secondly, your second question, I think as long as the economy maintains where it is, maybe ticks up a little bit, I think the prospects are very good. Hope is -- the Hope has a long history with the PGA TOUR. It's got a great charitable relationship with the Eisenhower Medical Center. It's raised millions and millions of dollars for that complex. It is a terrific experience for amateurs that we all know. We have a group of our own customers we're hosting there this week. And it's performed well in the marketplace. So I'm very bullish about it for next year.
In the event that -- I don't see that happening, but in the event that we struggle with title sponsorship for another year because of the economy, we will figure out a way to bridge it and work with it for a period of time, because it's an institution on the TOUR, and it, again, is a great venue for a lot of our customers and people in our sponsoring companies to come together, along with the people there in Palm Springs. So it would be a priority for us.
But the way things are going now, as I say, over the last 60 days, we have signed a lot of business, we have new sponsors, we have a lot of renewals, some of which more will be announced in coming months. So things are moving back to the kind of normalcy we've seen over the last 12 years. It's not normal yet. It's taking longer and it's challenged, but it's coming back. That leaves me quite optimistic about the future of Hope.
JOEL SCHUCHMANN: Thank you to the members of the media for your participation today. We look forward to your coverage of the McGladrey Classic October 7th through the 10th.

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