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December 9, 2010

Tim Finchem

TY VOTAW: Thank you for par anticipating this afternoon in Commissioner Finchem's year-end teleconference. As we have done in the past, we have made the Commissioner available for kind of a last, end-of-year summing up of the PGA TOUR and the entire organization.
With that, the Commissioner will have a few opening remarks and be available for questions. With that opening, Commissioner Finchem?
COMMISSIONER FINCHEM: Thanks, Ty. This is Tim Finchem. I just wanted to make myself available really for questions primarily today as we get ready to break for the holidays, and before I take questions, I'll just make a few brief comments.
First of all, I think that as we exit 2010 or about to and look back on the year. Overall we were very pleased in a lot of very solid individual performances this year; with Jim Furyk being recognized by his peers as Player of the Year, which we announced last week, and his three wins and the FedExCup title as he indicated, his best year on TOUR.
We also announced that the Champions Tour Player of the Year is Bernhard Langer, and we announced Jamie Lovemark, Nationwide Tour Player of the Year, and the youngest player ever to be leading money winner on the Nationwide Tour, as well. We announced Rickie Fowler as Rookie of the Year on the PGA TOUR. And we had previously announced Matt Kuchar as the winner of the Arnold Palmer Award, or leading money winner, and Byron Nelson Award for the lowest scoring average on the PGA TOUR.
I think the takeaway on the competition side of 2010, more than anything else, was the tremendous interest in young players coming up. I've never in my tenure seen so much buzz and interest about rookies and young players creating exciting performances.
Actually, it has led us to conclude that we really need to focus on that dynamic as we go into 2011, and it will be our primary promotional focus to get people to pay attention to how well the veterans continue to play, and the young stars, the competition between the newer generation and the more experienced and older players, we think makes for good theatre this year, and we are excited about that development.
On the business side, we had a very positive year, and I think over the last 18 months, we've made a lot of progress. Although we continue to be challenged by underlying economic indicators; a concern among business about the economic future. We still have signed a lot of business.
And then during the course of the year, we brought six new sponsors on the PGA TOUR level, and we had seven or eight renewals and another one or two to-be-announced renewals. We now have over 30 percent of PGA TOUR title sponsorships extended beyond 2012. And so we made solid progress.
However, as we go into 2011 even though we have a very solid schedule of 45 events. We have all of our tournaments funded. We still have a couple of title sponsor vacancies that we would like to fill as we go through 2011, the Bob Hope and The Heritage. The Reno event doesn't have a title sponsor, but it really never has, and it works well, so we are not overly concerned about that from a long-term stability standpoint.
So we feel like we had a good year. We are very pleased with our progress the last 18 months, and we look forward to a very good, solid schedule in 2011.
On the Champions Tour, one of the highlights on that tour this past year was playing for the first time in Asia at Songdo in Seoul, Korea. It was a very, very big success. Another highlight was Freddie Couples and Bernhard Langer's rivalry developing. And really, an upsurge in gallery and television audience, and a growing stability on that tour, as well, from a sponsorship standpoint.
On the Nationwide Tour, I would say the hallmark was a couple of things. One, the average age is lower, and as a matter of fact I should have mentioned earlier that we have 30 rookies, pure rookies, in our Q-School Nationwide class coming on to the tour this year, which is more than we've had in a long time.
But on the Nationwide, I think the hallmark, also, on the business side, is three good, solid events added to the Tour this year in Colombia, South America; Sawgrass here with the Winn-Dixie, which was a big success, and also in Cincinnati. So on all three tours we have seen progress and movement and success in the business area.
With regard to charity, we don't have all of the numbers in yet. But when we finish the year and announce details later in the first quarter, it's now clear that we will exceed $120 million raised by our tournaments, which is a nice rebound from a bit of a dip in 2009, and that's a reflection of the strength of our tournament organizations, strength of the business model, and an uptake in sponsorship. All three of those things I think work to the benefit of the bottom line of tournaments.
In addition to that our players themselves for the first time in our TOGETHER, ANYTHING's POSSIBLE Program were focused on player activity of their own, their own foundations and their own fund-raisers, and we now estimate that we could track somewhere between $25 and $30 million that were raised this year by the players in and of themselves.
So I think that in a very difficult economy, the fact that tournaments and the players combine for probably $150 million of financial generation is a very strong statement in terms of the quality of a PGA TOUR platform for charitable activity.
We had our first year of TOGETHER, ANYTHING's POSSIBLE, and I think it's off to a very strong start. In particular, we featured over 300 stories of videos about the work that players have done in their own communities. And the program has started to spin-off a lot of activity in different directions. One of the more notable examples is that country music star Darius Rucker wrote a song entitled, 'Together, Anything is Possible,' and he has donated the proceeds of downloads and sales of that song to PGA TOUR Charities. And there's a lot of other similar-type new directions on the charity side that will come out of that new initiative.
All in all, we are excited about '11. We are looking forward to a good, solid year, and I'd be happy to try to answer your questions as best I can. Thank you.

Q. Have you gotten any indications from FedEx that they want to continue with their umbrella sponsorship of the points race, and if that should not work out, are you committed to having the same version under a different title sponsor going forward?
COMMISSIONER FINCHEM: It's never occurred to me that it wouldn't continue. I have no reason to believe that it wouldn't continue. We'll be sitting down and talking to them later this year, but the response that we have gotten from the company from the start really of the program has been very, very positive.
So I feel strongly that will be the case. I'm not looking at any other alternatives at this point.

Q. And just quickly, the way that the FedExCup Champion has been determined the last couple of years where things did go down to the end, do you think you guys have kind of hit on the points formula? Do you foresee, with the way Tiger and Phil finished last year and Jim's finish coming down to the 72nd hole this year, you have this thing where you want it?
COMMISSIONER FINCHEM: I think so. We are going to; we are; have this year, not just spent a lot of time not just measuring it and looking at it from our perspective, but listening to people talk about it, and we think we are in a good place.
We know we are in a good place from the standpoint of the fans embracing it. We are getting a lot more traction with it internationally, significant uptake in television and fan interest overseas with it this year. The finish has worked out very, very well.
And there's a nice balance between play early in the season, and because it's been demonstrated time and time again, that the stronger you play early in the season, it increases the chances that you can position yourself in Atlanta. But there's an uptake in impact when you get into the Playoffs significantly, as we have seen players move up, but then you have to play again. So you have to play early, you have to play the Playoffs, and you have to play late. I think it's in a good place.
But I wouldn't ever say we wouldn't change it, but right now, we are very comfortable with it and we really like the trajectory of interest and focus by the fans on the Cup.

Q. As you head into TV negotiations this year, what do you think will make these negotiations different than the other two or three that you've had to go through?
COMMISSIONER FINCHEM: Well, I suppose in terms of a negotiation in and of itself, not much. But the structural aspect of the negotiations is somewhat different, because for the first time, assuming the merger goes through, we will have our cable partner, up until five years, we had multiple cable partners and then we went to one cable partner, and we'll have our cable partner really part of the same company as one of our network partners.
So it's just a different mix of conversations, really. Of course, the cable agreement goes for 15 years, and that's the first time we'll be negotiating just network agreements without the cable, which is set an extended period of time in the future, another ten years. But other than that, I think the elements of the discussions will be the same.

Q. And along those lines, have you given much thought to how you can make golf more appealing on television without losing some of the tradition of the sport?
COMMISSIONER FINCHEM: Well, I think that it is appealing on television. I think that the challenges we have are promoting what we have effectively. And we have had more challenges this past year on what's up against us than we have had in a while: The Olympics, the Winter Olympics performed significantly higher than anybody would have anticipated, and that hurt us three weeks early in the year, three weekends. The NFL combined; again in the first quarter; the NFL ratings were at an all-time high. That hurt us. And we have had four or five other instances later in the season where there were just uniquely popular programming up against us.
Now, that would not necessarily play out again this year. I don't think it's at all a function of the quality of the telecast. I think candidly, all three of our partners have done a much better job as the years have gone by, and I think they have got it down. I think if you want to watch golf, they do a great job. We particularly like the technological aspect, the high-tech aspects that have been added the last three or four years.
We like the way virtually all of our partners are trying to get the story lines out about players. Tougher to do when Tiger is playing really well, because he does eat up a lot of the interest and time. But in this last year when he didn't play early in the year and then in '08, it opened up the opportunity to get some of these other stories told, which is important to our future.
So we like the way that our television partners focused on that. I think we have to do a better job of bringing it home to our overall fan base, which is over 100 million people pay attention to golf on television on a regular basis. We have got to reach them with some compelling stories, and that's what we are really focused on.

Q. When you head into TV contracts, the media, we make a big deal sometimes, but does TV make a big deal of how many times Tiger plays, and do you have a sense, there's a chance in 2011 he'll play more than he has in the last few years?
COMMISSIONER FINCHEM: Well, you know, I'd ask you to ask Tiger that. I do have a feeling that in a sense from talking to a wide range of players that there's going to be fairly -- well, an extensive effort by players to shake up their schedule a little bit. I don't want to characterize any one particular player, but I think you're going to see that pretty much across the board.
With Tiger, you know, Tiger has not had a lot of movement in his schedule for about ten years, but his overall presence as a player who is chasing big records and a perennial No. 1 player, now No. 2, is that he increases interest across the board in the sport, whether he's playing or not, actually. And that's a positive thing.
So it is what it is. But I think that, again, I said this many times, from a television perspective, Tiger broadens the audience, increases the audience. But the core audience is there week-in and week-out, and it is at a very acceptable level from a sales standpoint. It's not at the same level from a sales standpoint as it is at a higher rating point, but it is at an acceptable level. It is at a level that allows us to grow, and I think that that dynamic and that reality is sort of the backdrop to any conversations we have with television.

Q. The game has grown so much internationally, and in the past, you have talked perhaps about there one day being some sort of world-wide tour. Curious how you see that affecting the TOUR as we know it today. Do you foresee in the future there being more TOUR events internationally, and secondly, where do you sort of expect those markets to be?
COMMISSIONER FINCHEM: Well, I've said publically a number of times that I think in the long term, after golf matures where it is reasonable to assume it will mature, which includes South America, Asia and Eastern Europe, that you will probably see a fairly different competitive landscape on a global basis I would think. That could take on different forms, but I think it will be very different when you see a significant percentage of top 150 players coming from those regions, and I feel very strongly about that.
But in the interim between now and then, I think the over -- there's a lot of focus on who plays what events where, but I think the fundamental is that if you're in the golf industry, whether you're on the professional side, the manufacturing side or whatever side, it's in the long-term interest of golf to do what we can wherever we sit, whatever hat we wear, to drive the growth of the game; particularly in areas where they are far from being mature golf-wise and/or they have glowing market capability to support the game.
So I see that as a major part of what we have a responsibility; to assist in that. At the same time, we want to make sure that -- we have been distributing our product internationally for 25 years. We want to make sure that the brand strength that we have globally, and we are taking advantage of for the benefits of our players.
So we are going to do some things, have done some things, continue to do some things internationally, but, it's marginal in terms of scope, because you know, we have such a strong base here. We want to maintain that base.
But you will see us more active, and not necessarily at the PGA TOUR level, but at different levels, very active in South America and Asia and other places as we go forward. It's hard, just in focusing on the calendar and an event schedule, to sort of predict what that means. So I don't want to predict what that means, but you'll see us more active as we go forward.

Q. I wanted to ask you, Furyk obviously didn't play in the first event in the FedExCup Playoffs, and then the rule was changed and by the time he got to the second event. I think that rule as I understood it was maybe changed temporarily, and I'm wondering if it is going to be a rule that is going to be change permanently?
COMMISSIONER FINCHEM: It has been changed permanently at our most recent board meeting. Basically what it says is that -- our staff can get you the details.
Basically it says two things. It says that if you're negligent with respect to a tee time in the Pro-Am; negligent, meaning, you made a mistake for whatever reason, it's not a disqualification. But it comes under the heading of conduct unbecoming a professional and subject to our disciplinary process, which can mean anything from a warning to a fine to a suspension defending on the player and his record, etc., etc.
If you blow it off, then you're not going to be able to play in that tournament; and, you're subject to disciplinary action.
So, now some of those words are somewhat vague, but intentionally so, because we want the flexibility to deal with situations that may differ.
And our thinking in all of that was that while the rule we had in place was designed appropriately to protect the sponsor that week, the Pro-Am for that sponsor. By the same token, it had the effect in a case where a player was negligent or made an innocent mistake of hurting the sponsor, and Barclays is a great case. We have had a couple of instances like that before, and in hindsight, we probably should have acted sooner. Sometimes we are reluctant to take on the job, and I say us; me, taking on the job of making tough decisions in those situations.
But here was a clear case of where we are hurting a sponsor and we didn't want that to happen again, so we are taking it on and dealing with it, and we have a very strong response positively from the membership on that.

Q. Is this only going to be for the Playoffs?
COMMISSIONER FINCHEM: No, it's for the entire year.

Q. So the rule has changed for the entire year?

Q. Secondly, you seemed to indicate in the press conference when you named Cadillac as the sponsor in Miami, that there's been a lot of historic events that have been with the TOUR for a long time but as time goes on, maybe the fact that they are historical and struggling to find sponsors, that they may have to -- there may be changes down the road. Am I reading that correctly that maybe you see obviously an event like the Hope -- I'm not suggesting the Hope is the one, but it's been there for 50-plus years; but the fact that it's been there 50 years, because it's struggled to find sponsorship, in 2012 or whatever, there are other events out there, other sponsors out there that would like to see an event somewhere else, you could see that maybe the TOUR has to make those changes?
COMMISSIONER FINCHEM: Well, that's always the case. It's not a question of whether a tournament has been with us for ten years or 50 years. We feel like we owe every tournament that is with us full and thorough opportunity to work with them to do what they need to to stay with us. We have a long history of not saying to Tournament X, we have a higher price point down the road, so we are going to say good-bye to you.
So we go the extra mile. Sometimes we push it to the 11th hour, but we work very hard to maintain that continuity and we continue to follow that, and will. However, situations arise where it just doesn't work out. That happened with Castle Pines three or four years ago. We had gone to extremes, and there just didn't seem to be any reasonable prospect of sponsorship for that particular event, and we made a change.
It could happen again. I'm not saying it will. We prefer it not, but I was just stating what our business philosophy is. We are loyal to our partners. At the end of the day, we have to make tough decisions to protect the overall integrity of the sport.

Q. Curious, you seem pretty positive for the designated events thing coming down. You seemed to be positive about it at THE TOUR Championship, and it didn't pass the second time around. Were you disappointed about that, surprised perhaps that it didn't go through, and will there be any attempts to bring it back?
COMMISSIONER FINCHEM: Well, the answer to your last question is, possibly. But no, I wasn't disappointed.
As a matter of fact, I recommended that we go down this direction. But the reason I recommended that, even though we had been working hard on what a rule could be, is that we got on the question of whether players would react positively; and in concert with a rule that says, we want you to either add an event to your schedule and/or play an event that you haven't historically played.
As we went from -- when we start our scheduling process for the following year and talking to our players about the schedule, it really starts at THE TOUR Championship and works its way into November and into December. In those conversations, the staff has come in telling me that we are getting a very positive reaction to the idea of doing this. Some players are concerned about changing our culture of writing rules directing players to play anywhere.
We also had a couple of tournaments that were sensitive to being on any kind of list that indicated that they had a weak field. They thought that was a negative. And not all of them felt that way, but a couple of them did and that probably wasn't a major reason but a factor. As a consequence of that, we just felt, let's just try this on a volunteer basis for a year, and see if we get virtually everything we were going to get out of it anyway without some of the downsides. And if that's the case, fine, we'll go with it. If not, we have the opportunity to come back and ask the board to pass the rue. So it's trying to maintain the culture we had, have our cake and eat it, too. We'll see if it works.
In the conversations I've had with players, certainly the reports I've seen up and through last week -- well, we are seeing a lot of movement. So I think it's going to have the desired effect, but we'll wait and see how the year plays out.

Q. If I can follow a completely different topic. Just curious, your own personal situation at the TOUR. Are you inclined or interested in coming back when your contract expires? Have you thought beyond that at all and will you -- in other words, do you want to stay on after this deal ends, which I guess is at your 65th birthday.
COMMISSIONER FINCHEM: Well, I've often said my goal is to die in office, and I assume I'm not going to die in a couple of years. So I'm thinking that's in the 80s. I'm just kidding.
No, I haven't made any determination on that. I actually intentionally have not discussed it with our board, because I just wanted to see, you know, where we are as we get into and the middle of '11, and then I'll sit down and talk to our board about it.
I'm pretty much where I've always been on this, which is as long as the players are happy with the direction we are going and the job I'm doing; as long as my energy level is sufficient to handle what's involved; as long as our team here is comfortable with my leadership, then I will most likely be open to staying, but those are the three big ifs.
I'd just assume, wait, see, and then talk to the board and then the board would have to make a decision whether they wanted me to stay for a while. But I have an open mind at this point, but I'm certainly not in the position of campaigning for it. It would be a question of what's in the best interest of the TOUR and the organization going forward, and if everybody agreed that staying a while was in the best interests, then I certainly would have that conversation. But thank you for the question.

Q. Is that something that you would think wouldn't occur until maybe like a year from now? Is that the time line?
COMMISSIONER FINCHEM: Well, I wouldn't want to create a bunch of speculation. I mean, I think that obviously the board in its due diligence is going want to have that conversation with me in '11, because if I was leaving, they are going to want to start to focus on succession, and of course, we have some very strong candidates in our team now. They may want to look at those. They may want to look outside, as well. That's their prerogative. I'm not really part of that process. But it's a process they take very seriously; so they are going to want some understanding of what their options are.
So how that plays out, time-wise, I just can't say right now. But it won't be something that waits until the middle of '12; I'll say that.
TY VOTAW: That concludes the teleconference. And on behalf of the PGA TOUR, we appreciate everybody's participation and questions today. And we wish everybody a happy holiday season and happy new year.

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