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June 6, 2008

Carolyn Bivens

Herb Lotman


COMMISSIONER CAROLYN BIVENS: First of all I want to thank you for joining us today. I know that you expected this to be on Sunday, and for a lot of reasons we decided to move it up so everybody can focus on what is shaping up to be an extremely exciting finish on Sunday.
It would be an understatement to say that it's been quite a start to this season. One the LPGA's all time transcendent figures Annika Sorenstam announced she'll step away from competitive golf even though she came back from last season's injury in a big way. The world's rankings leader and number one player in the world Lorena won four straight tournaments at one point this season and earned a spot in "Time" magazine's 100 Most Influential People in the world. As an organization, we implemented the sport's first drug testing program, worked to improve the pace of play, and witnessed a bevy of young talented players from all corners the world emerge and begin to leave their mark on this sport. One of the beauties of this sport is that it's unscripted. As the first half of this season has shown us, the LPGA continues to produce compelling drama and emotion on a weekly basis. We've had four playoffs so far this year, two Rolex first time winners, a tightly contested race for the Louise Suggs Rolex Rookie of the Year award, multiple wins by Lorena, Annika and Paula, and career earnings milestones that have been achieved. Annika passed the 223 million dollars mark and she is the first LPGA player to ever do so. With her win at the Sybase Classic, Lorena passed the 12 million dollars earning mark and she is the fastest player to ever pass that mark. Who knows what's going to unfold this weekend.
The McDonald's LPGA Championship provides the perfect opportunity to look back at where we've been so far this season and to set the stage for the rest of the year. Thus far in 2008 it's been a year of transitions. It's also been a year of transformations, and it's been a year of triumphs. Most importantly, it's been another year of crystalizing our vision to put the LPGA on par with other major sports around the world. Everything begins with our players. And because of their combination of personality, performance and approachability, we're the most accessible and aspirational of all the major sports leagues. Our players represent what's right about sports, and they continue to serve as role models for fans around the world.
Our tournament purses have been larger. Our roster of corporate partners have never been more robust and our players' individual endorsement deals have never been larger, all of which is indisputable and all of which makes me extremely proud. But we aren't finished yet. That old cliche that says success is a journey and not a destination describes the mindset at which we operate here at the LPGA. We continue to push and reach higher and farther. For three years now, we've articulated a consistent set of long-term goals for the LPGA. Our mission is simple: Take care of our members, take care of our fans, build partners and sponsors who share our belief in the value of the LPGA and take care of our game. All along I've stated that this is the best way to accomplish -- or the best way to accomplish all of this -- and truly raise the quality of the LPGA is to increase our purses, upgrade our venues, improve the flow of our tournaments and where it strategically makes sense, to own and to operate our own events. To illustrate this I want to offer the following. In just the last few years, we have added domestic standard field events in Miami, Charleston, Prattville, northwest Arkansas, Mobile, and Maui. We've also added events in China, Thailand, Mexico, and Singapore. We expanded the field for the Evian Masters and for the HSBC which moved to Singapore. Our tournaments have shown their commitment to the players with nearly ten million dollars more in prize money since the end of the 2005 season. We partnered with the Golf Course Superintendents Association to hire our tour agronomist John Miller to improve the consistency of our course conditions from week to week. I also want to ask that you don't forget the LPGA's purchase of the Duramed FUTURES Tour. It's a very important part of the LPGA's recent past, of our present, and of our future. We have completed a comprehensive rolling five-year strategic plan which includes the delivery of benefits to our members. We negotiated a new television agreement in Japan. For the first time ever it was awarded to Dentsu, one of the world's most prestigious ad agencies. The LPGA's International audience is growing rapidly. Valuable in more than forty countries around the world, the ratings are delivering for our partners abroad. While we're talking about television, let's talk about the viewer ship, which is a topic that not many sports organizations talk about right now. We're up 46% on ESPN 2 and 7% on the Golf Channel. A few examples from just the past few weeks. Sim Group Championship up 135%. Michelob Ultra is up 49%. Sybase is up 78%. This reflects the average number of households that turn that were turned in this year compared to last year.
Our website traffic is also setting new records week after week. Up to this point in the year, we're up 56% year over year. We're working hard to finalize a new TV package for the U.S. that will provide the LPGA with the kind of platform for exposure and for coverage and awareness that we think the organization and our members deserve. We call it Vision 2010. We are planning today for the LPGA of tomorrow.
And while we plan for the future, some have suggested that we're turning our backs on the U.S.-based markets. But it's quite to the contrary. In an exceedingly challenging economic environment, the LPGA continues to attract new sponsors and blue chip companies including Proctor & Gamble and Stanford Financial who are two of our most recent additions for this year. We also are attracting domestic venues like Kapalua for our U.S.-based events. On some levels, I do understand the skepticism among the media, some members, and others that arises with the announcement of each new overseas event. The assumption, albeit an erroneous one is that this is a zero sum game, with an International win necessarily equating to an American loss. In other words, if tournaments in Asia or other countries are given a bigger piece of the LPGA pie, then our domestic slice must be getting smaller. The argument is simply inaccurate.
We partner with International events when they are right for us. This includes opposite men's majors when we don't require U.S. television or when the U.S. sports and the TV landscape is so cluttered that our sport and many other sports have a difficult time breaking through. This is especially relevant for the LPGA given the International diversity of our membership. I would argue that because of this incredible diversity, our game is even more marketable, visible and embraceable for audiences around the world. We must celebrate this, not discount it. After all, international audiences are what other sports are investing large in and aspire to develop.
As we do every year, we have several events that are up for renewal. Approximately one third of all our schedule events are in a renewable phase. Some may find this troubling. I will tell you when I first came to the LPGA I wasn't sure my heart was strong enough for that. I've learned that that's just part of business in the sports world. But it's part of the regular business cycle. Tournaments come on a schedule at varying times, and for varying time frames. Sponsors and partners come to sports properties because they get access to high profile athletes and assets the league or the association. The LPGA has worked extremely hard these past two years in order to shore up the value that we deliver and garner more assets that are of valuable for our partners. We worked to put the LPGA in a position where we could provide value to our television partners as well as to our tournaments and to our sponsors. For instance, as a result of the contract negotiations with tournaments these last few years, we've gained the opportunity to aggregate most of the events. So rather than tournaments negotiating individual agreements for their tournament, the LPGA can bring a critical mass of events to the proverbial television table.
Just a few weeks ago on a whole nother front I was proud to join George O'Grady of the European Tour, Tim Fincham from the PGA Tour, David Faye from the USGA, and Peter Dawson from the Royal and Ancient as we traveled to Lausanne to visit with President Jacques Rogge the Head of the International Olympic Committee. Together and with one powerful voice we discussed our interest in golf becoming an Olympic sport for the 2016 Games and the process that would be followed. It's an enormous opportunity and I believe that the LPGA's diversity and our popularity in the U.S. and around the world can play a critical role in leading us to another historic milestone for our sport, players and our fans.
There's a lot of work to be done. But we're hopeful that the industry will be successful this time around. Here at the LPGA we are an organization of inclusion. And every day we're breaking down barriers and eliminating borders both literally and figuratively. By increasing exposure for our players and for our game around the world, we're taking the LPGA and the game of golf to unprecedented levels. That's undeniable. We're also working on our own house at the same time. The players have recently passed a couple of changes to the LPGA Constitution. The change that I think you would be most interested in today is that in 2009 for the very first time there will be an International member serving as a voting member of the player executive committee and as a member of the LPGA Board of Directors. The strides we continue to make in two thousand eight are enduring reminders that the LPGA is in the best position it has ever been and they're catalyst for continuing to chain the business model and the operation of our organization.
If the past five months haven't convinced you of our strength, the good news is we are just getting started. Day after tomorrow one the most prestigious trophies in our sport will be presented. We'll see the smile on the winner's face, we'll hear the roar of the crowd, and we'll once again be reminded that the future of the LPGA is very bright.
Now I'd like to invite Herb Lotman to join me on stage and offer some remarks and make a significant announcement. Herb.
HERB LOTMAN: It's not really -- first of all hold on. I hope you are all having a good day. It's not really a significant remark, you know the fact that we're going to switch from the LPGA to the PGA event is not significant is it? But we would never do that either because our amateurs -- our nine thousand amateurs in twenty eight years we only had one complaint. I like to know what the percentage would be on the other side of the fence. But we won't get into that. I'll behave. I promised Carol I will behave today.
I hope you all enjoyed the week so far. And I know we have a couple of exciting days ahead of us. We are immensely proud of our relationship with the LPGA. Our tournament has been on-going since nineteen eighty one when we founded the McDonald's Kids Classic. As you know, the event grew into the McDonald Championship and in 1992 we assumed the title the LPGA Championship, which enjoys an illustrious history dating back to 1955. We were honored when then commissioner Charlie Mechem presented the opportunity to us and we were very honored to carry on the tradition. We worked hard to build this tradition. And the history. And I hope you forgive me if I take credit on behalf of our team, but honestly, I believe we improved the event. There's a popular Venice book, from whose title I borrowed: We went from great to phenomenal. We not only made sports history, but we also broke the record for charitable contributions earned by a single LPGA event. Of all the wonderful benefits being associated with the LPGA throughout the years, we've enjoyed cheering on great golf, crowning some wonderful champions, as well as having the opportunity to raise funds for our charities. And the Ronald McDonald Houses in particular. We have been able to help millions of children and families enduring traumatic and life altering illnesses. And to do this while showcasing the very best golfers from around the world has been extra special. Since the early days of 1981, we have generated more than 46 million dollars for the tournament beneficiaries. That's what we're all about. At the same time, the LPGA is a wonderful setting for corporations to entertain and thank their best customers and distributors as well as perspective future partners. Through Pro-Ams we awarded hundreds of companies to host clients and to interact with some of the most remarkable women golfers in the world. Rookies, veterans, Hall of Famers, the experience is special and it makes a lasting impact. It is an outstanding opportunity for a company to market and showcase its brand.
The event has grown more than we could have hoped for. And this is the result of the countless hours by a dedicated staff, thousands of volunteers and sponsors and you the media. You have come along with us during this great journey. You have watched the event blossom. You have seen the performances of the LPGA players continuing to impress, entertain, and inspire us. You have helped to share the stories and memories of the LPGA Championship with readers and fans throughout the world. As I said earlier, all of this has been worth the hard work for the rewarding results for all who have been part of our Championship family. With this said I would like to acknowledge our great team at the McDonald's LPGA Championship who worked so hard to produce this week's tournament and many more others over the years. Betsy Rawls is here, Alice Miller is here, Denise Marroni, Laura Devenney, Pete Wilder and Sally Healy and multitudes of volunteers. Thank you.
Last but not least, I want to introduce Frank Quinn. I think most of you know, who when we're playing golf in Pine Valley many years ago we decided to run a golf tournament and to raise money for children. Well Frank we've had one hell of a run haven't we? Thanks for being a good partner.
As you know, the LPGA is strengthening its position with ownership and management of a select group of events. As a sponsor and a fan, I have seen how the LPGA's own tournaments have generated tremendous excitement, raised the level of play, and most importantly increased the awareness of this wonderful game and the incredible women who play in it. The LPGA Championship is a natural fit to add to this portfolio. In doing the opportunity to continue to support charity and also further the mission of the LPGA, is the driving reason behind this transition.
With all the pride in my heart and passion for the LPGA I announce to you that I am turning over the keys, ownership and management of the LPGA Championship effective in 2010 to commissioner Carolyn Bivens and the LPGA. While the ownership of the tournament will change, I know that charitable spirit will remain. That's why I've committed to working with the LPGA as the event continues to grow and prosper. As for our enduring partnership with the LPGA we accomplished great things together. And collectively we take immense pride in making this historic announcement. Working together we will continue to ensure that this is one of the premiere events on the LPGA calendar.
I look forward to watching and participating in the event as it continues to grow and prosper. Again, thank you for your commitment to covering our events over the years. We look very much forward to concluding this week's tournament as well as planning for our 2009 event here at Bulle Rock. Carolyn, we're all dedicated to assisting a smooth transition to the LPGA ownership. I would like to turn this back to the commissioner who will share with you some of the specifics for the event for 2010 and beyond. Thank you very much. (Applause)
COMMISSIONER CAROLYN BIVENS: This is truly a momentous day for the LPGA as it marks the first time in our history that we'll own one of our Majors. And I would say our most important Major. Think of the founding members and all of the sacrifices that they made to help us reach this moment. A moment where we proudly assert that the game has never been healthier, than it is right now. This is a seminal moment for the LPGA. As we have done with the LPGA owned and operated AT&T Championship and the Solheim Cup when in the United States, we are committed to enduring the LPGA Championship as a best of class tournament just as it is worthy of showcasing the best golfers in the world. While many details are still being worked out, I want to share a few of the decided items with you.
The LPGA Championship will not have a corporate title. The LPGA championship will be called the LPGA championship beginning in two thousand ten. Given the tremendous history of this event, the remarkable work that Herb and the rest of the McDonald's LPGA Championship family have done over the last 15 years as a major and 27 years total, I can't think of a tournament that better represents the values of the LPGA. That's why it gives me great pleasure to tell you that Herb will serve as honorary Chairman of the LPGA Championship. He will continue to be a valued voice in this major, and an outstanding proponent of women's golf. He will also be the newest member of the Commissioner's Advisory Council.
As further proof of this move aligning with our long-term vision, the total purse for the 2010 LPGA Championship will be 3 million dollars. This increase is a testament to the popularity of our game and to the quality of our product. As you undoubtedly have experienced this week, we could not have asked for a more gracious host than Bulle Rock and we look forward to returning here next year for this tournament, as we turn another page forward in the history of the LPGA.
The 2010 LPGA Championship venue has not been decided yet. We're reviewing this and will make an announcement when we make the decision. The Ronald McDonald House charities will remain one of the beneficiaries the LPGA Championship. Honoring and celebrating our past and doing so with an eye toward the future is what makes our game so special. Just as none of us will ever forget Annika's contribution to the game of golf when she steps away from this sport competitively at the end of this season, Herb and McDonald's will be forever linked with the LPGA. And just as players like Lorena, Suzann, Morgan and Paula, and others have picked up where Annika leaves off after this season, the LPGA championship will build on the success and the dedication of Herb and his team. Working with visionaries and philanthropic stalwarts like Herb has prepared the LPGA to undertake this new challenge of owning the championship. Believe me, no one care mores about this product and no one perhaps second only to our players will work harder to ensure that our players are given the opportunity to excel.
Now before I turn this over for questions, I want to read a statement from Charlie Mechem. Charlie Mechem was the Commissioner at the time that the LPGA Championship was without a sponsor. He's the commissioner that approached Herb.
"Some people may have forgotten there was a time in the early 90s when the LPGA championship precipitously lost its title sponsor. We were in a difficult position to find a title in a very short period of time. Herb stepped forward and agreed to turn his event into the LPGA Championship and assume all of this obligations and responsibilities that that entailed. Herb, Frank Quinn, Betsy Rawls and Alice Miller have done a superb job. I've never forgotten that. Today's announcement shouldn't come as a surprise to anyone who has known Herb as he has led a lifetime of devotion to the LPGA and to women's golf. The impact and imprint of all that he has done provides a lasting legacy in the long history of the LPGA. I'm delighted that the LPGA will own its own championship. I've dreamed of this for a very long time."
And that's what -- Charlie very much wanted to be here with us but had some personal situations that kept him at home. So he sent us that statement, Herb.
I certainly believe that our members are among the best athletes in the world and I'm honored that the LPGA is putting our name behind the Players Championship. I've never felt more honored to stand behind the greatest collection of women I've ever known. Thank you.

Q. I realize you haven't settled on a venue, however, is Bulle Rock in the running? And is this region -- will the tournament likely remain in this region?
HERB LOTMAN: I think, you know, right now that's been second on the list. We have some opportunities that we know that are available. Bulle Rock has been an outstanding partner. The general manager, I don't know we can get rid of him, no. (Laughing) Rick is a very special person. I think anybody is in the running. We have to decide what part of the country works. Do we want to have it in June. Do we want to have it in August? So we have some other decisions to make first. So I would say, yes, I mean it's a great major event. The course is unbelievable. It's in the best shape its been. So who knows.

Q. Herb, you are not one to mince words. Is this turning over to the LPGA your choice, their choice?
HERB LOTMAN: Our choice. Our choice. Our choice. Our choice. Our choice. Because I knew it was going to come up. This is our decision to make it -- when you are running a charity and work hard and raising funds for it, and, you know, we have to build our purses. Because the quality of the LPGA players and everything else is getting better. You know it and I know it. And as purses build up I can only gauge our Pro-Am players -- we got thirteen thousand for a Pro-Am spot. I can't charge fifteen or I'm going to get shot one of these days. It was time to say if Keystone Foods, my company, had a brand I'll take it over in a heart beat. But no it's -- Frank and I made the decision along with the rest of our board and we decided that's it and we're thrilled that the LPGA decided they're going to own it, they're going to run it. They'll probably have it a presenting sponsor like we have Coca-Cola. But it's going to be named the LPGA Championship.

Q. Would you like the venue to rotate or will it be at one course?
HERB LOTMAN: A rotating venue is really tough. You are coming into an area and you get your volunteers and you get it set up and we're in year four now. It's running almost automatic. DuPont we're at 23 years. To do it different every year you can't put on a quality event like it should be put on. And I would think we would not want to rotate. Although we have some discussion back and forth.

Q. Carolyn or Herb, either one, without a title sponsor you mentioned a 3 million dollars purse, how do you pay for it without a title sponsor? Is there a television component that any type of rights fee that would be involved there?
COMMISSIONER CAROLYN BIVENS: Herb doesn't turn over an event without seeing a perspective budget. And remember he's going to continue to be the Honorary Chair. There will be a presenting sponsor job. But hospitality -- just as we do at the ADT Championship just like we do at the Solheim, hospitality -- including the, tents, this is a major event -- will be a big part of, component of the budget.
HERB LOTMAN: I don't think there's going to be a problem getting a sponsor. We've had people call us over the years after they saw Coca-Cola up here what was it AIG first. Yeah first AIG then Coke. We've had maybe five other calls that they want to be a presenting sponsor. I think that will probably be the easy part.
Year one we ran the LPGA championship they say when you take on an event you lose money the first year, that was Ray Volpe and we made 175 thousand dollars the first year. We're not going to lose money. I don't believe in losing money. Especially when you are working for the kids.

Q. Herb, is there any thought of running the McDonald's regular tournament as opposed to a major tournament?
HERB LOTMAN: No. The Chairman of McDonald's says as long as Frank and I are involved he'll back it. After that, so, no.

Q. Will 2009 mark the retirement of Betsy Rawls and the rest of the tournament staff?
HERB LOTMAN: Betsy is never going to retire. (Laughing) are you kidding? When she says Guys take it easy being our Executive Director, I said fine you are now the Vice Chairman. I mean it took Frank and I what, two tenths of a second to make that. She comes in every day. Will Betsy be involved? If she isn't I will be greatly surprised.
Our whole staff has the potential and an opportunity of possibly coming along with the event. It's early but there is some potential there, yes.

Q. Herb, I don't know if this was asked but is DuPont back on as a possible site?

Q. Why?
HERB LOTMAN: The Wilmington area -- we lost a lot of business support financially and it was two seasons why we moved to Bulle Rock. First of all the support here in Baltimore and also the course. But we were there for 23 years and it was the same old same old same old for the amateurs and that's all you heard all the time so I don't think we'd move back to Delaware.

Q. You talked about all the options being on the table at this point, I wonder if you could tell us what the advantage would be number one to move it out of this region if there is an advantage, and what would the advantage be to moving it to a different time of year? I don't know if you are thinking about August, if you are talk about earlier, what are we thinking about here?
COMMISSIONER CAROLYN BIVENS: Our first preference would be for the Northeast. This is a good place. We like being in a major market. As Herb's alluded to, we want to be close to major sponsors and major areas of commerce. And the Northeast would be our first preference.
In terms of time of the year, again, remember our talk about Vision 2010, there are a lot of moving parts. 2010 affords us the opportunity with new television contracts and new tournament contracts to figure out the flow of all of our events, including now this Major. So we may not -- we play the Kraft and Nabisco in April then we're kind of bunched up. We may choose to move some of those around.

Q. Is this also an option with Kraft Nabisco as well that the Tour would own that event?

Q. Is it possible the Tour would also take over the Kraft Nabisco?
COMMISSIONER CAROLYN BIVENS: I don't want to answer for anybody from Kraft Nabisco, but they're -- the major that they own and operate, they own and operate it for very different reasons than this one. And I don't believe that that's a consideration. And remember the LPGA doesn't want to own very many.

Q. You say that prior --
HERB LOTMAN: Wait a minute. Can I answer that question.
You know I have one comment. If you have a brand that's an absolutely fantastic way to market the brand. And the cost to market it's really reasonable. And the exposure is fantastic. The entertaining your salespeople, your distributors and everything else I would really be doubtful if anybody who owns a brand but wanted to give it up.

Q. I was asking if it's a priority to have this Major on network TV? The other majors on the weekend network TV has it. In the future will the new 3 million dollars purse is it a priority to get on network TV?
COMMISSIONER CAROLYN BIVENS: That's one of the things that's yet to be decided. I would say for any of you all, most of you are all covering the event. For any of you who haven't been able to watch, the Golf Channel has dedicated a lot of resources and we're getting a lot of hours of coverage. They've done a very good job of covering this event. The LPGA does want a certain number of events covered on network television. One of the things we've worked hard as we've renegotiated contracts just as I said in my prepared remarks is to be able to aggregate the tournaments and to be able to negotiate with network television. We will always have a very important component on cable television as well.

Q. Herb, given the drop in corporate donations, charitable donations last year from the first two years, is it safe to say that this year may determine Bulle Rock's future in terms of hosting this kind of event is or charitable donations do not play into it at all?
HERB LOTMAN: Well you know the -- if the LPGA keeps it in Bulle Rock, it's totally different marketing than I do now. You know Frank and I get on the and bang all the suppliers. I'm supplier, and Frank is a licensee. So we split it up and work it.
I don't think it has any affect. You know, if they decide they want to stick with this course, you know, and that's not going to be my decision. I'll handle the financial end, Carolyn's going to handle the TV and the marketing and exposure and overseeing it all. And together the team is going to do well. We really don't know. It's early.

Q. Carol, would the players have a say in where they play their championship?
COMMISSIONER CAROLYN BIVENS: No. The players won't have a say, but there is -- you know, it's a bit of a new LPGA. Some of our very key senior staff members are former players. Jane Geddes is our Vice President of Competition, Jane Geddes in combination with Alice Miller and Kelly Hyne whom some of you all know who runs our LPGA owned and operate events, it is that team of three people who will be looking at the course. So two of the three were former players, played on tour. So in some respect is guess I would say that the players do have a say.

Q. Can you give us some sort of perspective, the financial advantage for the Tour to own this event in dollars and cents, what it means? And part B of is that can you give us a sense of when you came into the commissioner's job, how many tournaments the Tour owned, how many it owns now, and what your ultimate goal is in the future?
COMMISSIONER CAROLYN BIVENS: When I came in a few years ago the LPGA owned the Solheim Cup and was part owner of the ADT Championship. The most the largest profit contributor to the LPGA coffers was the Solheim Cup. Unfortunately on U.S. grounds it only comes around once every four years. So largely the LPGA needed to live off of the proceeds of the Solheim Cup when it was in the U.S.
It was very clear that a core competency of the LPGA was knowing how to run events. There is a huge advantage to own all of the local revenue streams when run well. I will also tell you owning and operating a tournament is high risk and high reward. You have to have people who know what they're doing to be able to maximize it. There's a second piece of it. And I hope for those of you who attended the ADT Championship you saw that everything at that the LPGA owns in terms of an event we attempt to make the very best of class. We work with our tournament owners the rest of the year and talk to them about the brand look and feel of an LPGA event. We put our money where our mouth is when we own and we operate events.
Hopefully when you walk into the ADT, you see and feel what we want fans to experience as the LPGA brand. So there's an advantage financially and it is a substantial advantage. Remembering that the LPGA doesn't own many assets. So it is a profit contributor. It's also extremely important from the overall brand perspective of the LPGA.

Q. Carolyn, are you going to be look to get a permanent site or to move it around among two, three, four sites?
COMMISSIONER CAROLYN BIVENS: As Herb said, we've caucused long and hard on this and we will look for a permanent home for the LPGA Championship. Something that is Championship quality and communicates what we want to say about the LPGA Championship.

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