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September 7, 2009

Seth Waugh


SETH WAUGH: We've had a great experience here, we really have, and it's been -- we've had a huge return on our investment, no question about it, far beyond all our expectations. Everybody loves it across the organization. The world is a little different than it was -- it was a lot different six months ago, it's getting better, and I would think that we're through the woods from a planning perspective, and all the reasons we do this still exist and more than ever.
Raising money for charity helps the economy here. Our brand has never been stronger and advertising has never been more important to our clients. I feel good about it, and we're going to make that decision over the next year or so.
We've got next year committed and then we've got an option on the next two years, and before the next tournament we'll be announcing what we're going to do.

Q. How optimistic are you that you're staying?
SETH WAUGH: At this point, very. And six months ago I would have said it would have been a very hard thing to do. We love this; it's been great. But if you sort of say -- if it's a question of jobs versus a golf tournament, it's not a fair fight. Not that it's ever that directly related, but this is the most expensive thing we do all year, and we also get a great return on it. So we're certainly going to go back and talk about it, but we certainly feel good about it, but it gets better every year and we get more coverage and a better feeling.
Everybody is worried about the economy; well, we gave out -- we had 850 guests today. Our previous high was 600. So whatever that is, another third of people that have demand. The pro-am was totally oversubscribed. Everybody is worried about can I be seen in public, and they like to be seen with us, apparently.
By all counts, we broke through last year's numbers yesterday and still two days to go. Weather obviously helps a lot. So on every measure it's been hugely successful, and we'll obviously see what the ratings are tomorrow.

Q. Where do you measure your return?
SETH WAUGH: I look at it in a few ways, and it's an art form rather than a science. We've always tried to go back and sort of do a postmortem on how it went, what we did well, and whether or not we thought we got a return.
Now, two years ago when Tiger and Phil were there, it was incredible theater obviously, and then the next year had Tiger ring the bell for us. That week, our media guys added up something like $400 million of media points. And I don't think that's dollars, right, but it's something. And that's a pretty good return on that front.
If we have a great experience with a pro-am with a couple of our A-list guys, we can pay for this thing that day pretty easily. And then all the folks that come in over the course of the week, not to mention doing the charitable stuff, which is important to us and a big part of how we think about it.
I just think these things, as much as people talk about them being frivolous, there's just so much leverage in these things if you want to brand yourself and you want to create some economic value in a place that you care about, and Boston and New England is a place that we care about a lot. There's just an awful lot -- and the charitable component, it's just a huge leverage to this thing.

Q. You said that there's a two-year option. Does that mean if you did renew, it would only be for two years?
SETH WAUGH: Well, it's our option for two years, and obviously we could go longer. I'm sure Tim would love us to go longer. The way that it happened is he asked me to do six four years ago, right, or three years ago, and at the time, six, we don't think in blocks of six years. So I said, look, I think we're good for six, but why don't we do four with an option on the two at pre-prescribed levels and then roll the two and then negotiate from there. He was trying to do six because that's what the television contract was, so I'm sure he'll want to have that lineup again.

Q. Is it an option for each of the two years or a two-year option?
SETH WAUGH: Two-year option, an option on the final two years. I'm pretty sure. I'd have to go back and look.

Q. What's been your take as the Playoffs have evolved and your involvement there in the middle of them?
SETH WAUGH: I think we've got the perfect slot frankly. The second week has been -- I like it's more or less a full field. We've tried to hold the line at 100 players because we feel like that gives you that feel and it helps with our pro-ams and that stuff, and we think that that gives a better fan experience frankly. Boston is sort of starved for golf. I think you'd want to give them as many as you can.
I think we were worried about going from 125 to 100, but I think it's actually been a better experience in some ways. I really applaud the fact that they're trying to make this significant at the end.
Three or four years ago, when Jimmy McCabe and I talked about it earlier, I said from our perspective, we know we're going to have the 100 best players in the world here. That's what we used to try to fight for. We always knew we had Tiger more or less, but you have to sort of -- Phil didn't come here until it was a Playoff, right. So from that perspective, that's been great. We obviously wanted to be a part of it, proud of the fact that we were the only Playoff that didn't move times. Everybody else moved. We were the only one there. We love our Labor Day spot, we love the Monday close.
Tim has asked me whether I'd consider rotating. I haven't said no, it's just I want -- people ask me when is your tournament this year, I don't give them a date, I say it's Labor Day. It's just the perfect time for New England. We've taken what was a tough weekend and turned it into something unique and now added value by the Monday deal. The whole thing as you guys can tell is a big family event, and that's the way we've always tried to have it be because it's a family weekend.
I think we also credit them with doing a good job of not having a whole lot of pride of authorship of the structure. We all knew it was a little bit -- wasn't enough movement the first year, it was kind of fait accompli; the next year maybe there was too much. I understand why Coke would want to have it sort of the last day mean something, and I get all that. And I think they're pretty close, I really do.
Yesterday eating dinner with a few folks last night, they were all saying, what do they have to do tomorrow to make it to next week. They're all thinking about it. I'm sure Tiger is not worried about that, but the guys that are 50 or something right now, know if I make the cut, am I in; maybe not, I've got to be Top 30 or something.
I think it's pretty cool. It's definitely made things better. You've got four events that mean something different. Is it perfect, can you all criticize it, probably; but it's better.

Q. From kind of a branding identity perspective, was there any concern when this started of Deutsche Bank sharing the stage with FedEx, and has that gone okay?
SETH WAUGH: There was a little bit, just because it's something different. But they've been great partners. They haven't tried to shove their way in at all. Everybody that we've dealt with all along, we're very fair dealers, so if it's a good deal, it's building a brand, and obviously they're paying a lot of money for something, so they should get value for something. And we're happy to have partners the same way that we've done that with our founding sponsors. We want them to have a good experience and come away saying, those guys are good guys and they're good partners, and we got value. We want FedEx to keep doing it.

Q. The problem is I don't know what the NASCAR Cup is called now, but --
SETH WAUGH: Well, I think the money is something that -- I mean, look, I think once you've played for $10 million you probably don't want to play for $2, so I think somebody will have to spend something like that. I don't know whether they feel like they've gotten value or not on it. So yeah, they've been good partners. It would have certainly been a concern if it was another bank or something. That would have troubled us a little bit.
Early on we're just making sure that it was still our event, that we controlled everything on campus, and look, we were very careful to not take over another day but begin our own because we didn't want it to be the Doral, that you forget is sponsored by whomever this year; we want it to be the Deutsche Bank. Some people call it Boston, but I think it's basically been called the Deutsche Bank ever since. We want to create a good experience for them so they want to do this, FedEx, I mean, and they want to do it with us. And by the way, they're a client, so.... But as a banker, everybody is a client. Either that or you want them to be.

Q. Back in February when Congress was having some issues with sponsoring of events, do you think since then that, A, Congress has got a better understanding of what this is all about; and B, do you think the TOUR did a good enough job to beforehand explain it and has done a better job now since then?
SETH WAUGH: I think they understand it better. I think a lot of us have done some things to have them understand it, some behind the scenes, some more public. I think the TOUR got a little bit surprised by it because it all happened very quickly.
But I think they've done a good job since then of not pushing back but being helpful. I think they've done a very good job frankly of surviving through this period and picked up some sponsors. Obviously you're going to perhaps lose some. And didn't panic but have -- again, the world has changed. This is very different, right; this is generational. This is not just another six-month crisis that's going away. People are going to think about money and how they spend it and what the investment dollars are.
And all you guys, you deal with advertisers every day. Even if you had money, you'd want to -- people are going to get a deal, right. People will spend money for a deal, but they're not going to spend money in the same way that they used to. People are spending whatever, a thousand bucks a night in New York because that's what the price was, and now they're calling up hotels.com to try to get them for $400. They're still going, but they're not being stupid about it. I say that in the context of everything, right.
So, you know, it was a really scary time. When you lose a decade in six months, it changes your thinking. So I can understand where the pendulum swung too much. I think they lost the plot and everything became evil, business, bankers, golf, anything that was considered somehow frivolous or greedy was bad. They lost the plot in the sense of the value that is being driven.
Is this a time that you want to kill something that's going to generate $50 to $70 million of revenue, which is what the local folks tell us. Those aren't our numbers, those are the greater Boston and Providence area numbers. That's never been more necessary.
I don't know if I answered your question.

Q. I guess to follow up, not that you spend stupid money, but obviously a lot of people got into the TOUR deals and they spent a lot of money. Now you have a two-year option. Is the TOUR more willing to be accommodating than they have been in the past?
SETH WAUGH: We'll see. Yeah, we'll see. You're saying they haven't been accommodating? Well, I think they need to think about things. Look, I've said in the past and was asked the other day -- for instance, I would not have raised purses last fall, not because they couldn't, it's just because I thought that sent the wrong message. Every model of every business is under pressure, and sports is one of them. You've got to create more value for people, either by doing it cheaper or by creating more value for people to do it because people want a deal and want to feel like they're getting one, and I think they've got to think through that in terms of having people feel good about the experience as opposed to being dictated as to what it is.

Q. (Inaudible.)
SETH WAUGH: We're locked in through three years.

Q. I'm talking about the prize money.
SETH WAUGH: It has an escalation every year, right? We were at 7 this year, next year 7.5, the next year 7.5. I think ours is an escalating, like if we take the next two years it costs more than the last two. I assume part of that is purse.

Q. Depending on what the option says, would you be more willing to toss around an option, say let's sit back and talk about four more years but we want to do a different kind of deal?
SETH WAUGH: Absolutely. Everything in the world costs less now than it did two years ago, okay. It just does. And it should, right? I'm not trying to negotiate with you guys, but yeah, the answer is if there's some value that can be created in that, we'd certainly love to talk about it.

Q. How important is the Doral, is the CA negotiation to you? The Bridgestone went up, I'm just trying to figure out....
SETH WAUGH: I sort of worry about the market. I sort of worry about my own deal. As you say, look, again, I don't want to start a negotiation in the press, right; that's not how I deal, and I'll deal fairly with those guys.
But we've created a lot of value here. We took a dead date, filled it with Tiger Woods, filled it with a world-class event, and I don't mind paying for that. But I also don't want to get charged for the value that I created. That's the way I sort of think about it. Does that make sense?

Q. The question is if Tim feels that way.
SETH WAUGH: Well, I'm sure -- Tim and I have a very good relationship. To be very honest, he's coming here tomorrow. We've talked about this already, and nothing on the table, just how are things going, just checking in a lot more than he used to.
I think at the end of the day, he's kind of got four different constituents. He's got the players, he's got the fans, he's got TV and he's got sponsors, and right now the two hardest people to please are going to be TV and sponsors. It doesn't mean you ignore the other two.
But in a bull market the players are probably getting more attention than the sponsors because there's plenty of people that want to do it. Now to find 30 people a year or whatever the number is that are going to spend that kind of money, that's not as obvious as it was. So you're going to have to start rethinking, and I'm sure television -- I'm not an expert, but I'm sure television is saying, like, things don't grow out of the sky, and we've got to figure out -- we're happy to do it, but...
Look at Yankee Stadium. How can you think you can charge three times what anybody has ever charged for a ticket and build your whole economic model on it? I'm getting off the subject. But it's wacky, right? It's hubris. You've got to have a business model.

Q. Have you found in your dealings that in this bear market that the players are accepting that they're not the No. 1 priority?
SETH WAUGH: Yeah, you guys know who the good guys are. The good guys get it and they all ask. They call and say, how are you guys doing and what should we be doing. A lot of the players would have said last year that we shouldn't have raised purses.
I just thought it was -- golf is different, right? We all love sports, but golf is different. To sort of have a chance to send a message -- I talked to Tim last fall, and I said, Tim, this is really bad. You ought to think about it in that context in terms of what's going on in the world.

Q. What did he say?
SETH WAUGH: He said that we're in good shape and the sponsors are strong, and we think it's a sign of strength. And I understand that perspective. I don't know that he was wrong or I was right; it's my perspective that you give value to people and then you have a customer for a long time.

Q. There were a couple of them that didn't go with that incremental increase, though.
SETH WAUGH: That's right.

Q. AT&T, Congressional, and I think Greensboro was another one. It wasn't much.
SETH WAUGH: No, that's right.

Q. Stanford.
SETH WAUGH: That was a little after the fact, but -- it's over in the sense that I think depression is off the table, but it's not over in terms of how people -- the depression changed two generations of people, our parents and our parents' parents and how they think about life and death and all that stuff, and to think this is just going to go away -- I mean, it was bad. We were in the heart of darkness. It's just not going to come back particularly quickly. I think we're looking at five years of sideways, and that's a win.
So the world is starting to think differently about things, and sports -- and golf is in better shape than virtually anything else in sports certainly, maybe the NFL. But you've still got to think about the legacy of that. I think that's what you're thinking about is the next 10 to 15 years of golf now and how do you preserve that as opposed to getting the most out of the next five years. They've done a great job of maximizing to this point, I really do. The question is, is that sustainable, because we all want it to be sustained, and we all want -- what we do here matters -- we want Barclays last week to be successful because then it adds to the whole thing, and if they stumble then it takes away some of our value. So we try to help everybody we can in the game.

Q. I may be a little naïve here, but you don't have Tiger anywhere near the lead tomorrow, as you probably know.
SETH WAUGH: Really? (Laughter.)

Q. Probably the one guy that's nearly impossible to replace, but how close does Harrington come?
SETH WAUGH: In Boston it's very close. Look, I think -- I'm not going to wait for anybody here right now, but I think it's a big deal. Let's put it this way, if Tiger and he were in the final group together, I think they'd be looked at tit for tat in Boston. I think it would be -- we've had great winners, right. Adam Scott first, we've had Vijay, we've had Tiger, Phil, Vijay, and to add a Harrington or really almost any of those guys up there, they're all class guys, right; it's a feel-good leaderboard.
Sean O'Hair went over -- did the volunteer deal. He just went over and spoke to the volunteers, and he's got to work tomorrow. He's a class act.

Q. There's a guy going above and beyond the call because he knows where his bread is buttered.
SETH WAUGH: Exactly right. And there's a lot of those guys.

Q. What did he do?
SETH WAUGH: He went over and spoke to the volunteers. Mike Weir did it last year for us, too. It didn't work out that well for him the next day.

Q. Would you have thought (inaudible)?
SETH WAUGH: Yes, I would have. I think you also talk about your investment, in the brand for us it's a really interesting time for us to try and launch things, and we felt like we were at a point we wanted to talk about how good we were and could be. You know, I'm not a brand expert, but you wonder the trajectory to value on that. So I would have said at least eight years would have been an investment that we would have made.
And there's no reason to think that we can't create value for another eight years. So yes, I would have absolutely said eight years, which is what next year gives us.

End of FastScripts

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