The Tiger Effect - doubling of Tour prizes, billions into players’ pockets

1,988 Views | 9 Replies | Last: 9 yr ago by country
PJYoung
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AG
http://www.sportingintelligence.com/2014/08/06/measuring-the-tiger-effect-doubling-of-tour-prize-money-billions-extra-into-players-pockets-060801/

quote:
The numbers bear out Mickelson's observations. By 2008 purses totaled $292 million, representing an increase of 9.3% per year since Tiger joined the Tour. This difference in the growth in prize money from 3.4% in the years before Tiger joined the Tour to 9.3% in the years after can be called the 'Tiger Woods effect." I was curious as to what financial impact the "Tiger effect" had on his peers, so I looked at the data.
The results are astonishing. Tiger effectively more than doubled the prize money for every other golfer, adding billions of dollars to fellow players' pockets. How can we demonstrate this?
Here is what I did. I considered all players who earned a pay cheque on the Tour in 2013. I then calculated their total earnings from 1997 to 2008 (176 players). I then calculated how much of those earnings were due to the "Tiger Woods effect" under the assumption that golf purses would have grown at the earlier rate of increase. I then subtracted this value from what they actually earned leaving a residual due to the "Tiger Woods effect."
Other assumptions are of course possible, but the overall conclusions will be much the same Tiger's peers have benefited enormously in competition from his successes, even though Woods himself took home almost $100 million in prize money over that period.


CapCityAg89
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That's incredible. It's not all that surprising as you could sense that escalation, but it is eye opening to consider that Phil won $30M more than he would've. And that is not counting the increased visibility of the tour which made him a viable ad pitchman.
heavens11
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10s of millions... Definitely amazing one player can have that affect on the pie for everyone
country
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I don't think there is any question that Tiger had a significant impact on purses. But I think the true effect is overstated with the type of calculations the author uses. Tiger also played during a time in which the national economy was on fire for the most part. Television deals for all sports grew at astronautical rates. For example compare the money in college football today vs 1997. There is no comparison. Golf was the recipient of a lot of that as well. I am not a Tiger hater and am actually a pretty big fan of his. No question he's been good for the game from a financial standpoint.
AgPrognosticator
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country, I agree to an extent. Golf Channel's rise to fame (and bundling with cable packages) certainly helped Tiger.

However, I think there was a synergistic effect between the booming economy, the rise of the golf channel and Tiger's affect on the game. Tiger grew the game in a HUGE way among young people. Pre-Tiger, almost no young person gave a sh*t about golf unless their parents played or encouraged it. Golf was not "cool". I think you can give credit almost exclusively to Tiger for making golf cool. Figjam, Ernie Els, et al certainly didn't make the game "cool" -- even though I love watching those guys.
AgDotCom
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I agree with country concerning the parabolic revenue growth in many sports.

A&M paid Jackie Sherrill $250,000 when he was hired in 1982, a ground breaking figure. Using the pre-Tiger growth rate, we should be paying Sumlin $522,000 today.

I'm open to corrections, so someone let me know if my numbers are off or I misread the article.

http://www.investopedia.com/calculator/fvcal.aspx
Our-turn-to-rule
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agree with Country and DotCom....

geez, why don't we just give Tiger the credit for the stock market gains as well
BarryProfit
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quote:
I don't think there is any question that Tiger had a significant impact on purses. But I think the true effect is overstated with the type of calculations the author uses. Tiger also played during a time in which the national economy was on fire for the most part. Television deals for all sports grew at astronautical rates. For example compare the money in college football today vs 1997. There is no comparison. Golf was the recipient of a lot of that as well. I am not a Tiger hater and am actually a pretty big fan of his. No question he's been good for the game from a financial standpoint.


I get your point, but to be fair that time period used included two recessions. The cumulative price return for the S&P 500 for that period is less than 13% for an annualized number of ~1%. If you reinvest dividends you're looking at a cumulative number in the mid 30s% or an annualized rate of roughly 2.6%. It wasn't the roaring 20s.
BarryProfit
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dp
AgPrognosticator
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Great point Barry -- outside economic influences slowed the growth of purses as well.
country
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I agree with all of that. As I said, I don't think there is any doubt that Tiger had an effect. I just don't think he deserves credit on a $ for $ basis like the article insinuates.

As a comparison, the men's U.S. Open tennis champion took home a $3,000,000 pay day for the 2014 tournament. 10 years ago, Roger Federer was paid $1,000,000 for the exact same tournament. Another way to look at it is Pete Sampras had career winnings of $43,280,489 with 64 titles. Roger Federer has career winnings of $88,691,538. On a per title basis, Roger is at $1,068,573 and Sampras was at $676,258. Obviously you'd have to dive way deeper to get a true comparison of the two, but considering both were pretty much the best player of their respective eras, the overall results have been similar in terms of tournament finishes.

The majors of Tennis went through a revolution in payment much the same as golf. And, like golf, Tennis benefited from better television contracts, better viewing ability on newer technology, and its own Tennis Channel. I would say golf beat out Tennis in purse raising on the smaller tournaments, and that is perhaps Tiger's biggest impact to golf. My only point was that golf was the recipient of many things that helped elevate pay for players in addition to having Tiger on tour.
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