View large image
|With so much cash on the table, who can blame driving range warriors for trying? (.)|
Reports from all sectors of the country indicate that the stalls of the driving ranges are crowded with bright-eyed teen-agers flailing away from the hindquarters at the little white ball, while visions of sugarplums dance in their heads. And who can blame them?
With a wobbling economy and less-than-bright job prospects for the Class of 2001, more and more young people apparently are viewing professional golf as a realistic career opportunity rather than merely a kid's pipe dream. Anyone who saw Sergio Garcia walk off the course at the Westchester Country Club with a $630,000 check in his hand for winning the Buick Classic can understand what stimulates this kind of thinking.
Further, the charismatic Spaniard is only 21, has never been to college, and thus far this year has already banked $2.1 million on the PGA Tour. And about another $50,000 from other events.
If this isn't incentive enough, then perhaps we should mention the name, Tiger Woods, who has now aged to 25, and is well on his way to becoming the "first billionaire athlete," the fellows with the calculators tell us.
But, there's even more. Over the last fortnight, the PGA Tour has passed out some samplings of the massive pension program it has in place for its members. Combined with the rapidly accelerating prize money, it provided the kind of career-and-beyond opportunity that leaves all other professional sports lagging behind. And it's sure to cause young fathers, who normally head for McDonald's with Junior, to take a detour to the miniature golf course.
Of course the pro tour golfer is an independent contractor. He pays an entry fee to play in a tournament and underwrites all his expenses. His only compensation is the prize money he wins, which sometimes is zero. Other professional athletes receive bonuses for signing playing contracts, and are guaranteed specific annual salaries and other bonuses, plus expenses and health care. This unique structure enabled the PGA Tour bosses to create a retirement program based on performance. It was put in place in 1983, after the Internal Revenue Service shot down numerous other plans.
Unfortunately, former players on the tour cannot be in the program, and that is a double blow to some of the old players who contributed so substantially to the growth of tournament golf in the early difficult days. Those players not only miss out on the golden balloons of retirement, but in their prime years the prize money was meager by today's standards.
While the PGA Tour normally says little about this program it funds for the players, recently it gave the newspaper "Golfweek" an example of how the plan would work for a player. Based on the Tour's projections, a player starting out on the circuit today and playing a lengthy career could accumulate as much as $42 million in his retirement account without winning a single tournament. And he could start drawing on that at age 60.
On the higher end of the scale, it revealed that the $1.2 million earned by Tiger Woods for his retirement account last year, could grow to at least $12.9 million when he reaches 60. And if Woods remains injury-free and stays reasonably close to his performance level of the past four years, Tour officials estimate he could receive as much as $300 million in retirement checks over 20 years. But it's not likely that Tiger, at age 60, will be waiting for the mailman to arrive.
The program, which essentially is a deferred compensation plan, is divided into three tiers, and all are built on incentives. In one, a player must play in 15 events a year for five or more years to be fully vested. He receives $3,500 in his account for every cut he makes. Over 15 cuts, it doubles to $7,000. Officials estimate the average player this year will earn more than $60,000 for his plan.
Another tier divides the schedule into three calendar segments and has an adjusted money list for each segment. Each position on each segment list has a scaled dollar value. Last year, 117 players earned contributions in this manner, with the average contribution being $51,000.
The third tier is based on the year-end prize money list. Players occupying positions 1 through 30 receive contributions of $75,000 each. On the lower end of the 150-player list, it drops to $30,000.
The healthy growth of the program and optimistic projections for the future are based on the assumption of a 5 percent annual increase in plan funding by the Tour, and an 8 percent average annual return on the fund's investments. And, of course, the payouts cannot begin until the player hits his 60th birthday.
Thanks to the upward movement of every aspect of the PGA Tour, and especially the television revenue, Tour officials see a smooth path ahead. The $200 million fund is not without risk, or critics. As a nonqualified plan it is unprotected, and could be vulnerable to an earth-rocking lawsuit. And there are some who think the Tour's projections are too optimistic. Player performance and longevity involve many variables and make projections difficult at best, but numerous pension experts have put a passing stamp on this one and have declared it the best in the sports world.
Actually, the loudest criticism of the program came from the players themselves back in the very beginning. A retirement plan for the players had a priority spot on Deane Beman's agenda when he became commissioner of the PGA Tour in 1974. Beman, a two-time winner of the U.S. Amateur, had a flourishing insurance business in the Washington, D.C. area and knew his way around deferred compensation and retirement plans. He also knew it might be wise for the Tour to tap the services of a brainy, young capital tax lawyer, Victor Garci, as its tax counsel.
Between them, Garci and Beman tried numerous approaches to putting a program in place, but if it involved diverting Tour funds for the purpose, there could be complaints from the players. They strongly believed that those should be used to boost their prize money. They also groaned when Beman suggested that they start developing a string of Tournament Players Clubs and other promotions that cashed in on the Tour's reputation and image. But these investments are now producing the huge funds that make the pension program feasible.
Before Beman retired in 1994, the players finally lifted their glasses to him. And to acknowledge Garci's unique contributions, they gave him a chair on the Tour's powerful Policy Board.
Perhaps the players will remember them at a later date, too, when they're cashing those fat retirement checks!
(c) Copyright John M. Ross
June 27, 2001
By September, 72-hole stroke play tournaments are stale, writes Brandon Tucker, who suggests a new alternative to FedEx Cup events that takes a page from the FIFA World Cup. The idea blends the drama of match play with the necessity of stroke play to hold television viewership.
... full article »