One morning last week, I was quietly minding my own business in Indiana when a member of the golf media reached out via text from Bellerive Country Club in St. Louis, site of the PGA Championship.
“Some rumblings here the PGA and PGA Tour in merger talks…”
While I was taken aback by the thought, stranger things have happened. Fifty years ago, a group of players led by Arnold Palmer and Jack Nicklaus revolted, leading to the formation of what we now know as the PGA Tour. Palmer and Nicklaus thought that the players would be better off managing their own tour than having the PGA of America do it. That worked out pretty well for the players, and I think a merger of the Tour and the PGA could benefit club pros and their affiliates, as well as the sport.
The PGA of America is in flux with its leadership. The search is on for a new chief executive officer after Pete Bevacqua announced July 24 that he was leaving, effective Aug. 13, to become president of NBC Sports. Many PGA members think that their governance model is broken and outdated. Fourteen volunteer golf pros, two independent directors, three officers and a past president compose the PGA Board of Directors. The board meets three or four times a year to make decisions that will impact the PGA, a 501(c)(6) nonprofit with approximately 28,000 members and apprentices.
The PGA consists of 41 sections across the country, but governance is not equitable. Small sections such as three from upstate New York – Western, Central and Northeast – have two delegates apiece to the PGA annual meeting while the Carolinas Section, which covers North Carolina and South Carolina and is one of the PGA’s largest, has only two votes.
The PGA Tour is run more like a business. It has a commissioner who answers to a nine-member PGA Tour Policy Board made up of four influential independent directors (usually CEOs of large corporations) along with four PGA Tour players and the current president of the PGA of America. The hierarchy of PGA Tour executives brings a vast array of legal and business experience to the Tour’s operations. Having served as a PGA officer and a member of the PGA Tour Policy Board, I am convinced that there would be tremendous advantages for PGA members to be managed by the PGA Tour.
Here's an example of the two organizations’ business acumen: The Tour manages more than 30 properties and nets a profit in excess of $10 million per year on its golf operations. The PGA runs two properties and loses money.
“The PGA of America is at a huge disadvantage from a structural standpoint, whereas the Tour is set up like a business,” said Deane Beman, a former commissioner of the PGA Tour. “Without question, a single organization combining the Tour and the PGA would have more influence on the game of golf. The two together would be more effective in marketing and growing the game.”
According to Beman, who ran the PGA Tour from 1974 to 1994, the Tour and the PGA were supposed to re-engage in a conversation about a merger in the early 1980s, but it never happened. “The PGA officers at the time never presented it to their board,” he said. It was all part of an agreement that allowed both organizations to go their separate ways from a marketing standpoint.”
It’s no secret that until the past five years, the relationship between the Tour and the PGA had been frosty, to say the least, even though Tour players also are members of the PGA of America. There is no greater example of this newfound harmony than the PGA Championship’s move to May beginning in 2019, which cleared the August schedule for the FedEx Cup playoffs to finish ahead of the football season. Many observers were left questioning what the PGA of America got from the Tour for making the move. Merger talks?
“I’ve always felt if the PGA did not have the Ryder Cup and the PGA Championship, it would be forced to do more for its members,” Beman said. “In many ways, they [the PGA Championship and Ryder Cup] become distractions and take away from attention to members.”
That’s an observation shared by many PGA members, but the approximately $35 million in annual revenue derived from these events (not including TV rights fees) also fuels member programs and helps keep dues reasonable. However, due to inurement restrictions, PGA members are limited in how those championship-event revenues are shared. There are no retirement or health-insurance plans available to PGA members.
By comparison, Tour players have a deferred-compensation structure, not a retirement plan, which according to Beman took a special exemption under the federal tax code several decades ago. The Tour can justify the deferred compensation because players perform in tournaments. The players have a health-insurance plan for which they pay a little, and the rest is subsidized by the Tour.
As valued assets, the PGA Championship and Ryder Cup actually could be major stumbling blocks in a potential merger.
“You have to eliminate that as an obstacle,” Beman said. “The value of those should be used for the benefit of PGA members. Follow the money. Does it directly benefit the PGA member? It’s not easy. It would be a hell of a transaction, and it would take a lot of strategy. There was probably a better chance of doing this in the early 1980s than now because there is so much money involved today.”
As Beman suggests, one PGA organization would be stronger, and life could be better for all of its members. Many PGA members think that their association has become too corporate and less member-focused. A merger with the Tour might change all of that, plus it could put the PGA in a position in which it could have a far greater international presence in growing the game and helping golf professionals around the world.
Ted Bishop, who owns and operates The Legends Golf Club in Franklin, Ind., and is the author of “Unfriended,” was president of the PGA of America in 2013-14. Email: firstname.lastname@example.org; Twitter: @tedbishop38pga