The Masters has established itself at the top table of golf majors thanks to a long-term strategy of careful quality control over its brand. Richard Gillis reports.
TO UNDERSTAND HOW the Masters works, it is best to start at the 12th hole – a microcosm of the history of the event’s relationship with the commercial world.
In an ideal world, sports marketing would be about creating scarcity and value. Yet often it is synonymous with more events, activations and noise. By contrast, at Augusta the only noise comes from those watching from the galleries.
In the context of today’s distance-no-object, rip-it-and-find-it, bomb-and-gouge world of the PGA Tour, Augusta’s 12th is a throwback to the hickory shafted days of Bobby Jones, the greatest ever amateur player and the co-founder of the tournament.
History and nature combine to create one of the most treacherous short holes in golf as part of the course’s legendary Amen Corner. Course architects around the world have tried to copy its design and golf-mad Nascar motor-racing driver Kevin Harvick even has an exact replica in his back garden.
The hole is a mere 155 yards, defended by water at the front and flower beds and sand traps at the back. The wind is notoriously hard to fathom, swirling off the trees and playing havoc with the caddie’s yardage book. That is before you step onto the green, where holing a four-foot putt for par becomes a nerve-shredding affair, like rolling a marble across a kitchen floor. Yet when the Masters first appeared on television in 1956, the 12th was nowhere to be seen and it remained that way until 1973.
Broadcast rights were acquired by the CBS network for a rights fee of $10,000 after rival network NBC, which covered the tournament on radio, had turned it down. CBS has retained the rights to the Masters ever since through an arrangement that is famously renewed on a year-by-year basis.
This means that 2016 is the 60th consecutive year of CBS coverage based on a one-year contract, a unique arrangement in the sports industry.
When the famous 12th hole finally did make an appearance on screens in the early 1970s, Clifford Roberts, the club chairman and co-founder of the Masters, was not about to give up Augusta’s other jewels. With rival network ABC hovering to challenge the incumbent rightsholder for Masters coverage, Roberts recalibrated the relationship to keep other parts of the course off limits from CBS, despite requests, to protect an element of mystery and intrigue at Augusta. For years, the front nine holes at the course were not shown on television.
“CBS bent over backward to make sure that they made Roberts happy and didn’t lose the prestigious event,” CBS commentator Pat Summerall wrote in his book, ‘Giants: What I Learned About Life from Vince Lombardi and Tom Landry’. “They bowed to every demand: CBS wasn’t allowed to expand its coverage of the Masters, as it had for the US Open and other majors, and we had to limit commercial content and get final approval for all commercial content from the Masters tournament office. As a broadcaster, we were also given a dos and don’ts list of things we could say on air. We could not make any references to money or how much the prize was, we had to make sure to call the venue Augusta National Golf Club, not a country club, we couldn’t talk about how one gets to be a member or refer to membership at all, and we couldn’t mention the brand of shoes a player was wearing.”
There is still feverish demand for coverage from Amen Corner and Augusta’s culture of control has ensured that the section of the course occupies a whole rights category of its own. Broadcasters from around the world offer the 12th hole as an added-value digital service.
The integrity of product makes the proposition extremely attractive
In February 2014 the Masters signed a deal with pay-television broadcaster Fox Sports in the Australian market. As part of Fox Sports’ subscription television and IPTV rights, the broadcaster offered continuous live coverage via the red button service of ‘Amen Corner’ – the 11th, 12th and 13th holes. The first 4K television coverage of a sports event in the US market was of Augusta. US satellite operator DirecTV offers 4K coverage for all four days of play at Amen Corner as part of the broadcaster’s Ultimate and Premier packages.
“The Masters tournament committee is able to navigate in complete control,” said Barry Hyde, executive vice-president, global brands and properties at sports marketing and talent management company Wasserman Media Group.
“From broadcast rights, international distribution and merchandising through to ticket prices, hospitality and the way they structure their corporate partnerships, it is all under the control of one person. This is the secret to the brand’s consistency over time. It has made it the most distinctive major championship and certainly the most coveted by the corporate community.”
Such control can create an exceptional product, according to Michael Pask, former senior vice-president at the WME | IMG agency. “The Masters is one of the best examples of an event truly caring about its value system over a long term, which has a profound effect on its revenues,” Pask told SportBusiness International.
“The look, feel and organisation of the event are truly world class, and start with a spectacular course. This retention of a value runs through Augusta National itself and its members, and is mirrored in the constant investment in the event and its facilities, perhaps made easier by the fact that it is an annual event. It is this integrity of product that makes the proposition extremely attractive across all commercial components.
“This is further enhanced by the fact that the Masters has taken a view that less is more, both in terms of partner numbers and visibility of branding. It is, however, one of the reasons why the event looks so spectacular. The event has further enhanced itself by the quality of delivery around the merchandising, hospitality and all the commercial elements, which are extremely successful when benchmarked against any other events.”
Pask’s outlook is supported by the numbers. According to recent research by Golf Digest magazine, the Masters will generate about $115m (€103m) in revenue in 2016, more than a five-fold increase from the $22m the same magazine estimated in 1997, the year of the first of four Tiger Woods triumphs at the event. The magazine estimates that the club will make a profit of almost $30m, up from $7m 19 years ago. Ticket prices and on-course concessions remain good value for the lucky few to be allowed in. The Masters is the hottest ticket in golf and, paradoxically, one of the cheapest. This year’s event is expected to garner $34.75m from ticket sales, yet the price of the tickets remain excellent value compared to events of a similar stature.
It costs $325 for a badge that gains access to the four competitive rounds. By comparison, golf fans will pay three times that amount for four days at the Open Championship at Royal Troon in Scotland this year. Tickets for this year’s Super Bowl floated between $800 to $1,900 and baseball fans were paying up to $500 for one game of the 2014 World Series.
Owing to the disparity between supply and demand, the same four-day badge on the secondary market starts at a price of more than $5,000 on StubHub, according to Golf Digest. Wednesday practice-round tickets sell for about 15 times their face value, while a one-day Sunday pass can cost at least $1,600.
The less is more philosophy runs throughout the commercial programme of the event. There are three official tournament partners – IBM, AT&T and Mercedes-Benz – with the latter having replaced Exxon Mobil on the roster, having previously been an international market partner. Rolex and UPS are added to these brands in the international market.
A signature of the Masters brand is the absence of marketing clutter, both on the course and across the communications mix. Everything is aimed at enhancing the experience of the viewer and the spectator, so there are no advertising hoardings surrounding the tees or the greens. The partnerships are in effect broadcast sponsorships, with Augusta acting as a broker between the tournament and its broadcast partners.
Each sponsor pays between $6m and $8m, which is used in large part to cover television production costs. In return, the brands receive a combined four minutes of advertising time per hour around the tournament transmission, Hyde said. CBS is not allowed to sell advertising time around the Masters on the open market. By way of comparison, viewers of regular PGA Tour events can expect to watch 12 to 14 minutes of adverts per hour. The monopoly of advertising time, however, is just one part of the ROI puzzle for the event’s sponsors.
Name recognition is not high on IBM’s requirements when it comes to sport sponsorship objectives. Most people have heard of the company, but they may not know what it does with any degree of accuracy.
When the computer giant began its partnership with the Masters 14 years ago, it was still best known as a builder of computers. Today, IBM uses its precious media time around the tournament to educate the audience about its full suite of services. Two years ago, working with Ogilvy and Mather in New York, changed how it used its 45 ad spots, moving towards greater integration with its ‘Made by IBM’ content marketing strategy.
“The choice we and other sponsors have made for years is that we’re going to create a fairly limited number of spots and we’re going to have you see them many, many times, and the repetition of the story or the message is truly going to be ingrained and embedded,” a spokesman for IBM in the US said. An alternative approach was tested out in 2014, when 45 separate films were shown, short stories featuring the work of IBM’s staff around the world, building a broader picture of the services offered by today’s multi-faceted company.
Beyond the advertising strategy, IBM’s involvement in the Masters helps the tournament organisers to build a state-of-theart suite of digital and social products, from the Masters official website through to social platforms across Android and IOS platforms. This not only provides a valuable service to viewers and attendees, but it also helps position IBM in other markets, including cloud computing and the data analysis space, one of the most dynamic sectors in sport sponsorship.
The Masters has benefited hugely from long term brand management of a type seen very rarely in modern sports marketing. Indeed, the brand is so strong and distinctive that it has come to represent a version of golf in the public imagination, both in the US and abroad. However, Clifford Roberts’ legacy went far beyond issues of marketing and brand control. The power he exerted from the centre had other, far less palatable consequences.
“As long as I’m alive, all the golfers will be white and all the caddies will be black,” said Roberts, who committed suicide in the grounds of Augusta in 1977.
The club’s collective world view reflects its history, but it has been painfully slow to respond to pressure from beyond its perimeter fence. Female members at the Augusta National Golf Club are like buses – the world waited 85 years for one and then three came along at once. In 2012 US Secretary of State Condoleezza Rice and Wall Street investor Darla Moore were invited to become the club’s first female members, and IBM chief executive Virginia Rometty joined two years later.
A signature of the Masters brand is the absence of marketing clutter
Billy Payne, Roberts’ successor as chairman, has been credited with softening and modernising Augusta’s image whilst keeping the good bits and making more money from them. As Golf World magazine said: “Augusta National has become more international, less old-boy, less southern, more high-tech and an ever-bigger business. He has expanded the TV coverage, he has lectured Tiger Woods and he has moved the scalpers away from Magnolia Lane.”
Payne’s relationship with Augusta goes back a long way, even before he campaigned for golf’s inclusion in the 1996 Atlanta summer Olympic Games. As head of the Atlanta Olympic Committee, Payne prepared a proposal for the Augusta National to host the Olympic tournament, an idea that secured the backing of the Masters tournament committee, but not the International Olympic Committee. “It’s clear the biggest thing missing here is golf at Augusta,” Payne said at the time. “I’m sorry about that. It’s my biggest personal disappointment.”
Payne’s tenure as chairman has coincided with a building boom in the grounds of the Augusta National and regular visitors each spring have noticed the changes. A couple of years ago specially-constructed cabins appeared just off the 10th hole for corporate partners IBM, Exxon and AT&T. Near the first fairway Magnolia Suites were constructed to house guests from CBS, Rolex and Mercedes-Benz. A new Members Retreat debuted last year between holes 13 and 14.
The big-ticket item, however, is Berckmans Place, a 90,000-square-foot permanent structure built near the fifth green, on the property’s perimeter, between the golf course and Berckmans Road. The three-storey facility has five restaurants and can hold 2,000 people. It opened in 2013 and is Augusta’s answer to Formula One’s Paddock Club, targeting the top end of sport’s hospitality market.
Weekly tournament passes for Berckmans Place are sold for about $6,000 apiece and are routinely snapped up quickly by Augusta National members, sponsors and other members of the extended Masters family.
In large part, Berckmans Place is an attempt to prevent hospitality revenue leaving the premises. Previously, the relative lack of hosting venues within Augusta National meant that much of the corporate hospitality took place away from the course. Unsurprisingly, the prices for the full Berckmans Place experience are well above the market rate for golf hospitality. Media sources suggest that the Ryder Cup comes closest in the American market. The price of hospitality at Medinah in 2012 was around $235,000 for 50 people in a chalet, the equivalent of $4,700 per pass.
The last few years have seen a dramatic hike in fees in the domestic and overseas markets for golf’s key rights-holders. This inflation has put pressure on the likes of the Royal and Ancient Golf Club (R&A) and the United States Golf Association (USGA), which jointly establish the sport’s rules and operate key events on the calendar, to maximise financial returns.
In 2013 the USGA signed a 12-year multimedia deal with the Fox network in the US, positioning Fox Sports 1 as the domestic broadcast partner for the US Open, replacing the NBC network. This was the second big blow for the Peacock Channel in as many years. In 2011 NBC lost Wimbledon tennis rights to pay-television sports broadcaster ESPN, bringing to an end a 43-year partnership.
Stung by the loss of the US Open, NBC signed a deal for the Open Championship, arguably the closest rival in terms of stature and prestige to the Masters. In June 2015 NBC Sports acquired the key US broadcast market rights for the Open for 12 years, starting in 2016. At the same time the R&A came under fire for selling its exclusive UK live rights to pay-television broadcaster Sky after years of coverage on public-service broadcaster the BBC.
The comparison between the broadcast strategies of golf’s top rights-holders is revealing, according to Hyde, who compared the ownership structure of the Masters to that of the rights-holding governing bodies of the other three major championships that make up golf’s top tier: the Open Championship, US Open and US PGA Championship. These events are owned and commercialised by the R&A USGA and PGA of America, respectively. “The reality is that the other major championships are the overwhelming source of revenue for the respective governing bodies and they are under great pressure to exploit the events for maximum commercial return. This is not the case at the Masters,” Hyde told SportBusiness International.
CBS and the pivotal 12th Hole
For their initial $10,000 outlay for the rights to the Masters, the CBS network showed just the 18th hole from the beginning of its coverage of the event in 1956, often with just one camera behind the green to capture the winning putt. Clifford Roberts, the club chairman and co-founder of the Masters, sensed this was under-selling his tournament and urged CBS to up its coverage, offering to cut the rights fee in half to $5,000 if more of the course was shown in their broadcasts.
CBS added a second transmission station, screening two-and-a-half hours of the Masters over three days, but still only offering just the last four holes. Still Roberts wanted more and, via the club’s annual report, he wondered aloud how the CBS coverage in 1957 could be improved. “A most picturesque part of our golf course lies about the 12th hole and 13th green. An attempt should be made through employment of portable cameras to bring this area into live broadcast. If this is impractical, a few films of the area could be shown,” he said.
This teaser did not hook CBS, which wanted to keep costs down and saw little benefit in showing more of the course. That is how it stayed for several years. Then Roberts read that CBS was planning to cover six holes at the 1964 Carling World Open at Oakland Hills, a far less prestigious event. He wrote to Jack Dolph, CBS’s director of sports, pointing out the anomaly. Dolph wrote back: “It’s true that we are covering six holes of the Carling’s rather than four as we do at the Masters. This was a commitment made in acquiring the rights to the tournament, one on which Carling’s insisted. We have grave doubts that this extra hole coverage will add to the overall impact of the tournament and we are, in fact, giving the extra two holes the very minimum of coverage.”
By the early 1970s Roberts had turned up the heat further; the time had come for leverage. In 1972 ABC Sports asked the club for permission to film the 12th hole during that year’s Masters, for a prime-time sports special that it planned to broadcast on the Monday following the tournament. “As you know,” an ABC executive wrote to Roberts, “this hole has never been shown on the live presentations of the Masters and our segment, which would probably be only five or 10 minutes in length, would not only show how some of the top finishers play this hole, but would also capture the many moods and some of the unique happenings that transpire at this locale.”
Roberts was well aware that ABC wanted the Masters on its channel and was prepared to outbid CBS – and Roberts knew that CBS knew. So CBS did install a camera on the 12th hole. It is worth noting that 1973 was the last time that the US Open got higher ratings than the Masters in the domestic market. Johnny Miller’s victory at Oakmont, courtesy of a brilliant final-day 63, drew a weekend rating of 9, beating that year’s Masters rating of 8.4. The next year the Masters edged ahead and has never been behind since. In 1997, the year of Tiger Woods’ first victory at Augusta, the weekend rating for CBS was 14, a record for a golf event.
However, the relationship between CBS and the Masters could become fashionable, as the power of free-to-air network television seems to be coming back into vogue among rights-holders worried by the fall in pay-television subscribers in the core US market. Pay-television distributors across cable and satellite fell below 100 million households in the final quarter of last year, according to Nielsen – a leak of 5.6 million homes in less than five years. ESPN alone has lost 8.7 million homes in that period, down from a high of 100.1 million in July 2011.
“We have lost five million golfers over the last 10 years.
This raises big questions for golf’s rightsholders, which are under pressure to balance reach with revenue. According to Hyde, there is a paradox running through the golf business. “At the professional level, as media content, it is thriving, as evidenced by the escalating rights fees we are seeing,” he added. Meanwhile, as a participation sport, golf faces many challenges, particularly in mature markets. Again, the figures back up this statement.
“We’re leaking golfers,” said Joe Beditz, head of the National Golf Federation (NGF), an organisation that promotes the sport. Speaking at the PGA Merchandise Show in Orlando, Beditz said: “We have lost five million golfers over the last 10 years. Five million – and that’s out of 30 million.” He estimated that things were going to get worse. Another five million people – of the remaining 25 million golfers – will quit the game in the next few years, he said. Many of the missing five million are from the age group the marketing industry prizes above all others, the millennials. This is the name given to the demographic group born between the early 1980s and 2000.
The NGF survey asked 1,200 Americans aged 18 and older why they do not play golf. It found that 57 per cent hold a negative view of the game. “And you know what the No.1 word was that they used to describe it? Boring,” Beditz said.
Golf participation among this age group has declined 30 per cent over the past 20 years. Their importance cannot be understated, as this is the age range when most people take up the game for the first time. For this reason the decline has profound implications for golf’s future. Approximately 400,000 people left the sport in the past year, according to the NGF.
“Young people entering the game after high school, 18 to 30-year-olds, are down 35 per cent in the last 10 years,” said Mark King, who was until last year the head of adidas’ TaylorMade golf-dedicated division and is now head of adidas North America. “So I don’t like where the game looks like it’s going.”
Given its financial success, the Masters is keen to be seen as part of the solution, using its fame for the good of the game. To this end, it distributes large sums of money to help encourage participation. “What they have done with the Asia-Pacific Amateur Championship and Drive, Chip and Putt (a grassroots development programme) does them enormous credit,” Hyde said.
— Masters Tournament (@TheMasters) April 2, 2016
In 2009 the Masters and the R&A created the Asia-Pacific Amateur Championship, the winner of which goes to the Masters. This was followed by the founding of the Masters Tournament Foundation, which supports the LPGA Foundation, LPGA and USGA development programmes, and was provided with $6.1m in donations across 2011 and 2012.
“We essentially give as much as we can every year and then try as best we can to use that money in our grow-the-game efforts,” Payne said at the traditional pre-tournament chairman’s news conference, one of his few media appearances each year. “It is our intention going forward to be very substantial contributors to our foundation. The establishment of the Masters Tournament Foundation is central to fulfilling our responsibility of supporting the game’s continuous growth around the world.”
Any review of the business behind the Masters must conclude that something has gone right. It is probably telling that Clifford Roberts created the tournament’s brand before the invention of the sports marketing industry. Roberts did not spend time worrying about clip deals with Snapchat or chasing down illegal feeds on Twitter. The unique nature of the tournament affords it the luxury of ignoring the advice of sports marketers offering solutions.
One prominent publication suggested that the people who run Augusta National are missing out on $200m. By upping ticket and concession prices, it argued, they could squeeze a few more dollars from the patrons. Its archaic annual handshake deal with CBS is an anachronism from a different time, for example. However, such talk suggests the real lesson to be learnt from the Masters is clear: less is more – much, much more.