The Business Behind the Masters: Sacrificing Money for Fans

The Business Behind the Masters: Sacrificing Money for Fans

When it comes to golf, there is no event in the world more popular than the Masters. The final round this past Sunday on CBS earned a rating of 7.6, down 11% from 2016, yet still double every other major event in 2016 (U.S. Open on Fox had 3.8, British Open on NBC 3.3 and PGA Championship on CBS 3.4). Augusta National brings in roughly 30 million dollars in revenue after taxes every year. This may seem like a lot of money, and it is, however, with the recent ratings and attention the Masters attracts, Augusta could easily double or even triple its revenue.

The Masters will generate approximately 115 million dollars in revenue for Augusta National. Of that 115 million roughly 47 million will come from merchandise, 25 million from international TV rights, 35 million from tickets, and 8 million from concessions. Notice the absence of domestic television revenue. This is the right to televise the tournament in the United States. For many competitions, it is a primary source of revenue. CBS has been broadcasting the Masters for over 60 consecutive years now. CBS and August National sign a one-year contract every year, in which neither party makes any money. This is quite shocking considering Fox Sports has recently agreed to a 12-year 93-million-dollar deal for rights to televise the U.S. Open, U.S. Women’s Open and U.S. Seniors Open, events that generate a fraction of the ratings the Masters does. Augusta could easily pursue a TV deal that generates over 100 million dollars annually. However, Augusta does have a good motive for forgoing such large sums of money in its domestic TV deals. The one-year contracts give Augusta National complete control over how its event is broadcast throughout the United States.

It’s not just TV revenue Augusta is intentionally forgoing, they also miss out on millions of dollars in ticket revenue. Day passes for last week’s Masters sold for 100 dollars. However, tickets from secondary sellers, like StubHub, TicketCity, and VividSeats, were charging 20 times that amount and still sold out. The average ticket price on these secondary platforms was over 2,000 dollars for a day pass. Augusta is, therefore, shortchanging itself massively and missing out on nearly 100 million dollars of ticket revenue. Augusta further limits its profits by selling all concessions on the course at break even.

So, the question remains: why decline hundreds of millions of dollars in potential revenue? The primary reason is simply is for the love of the game. Since its creation in 1934, the focus of the Masters has been to give both fans and players alike, the best possible experience. It is not about the money, it is about the sport. Augusta places emphasis on the game of golf in its purest form, away from the logos, marketing, and commercialization that has taken over the modern sporting world. Billy Payne, Chairman of Augusta National Golf Club, has made it his mission to use the club’s resources to help grow the game both domestically and globally. At Augusta, money takes a backseat to golf. In an interview conducted several years ago, Payne brilliantly conveyed Augusta’s unique viewpoint, “I think we, perhaps at Augusta, measure success, the future of the game a little bit differently. We don’t do it in numbers. We don’t do it indefinable, ascertainable arithmetic growth rates. We measure it in smiles on the faces of these kids. If we can create that here, see it by extension go to others, then we are very happy with the current state of the game of golf.” At Augusta, golf is celebrated and enjoyed for the wonderful game it is. It is a shame more organisations do not share Augusta’s understanding of golf and sports in general.