PGA TOUR CANADA:News release| Hearn's reaction | Your thoughts?
THE MODERATOR:Good morning, everyone, and thank you to the members of media and special guests for participating in today's teleconference. On the line today we have the commissioner of the PGA TOUR, Tim Finchem, chairman of the Canadian Tour board of directors, Pierre Blouin, and the commissioner of the PGA TOUR, Rick Janes.
Today's call will start with some opening remarks from the gentlemen I just introduced, and then will be immediately followed by a question and answer period open to the media on the line.
With that, I'd like to introduce the Commissioner of the PGA TOUR, Tim Finchem who will get us started.
COMMISSIONER FINCHEM:Thank you and good morning to everyone on the call. I think everybody's aware of our long term relationship with golf in Canada and at a number of different levels. I'll refer to that further here in a moment.
But today's announcement is simply that after a lot of conversation and review, the PGA TOUR has determined to move ahead to assume operational control of the Canadian Tour going forward starting in 2013. This TOUR will become known as PGA TOUR Canada, and similar to PGA TOUR Latinoamerica, it will award access to the Web.com Tour to top players on the order of merit of PGA TOUR Canada.
In fact, the Web.com Tour membership will receive five of the Top 5 money leaders from PGA TOUR Canada, and the next five will be exempt into Web.com Tour qualifying tournament finals as well.
As diagrammed in 2012, we agreed to lend strategic and financial support this year and to evaluate what our future involvement might be with this series of events. As part of that exercise, our staff attended virtually every tournament and interacted with tournament staff, sponsors and players to learn as much as we could about where the TOUR is today and what its future potential is.
In short, we determined that while the TOUR does have its challenges, it presents a tremendous opportunity for the future, and if successful, would have a very positive impact on golf in Canada and globally. With a solid foundation of existing tournaments and outstanding opportunities to establish new events in Canada, we're confident that PGA TOUR Canada will strengthen and grow in coming years.
We know how strong the interest is for golf in Canada. We are particularly aware of the intensity of the golf fan base throughout Canada, not just from the statistics of participation, but from our own experience with the RBC Canadian Open, the Champions Tours, Montreal Championship, and the 2007 Presidents Cup at Royal Montreal Golf Club. I would say the intensity of the golf fan in Canada rivals anywhere in the world.
PGA TOUR Canada will play an important role in professional golf, and it will be a valuable system for developing players. The development of elite players is one of the major functions of this TOUR, and we're all excited about when the next Mike Weir will emerge.
Again, the goal is to build upon a foundation that's been established and strengthen PGA TOUR Canada. We plan to work with all Canadian media, and our current television partners, Shaw GlobalTV and TSN to broaden coverage of this TOUR.
PGA TOUR Canada will also be fully supported through our media resources, including digital platforms and PGATOUR.com, where Canada is consistently second only to the U.S. in traffic.
Finally, I would like to acknowledge and thank Pierre and the entire Canadian Tour Board and the Canadian Tour staff headed by Rick Janes for their support, hard work, and collaborative spirit throughout this process. We look forward to getting to work on the 2013 season and beyond. We'll provide updates as they become available, including the 2013 schedule.
With that, I'll turn it over to Pierre Blouin, the current chairman of the Canadian Tour Board.
PIERRE BLOUIN: Thank you very much, Commissioner. Good morning, everyone from the press. This is the next logical step for the Canadian Tour's sustainability and growth. The PGA TOUR as you've heard provided invaluable assistance throughout the 2012 season for the Canadian Tour, and through its evaluation process saw strong potential.
Because you all know golf is incredibly popular in Canada, and PGA TOUR Canada will be a very important part of Canada's sports landscape in the coming years, this is a great opportunity for current and future members of the Canadian Tour to get one step closer to the PGA TOUR and fulfill their life long dreams. This is also great for Canadian golf, which will help to cultivate the next golfing heros for all Canadians well into the future.
I want to acknowledge the efforts made by Commissioner Rick Janes and his staff through his process to assist the PGA TOUR, in getting a better understanding of the Canadian Tour. I speak today on behalf of the independent directors and player directors of the Canadian Tour Board when I say that we're very excited about the future of PGA TOUR Canada, and more importantly the positive effects it will have on golf in Canada.
I'd like to turn it to Canadian Tour Commissioner, Rick Janes.
RICK JANES: Thank you, Pierre, good morning, Mr. Finchem, and to the press and special guests that are on the line. Joining forces with the PGA TOUR has long been a vision and a very conscious change of direction for the Canadian Tour. As Pierre notes, it's the logical next step and logical evolution for the Canadian Tour. And I have to say this is a very proud moment to see the TOUR elevated to such an exciting new level. This level, I might add, simply would not be possible without the involvement of the PGA TOUR.
I would be remiss if I didn't extend my appreciation to those who over the past 40 years helped build the foundation of the Canadian Tour. Those commissioners who preceded me, the members of our board and dedicated employees who have served the Canadian Tour over the years, all the sponsors, the tournaments, the fans, the volunteers, and in particular the players and the alumni. The likes of Mike Weir, and Steve Stricker, and Stuart Appleby, Chris DeMarco and Tim Clark, just to name a few who have represented the Canadian Tour so well over the years and gone on to find success on the PGA TOUR and around the world. They are forever going to be part of our legacy.
Finally, I want to extend my thanks to everyone who shared the vision of PGA TOUR Canada and contributed to making this a reality today.
THE MODERATOR:Joining us for the Q & A portion of the call is senior vice president Jeff Monday who was involved in a due diligence that was addressed before on behalf of the PGA TOUR on getting us to this point.
Q. Jeff and Rick, do you have any sense of how the actual operational structure of this will change? Rick, are you planning to stay on in your role? Is this going to get more direction now from Florida than it is from Oakville?
RICK JANES:My role will be in a consulting role, and we're in discussions about what that will look like going forward. But perhaps Jeff could speak more plainly to the operational side of the business.
COMMISSIONER FINCHEM: This is Tim, I'll be happy to answer that question because it's fairly straightforward. We view PGA TOUR Canada as a division of the PGA TOUR. It will be managed just like PGA TOUR Latinoamerica, the Champions TOUR, the PGA TOUR and the Web.com Tour. It will be in the same management mix, and it will draw from the management expertise from our tournament areas.
Q. So will there be Canadian management involved in this or is it all coming now from the states?
COMMISSIONER FINCHEM: Well, as Rick mentioned, we envision Rick staying on and in a consulting role. The details of that have not been defined yet. The operational details have not yet been defined, and the staffing has not yet been defined. But we want to maintain, obviously, a continuity, because there is strength in the tournaments. We'll be working on that over the next several weeks. We anticipate kicking things off on November 1st.
JEFF MONDAY:We will maintain a Canadian office, and there will be Canadian employees working out of Toronto.
Q. There are a handful of employees there now?
JEFF MONDAY: That's correct.
Q. So the expectation is you'll maintain a similar employee count, or how do you see that?
JEFF MONDAY:We're working through that as we get through all of the organizational structure.
COMMISSIONER FINCHEM: We'll have that information for you in a few days.
Q. Considering the Canadian Tour has had its struggles in the last couple of years what was it that the PGA TOUR saw that led it to believe this is going to be a growing and viable operation?
COMMISSIONER FINCHEM: Well, I think that we felt the events themselves were managed well but I think fundamentally here we're looking at the need to continue a couple of things. One, elite player development in Canada. But also we recognize that the Canadian golf fan is a great supporter of our telecast in Canada. So we have a lot of reach in Canada. We have a number of sponsors in Canada. So we have an ongoing relationship with the Royal Canadian Golf Association.
So we have an awful lot of activity there now. We see this TOUR as important to maintain the thread of being able to say to new players, here's an avenue that's available to you. And the combination of being able to strengthen these events and add to that, the goal of moving to the Web.com Tour, which now starting next year will be the pathway, the pathway to the PGA TOUR, which is a fundamental difference in the way our qualifying is hopefully we'll have the impact of stimulating interest to young players to take advantage of that route.
It's important to be done regionally, and it makes all the sense in the world to be operating in an area where we have such very strong interest the game of golf.
Q. Are there any other TOURs out there that you see lending operational support and bringing under the TOUR umbrella?
COMMISSIONER FINCHEM: No, we don't have any other conversations going on at this point in time. But we're intrigued by the Ferguson Mini Tour going on in New Mexico. We may take a look at that one.
Q. Full exemption?
COMMISSIONER FINCHEM:Meaning half an event.
Q. What will be the actual synergy's between the Canadian Tour and Latinoamerica. Will there be any at all or are they separate entities?
JEFF MONDAY: They will be separate TOURs and have their own qualifying system, and hopefully their own schedules. But we will work to coordinate those schedules so it would be possible for a player if they wanted to take out membership and earn membership on each TOUR. They would be able to play a full season between the Latinoamerica TOUR and the PGA TOUR Canada beginning in 2013 when PGA TOUR Latinoamerica goes to a spring fall schedule, and then all of the PGA TOUR Canada events would be held in the summer.
Q. Are we talking separate Q schools?
JEFF MONDAY: That's correct, yes.
Q. How much priority is being put on I know for years the Canadian Tour has been trying to get an overall TOUR sponsor. Is that a priority right now?
COMMISSIONER FINCHEM:It is. Overall sponsorship, umbrella sponsorship, subsidiary sponsorship. We're going to need sponsorship to support and grow the TOUR. Again, we're following the same model with this TOUR that we've followed with our other TOURs. Which means that we're looking for engaged sponsors who see the potential who want to be partners, not just sports marketing arrangement where you get branding by putting your name on something, but companies that really want to engage and become involved and help us maximize the potential that's here.
Q. Obviously, with the PGA TOUR brand it makes it a lot more attractive now, doesn't it, Tim?
COMMISSIONER FINCHEM:Well, we'd like to think so. We have great support in Canada. If you just look at when we play tournaments up there, the turnout and the response, and the support of sponsors at all levels and the fans have been extraordinary. It just kind of makes sense that the extension of that to the early period of professional players careers, that is the qualifying part of it be part of that down to the grass roots. We think that all fits very well as well.
Yeah, I think that will help us. We're very optimistic about the opportunities to reach out to the business community in Canada and bring in that kind of support.
Q. Rick or Pierre, how many more tournaments do you see on the Canadian Tour schedule by the time 2013 rolls around?
RICK JANES: We're looking at a TOUR change, we're looking at a minimum of eight events for next year.
Q. One clarification off the top, as far as the Top 5 players on the order of merit getting Web.com status, is that full exempt status for the entirety of next year?
COMMISSIONER FINCHEM: Well, as we start this, the leading player, the number 1 player would have full exempt status and the other four would have conditional status, but reasonable access. Then the next five would move directly into the finals of the qualifying school.
Q. If I could just a question for Rick. Rick, the Canadian Tour prior to today has had some struggles. I know you've dealt with a number of negativity in terms of stories and questions. I know you talked about it off the top, but can you expand on your emotions today after a lot of years in this job and just reflect on today's announcement?
RICK JANES:Well, unquestionably, it's a very proud moment. We have envisioned aligning with the PGA TOUR for a great many years, and we not only had that vision, we established it as a strategic direction. So I have to say it is a very proud moment.
But I clearly have to say we wouldn't be here without the PGA TOUR, and I'm grateful for their support.
Q. You mentioned the vibrancy of the Canadian golf market, but clearly the TOUR had struggled. Can you tell me exactly when you were doing your evaluation, what exactly were some of its challenges and how will the PGA TOUR fix them?
COMMISSIONER FINCHEM:Well, I think that sometimes people get the impression that given the success of the PGA TOUR, that operating golf tournaments is just an easy thing to do. But if you look around the globe, it can be a struggle. We face a short season in Canada.
But I think that the interrelationship of the qualifying again with the pathway to the PGA TOUR, we see thousands and thousands of aspiring players come to our process every year from all over the globe. We don't see any fallout from that with the route going through the Web.com Tour, because at the end of the day, it's the largest and strongest TOUR in the world. Tieing all of that together in and of itself can positively impact the future of this TOUR.
In addition to that, what we've learned in terms of sponsorship side over the years is each potential sponsor has a wide range and differing range of needs and aspirations from a sponsorship partnership. And having the capability to leverage assets on some of our other properties and other TOURs to support and our television assets and our digital assets creates a lot more value to a sponsor. Then you put it all together in a package, and it becomes more attractive.
I just think that is probably the leading thing in terms of creating a financially solvent structure going forward. Then the qualification tie in I think is going to lead to a strong upsurge in the number and quality of players that want to play.
I do think that over time our focus really needs to be in Canada. I think it's important to the future of the game, given the strength of the fan base. There are more Mike Weir's out there, there are more role models and golf heroes to continue to stimulate that fan base. The extent to which a more vibrant tour results in more Canadian participation, I think is a very strong goal that we should keep in front of us.
So there is a lot to this. But let me just say that Pierre and Rick and people at the RCGA and the sponsors we know, everybody we've ever dealt with in Canada are terrific people, great support for the country. Great golf country and this is just an extension of what we've been doing over the years and moving in a slightly different way, organizing it hopefully in a way that will have more success.
Q. Tim, two clarifications. Is it fair to characterize this as an actual acquisition?
COMMISSIONER FINCHEM:A merger/acquisition, however you want to call it. The TOUR is now going to be part of the PGA TOUR.
Q. I know that the PGA TOUR had lent both strategic and financial support this past year. Can you elaborate on how much financial assistance was given to the Canadian Tour?
COMMISSIONER FINCHEM: It wasn't an extreme amount. I don't see any reason to talk about that publicly. We wanted to be of assistance, and we certainly wanted to make sure that every opportunity was available to look at the future here, both from the standpoint of what it wound up to be, but also from the standpoint of if it didn't go this direction, our assistance allowed other options maybe to come on the table. It developed, and it is going to go this direction. Now we're past all of that and moving forward.
Q. I just wanted to find out how many events will be on the Latinoamerican TOUR, And if you can compare the total purses and annual purses of the Canadian PGA TOUR and the Latinoamerican TOUR?
COMMISSIONER FINCHEM: Well, we started the Latinoamerican TOUR on September 11, between September and December this year. Next year we go to a spring fall schedule. Our goal over the next two years is to take that number to 13 to 15 range. On the PGA TOUR Canada, we anticipate eight events in 2013, and that number going to 11, to the 11 to 13 range.
Prize money this year on the Latino America PGA TOUR Latinoamerica is 150, in that range. On the PGA TOUR Canada, we anticipate at least in the first year 150 per tournament. The extent to where that goes
I mean, both of these TOURs, you may recall when we started the Web.com Tour as the Hogan Tour 30 years ago, those events were at $100,000 a year. And they largely have grown on a pay as you go basis, which is strength of sponsorship to where we anticipate that next year they'll be in the $750,000 dollar range.
So we anticipate some growth. We're not saying now what we expect that to be because in both cases it's really a function of developing a confidence and an understanding with elements in the community and various markets in South America and in Canada, and we'll see what develops from that.
Q. At least to start with it sounds like the purses will be comparable?
COMMISSIONER FINCHEM: Between these two, yes, same general range.
Q. I wanted to know is it part of a conscious effort on the part of the PGA TOUR to sort of follow Major League Baseball's blueprint of various developmental levels under the PGA TOUR?
COMMISSIONER FINCHEM:Well, no. I don't think we've ever talked about baseball as a model here. The fundamental difference between our sport and team sports is that in team sports somebody decides how good you are and makes a decision on whether they should hire you to be on their team at whatever level. In this sport, you have a specific qualifying system, and you show up with your clubs and you demonstrate you can play.
So when we say, for example, now there is a way you can go to the Web.com Tour in South America. Now there is a way can you go in Canada. That will attract players from Australia. Because these two TOURs now will come up in stature in terms of the kind of competition they are and because largely because of the nature of the players. Behind that, would be the structure of the TOUR. Then from then on, it's how well a player plays.
Now, to your point though, I do think that in both cases making the early stage of qualifying very available on a cost standpoint to more players by playing the early qualifying there in South America, not waiting for players to come to the United States, same thing in Canada, we hope has the impact of creating a growing number of elite players in both areas. With the focus on golf going into the Olympics in 2016, there is a lot of interest in these countries for that happening.
From the standpoint of the U.S., the future of the U.S. TOUR and global golf generally, clearly the more elite players that come from these players is a positive thing as well.
The more diversity internationally, the more global feel of the sport, the stronger it is as a global property, regardless of how these various tours, us and Canada and Asia map out. So 30 years from now we'll look back and see these steps have caused an impact.
Q. I know you said there is no current idea towards assuming operational control of any other tours right now. But do you envision a day where there are other tours under the PGA TOUR umbrella where players would graduate to PGA TOUR Canada, and PGA TOUR Latinoamerica?
COMMISSIONER FINCHEM: I hadn't really thought about that particular scenario. But I've said this publicly a number of times. The game of golf is a global game. The competition at this level and the organization of it is going to continue to move down the path of being organized on a global basis. Maybe in some people's minds, a snail's pace, but I think it will continue to move in that direction.
Now where that leads well after my watch, I don't know. But I think there are all kinds of permutations that are out there that could be harnessed in years to come.
Q. Commissioner Finchem, Vancouver was host to a Canadian Tour event for many years, but hasn't been for the last several. Do you see adding a Vancouver stop to the Canadian Tour schedule as a priority?
COMMISSIONER FINCHEM:Well, we're open. We've played PGA TOUR golf in Vancouver. We had a fantastic experience there. I'll never forget the first year we played and the tournament wanted to play a Monday Pro Am involving NHL players, and there were 26,000 people at a tournament on Monday watching a Pro Am. That was impressive. So we've had great experience in Vancouver. It's certainly an area we're going to look at.
I know when the RBC Canadian Open goes to Shaughnessy, it's an extremely popular golf course with our players. So, absolutely, we'll be looking at Vancouver.
Q. As far as qualifying school goes for the PGA TOUR Canada, will it be held in the United States or will it be held in Canada?
JEFF MONDAY: It most likely will be held in the spring in the United States.
THE MODERATOR:Thank you.