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European PGA Tour comes to South Africa

Tuesday 15 January, 2013

The European Professional Golf Association Tour came to South Africa to host the Volvo Golf Champions tournament @ the Durban Country Club (DCC), called the most prestigious professional golf tournament in South Africa by the DCC president.  In checking it out while teaching @ Regent Business School in Durban, my plan was to evaluate the economic impact of the tournament, but little information appears to be available, so I’ll just wing it & take a look @ the event from a business perspective.

By the global #’s:  1st of all, Volvo, the prime sponsor, awarded €2M as the total prize fund, no small sum for a 4-day tournament, €350K of which went to the winner, native son Louis Oosthuizen, €225K to 2nd place, €130K for 3rd, €110K to fourth, & so on down.  Golfers from 17 countries participated, all champions of @ least 1 tournament the previous year or 10 in their careers, on a tour with tournaments in 27 different countries, fully 1/3 of which are not in Europe, (including the US), which says to me the European tour is no longer restricted to Europe by any means.  In 1 way it’s not surprising that a South African won for a couple reasons:  South Africa led the field with 6 golfers playing @ home, &; only South Africans have won European Tour events when hosted @ DCC.  As to which country produces the best golfers, again not surprising given it’s history, Scotland sent 4 golfers to the tournament, while Spain sent 3, & Denmark, Ireland, Northern Ireland, England, & Italy all sent 2.  France, Thailand, India, Belgium, Sweden, Wales, Portugal, Austria, & Germany all sent lone representatives.  Names of golfers who played in the tournament many Americans might recognize include Ernie Els, Darren Clarke, Retief Goosen, Padraig Harrington, Colin Montgomery, & Jose Maria Olazabal.

Sponsorship:  …is rampant everywhere you look, from the giant billboards & Volvo cars & trucks posted all over the course to attract the attention of TV cameras, to logos on the players clothes, bags, wherever.  Sponsor KwaZulu Natal province of South Africa named Retief Goosen as it’s global ambassador @ the tournament. IMG hosted & sponsored the event for the 1st time.

Pricing:  the event seemed relatively inexpensive in American terms with a ~$15 general admission price, yet the course did not seem that crowded.  A throng of 100’s followed home boy Louis Oosthuizen as he closed a 5 shot gap in the last round, but few other golfers attracted much of a crowd.

Product development:  I was surprised to see that amount of change & innovation in much of the equipment the pros use these days.  New materials in club heads & shafts was apparent.  Few wear traditional golf shoes, with many wearing what looked like regular athletic shoes, although that might have been because the course was somewhat soggy from rain during the tournament.

Technology:  I was also surprised to see the use of old-fashioned manually-updated leader boards.  I was under the impression that all of this had been digitized so that updates would show automatically on electronic leader boards.

athletes?:  As 1 who has completed 70+ sprint triathlons, when I look @ these pro golfers, I just laugh in terms of their athleticism.  The walrus, Craig Stadler, epitomizes the athleticism of golfers.  I understand that the hand-eye coordination, strong mental focus,  & to a small degree, strength play a role in success on the golf course, but this kind of athlete doesn’t compare with the aerobic or strength of many other athletes.

Economic impact:  These guys pop in for a week to win millions of €’s, but how much does that help the local economy?  The winners take their winnings home with them, so that doesn’t help much, although local authorities may impose income taxes on earnings here.  The organizer, IMG, earned their fees, & there may be local taxes paid on those earnings.  The players & organizers rent out hotel rooms & maybe rent cars while they’re here, so that’s a small impact.  I didn’t see that many out-of-towners traveled to Durban to see the tournament, so that impact seems minimal.  Caddies may be based locally & take home as much as 10% of their players earnings, so 10% of €2M is €200K, & since some are local, they would be earning & spending those earnings locally. That could be a sizable impact if they are indeed locally-based.  In looking @ the different stakeholders & who wins & loses, the players who all earn @ least €22K for a week’s work, clearly are winners.  The sponsors who get lots of coverage probably win, depending on how much they spend as opposed to the amount of recognition they gain.  Viewers are probably happy with an exciting tournament.  Golfers watching the tournament would probably benefit if there were some way for them to learn more about how to improve their games.  Durban & the province of KwaZulu Natal should benefit from positive association of a well-run tournament.  The organizers hire a small number of workers for the week, so there is a minor employment effect.  On the whole, I’m sure these tournaments are good for the businesses of the stakeholders named here.  I do question how much the local economy benefits from holding the tournament here.

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