USGA expects $10 million loss at Merion

[Howard Riefs]

Have you been to the U.S. Open recently? It's all about the money. 

Not this year.

Bloomberg reports that the USGA will lose $10 million on hosting the US Open at Merion. 

“I don’t think we’ll make up for the loss,” Sarah Hirshland, senior managing director of Business Affairs for the USGA, said in a telephone interview. “Clearly these line items will look different this year.”

"While USGA officials declined to detail how much this year’s Open could end up costing the organization, ticket revenue and merchandise sales probably will be down about 20-25 percent."


Such is the price the USGA pays for "choosing history over profit."  I'm glad it did. Even if it may be for the last time.


http://www.businessweek.com/news/2013-06-12/merion-grand-slam-presents-ben-hogan-ghost-with-10-million-loss

[Sean Leary]

Lose 10 million? Or make 10 million less.

Not sure I buy losing $10 million.

[Jeff Taylor]

The story proves that it is about the money.
Money must be managed in order to achieve organizational goals. Previous gains allows for such a loss.
Yes, it's all about the money.

[David Stewart]

Lose 10 million? Or make 10 million less.

Not sure I buy losing $10 million.

+1
This is exactly it. They aren't going to take a $10 million bath.

[Tim_Cronin]

Lose 10 million? Or make 10 million less.

Not sure I buy losing $10 million.

+1
This is exactly it. They aren't going to take a $10 million bath.

Reminds me of the baseball story where the owners were complaining about player salaries, and Dodgers owner Walter O'Malley, whose club drew more fans than any other team, said, "We're going to be $1 million short this season." The other owners took that to mean a loss and vowed to hold salaries down. O'Malley allowed that interpretation to hang in the air, when he really meant the Dodgers would make a million less than the year before.

[Brent Hutto]

Kind of like when the federal government talks about a 5% tax increase, decides to leave the rates the same after all and trumpets that decision as a 5% tax cut.

Or vice versa if it's the other party running things...

[Mike Vegis @ Kiawah]

Last year's PGA Championship at Kiawah only had 25,000/day and it was the second most profitable (after the 2004 Whistling Strait) in ticket sales since 2000.  

[Sean_A]

How is it possible the USGA could lose money if it has a tv deal and sold tickets?  Either the USGA negotiated a bad tv deal and/or undervalued the tickets or the USGA is paying too much for services.  I don't buy either scenario and suggest the USGA is making $10 million less than they would have at another site.  Though I spose there must be some leeway in those figures because the USGA can't always maximize profits if it continues to utilize a wide variety of venues for the Open. 

Ciao

[Bill Shotzbarger]

I paid $26 for a tshirt, so they're definitely doing their best... 

[Kevin Stark]

I paid $26 for a tshirt, so they're definitely doing their best... 

Exactly. The USGA is shameless about this.

[BHoover]

I paid $26 for a tshirt, so they're definitely doing their best... 

Exactly. The USGA is shameless about this.

When you go to any sporting event, merchandise is always overpriced.  But people still buy the stuff, so how is it shameless?  If the market will bear the price, it's called capitalism.

[Kevin Stark]

I paid $26 for a tshirt, so they're definitely doing their best... 

Exactly. The USGA is shameless about this.

When you go to any sporting event, merchandise is always overpriced.  But people still buy the stuff, so how is it shameless?  If the market will bear the price, it's called capitalism.

No argument that they should get every dollar they can. It doesn't mean that they're not shameless about it.

[William_G]

Lose 10 million? Or make 10 million less.

Not sure I buy losing $10 million.

+1
This is exactly it. They aren't going to take a $10 million bath.

+2

[BHoover]

I paid $26 for a tshirt, so they're definitely doing their best... 

Exactly. The USGA is shameless about this.

When you go to any sporting event, merchandise is always overpriced.  But people still buy the stuff, so how is it shameless?  If the market will bear the price, it's called capitalism.

No argument that they should get every dollar they can. It doesn't mean that they're not shameless about it.

Fair enough.

[Niall Hay]

  I'm glad it did. Even if it may be for the last time.


http://www.businessweek.com/news/2013-06-12/merion-grand-slam-presents-ben-hogan-ghost-with-10-million-loss

I agree Howard, I think it's great that Merion is back for the US Open. It is great for golf, history and Philly.

[Bill Vogeney]

The USGA acknowledged that their financial plans were to use some of their profits from past Opens to subsidize the occasional Open held at a site that might not allow them to generate a profit...like Merion...I read this recently

Have you been to the U.S. Open recently? It's all about the money. 

Not this year.

Bloomberg reports that the USGA will lose $10 million on hosting the US Open at Merion. 

“I don’t think we’ll make up for the loss,” Sarah Hirshland, senior managing director of Business Affairs for the USGA, said in a telephone interview. “Clearly these line items will look different this year.”

"While USGA officials declined to detail how much this year’s Open could end up costing the organization, ticket revenue and merchandise sales probably will be down about 20-25 percent."


Such is the price the USGA pays for "choosing history over profit."  I'm glad it did. Even if it may be for the last time.


http://www.businessweek.com/news/2013-06-12/merion-grand-slam-presents-ben-hogan-ghost-with-10-million-loss

[Tom_Doak]

If they really are going to lose $10 million -- which I have a very hard time believing -- maybe they should have just left the golf course the hell alone and saved a few bucks.

[jeffwarne]

If they really are going to lose $10 million -- which I have a very hard time believing -- maybe they should have just left the golf course the hell alone and saved a few bucks.

ummmmmmm......how about doing that every year?

Let the COURSE chosen be the featured event, not the setup or the changes.
Sadly, the WORST legacy of Opens is that some courses retain the setup (Bethpage )
I honestly was thrilled when they chose Erin Hills-a modern sized course with quirk they wouldn't have to change.
and then the (then) owner changed it

[Paul Jones]

That is hard to believe.  I call BS on that.

[V. Kmetz]

However you think about or view this "10 million dollar loss" remember it starts with the 2 million (+/-) in entry fees.

In 1995, when NBC first secured the broadcast rights to the USGA properties it was 13 million a year for 5 years...now...Street and Smith's reports

"The New Jersey-based USGA packages its major golf tournaments in separate deals with NBC, ESPN and Golf Channel, all of which expire in 2014. The combined annual revenue from all three of these deals is $35 million to $38 million a year, according to industry insiders."

Ticket sales...25,000(?) patrons...I don't know what a Week-long badge represents...is it fair to call it 100 a person...if so...2.5 million

So before a hot dog or T-shirt or logo item is sold, we're in the 40-45 million gross revenue area.

cheers

vk

[Bill Shamleffer]

How is it possible the USGA could lose money if it has a tv deal and sold tickets?  Either the USGA negotiated a bad tv deal and/or undervalued the tickets or the USGA is paying too much for services.  I don't buy either scenario and suggest the USGA is making $10 million less than they would have at another site.  Though I spose there must be some leeway in those figures because the USGA can't always maximize profits if it continues to utilize a wide variety of venues for the Open. 

Ciao

When the USGA calculates their US Open revenue they do not include the TV revenue since the TV contract is for ALL of the USGA events - even though the US Open is the only event the TV actually wants.  Therefore, no matter if this $10,000,000 is an actual loss (revenue less than expenses) or if it is a $10,000,000 decrease in the average net income for other recent US Opens, the TV revenue is not included.  So add the net income from the TV contract, and that is the real US Open revenue for this year.  Of course the other two Opens (Women's and Senior) break even at best, and all of the amateur events lose money.  Nevertheless, no need to send the USGA your loose change (if you see a USGA blue coat standing on the Main Line with a cardboard sign saying "Will make ruling for food.").

[Mark Provenzano]

However you think about or view this "10 million dollar loss" remember it starts with the 2 million (+/-) in entry fees.

In 1995, when NBC first secured the broadcast rights to the USGA properties it was 13 million a year for 5 years...now...Street and Smith's reports

"The New Jersey-based USGA packages its major golf tournaments in separate deals with NBC, ESPN and Golf Channel, all of which expire in 2014. The combined annual revenue from all three of these deals is $35 million to $38 million a year, according to industry insiders."

Ticket sales...25,000(?) patrons...I don't know what a Week-long badge represents...is it fair to call it 100 a person...if so...2.5 million

So before a hot dog or T-shirt or logo item is sold, we're in the 40-45 million gross revenue area.

cheers

vk

Week long badges were ~$450 each.

[Jim Nugent]

Mark, did the USGA sell 25,000 badges at $450 each?

[V. Kmetz]

Well, I didn't factor non-weekly (daily) badges nor did I go day by day

but even if they were ALL weekly badges and all cost $450 then

25,000 x 450 = 11.25 million so...50-55 million in gross revenue before a hot dog or t-shirt or golf cap is sold...

90% of the course staff is volunteer from local clubs (including some external green staff to work the course)...the vendors (I'm sure) are responsible for their paid staff...

I just don't know how the product and vending contracts are handled...whether or not:

The USGA has a long-running relationship with soft goods vendors who pay to be on site plus a percentage of gross receipts?
The USGA engages local vending contractors unique to each site locale?
Sumint else?

cheers

vk

[Sean_A]

How is it possible the USGA could lose money if it has a tv deal and sold tickets?  Either the USGA negotiated a bad tv deal and/or undervalued the tickets or the USGA is paying too much for services.  I don't buy either scenario and suggest the USGA is making $10 million less than they would have at another site.  Though I spose there must be some leeway in those figures because the USGA can't always maximize profits if it continues to utilize a wide variety of venues for the Open. 

Ciao

When the USGA calculates their US Open revenue they do not include the TV revenue since the TV contract is for ALL of the USGA events - even though the US Open is the only event the TV actually wants.  Therefore, no matter if this $10,000,000 is an actual loss (revenue less than expenses) or if it is a $10,000,000 decrease in the average net income for other recent US Opens, the TV revenue is not included.  So add the net income from the TV contract, and that is the real US Open revenue for this year.  Of course the other two Opens (Women's and Senior) break even at best, and all of the amateur events lose money.  Nevertheless, no need to send the USGA your loose change (if you see a USGA blue coat standing on the Main Line with a cardboard sign saying "Will make ruling for food.").

Well, I spose a lot of companies can report a loss and not be liable for corp tax if the largest source of revenue isn't reported.  Accountants.....

Ciao

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