Book excerpt: Beman put the 'Inc.' into the PGA TOUR

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Stan Badz/PGA TOUR

Former Commissioner Deane Beman won the PGA TOUR Lifetime Achievement Award in 2007.

Earlier this year, Adam Schupak's book about former PGA TOUR Commissioner Deane Beman -- "Golf's Driving Force" -- was released by East Cottage Press. Here is an excerpt from the book, which is available at Amazon.com by clicking here.

It's been said that Deane Beman put the Inc., in PGA Tour. By making golf the sport of corporate America, Beman ushered the game into the modern financial era. Purses jumped from slightly more than $8 million when he took over in 1974 to more than $100 million on three tours 20 years later.

Beman didn't invent the corporate title sponsorship -- the Kemper Open, named for the insurance-provider, and the Buick Open both pre-dated him -- but he was the first to realize its potential. For the most part, networks refused to plug the title sponsor. They habitually dropped the corporate name. So did newspapers.

"Eastern Airlines would beat me over the head," recalled Art West, the Tour's director of marketing from April Fool's Day 1979 until April Fool's Day 1992. "I told them we didn't control that aspect of it. (The network would) call it the Doral Open unless they bought air time. The network wasn't going to give away free ads."

Soon the rules would be re-written. The 1960's and '70s was the golden era of the celebrity host. Bing Crosby, Glen Campbell, Sammy Davis Jr., Joe Garagiola, Jackie Gleason, Dean Martin, Ed McMahon, Danny Thomas, and Andy Williams all had their names attached to Tour events in 1980. But by 1989, when Williams ended his 21-year association with the San Diego event, Bob Hope was the only celebrity whose name still was connected to the Tour. "It went from Dean Martin to Dean Witter," said Golfweek's Jeff Rude.

But as popular as they were, celebrity hosts didn't lift television ratings enough and couldn't anchor a long-term TV business model. In one of his least appreciated contributions, Beman changed the conventional thinking of golf on television, which was shown sporadically and limited to an abbreviated weekend telecast of usually no more than nine holes. The reason? Golf was the most expensive sport to broadcast because the cost associated with laying cable over a golf course compared with a stadium or arena was significantly more. "Until we found a way to underwrite that production cost, getting a substantial rights fee was a problem," Beman said. "First we had to solve the networks' financial problems."

Beman convinced corporate America to pay the freight. In return, they received substantial brand exposure outside of commercial breaks. In the new model, Beman eliminated the networks' risk, guaranteeing not only the production costs, but the rights fee it paid. In addition, the Tour left the network 40 percent of the inventory to sell for profit. This spurred networks to expand coverage of golf, bringing the sport into the television mainstream and leading to skyrocketing purses. The Tour's TV rights fees increased more than 2,000 percent from $2.8 million at the start of Beman's tenure in 1974 to $69 million in 1994. "Beman was the first commissioner to solidify the foundation of his sport with corporate sponsorship," veteran sports television producer Don Ohlmeyer said.

The TV strategy's brilliance was in its simplicity. If the networks embraced a corporate sponsor, the Tour would guarantee that the title sponsor would purchase enough advertising to make the deal profitable for the network.

"Occasionally (Deane) had to lead television by the hand and say 'This is good for you. Trust me,' " said Neal Pilson, former president of CBS Sports. "It was good for television and we did trust Deane, and it all worked out."

Indeed, the Tour's success in television can be traced back to a strategy borne of economic necessity in 1982. Beman's prediction that the Tour's lower ratings would result in lower rights fees during the next TV negotiation proved true. "We had our teeth kicked in," Beman said.

Its TV rights fees from the networks dropped by $1.5 million beginning in 1982. Beman's TV deal with CBS reduced the number of tournaments it aired from 18 to 12, and the refusal of NBC to add to its golf package left several tournaments without coverage. These were the days when ABC still wouldn't answer the Tour's calls.

Having an event televised was a mark of prestige and part of the promotional effort for the host city. In the aftermath of the 1980 TV negotiation that reduced the number of televised tournaments, some of the events that were bounced sought their own coverage. To get back on television through syndication or cable, tournament organizers courted corporate sponsors to front the money to buy time on TV. Chip Campbell, the Tour's point man on its television negotiations, presented a package to tournament organizers calling for the sponsor to assume 40 percent of the telecast advertising time. This eliminated the Tour's risk in producing the event. "This paved the way to lay off the complete risk of the production and ultimately the rights fees to the commercial sponsor," Beman said.

The cable networks showed little concern for program practices. The appeal of a sponsor fronting the dollars for programming trumped all. The Tour's first direct experience with the promise of this model occurred at the 1982 USF&G Classic in New Orleans. The Tour bought broadcast time on ESPN. USF&G, the Baltimore-based insurance company, paid $452,000 for 40 percent of the TV ad time. Then the Tour sold the rest of the inventory. The Tour received significantly lower rights fees from cable but with corporate sponsors funding the television component, purses continued to grow.

Beman termed the Tour's first foray into the TV syndication arena in New Orleans a disaster. Rain washed out play on Friday, forcing the broadcast of the tournament to be shown on tape-delay. Yet after it was all said and done, even without the benefit of a rights fee, the Tour still netted $150,000, and learned that the title sponsor didn't prevent the sale of the rest of the inventory. Actually, quite the opposite occurred.

"With a sufficient amount of the marketplace pre-sold, it created a demand equation for the rest of it," said NBC Sports' Ken Schanzer. "If you have 100 units to sell and 60 are already accounted for, it makes it easy to get value for the remaining units. So the value proposition is not only for the sponsor. It also helped create a marketplace. It's brilliant."

The Tour realized there was substantial extra value to stamping a corporate name on the event. Even though it was netting lower ratings on cable, the corporate sponsor more than made up for the lost exposure because its name gained almost immeasurable publicity through mentions in local television reports and newspaper coverage.

The approach was refined in subsequent deals. "The lights went on here," Beman said. "I reported to the Tour's board on May 11, 1982, that this was a terrific learning experience for us. If we can overcome the program practices, the corporate sponsor gets its name in the telecast, the network gets its production costs, and we get a bigger rights fee. If we can sell the rest of the advertising on there, we can make some big dollars. Applying that to the networks, it's a bonanza. It takes us out of the ratings game for negotiations and takes us into a whole new horizon for golf on television. It overcomes the huge negative that golf has on TV -- low ratings, high production costs.

"I wish I could say we sat in a room and said, 'Hey this is what we have to do,' but it was a step-by-step process of solving individual problems and recognizing the successful model you see today."

As the Tour became more sophisticated selling corporate titles, it began measuring the value of sponsorship.

"You couldn't buy an ad on the front page of the sports section. We were getting their name in places they couldn't even buy," Beman said. "The corporate sponsor was getting a bargain. Once you started to evaluate the return on investment, it was an easy sale."

In 2011, a corporate sponsor pays approximately $7 million to $8 million for a FedEx Cup season event with network television, according to the Tour. The title sponsorship generates as much as $25 million in advertising value through its combined media exposure, the Tour said. (Because of the Tour's international broadcasting rights, a multinational corporation reaps as much as $35 million in total media value all for the same investment, according to the Tour.) "Whenever we sold golf, we stressed that the sum of the parts was greater than the whole," said Gary Stevenson, the Tour's director of marketing from 1987 to 1995.

For Beman, the new business model represented an escape from the Tour's dependency on ratings. In preparation for the next TV negotiations, the staff pitched to major corporate sponsors the value of having only one name to the tournament. Instead of the Buick San Diego Invitational, the tournament would be known as the Buick Invitational. "It wasn't going to be a convoluted name," Beman said. "There was only one name to call it. The corporate sponsor had to get the most value. It put up the money to guarantee the television."

Beman surmises that the Tour crossed its last hurdle in 1984 when Arnold Palmer requested that the Bay Hill Classic be named the Hertz Bay Hill Classic. Palmer's own company had been purchased by NBC's parent company, and so the network agreed to change the name beginning in 1985.

"This was the last nail in the coffin for program practices for NBC," Beman said. The network now was among the converted.

Beman transformed golf from the most expensive sport to produce to the most profitable. A 1987 Forbes article noted that at the time the networks' earned upwards of $1 million per televised tournament. Sponsors maximized their exposure. Charitable contributions grew significantly. And the Tour was no longer at the mercy of ratings.

"The difference between a 3.2 rating and a 2.4 is a 25 percent drop. It seems like a disaster when you read about it in the press," Beman said. "But when your spread on the investment paid by the corporate title sponsor is $7 million v. $25 million in value received from all the extra advertising and promotion outside the telecast, the ratings would be nice to have, but should never be a deal breaker. That's what the press still don't fully understand."

The model the Tour developed under Beman worked then and it works now, Pilson said.

"He enabled television to provide extended coverage of golf compared to what it was in the mid-1970's," the former CBS Sports president said. "We have Thursday-Friday golf, prime time golf, golf on multiple channels, and there's Golf Channel itself. All of these in one way or another, Deane was responsible for and helped bring to fruition."