Are professional golfers overpaid? Phil made $38 million in 2008
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Written by BigRed
Forbes magazine recently published a list of the best-earning golfers and their income for the year 2008. It will not come as much of a surprise that despite his long absence from professional golf, Tiger Woods tops the list with earnings of $110 million. This fact illustrates the trend that appearance fees and prize money account for only a relatively small fraction of the income of world-class golfers these days. The bulk of Woods’ 2008 income came from sponsorship deals with companies like Nike, AT&T, Gatorade and Gilette.
Just as in the world golf rankings, Phil Mickelson is number two on the list. However, while Phil was able to take advantage of Tiger’s absence and (almost) closed the gap in the world rankings, his 2008 earnings of $38 million are just a little more than a third of what Tiger made. While Phil Mickelson made a good portion of his income through prize money (he rarely plays outside the US and therefore does not get a lot of appearance fees), he’s also got a neat list of blue-chip endorsements with (among others) KMPG, Barclays, Rolex and Callaway.
Here is the complete list of the ten highest-paid players in professional golf:
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1. Tiger Woods (USA) - $110 million Sources: AT&T, Gilette, Gatorade, Electronic Arts, Accenture, Nike. |
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2. Phil Mickelson (USA)- $38 million Sources: KPMG, Callaway, Barclays, ExxonMobil, Rolex. |
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3. Vijay Singh (FIJ) - $37 million Sources: Vijay’s 2008 earnings include a $10 million bonus for winning last year’s FedEx Cup, even though the money will be paid out in annuities. Endorsement deals: Stanford Financial, Cleveland Golf, Footjoy. |
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4. Greg Norman (AUS) - $24 million Sources: Even though the “Great White Shark” rarely picks up a club for a competitive round of golf these days, his income from various business activities (including but not limited to golf course design, real estate and clothing) is anything but negligible. |
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5. Sergio Garcia (ESP) - $24 million Sources: “El Nino” had one of the best seasons of his career in 2008, e.g. with a play-off victory at the Players Championship, but is still missing that elusive first major title. Garcia has sponsorship agreements with Adidas, Omega and Michelob. |
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6. Ernie Els (SAF) - $23 million Sources: The “Big Easy” hasn’t had much success on the greens during the last years but as a truly global golfer he picks up appearance fees all over the world (especially in Asia). Together with endorsements (e.g. Callaway, SAP, Omega) and several business activities (golf course design, wine, tourism) it is still enough for 6th place on this list. |
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7. Padraig Harrington (IRE) - $16 million Sources: Arguably the most successful golfer of the past season, Harrington has to settle for 7th place. The major share of his earnings stems from – attention - playing golf. It certainly doesn’t hurt to win a couple of majors in one season. |
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8. Jim Furyk (USA) - $15 million Sources: The 2003 US Open champion is coming off a sub-par season (given his high standards) but still has strong endorsement deals with the likes of Electronic Arts, Exelon and Marquis Jet. |
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9. Camilo Villegas (COL) - $13 million Sources: Villegas is known for his flashy clothes, long hitting and Spiderman-like crouch reading putts. He appeals strongly to younger people (women in particular) and the Hispanic population, thereby making him very attractive for the advertising industry (e.g. Café de Colombia, Cobra, Footjoy, J. Lindeberg). |
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10. Retief Goosen (SAF) - $9 million Sources: A relatively meagre $9 million is enough for 10th and last place on this list. Goosen – who has recently returned into the winner’s circle on the PGA Tour after several winless years – has endorsement deals with CA, Taylor Made, Grey Goose and Electronic Arts. |
While the earnings of top athletes have always been astronomical, the justice debate is more current than ever. The main targets of public anger have been managers and bankers, but professional golfers are making just as much or even more money.
How come that no one is asking for a “salary cap” on the PGA Tour? Don’t you feel that the prize money for PGA tournaments and the appearance fees paid to the best players are too high and should be adjusted? I am looking forward to a hopefully lively debate through the comment function.
May 10th, 2009 at 7:19 pm
As you say, “appearance fees and prize money account for only a relatively small fraction of the income of world-class golfers these days” - the main source of income is from sponsorship deals. And if big corporations like Nike, Accenture, Callaway, KPMG etc. deem it worthwhile paying these guys that kind of money, there is really nothing that anybody linked with the PGA Tour can do about it - a ’salary cap’ or reductions in prize money isn’t going to drastically affect their earnings, for the above reason.
As you say, the main targets of public anger have been directed towards managers and bankers, and not top athletes (although, of course, there are always some voices, notably among the ex-pro legion, who do often like to go on about how much more top golfers get paid these days). I think that this is because guys like Tiger and Phil are genuinely world-class golfing talents, doing something that only they can do at their level, whereas there exists a perception (whether rightly or wrongly) that bankers and managers have skills that are replaceable. Is this true?
To an extent, yes. For the most part, bankers etc. just do what everyone else is doing - it’s the easiest thing to do. If everyone does well, everyone is happy. If everyone does badly, then the banker just says to his clients ‘It’s been a bad year, and returns are down across the board’. Obviously, this is a very cynical and smplified view of the business world, but there is an element of truth in it.
It is also certainly the case that CEOs are paid ‘presitge wages’, i.e. they get paid $4 billion not because their input is worth that much, but because it sends out a signal to the markets that they can afford to pay that much, and that if their CEO is the highest paid, they must have the best CEO and the best company. Research shows alarmingly little link between CEO performance and company performance, suggesting that the skills they purport to bring to the table are, in fact, vastly overstated.
Look forward to hearing your thoughts, Big Red.
May 18th, 2009 at 5:59 pm
Andrew,
thanks for your comment. Let’s see what I think about your points:
1) I agree that a salary cap won’t change anything as long as big corporations deem it worthwile to give heaps of money to professional golfers. However, these companies also paid big bucks to their top-level management and everybody is going nuts about it…
2) Managers and bankers do something that everybody can do? I definitely don’t agree here. If everybody could do the job, the market would ensure that salaries would be a lot lower, e.g. at the level of construction workers, room maids or office clerks (even though I am not even sure that everybody could do these jobs…).
To me it seems obvious that the economic system determines a person’s earnings, both in sports and business. You could even argue that managers have to be paid a lot more than professional athletes as their responsibility is certainly a lot more important. If Phil Mickelson hits a poor shot, no one else but himself will bear the consequences. If the CEO of a fortune 500 company makes a bad decision in an important matter, thousands of jobs will be impacted.
I feel that the main difference between these two groups and their perception in public is exactly that. Since no one will suffer because of poor performances by well-paid athletes, people are less likely to have a problem with their earnings. For managers, it is obviously different…
May 18th, 2009 at 9:59 pm
1) I believe that ‘everybody is going nuts about it’ because despite the fact that top-level management have lost a lot of money, in some cases they are still walking away with large bonuses and severance payments. Surely they cannot have an issue with rates of pay on a fundamental level - as you say, their decisions can impact thousands of jobs and alter the organisation’s profits by millions, or even billions - it is the perceived ‘reward for poor performance’ that is annoying people.
2) Point taken - but even so, only two people are as good as Tiger and Phil, for example, whereas there exist many more competent leaders/managers/CEOs. It is not surprising that Tiger and Phil earn a vast income?
Also, it is very easy to assume that the economic system equilibrates perfectly at a level where everybody gets paid what they are worth. Perverse incentives (or seemingly perverse incentives) can lead to ’surprising’ outcomes - sure, nobody ‘benefits’ from Tiger hitting a great shot, but Tiger’s continued hitting of great shots gives screen time to their brand name/logo (i.e. Nike tick on Tiger’s ball on 16th at Augusta some years back), which ingrains the prestige of the brand into the minds of millions of viewers worldwide, recouping their multimillion dollar outlay on Woods several times over.
On a general note, I find it strange that the term ‘overpaid’ is bandied around, as if there was some kind of ‘fair’ level of payment. Perhaps people are simply uncomfortable with the idea that a CEO’s decisions can make or lose billions, or that a logo on Phil’s shirt brings millions more dollars in sales to Callaway? Why, then, should CEOs and golfers not be paid a large share of this? I would propose that, in fact, golfers are not overpaid, but that CEOs are underpaid. The problem that I (and I’m sure many others) ahve with CEO pay is that often, pay systems (with ‘performance’ incentives) are set up in such a way that average, even poor performance is rewarded. If a CEO is responsible for decisions that increase company profits by $100 billion, then why should the CEO not earn billions?
May 20th, 2009 at 9:33 pm
The market determine the value of skills. I agree that ” no one will suffer because of poor performances by well-paid athletes, people are less likely to have a problem with their earnings. ” So why did they get paid so much ? If consumers didn’t watch golf tourment,didn’t buy shoes or merchandises because of the ad run by those athletes, then the big corp won’t pay that money on those athletes. With current economics condition, people have less money to spend on the tickets of games and the expensive shoes like Niki, I think the salary will change too.
May 23rd, 2009 at 9:59 pm
Two scenerios:
Golfers, as athletes, always had to perform in order to make money in tournaments - unlike other sports, where they are paid regardless of performance.
Corporate sponsors are “advertising” their goods and giving the money to golfers instead of television or other ad venues. That really has nothing to do with their performance - although it helps to be in the top ten. (see John Daly) Aren’t advertising costs really a chunck … thus the large money going to the athlete?
All other salaries are another story - but all the money that comes in from the VAST audiences must go somewhere…..so CEO’s pay etc should be looked at - as to whether or not they are a “publicly traded” company….the stockholders should benefit, as well as the workers. Now that’s really the “democratic” way, don’t you think? (p.s. I am Republican)
To solve the problem of “take away” pay when the company is losing and the CEO is ousted…..it should take away any severance pay - based on performance!!
May 29th, 2009 at 6:00 am
You cannot be serious. Athletes deserve every thing they get. They are the show. They are the business. Golfers don’t have a draft and salary to protect them. If they don’t perform, they don’t get paid. The overpaid people in our society are the political types that do nothing but take money in their backpockets and practice class envy. I am sure that our socialist government will soon tax every penny that is earned by you and me. How else will they pay for their welfare programs. Leave Athletes alone/Impeach Obama
June 9th, 2009 at 2:31 pm
A golfer / athlete has worked 365 days a year, up to 16 hours a day for 10 + years just to make their first cut. Some have already had wrist / elbow/ knee / ankle surgery, even before their first serious tournament. They all know that they will be having surgeries / injuries from their chosen sport.
So they play at their club, clawing up thru the ranks to get into a mini tour. Claw their way thru this tour to get into their first sub-professional tour, claw their way thru this, for a 1 in 5000 chance of getting on the PGA tour.
Their parents / relatives / supporters have mortgaged their house, maxed out all their credit cards, taken extra jobs, etc.
They finally have a chance to get some of that back, only to find someone talking about putting a cap on the winnings.
June 14th, 2009 at 8:33 pm
no
the show that we as viewers get is astronomical for the amount that WE pay..
these players are good sports and do allot for their communities etc
maybe this is too simplistic for y’all but this is what allot of us think.
November 11th, 2009 at 8:33 am
Pro golfers earn their money by their performance. If Tiger was not the best on planet Earth, then the giant endorsement deals would never have been made.
The golf club manufactures know that PGA Tour exposure validates their golf equipment, and apparel. If Tiger wins with Nike, then Nike will benefit globally. And if Phil wins with Callaway Golf, then Callaway Golf wins too. So, professional golfers are NOT overpaid.
Remember when Alan Iverson played for the Philadelphia 76ers, and practice [team practice] was an issue, but he would show up to the games. He was paid millions win or loose…
May professional golfers worldwide earn more!
- Robbie Camacho
October 18th, 2011 at 7:55 pm
These top stars bring in the people and create interest in the sport. This benefits thousands of golf courses, hotels and restaurants all over the world. The only problem is Tiger Woods, whose dissolute lifestyle has damaged the reputation of golf as a sport. I think his earnings are over the top for what he deserves.