The Masters: Leaving Over $200M Behind

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Friends,

Next week, for the first time in its 86-year history, the Masters Tournament will be played without fans in attendance — similar to the strategy we’ve seen almost every other major professional sports league take.

With the NBA, NFL and MLB projected to lose billions of dollars due to the COVID-19 pandemic, what is the potential financial impact without fans at the 2020 Masters Tournament?

Well, it’s not exactly clear.

As one of the most prestigious sporting events in the world, famously referred to as “A Tradition Unlike Any Other,” Augusta National has historically kept a tight-lip on their overall finances.

Frustrated I couldn’t find one comprehensive source, I’ve decided to break it down myself.

Today we’ll go through what a typical tournament looks like and how each source of income is impacted by the COVID-19 pandemic.

(📸 / Augusta National)

When it comes to overall revenue generated by the Masters Tournament, the most recent publicly available figure comes from a Golf Digest article in 2015 — which reported the Masters Tournament took home $115M in total revenue that year.

Given the tournament’s revenue has grown at a ~10% compounded annual growth rate since 1997, we can somewhat confidently project the Masters Tournament Committee expected 2020 revenue to come in around $185M — a 740% increase from the $22M they reported in 1997 (Source).

Here’s a breakdown of where the $115M in 2015 revenue came from (Source):

• Merchandise: $47.5M

• Tickets: $34.75M

• TV Rights: $25M

• Concessions: $7.75M

The only problem?

This year is different.

Let’s run through each category…

Merchandise

(📸 / Golf Digest)

Unlike all other major sporting events, the Masters Tournament intentionally limits the sale of merchandise to in-person attendees only — which creates a feeling of exclusivity and causes the 200,000+ weekly tournament visitors to shell out some serious cash.

How much?

About $50 million worth.

But all is not lost in 2020 — with exclusive “2020 Masters Tournament” merchandise already being ordered, made, and delivered to Augusta National, the tournament has decided to allow online shopping access for patrons scheduled to attend this years tournament.

Although it’s unclear what kind of demand there will be to purchase 2020 stamped merchandise for a tournament you didn’t attend, and each patron will be limited to two online orders each, you have to imagine the Masters will still command a decent percentage of their typical $50M in annual merchandise revenue.

Next up — Tickets.

Tickets

(📸 / Golf Week)

Masters tickets — or also known as “badges” at Augusta National — are some of the most sought after tickets in the entire world of sports, commonly commanding thousands of dollars in the secondary market.

But this year, with Augusta National Chairman Fred Ridley saying “the potential risks of welcoming patrons and guests to our grounds in November are simply too significant to overcome,” there will be no fans in attendance for the first time in the tournaments 86-year history.

Outside of companies like Endeavor, who typically controls 10-15% of the total tournament badges being offered in the secondary market, the Masters tournament is budgeting over $35M in lost ticket revenue themselves (Source).

Here’s a breakdown (Source):

• Around 40,000 Thursday-Sunday badges are sold at $325 each, totaling $13M in revenue.

• Around 150,000 Monday-Wednesday practice-round badges are sold for $65 each, totaling $9.75M in revenue.

• Around 2,000 tickets are sold separately for Berckmans Place, a 100,000 square foot entertainment facility next to the fifth fairway, which generates about $12M in revenue.

Simply put, just like every other sport, the Masters will lose millions of dollars without fans in attendance.

Concessions

(📸 / Golf.com)

While tickets to attend the Masters have more than tripled in price since 2000, the concession prices at Augusta National have largely remained the same.

What am I talking about?

Here’s a look at the menu, which will run you about $3 for a solid breakfast.

Even with an offering of $1.50 coffees and chicken biscuits, the Masters is still expected to lose out on almost $8M in concession revenue this year.

With merchandise, ticket, and concession revenue not looking great, the typical billion dollar broadcast deal we see in sports will save them, right?

Not so fast.

Broadcast Rights

(📸 / 2Paragraphs)

For a tournament with astronomically high ticket prices, over $50M in annual merchandise sales, and $1.50 sandwiches, one revenue component might be even more interesting than the rest — broadcasting rights.

Since their iconic four-hole television coverage in 1956, CBS has televised the Masters Tournament for 64 straight years.

The interesting part?

They don’t make any money doing it.

Based on a mutual understanding of the tournaments prestige, and the Masters unwillingness to relinquish control of TV production & sponsorships, CBS and the Masters have continuously worked on one-year breakeven broadcast agreements — which are rumored to be well below the $100M+ in annual value the Masters would command.

As if that wasn’t unique enough — the agreement between the Masters and CBS typically allows only 4-5 corporate sponsorships annually, which come with no course signage and just minutes of TV advertisement time, but still generate enough cash to pay CBS’s costs.

Even with ~$25M in revenue from international media rights, the Masters is estimated to be leaving over $200 million on the table through an inadequate exploitation of broadcast rights and corporate sponsorships.

(📸 / Augusta National)

In the end, after paying out tournament expenses and over $11M in prize money, the Masters Tournament typically generates about $30M in profit.

What about this year?

With an unwillingness to maximize profit through broadcast rights & sponsorships, and almost $50M in missing revenue from ticket sales and concessions alone, you can expect Augusta’s profit from the 2020 Masters to be closer to $0 than $30M.

But for a tournament that has spent the last 86 years building up a legendary reputation, I’m certainly not going to question their strategy.

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