Sportsrisq's December Golf Newsletter

Tour Update: December

Dubai World Championships - 8th - 11th December

The season ending Race to Dubai will determine the final positions for the European Order of Merit in what has been a stellar season for the players on the European Tour. There is still a lot to play for as a shuffle of positions amongst the places in the bonus pool more than likely.

Player	Total 2011 Prize Money	Dubai World Championship Prize Money	Bonus Pool
Luke Donald	€ 3,856,394	€ 922,645	€ 1,500,000
Rory McIlroy	€ 3,066,606	€ 615,094	€ 125,000
Martin Kaymer	€ 2,830,264	€ 359,831	€ 750,000
Charl Schwartzel	€ 2,265,525	€ 276,793	€ 600,000
Lee Westwood	€ 2,004,482	€ 221,434	€ 525,000
Anders Hansen	€ 1,738,892	€ 180,041	€ 450,000
Sergio Garcia	€ 1,580,748	€ 160,540	€ 412,500
Thomas Björn	€ 1,517,392	€ 149,468	€ 375,000
Simon Dyson	€ 1,444,558	€ 138,396	€ 337,500
Darren Clarke	€ 1,379,498	€ 127,325	€ 300,000

Apart from Luke Donald, Rory McIlroy is the only other player with a chance of winning the Race to Dubai. McIlroy will not only have to win the Dubai World Championship but hope that Donald finishes outside of the top 9 as well. A second place finish won’t be enough no matter how Donald plays. After round 1 there is a 26% chance that Luke Donald will relinquish his position at the top of the European Order of Merit.

If Sergio Garcia were to win the Dubai World Championship he could rise as high as 5^th in the Race to Dubai if Westwood finishes worse than 2^nd. There is a 13% chance of this happening.

At the other end of the spectrum on the European Tour a number of players have been battling to keep their card. Sportsrisq would like to congratulate our brand ambassador Gareth Maybin for securing his card on the bubble after shooting a closing round 69 in the UBS Hong Kong Open.

2012 Sponsorship Deals

Shift in Power

All sponsors in golf are looking to generate maximum exposure from their golf sponsorships. Over the last couple of years we have witnessed the form of the Big 5 drift. Woods, Mickelson, Goosen, Els and Singh have dominated most of Major Championship golf over the last decade but between them have only won a single major over the last 3 seasons. Mickelson has fallen out of the top 10 in the OWGR and the others all fell out the top 50 during 2011.

Sportsrisq Sponsorship Index

Rank	Change	Player	Sportsrisq Sponsorship Index
1	-	Rory McIlroy	554
2	-	Tiger Woods	541
3	-	Luke Donald	491
4	-	Martin Kaymer	271
5	-	Webb Simpson	269
6	+1	Dustin Johnson	257
7	-1	Jason Day	253
8	-	Charl Schwartzel	230
9	+3	Sergio Garcia	193
10	-1	Nick Watney	190
11	+2	Adam Scott	181
12	+3	Lee Westwood	174
13	-3	Keegan Bradley	171
14	-3	Phil Mickelson	146
15	-1	Rickie Fowler	141
16	+1	K.J. Choi	133
17	+1	Matt Kuchar	127
18	+1	Justin Rose	117
19	+1	Y.E. Yang	117
20	-4	Tom Lewis	115

Lee Westwood has climbed up the SSI as his commitment to play on the PGA Tour and European Tour next year has given his sponsors a greater global exposure. His minimum requirement to play in at least 12 tournaments in Europe and then spend the rest of his time on the PGA Tour will help UPS, Dunlop, Ping and Audemars Piguet benefit from exposure to a much larger audience.

Tiger Woods’ excellent performance in the Chevron World Challenge has boosted his SSI rating considerably. His performances have also increased the cost of covering his bonuses for next season from 6% to 16%.

Breakthrough Players

This season has seen a number of breakthrough players generate widespread exposure for brands that are new to golf sponsorship or have smaller marketing budgets. This strategy of backing younger players has been highly successful for Jumeirah, Greenway Medical Technologies and Dow to name a few. All of these sponsors have benefitted from sponsorships that were structured at a low cost but have seen their players perform exceptionally this year. The graph below shows the changes in prices for the 3 Breakthrough Major Winners of 2012 and also for Webb Simpson, the highest placed rookie on the PGA Tour Money List for 2011.

Sponsors of ‘Breakthrough Players’ have to be aware that price changes can have major implications on the expected value of the bonus payouts that they are exposed to so it’s important to lock in the lower cost of cover early.

Best Value for 2012?

Another great example of covering at the right time is Rolex who backed Tiger Woods to return to winning ways before the Presidents Cup. They benefitted from structuring the contract whilst his cost of cover was at an all-time low. In October (when the deal was publicised) the rate to cover Tiger Woods’ bonuses for the 2012 Masters was 6%. Currently it would cost 16%. Historically this price has been as high as 60% so insuring at 10% of the historical high was incredibly astute.

Player Focus

Dustin Johnson

With a 3^rd place finish in the US PGA Championship in 2010 and a 2^nd place finish in the British Open in 2011, Dustin Johnson has a record of performing well in big tournaments. A successful knee operation has removed the pain that aggravated him at the end of the 2011 season. This should allow him to start the 2012 season quickly. Despite a couple of average performances at the Masters in recent years his natural right to left ball flight and length off the tee make him a major contender for the first major of the year.

As we look forward to 2012 and the year’s first Major the graph above shows a strong correlation between driving distance and finishing position for the top 80 players at the 2011 Masters. Dustin Johnson, one of the longest on Tour will be hoping that there is also a very strong correlation in 2012.

Sportsrisq's November Golf Newsletter

Welcome to the Sportsrisq Golf Newsletter. We aim to provide fresh insight on the golf industry for sponsors, agents and players. Please drop us a line at golf@sportsrisq.com to let us know what you think or if you would like us to discuss particular topics. Enjoy.

Tour Update: November

Barclays Singapore Open - 10th - 13th November

The Barclays Singapore Open has become a permanent fixture on the schedule due to its ability to offer large appearance fees. Most first time Major winners will more than double their appearance fees following their win. With 4 new major winners in 2011, the cost of appearance fees has risen considerably. Interestingly none of this year's Major winners will play in Singapore. Previous Major Winners Mickelson, Els, Goosen, McDowell, Oosthuizen, Y.E. Yang and Harrington have been confirmed in a 204 player strong field starting on Thursday.

Appearance fees linked to performance bonuses are becoming more common in the industry and there are some creative ways to attract the world’s big players to tournaments. Although Rory McIlroy has decided not to play in the Barclay’s Singapore Open a structure like this could have tempted him;

“$1,000,000 bonus payable to Rory McIlroy if he finishes in the Top 5 of the WGC HSBC Champions and Wins the Barclays Singapore Open.”

The cost of this bonus to Barclays could have been covered by Sportsrisq Capital for 6.8% = $68,000 net.

This is a better way to attract top golfers to tournaments rather than just paying a flat appearance fee. It's cost effective for sponsors and more attractive to many of the top players too. Larger incentive payments also serves to further motivate players and discourage a culture of turning up simply to collect their appearance fee.

Presidents Cup – 17th - 20th November

The USA will take on the Rest of the World in the President’s Cup in Australia. Tiger Woods and Phil Mickelson are both priced at 9% to be the cup’s leading point scorers.

Rest of the World Captain Greg Norman said that Robert Allenby was an automatic pick due to his long time success at Royal Melbourne. He plays his best golf down under having won 4 Australian PGA Championships and 2 Australian Opens. If Robert Allenby had a $100,000 bonus clause in his Srixon contract to be leading point scorer this could be covered with Sportsrisq Capital at 5.1% for $5,100.

Introducing the Sportsrisq Sponsorship Index (SSI)

The SSI provides ranks the top golfers in related to future expected earnings on and off the course. The main components of the index are future expected on-course performance weighted over 5 years, current marketability and global exposure.

Tiger Woods currently has the strongest individual brand in golf which has been confirmed by his recent sponsorship deal with Rolex. However, Rory McIlroy’s future sponsorship index looks brighter. He has been voted to star alongside Tiger Woods on the front of the 2013 Tiger Woods game for EA Sports and has reached a career high World Number 2. It further illustrates a changing of the guard in global golf.

Rank	Player	SSI
1	Rory McIlroy	539
2	Tiger Woods	458
3	Luke Donald	442
4	Martin Kaymer	271
5	Webb Simpson	269
6	Jason Day	253
7	Dustin Johnson	252
8	Charl Schwartzel	230
9	Nick Watney	190
10	Keegan Bradley	171
11	Phil Mickelson	162
12	Sergio Garcia	160
13	Adam Scott	158
14	Rickie Fowler	141
15	Lee Westwood	139
16	Tom Lewis	136
17	K.J. Choi	133
18	Matt Kuchar	127
19	Justin Rose	117
20	Y.E. Yang	117

Greater brand exposure will also be created by the changes to the Ryder Cup selection process for 2012. The bottom line is that players ranked on the PGA Money List are more likely to qualify than those on the European Tour. Although the changes have gone relatively unnoticed it could lead to more European players participating in the US as they look to fight for the last 5 automatic spots.

Brands that want a global exposure should be aware of this to maximise their global impact. Luke Donald, Justin Rose and Sergio Garcia (player profile below) are 3 players that are exempt on both the PGA Tour and European Tour next year and between them they offer excellent global sponsorship opportunities.

Player Focus

Sergio Garcia

He has become only the second player to win back to back on either the European or PGA Tours this year. He is 2nd on the European Ryder Cup Points List and 5th in the World Ryder Cup Points List.

His improvement in form has been excellent exposure for Adidas and TaylorMade. However, they have had to make bonus payments for his wins and now future cover for his bonuses will prove a lot more expensive.

Sergio Garcia’s Cost of Cover for 2011 and 2012 – Million Dollar Bonus for each Major Win

This day last year it would have been possible to cover a $1,000,000 bonus payment for each of Garcia’s major wins in the upcoming season for $61,000. Now it would cost $188,000.

Sportsrisq Capital’s ability to actively manage portfolios and lock in long term prices could have covered Sergio Garcia’s prices when they were lower and offered Adidas and Taylormade steady cash flows for the long term.

Tom Lewis

Tom Lewis announced himself on the world stage this year at the Open Championship and with his win in Portugal has earned his European Tour Card for the next 2 years. He is expected to play a lot of tournaments in 2012 and should give great brand exposure to Ping and Hugo Boss. He is becoming much more marketable and his future prospects are constantly improving as shown in Sportsrisq’s Sponsorship Index.

Gareth Maybin trick-shots

Sportsrisq Agrees £1m with Rising Russian Tennis Star Diatchenko

Vitalia Diatchenko in action at Wimbledon

PRESS RELEASE: Sportsrisq Capital, who made headlines earlier this year with a $50m endorsement of European Tour golfer Gareth Maybin have agreed a sponsorship deal ahead of Wimbledon with up and coming, Irish based Russian tennis player Vitalia Diatchenko (20).

It’s not your average sponsorship deal though.Sportsrisq will provide ‘development funding’ for the player and receive returns based on her future performance and commercial value. Sportsrisq will also make bonus payments of up to €1.2m depending on results.

The project sees Irish Davis Cup captain Gary Cahill assume responsibility for Diatchenko’s training programme. Cahill and his team will accompany the player on tour and plot her rise through the rankings. Cahill commented “This is a great initiative that I’m excited to be involved with. Vitalia is a real talent and will benefit greatly from the new structure.”

Sportsrisq Managing Director John Nagle said “It’s great to get this project up and running. We feel that with the right support, Vitalia’s game can reach the next level. From our perspective, performance-linked finance is a growth area and we hope this is the first of many similar investments.”

Diatchenko beat 7th seed Maria Elena Camerin 6-3. 6-3 in the 2nd round of Wimbledon qualifying on Wednesday and plays Canadian Stephanie Dubois for a place in the main draw on Friday. She will also play the main draw in doubles.

___________________________________________________________________________
Vitalia Diatchenko is a professional tennis player from Sochi, Russia. She plays on the WTA Tour. She is managed by Alan Moore at Hiberno Ltd. admin@hiberno-knin.com

Sportsrisq Capital is a risk consultancy and sports finance company.
27 Clements Lane, London EC4N 7AE.  www.sportsrisq.com
For further information contact Tom Mitchell at +44 (0) 203 207 9059

Football Highs & Lows

As we near the end of the European Football Season we thought it would be interesting to review some risks and opportunities that arose for English teams and their sponsors throughout the season. 

Qualification for the Champions League brings a financial windfall and this was clearly visible in Tottenham’s interim results to December 31st 2010, which showed an increase of almost 50% in revenues to £80m. In total, the club posted a profit of £4.2million compared to the £6m loss they made during the same period in 2009. Merchandise sales rose 22% and Sponsorship and Hospitality revenues were up 26%. The majority of these increases can be directly attributed to Spurs Champions League status. 

In March, Tottenham announced a new sponsorship with US apparel manufacturer Under Armour. Their high profile participation in the Champions League was a factor in clinching that deal - reportedly worth £10m a year. Tottenham’s CL participation was also a factor in their innovative second shirt sponsorship deal with Investec. 

Autonomy, who appear on Spurs shirts for League games pay a reported £10m per year. Investec apparently secured the rights for £5m just for the cup competitions - which includes the Champions League. While the cup sponsorship carries with it more risk in terms of results and consequently less exposure if the team loses early, Spurs run to the quarter final this year meant that Investec received a great deal of worldwide exposure. They perhaps got the better deal this year but with Tottenham not qualifying for next season’s Champions League, Investec will be relying on the FA Cup and League Cup for exposure. That exposure will be a fraction of last year’s unless they can win the FA Cup.

Incidentally, Investec are considering a £15m a year deal with Tottenham once Autonomy’s deal ends in 2012

Manchester City will replace Tottenham as the fourth English representative in next season’s Champions League. This was the minimum requirement for a team that has spent over £300m on players in less than 3 years. And now that they can offer players the prospect of playing in Europe, they’ll likely be able to buy whoever they want!

On a side note, City are also set to earn a considerable sum (at least in most club’s eyes) if Cardiff get promoted to the Premier League. The loan deal for Craig Bellamy included a clause whereby City are returned the £1.5m in wages paid to the player if Cardiff are promoted. These types of performance-related deals are becoming more prevalent and rightly so. A team’s income is directly related to its performance on the field so why shouldn’t a player’s remuneration be similarly correlated?

Meanwhile, West Ham look set to be relegated from the Premier League and the owners say it will cost them £40m to keep the club alive if and when that happens. Last September, the Hammers were approximately 18% chance to be relegated so that £40m could have been bought for £7.2M. Clubs need to have a longer-term outlook and consider the financial options available to them. Some English clubs are taking huge financial risks to stay in the Premier League and it all comes apart when they fail.