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The "New" Economics of the LPGA

2008 February 28
by Phil Miller

GolfWorld’s Ron Sirak has an interesting article on the LPGA. Endorsement money has begun to flow in to the top players:

When Meg Mallon won the 2004 U.S. Women’s Open she wore a hat purchased in The Orchards golf shop and her caddie carried a bag uncluttered by corporate logos. The following week, after she took the Canadian Women’s Open, Mallon received one congratulatory call from an equipment rep — and no endorsement offers. What made the situation more depressing was that Mallon had 17 LPGA victories, including four majors, and possessed one of the most marketable personalities in her sport.

“It’s very frustrating when you watch the men’s qualifying school and the winners say [golf manufacturers] are throwing money at them right and left, and our tour can’t even get a bonus pool,” she said at the time. She was not alone in her frustration: Beth Daniel, Juli Inkster and Rosie Jones were unrepresented or under-represented in endorsement deals.

Fast forward to today and LPGA players are hot commodities — at least the stars. All four major winners from a year ago had endorsement deals well in excess of seven figures annually, many from multinational companies outside golf. Three have lucrative equipment deals. As the tour embarks on its 59th season at next week’s SBS Open at Turtle Bay in Hawaii, Mallon said she was “ecstatic that [equipment companies] have finally found the value in the women’s game. I hope the trend continues.”

Via Golf Blogger (HT to John LaPlante). John noted that the improvement in deals is partly driven by the change in womens’ labor market presence and by Title IX requirements. But those factors have been more gradual and don’t go well in explaining the spike in the right tail of the star spectrum. A better explanation of the spike, as Sirak argues, is that several of the LPGA’s rising stars, such as Paula Creamer and Natalie Gulbis are new to the LPGA and provide, well, sight-utility. And they are good golfers. As John noted in an email to me:

Three youngsters–Paula Creamer, Natalie Gulbis, Morgan Pressel–have both good looks AND game. Nothing succeeds like success.

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