Spring is officially here for golf fans, and the sport's most revered tournament, The Masters, has teed off for the 78th time. While talk of Tiger Woods' absence, Rory McIlroy's potential, and Augusta National's history is inevitable, there's another issue worth exploring: the economics of the tournament.
The sponsor-to-TV switcheroo
It all starts with the sponsors. Unlike most sporting events that are inundated with ads, The Masters limits the marketing opportunities available to corporate partners. Like most years, the tournament has just three primary sponsors in 2014: IBM , AT&T , and Daimler's Mercedes-Benz.
Because Augusta restricts commercial time to a brief four minutes per hour, this trio is experimenting with new advertising strategies. IBM, for example, says it will show 50 different TV spots during the tournament. The campaign, "Made With IBM," is comprised of mini-stories that illustrate the company's relationship with various clients.
Mercedes is using its existing relationship with defending Masters champion Adam Scott on social media, and the automaker's cars are also being marketed on the golf course.
AT&T, meanwhile, is introducing a new slogan, "Mobilizing your world." The phrase replaces the iconic "Rethink possible," which the company had used since 2010.
Although the terms of each sponsor's agreement aren't disclosed, IEG has calculated the total annual figure to be near $18 million in years past.
And herein lies the switcheroo. IEG's Jim Andrews told Bloomberg Businessweek that after the tournament's broadcast partners -- Disney's ESPN and CBS -- estimate expenses, a curious process begins. "Augusta then acts as a broker," the outlet says, "arranging for the tournament's three official sponsors...to cover those costs." It's unknown if either network makes money, but Andrews says they "maybe make a little bit of a profit."
That doesn't mean ESPN and CBS aren't chomping at the bit to provide coverage, though. The Masters' unique combination of prestige and exposure is unmatched in the golfing world. It's the sport's most-watched event, and last year, it generated almost twice the level of television interest as the U.S. Open, and three times as many viewers as the British Open and PGA Championship.
Don't forget about tickets and merch
This represents the other main chunk of change. Last week, I wrote, "although Augusta doesn't share attendance information, most estimate The Masters averages close to 40,000 spectators per day." Assuming average daily ticket prices are $1,000 -- a figure near what TiqIQ reports -- total ticket revenues are at least $160 million for the four-day tournament. And including the Monday through Wednesday practice rounds, when the course can hold 50,000 spectators at lower prices, another $50 million is likely made.
Merchandise sales, by comparison, are harder to estimate because they're not disclosed publicly. Items available for purchase range from a $3 sandwich to a $175 belt, so assuming every patron spends a mere $10 per day, that's another $2 million to $3 million. Given that thousand-dollar tabs aren't uncommon -- Golf Channel's Jason Sobel just found one for over $5,000, for example -- my estimate could be on the small side.
The bottom line
At the end of the day, the relationship between sponsors and TV broadcasters is largely self-sustaining, and is worth a shade under $20 million a year. Tickets and merchandise sales are at least 10 times larger. And at over $200 million, the tournament's size -- from a revenue standpoint -- even rivals events like the NCAA Final Four and the MLB's All-Star Week.
While Augusta National probably won't release its financials any time soon, it's clear a lot of money changes hands at The Masters.
How to get even more income during retirement
Social Security plays a key role in your financial security, but it's not the only way to boost your retirement income. In our brand-new free report, our retirement experts give their insight on a simple strategy to take advantage of a little-known IRS rule that can help ensure a more comfortable retirement for you and your family. Click here to get your copy today.
The article The Money Behind The Masters originally appeared on Fool.com.Jake Mann has no position in any stocks mentioned. The Motley Fool recommends Walt Disney. The Motley Fool owns shares of International Business Machines and Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.