The Secret Finances Behind The Masters Tournament

The Masters tournament was expecting to bring in around $200M in revenue this year, but how will that change with limited fans allowed to attend?

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Friends,

There has been a total of 627 days since Shane Lowry won the 2019 Open Championship in Northern Ireland, marking the last time any major golf championship was held at its regularly scheduled time and location.

Today, with the Masters Tournament teeing off in April at Augusta National Golf Club, the golf world returns to a certain sense of normalcy.

The main difference?

There will only be about 12,000 patrons per day on average attending this year’s Masters tournament, compared to the typical 40,000 to 50,000.

Let’s run through what a typical tournament looks like and how lighter crowds will impact each income source due to COVID-19-related attendance policies.

When it comes to the overall revenue generated by the Masters Tournament, officials at Augusta National Golf Club have historically been tight-lipped about the details. 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 2021 revenue to come in around $200M — an 800% 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

But this year is different.

Let’s run through each category…

Merchandise

Unlike all other major sporting events, the Masters Tournament intentionally limits the sale of merchandise to in-person attendees only. Their goal is to create a feeling of exclusivity, causing the 200,000-plus weekly tournament patrons to shell out some serious cash.

How much?

About $50 million worth.

Even crazier?

That’s $850,000 an hour.

Last year, with exclusive “2020 Masters Tournament” merchandise already ordered, made, and delivered to Augusta National before the pandemic, the tournament decided to allow online shopping access for patrons scheduled to attend the event.

This year, they’ll continue that “tradition,” but it’s hard to imagine the Masters sees anywhere close to their typical $50 million in annual merchandise sales.

Tickets

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.

Last year, there were no fans in attendance for the first time in the tournament’s 87-year history. This year, attendance will be limited to about 12,000 fans per day that have tested negative for COVID-19 within 72 hours of entry. Even still, Augusta National Golf Club is set to lose millions of dollars.

Outside of companies like Endeavor, who typically controls 10-15% of the total tournament badges being offered in the secondary market, the Masters tournament will likely budget for more than $20M in lost ticket revenue themselves.

Here’s the breakdown for a typical year (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.

Like every other major professional sports league, the Masters tournament is set to lose millions of dollars without fans in attendance.

Concessions

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.

Here’s a look at the menu, which will run you about $10 for a sandwich, snack, and beer.

Even with an offering of $1.50 Pimento Cheese sandwiches and $4 beers, the Masters typically brings in almost $8 million in concession revenue annually. This year, that number will be less than half.

But similar to other professional sporting events, their typical billion-dollar broadcast deal should save them, right?

Not so fast.

Broadcast Rights

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 tournament’s 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 inadequate exploitation of broadcast rights and corporate sponsorships.

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

With an unwillingness to maximize profit through broadcast rights & sponsorships, and over $30M in missing revenue from ticket sales and concessions alone, you can expect Augusta’s profit from the 2021 Masters to be closer to $0 than $30M.

My thoughts on the Masters approach?

For a tournament that has spent the last 87 years building up a legendary reputation built on prestige and exclusivity, I’m certainly not going to question their strategy.

Have a great day, and we’ll talk tomorrow.

Most of the details for today’s email were pulled from my original breakdown in November, but given the Masters is “A Tradition Unlike Any Other,” I figured it was worth resurfacing :)

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Extra Credit

ICYMI — Last night I wrote a thread detailing one of the most unknown stories in the history of Augusta National Golf Club. Check it out 👇


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