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Oct 7, 2009

Taxpayers can’t separate Tiger Woods from its IMG fees

While the rest of the country slowly pulls itself out of recession, a full-scale Tiger Woods-led recovery will be raging down in a little suburban pocket of south-east Melbourne.

Tiger Woods’ visit to Melbourne for next month’s Australian Masters tournament will be a boon not just for Australian golf fans who’ve had to wait a decade to see the world’s No.1 player again. Equally happy — in fact, deliriously so — will be the tournament’s owner, and Woods’ management company, International Management Group.

For IMG last week sold the last of its 80,000 tickets to the tournament — 20,000 for each of the four days at Kingston Heath Golf Club starting on November 12. On top of that, the US-based sports marketing company has sold all eight of its Platinum corporate boxes around the 18th green, as well as 12 Gold boxes and even the four Sky boxes.

Each day, the Champions Club lunch — seating 560 people — has also been sold out.

All up, IMG’s hospitality division stands to gross many millions of dollars from its on-course corporate entertainment during the week.

Then there is the Masters Gala Dinner at Crown’s Palladium ballroom (at $6000 per table), the new sponsors drawn to the event this year such as 3AW and Gatorade and a new, two-year TV broadcast rights deal with Channel Nine.

So while the rest of the country slowly pulls itself out of recession, a full-scale Tiger Woods-led recovery will be raging down in a little suburban pocket of south-east Melbourne.

But, and here’s the thing, the IMG “take” from the Woods extravaganza — huge as it is — will be increased further still by the Victorian Government, through its Major Events Company.

Woods does not come cheap. His Masters’ appearance fee is reportedly US$3 million (A$3.42 million) and the VMEC has stumped up a considerable sum to help pay some of that bill, although no-one will say exactly how much.

The State Government figures the Masters — which will be telecast by the US Golf Channel and other networks around the world — will be good for Melbourne’s “branding”, so they have signed on for three years. With 35% of the tickets bought from interstate or overseas, Tourism Minister Tim Holding claims the tournament will create benefits to the local economy of $19 million. But this means IMG wins on every count — from all the money it reaps from ticket sales, corporate hospitality, TV rights and merchandising, and also from the State Government’s generous backing.

So you and I, as taxpayers, are helping to pay for this exercise and, consequently, adding to the bottom line of IMG, the Cleveland-based sports behemoth.

The director of IMG’s Australian golf division, David Rollo, pointed out yesterday that running golf tournaments has hardly been a lucrative pastime in Australia in recent years. He said IMG carried all the financial risk in operating events such as the Masters.

Rollo said while some might carp at the cost of securing Woods, most Victorians would understand what a major coup it was getting the world’s best, and most recognisable, sportsman to their state.

It has to be said IMG has done a good job in keeping ticket prices affordable: $10 for Tuesday’s practice, $30 for Wednesday’s pro-am, $44 for the first three days of competition and then $49 for Sunday’s final round. But I guess that’s the upside of having a Major Events subsidy.

(They have not fallen into the trap of the Kiwi consortium which brought Woods out to play the New Zealand Open in 2002. Then, ridiculously exorbitant ticket prices, combined with a week of miserable weather, turned the much-trumpeted American’s appearance into a complete fizzer, and a financial disaster.)

As for the golf, Woods has not won here in three visits — the 1996 Australian Open at The Australian GC in Sydney, the 1997 Australian Masters at Huntingdale and the 1998 Presidents Cup, when he was part of the vanquished United States team at Royal Melbourne. He also came up short in that New Zealand Open when he finished six shots behind winner, Craig Parry.

So there’s plenty of motivation for him to break his Australasian duck this time around.

And, on the strength of the extraordinary financial windfall that has materialised in his wake, even more motivation for IMG to get Woods back to Australia sometime very, very soon.

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5 thoughts on “Taxpayers can’t separate Tiger Woods from its IMG fees

  1. Heathdon McGregor

    Can the Brumby government say no to a photo-op? Victorians are used to seeing their taxes eaten up so the major events committee can get their photos taken. Grand Prix anyone?

  2. johnny kesselschmidt

    The point about the commercial in confidence agreement that gets Tiger Woods to Victoria is that it earns Victoria a cool 19 million out of a mere couple of million invested. Surely it is primarily that Victoria is the huge earner not just Tiger Woods. Stating the bleeding obvious about IMG and what it might earn,misses the main point for us in Victoria is that it looks like the Victorian Labour Government actually did something financially and socially worthy.

    Johnny Kesselschmidt

  3. Heathdon McGregor

    Johnny we are continuosly told how much the grand prix will bring in and then when it is audited we are told it actually costs money. I think that there could be many more worthy causes other than this to spend the taxpayers money on.

  4. johnny kesselschmidt

    The grand prix may well be a financial disaster among other things. However the Tiger Woods outlay of a couple of million to earn at least 19 million seems pretty good to me. If you do the maths conservatively on ticketing, transporting, feeding, and “hotelling” an extra 15-20,000 people for the few days that the thing is on, you get up to ten million dollars which is not a bad little earner by itself. However, add the sponsorship deals and the TV money and we are talking about a very tidy profit for the state.
    Are there indeed more worthy causes that are equally if not better earners than this one? I’d sincerely like to know.

  5. Heathdon McGregor

    Dear Johnny

    If the figures stack up then I agree. The problem is that the audits of the grand prix have shown differently.