LOS ANGELES – COVID-19 did its best to postpone, but not cancel, the U.S. Open in 2020. Bryson deChambeau won the 120 th U.S. Open at Winged Foot, New York in September, not June. The next year, the Torrey Pines national championship took place in June. The USGA still lost money on their big moneymaker due to limited or non-existent ticket, merchandise, and corporate suite sales.
The USGA’s mission is to promote and advance golf. Golfweek reported that in 2020 the U.S. Open will generate $165 million annually in revenue, which is about 75 percent the USGA revenue. This money is used to fund the USGA’s 13 other national championships. The USGA’s insurance policy against such events offset a portion the losses associated with COVID Opens. The USGA, according to its Internal Revenue Service 2021 Form 990, filed an insurance claim in 2020 for business interruption. It received $29.5 millions that allowed it to continue providing core services, and cover the costs of conducting a small number of championships despite significant losses in fan revenue.
Sentry, a corporate sponsor of the USGA, paid the USGA $25.5 million in 2021 for the change to the U.S. Open hospitality experience caused by the California COVID laws. This was based on both the validity of the claim as well as the estimated total claim value.
John Bodenhamer said that the USGA’s senior manager of Championships, John Bodenhamer, was “way down” on U.S. Open revenues during the COVID years. “But we did have business interruption insurance. Our organization decided to buy this insurance several years ago due to great leadership. There was some skepticism at the time as to why we needed this. We were all considered crazy. “Now everyone is patting themselves on their back.”
It does raise the question of why a non profit 501-C3 needs to file a claim for about $740 millions in net assets according to its 2022 submission?
Susan Pikitch was unable to talk to Golfweek during the week of last week, but she answered multiple emails.
The USGA has approximately 400 million dollars in reserves, which our Finance Committee recommends to be a best practice for fiscal responsibility. She wrote that $400M is less than two years’ worth of operating funds. It is prudent for businesses to keep at least three years’ worth of operating costs in reserve to ensure critical services are maintained and to mitigate the risk that catastrophic or long-term impacts will affect business operations. We learned from the pandemic that having these funds available is crucial to ensure continuity.
“The USGA has had event cancellation/curtailment insurance for at least 10 years. “We continue to view this insurance as a best financial practice, but the policy no longer covers pandemics,” added Ms. Sherry.
She wrote: “Our business suffered a significant impact in 2020 when the pandemic began, particularly after we postponed and cancelled the U.S. Open. This was done without the normal fan and hospitality functions which drive significant revenue to our programs.” “Despite returning all 14 championships to 2021, continuing our work on golf course sustainability, growth of the game, governance and GHIN/handicapping, and providing significant support to the Allied Golf Association Network, the financial result of our two main revenue-generators – The U.S. Open, and U.S. Women’s Open – were heavily influenced California COVID restrictions. The amount of corporate sponsorship, ticket sales and other revenue that we receive was reduced. Our insurance policies allowed us to recover a portion of the revenue that was lost based on projected revenue losses.
Bodenhamer responded to the question on reserves posed by a reporter on Wednesday: “You think of the U.S. Open. It means more than just the trophy and gold medal we present. This championship is important for the game. There’s no golf course in the United States that hasn’t benefited from the turf-grass fund. We’re spending, I believe, $3 million on it this year. These are all things that do not make money, but nobody knows about them. “It’s the U.S. Open.”
Pikitch said that the USGA Finance Committee had recommended the business interruption insurance several years earlier for these exact reasons. It was to ensure the core functions could continue when revenue sources, with the U.S. Open as the primary source, are disrupted. “Like many other sports organizations we felt lucky to have insurance in place, so that we didn’t face layoffs or other difficult decisions.”
The USGA refused to disclose its premiums. However, on page 71, its public filing for 2022, it mentions that Sentry Insurance received a payment totaling $135,122.
The USGA has released its full-year Form 990 for 2021, the latest year that is available to the public.
- In his last year as chief executive, Mike Davis earned $4.4million ($895,252 base salary, $2,122.548 bonus and incentive compensation, and $1,440.292 other reportable compensation), plus $89,000 of retirement, other deferred compensation, and non-taxable benefits. Pikitch stated that Davis completed 31 years of service at the time he left the association in 2021. He served as an advisor for the rest of 2021 to help with the leadership transition. His 2021 reportable compensation includes his base salary, bonus and ancillary benefits, as well as an initial distribution of the USGA retirement plan.
- The 990 form includes some additional details. “Michael Davis was CEO of the USGA until June 30, 2021.” From July 1, 2021 to December 31, 2021, Davis also served as an advisor to the USGA. Davis received two payments at the beginning of 2022, which were reflected in his compensation for 2021. Davis received an approximately $1.2million distribution from the USGA’s 457F plan in January 2022. This payment was reported in schedule J part II columns B (II), and F. Mr. Davis also received a bonus discretionary of $1.7 million based on his position and service length with the USGA. This payment was approved by the Compensations Committee of the USGA. It is reported in Schedule J Part II column B (II).
- Mike Whan who replaced Davis was paid $884,00 for less than a six-month period of work plus an additional $55,000.
- The revenue totaled 304 million dollars, of which 37 percent came from broadcasting and media rights. Another 30 percent came from championships and 15 percent was from corporate partnerships.
- In 2021, the USGA earned $45 million from its sales of securities.
- The USGA has listed $36 millions in gifts and contributions to 2021 and a total of $122,000,000 over five years.
- In 2021, membership dues amounted to $13.2 million. Pikitch said, “As a not-for-profit organization, we are grateful for the private donors that support our mission and help the game. Most donations are pledges to USGA core programmes which do not generate revenues.”
- The FOX termination fee was $323.44million. Pikitch explained that when the USGA renegotiated their domestic broadcast rights for 2020, switching to NBC Sports from Fox Sports, they received a lump sum payment related to termination of the Fox Contract. This payment was made upfront but has been placed in a reserve created by the Finance/Audit Committees. It will be used for operating expenses only, and can last until 2026.
- The USGA confirmed that it reduced its TV rights fees by moving the championship from September 2020 to September 2021, when they had to compete with football. However, they did not disclose how much.
The USGA grants money to 95 different Allied Golf Associations, schools and turfgrass research programs. This is part of its mission to advance and champion the game. These missions are aimed at junior golf programs and golfers who have disabilities. The USGA announced this year that it would invest $30 million over the next fifteen years to help golf courses reduce their water consumption by up to 45 per cent.
Mike Whan, USGA CEO, wrote that it would be a mistake for the organization to rest on its laurels. His message was posted online. When golf is so strong, we have an increased responsibility to foster its growth and ensure that we leave the game better for future generations.
