How the PGA Tour Should Counteract the PGL, NFL Contrarianism, Torrey Pines, and Bookmaking

Jun 14, 2021

Combatting the Premier Golf League

The top professional golfers in the world are underpaid. Fans who watch golfers compete for $7 million to $15 million per week might roll their eyes at that sentiment. But the point is not that golfers should make more money; the point is that the top golfers (the golfers who attract eyeballs and revenue) are not sufficiently compensated in proportion to the total money earned on the PGA Tour.

Players do not earn a salary for playing on the PGA Tour; they are compensated by earning money from the tournament purses (and from sponsorship money, but that’s external).

So far this season, Phil Mickelson has made $2.5 million, ranking 35th on Tour. He has made $1.3M less than Billy Horschel, who has made the same amount of money as world #1 Dustin Johnson. Are fans buying tickets to watch Billy Horschel?

The PGA Tour hosts ~50 tournaments per year with little variety in format: 72 holes of individual stroke play spread across four days. The American Express tournament viewing experience is nearly identical to the Rocket Mortgage Classic viewing experience. If those tournaments do not sound like must-see television to you, that’s because they aren’t. Depending upon one’s level of fanhood, there are probably only 5-10 golfers (out of a 220+ player pool) who compel a fan to turn on the television to watch a Sunday round in Detroit, Michigan. Shouldn’t these 5-10 golfers be paid accordingly?

So the top golfers, the players who actually move the needle for fans and provide the most value to the Tour, are underpaid as a result of the PGA Tour’s infrastructure. Like any business lacking an efficient business model, the PGA Tour now has a threat: the Premier Golf League (PGL), which made some noise again this week. The PGL offers a different infrastructure: They want to pluck the best 48 golfers in the world and play 18 events per year with a purse of $20M per week. Trim the fat, play a leaner schedule, vary the format, and compensate top talent accordingly.

With rumors swirling about the establishment of the PGL, the PGA Tour responded in April by launching the Player Impact Program, a $40M fund designed to pay the most valuable players on the Tour. How is “most valuable” calculated? It’s a bit of a black-boxed formula that heavily weights a player’s media exposure and popularity. It incentivizes virality, which over time, will lead to contrived social media rivalries and inauthentic campaigns in pursuit of clout. It’s a short-sighted effort to appease the golfers the Tour needs to appease. It’s a Band-Aid approach to a problem rooted in the Tour’s infrastructure. Authenticity sells, and this is a step in the opposite direction.

I have a better idea. The PGA Tour (potentially in conjunction with the LPGA Tour) should have an All-Star Weekend. How…does this not already exist? Most major sports leagues have an All-Star Weekend full of skills competitions and exhibitions. Perhaps no sport is more conducive to hosting skills challenges than golf, and it actually solves for compensating the best players while injecting excitement into a mundane schedule.

Showcase the unique skill sets of the world’s best players through formats like:

Playing a couple holes where you can only use one club
Short game challenges
Closest-to-the-pin challenge from behind a tree
Head-to-head competitions amongst rivals

Get creative! Corporations would line up to sponsor such challenges. With the explosion of sports gambling, there would be an abundance of betting opportunities as well. All 10-20 players who participate should make millions of dollars over the course of a fun few days. Whether the weekend is in a western location like Hawaii or played under lights, the event should take place on prime time television.

This is an innovative, feasible solution to a pressing problem, and if an All-Star Weekend replaces a few 72-hole stroke play events, the current and future state of golf would immediately improve.

Playing a Contrarian Style

Those who frequently play strategy games like poker should be familiar with the value of playing a different style than the norm: Being a contrarian is advantageous. This week I was listening to a podcast about NFL salaries, and the host continually referenced market prices for players (“A wide receiver averaging 1600 yards? That contract is worth $X per year”). So by looking at average salaries by position, you can infer how much a position is “worth” in the NFL – you should make adjustments for factors like rookie contracts and age but let’s keep it high level.

Implicitly, market prices reflect playing styles. In other words, since the NFL has trended towards passing more often than running the football, wide receivers’ salaries increase and running backs’ salaries decrease, relative to a team’s overall salary cap. The longer I was listening to the podcast, the more it became clear how valuable a contrarian style is in the NFL.

In talking to others about this concept, a few different people gave me the same example, and it’s a really good one. In the NFL, left guards are worth more than right guards because they protect a quarterback’s blind side. When a quarterback drops back to pass, pressure coming from behind him is more dangerous than pressure he can see. The data reflects the premium for left guards. Per Over the Cap, of the top 32 salaries by position, left guards average $5.02M per year while right guards average $4.55M per year.

So, what if I have a left-handed quarterback? Now my right guard protects his blind side and is worth more to me than a left guard. If I’ve allocated $9.5M to my starting guards for the year, my $9.5M can buy better linemen than it could with a right-handed quarterback. I can sacrifice a bit at left guard because I no longer value this position like I did before, so maybe I pay a left guard free agent like $3.5M. The market rate for a right guard is around $4.5M, but it’s more valuable to me than to other teams; I might spend like $6M here and I’m probably getting one of the better right guards in the league since I’m willing to pay more than other teams.

It’s a simple example, but you can extend this to every position on the field. If athletic pass-catching tight ends increase in value across the NFL, you have to pay a lot for one! Additionally, athletic linebackers who can cover these tight ends will increase in value too. If I take a different offensive approach, an approach that does not heavily utilize an athletic pass-catching tight end, I do not have to compete with other teams to obtain such a valued player. I value skill sets that others do not: an advantage in free agency. Moreover, the teams I play against will not have the personnel to match up with my offensive style because I’m playing differently.

By playing a contrarian style, it’s easier/more flexible for the front office to compile a team under the salary cap, and it’s harder for other teams to match up and scout against. We talked about this same concept in soccer a few weeks ago with Barnsley FC. Perhaps there is merit to it.

U.S. Open at Torrey Pines

The U.S. Open is at Torrey Pines this upcoming week, site of Tiger Woods’ famous 2008 victory on a broken leg. By quality of venue, I do not think you can select a more mediocre location than Torrey Pines. From an architectural perspective, the golf course is underwhelming. On a positive note, this is a public golf course with notable history. Golf needs to shed its perception (and reality) as a privileged, exclusive sport, and highlighting a publicly accessible course is good!

If you are interested in why the architecture is poor, I’d recommend The Fried Egg’s discussion, time stamps (35:05 – 50:30). In short, a golf course architect must design 18 holes that maximize natural features on a given piece of land while providing variety and a strategic test. Torrey Pines fails on all fronts despite its location on a terrific seaside property.

Which players will succeed at Torrey Pines? Well, length off the tee is strongly correlated with success at Torrey Pines, and the correlation will be stronger at the U.S. Open than at its annual tournament (Farmers Insurance Open) because based on reports, the rough is going to be thicker. If you read this newsletter every week, you are familiar with the concept that narrow fairways with thick rough emphasize length off the tee, but let’s revisit why with some numbers.

Rory McIlroy and Webb Simpson are both top players, ranking #10th and #12th in the world respectively. Each has a quite different playing style. McIlroy hits his driver about 25 yards farther than Simpson. At Torrey Pines, very few holes lend themselves to hitting a club other than driver off the tee, so you can reasonably expect McIlroy to outdrive Simpson by 20-25 yards per hole.

So let’s just look at one hole, which due to the lack of variety at Torrey Pines, is unfortunately indicative of the profile of most holes on the course: Hole #10, a narrow 450+ yard Par 4 surrounded by thick rough. Though subject to wind and tournament setup, McIlroy will likely hit his second shot from 140-160 yards, while Simpson will hit his second shot from 160-180 yards.

Here’s some data from past events on Hole #10 at Torrey Pines:

So when both players are playing from the fairway, Rory will have an advantage of about 0.2 strokes. When both players are playing from the rough, Rory will have an advantage of about 0.3 strokes, a spread that will only widen as you increase the length of the rough.

As I wrote a few weeks ago, a reasonable interpretation is:

If we’re both in the fairway and you are 20 yards ahead of me, I’m in trouble. If we’re both in the rough and you are 20 yards ahead of me, I am dead.

The proper counterargument is, of course, “Well, Webb Simpson is more accurate off the tee. Therefore, he’s finding more fairways and Rory’s distance advantage is mitigated by Webb’s accuracy advantage.”

Yeah, that sounds nice but it does not play out. Tee shots at Torrey Pines find the fairway 55%-65% of the time. Across holes on the PGA Tour with a fairway percentage between 55% and 65%, McIlroy hits 59% of fairways and Simpson hits 63% of fairways. The 4% difference (less than one expected extra fairway per round) is not nearly enough to counteract the distance Webb is losing to Rory.

The distance advantage is something for you to observe this week, and hopefully it will become increasingly clear that playing shots out of short grass enables a variety of styles to thrive. Torrey Pines will not offer this option.

Keeping Prices in Sync

Here is a challenging problem faced by modern sportsbooks. As sports gambling surges in popularity (and legality), sportsbooks are offering more and more options for people to gamble on. And many of these options are correlated with one another. For example, “Will the Tampa Bay Buccaneers win today?” is strongly correlated with “How many touchdowns will Tom Brady throw today?”

Take a simple example in which there are four equally talented teams in the playoffs for a sport. Sportsbooks might offer you “Will Team X win?” at 2.8/1, meaning you can win $2.80 for every dollar you wager on each of those four teams. The implied probability associated with 2.8/1 is 26.3% (1/3.8). That’s how Las Vegas makes money over the long run. They’re offering you each team at a breakeven price of 26.3% even though each team (in this example) has a 25% chance of winning.

What does a sportsbook do when a really smart bettor places a large bet on a team? The sportsbook adjusts prices accordingly. Instead of each team being listed at 2.8/1, now the heavily bet team might move to 2/1 and the other three teams might shift to 3/1. By the time the games start, the sportsbook will have its liabilities spread out somewhat evenly and make money on almost any result.

But how does a sportsbook ensure that all of its markets are synchronized? If a really smart bettor places a huge bet on the Buccaneers to win a game, it’s clear that the sportsbook will adjust the price of the Buccaneers winning. Should it also adjust the price of “How many touchdowns will Tom Brady throw today?” What information did that sharp bet contain?

Here’s an example I was looking at last Thursday. The Phoenix Suns were listed at +550 (15.4%) to win the NBA Finals. Devin Booker, the clear superstar for the Suns, was listed at +900 (10%) to win Finals MVP. How probable is it that the Suns win the Finals and Booker is not the Finals MVP? Which bet is better?

The short, markets-are-efficient answer is: “These bets are roughly equivalent. There should not be a bigger edge on one bet than the other.” The more correct, nuanced answer is, “It’s really hard for the sportsbooks to manage all of these derivative markets. Smart gamblers are constantly monitoring these bets independently and looking for mispricings and arbitrage opportunities.”

In completely unrelated news, I’ll be really happy if Devin Booker wins Finals MVP.

Contact/Feedback:

Joseph.LaMagnaGolf@gmail.com

Finding the Edge