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An Analysis of the Design of the PGA Tour’s FedExCup

The latest Research Paper has been published by the Birkbeck Sport Business Centre.  The paper, authored by Birkbeck MSc student Alan Cinnamond, examines the design of golf’s most lucrative competition in operation since 2007: the PGA TOUR’s FedExCup.

In an effort to add a defined seasonal competitive element to the PGA TOUR, the FedExCup organisers have relied upon substantial financial incentive in order to attract the best players in the world to compete in the climactic FedExCup Playoffs series.  The $10m bonus prize awarded to the FedExCup champion is the largest first prize awarded in individually contested seasonal sport competitions worldwide.  The spread of the overall $35m bonus pool is such that from the theoretical perspective of financial rewards as incentives for the maximisation of competitor effort in sport and resulting enhanced spectator interest, the FedExCup should be considered the most important competition in golf, creating more fan interest than other competitions and generating increased revenue streams for the PGA TOUR from broadcasting rights and sponsorship agreements.  However, since the inaugural FedExCup season in 2007, the competition has not generated the desired level of interest and the PGA TOUR has been compelled to make several changes to the format of the competition, almost on an annual basis.

Having completed an initial analysis of the design of the FedExCup for the Birkbeck Department of Management’s Sports Economics module, Alan undertook further research on the issues facing the PGA TOUR in respect of the FedExCup.  In the paper, he identifies that whilst the PGA TOUR has thus far been successful in achieving some of its broadly defined objectives for the competition, there is evidence to support the assertion that the FedExCup is considered neither by spectators nor by leading players to be the most important competition in golf.  Examining the reasons behind this, it is argued that both the traditional aspects of the sport, such as the status attached to the major championships, and other more design-specific flaws in the structure of the competition, such as excessive volatility caused by the FedExCup points system, have combined to undermine the perceived importance of the competition.  This is supported by an overview of trends in US television viewership ratings, performances of major champions and top-ranked players and also by specific examples of where the impact of the points system has led to the fairness of the competition being called into question.

In conclusion, a recommendation is made for an amended format for the FedExCup finale tournament ‘The TOUR Championship’, to accompany further changes that have been applied to the points system for the 2014/15 season.  However, doubt persists as to whether the FedExCup can achieve a status that is befitting of its bonus prize fund in the future.  In football, Champions League organisers UEFA can be reasonably certain that the ‘biggest’ clubs will reach the final stages of the competition in most seasons.  However in golf, given the nature of tournaments with large competitor fields and varying conditions, a lower probability exists that the likes of Jordan Spieth, Rory McIlroy, Tiger Woods and Phil Mickelson will all be in contention nearing the conclusion of any single tournament, let alone at the conclusion of a playoff series.  Thus, without being able to ensure a grand finale and without the status attached to tradition, the PGA TOUR is faced with an ongoing dilemma of how to maximise the value of the FedExCup.

Copies of the research paper can be downloaded here.

 

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