Apr

9

I don't play golf. Occasionally I watch golf on TV, just to admire the landscape at Augusta or Pebble Beach, or to catch a dramatic last-round showdown. And I know the big names: Tiger, Ernie, Vijay, Phil. And even Retief. And the older guys such as Freddie and Davis and Ian. And, of course, Arnie and Jack.

But I'd never heard of Troy Matteson. He finished tied for 84th at the Masters this last week. He's ranked 83rd in the world right now, according to the PGA site. Take a random survey and ask people who Troy Matteson is. Take a survey of people who actually play golf and ask them who Troy Matteson is.

Who is Troy? He is a young man from Rockledge, FL, who went pro in 2003, at the tender age of 23. And Troy has made about $2.8 million playing golf since then.

Ever heard of Kenny Perry? He's # 113 in the world right now. Steve Stricker? He's # 41 in the world and tied for 77th at the Masters. Dudley Hart (# 224)? Eric Axley (# 232)? Chris Riley (# 369)? No? What about lowly Len Mattiace who is # 997 in the rankings?

Don't feel sorry for Len. Here are some stats:

Rank / Player /     Year Pro / Approx Lifetime Earn
# 41 Steve Stricker     1990   $11.1M
# 83 Troy Matteson     2003   $ 2.8M
#133 Kenny Perry       1982   $20.5M
#224 Dudley Hart       1990   $10.2M
#232 Eric Axley          1997    $ 1.5M
#369 Chris Riley         1996    $ 8.6M
#997 Len Mattiace      1990    $ 6.7M

You don't have to be the best. You don't have to be famous. Just being good, and being persistent, can really pay off in the long run. 

Steve Leslie writes: 

Disclaimer: I am not an attorney nor claim to know much about contracts or labor law. I leave this up to my friends who are. However I do know a bit about the various sports and I have known more than a few professional golfers who have played on the PGA tour.

Golfers are independent contractors and do not receive a salary nor guaranteed paydays. Therefore whatever they win in tournaments is theirs minus personal expenses such as travel, food and caddie fees which can be 7-10% of the check.

They are free to play in corporate events and other events get paid for public speaking and can be paid appearance fees in other tournaments around the world. The PGA does not allow money to be paid for appearances in domestic tournaments. In essence, they are their own entity and their own corporations, therefore the elite players own their own planes and helicopters and use them to travel to such events.

They also have to have a touring card that can be acquired in a variety of ways.

They can go to the qualifying school that is held once a year and has different stages of qualifying. The final q-school is a six-day tournament and the top 30 qualifiers and ties get a PGA card for the year. They can finish in the top money earnings from other tours such as the nationwide tour and foreign tours.

They keep their card if they win a tournament or have won past major tournaments or finish in the top 125 money earners from the previous year.

They can receive medical exemptions to play on the tour and there are sponsor exemptions that allow a player to play in a tournament with the sponsor's blessings. Michelle Wie has taken advantage of this allowance.

Certain events such as invitationals which include The Masters, gives the event organizer latitude to establish their own criteria as to whom and how many they may invite. The Masters has the smallest field of any of the 4 majors, currently 90. They have a tradition that anyone who has ever won the Masters is invited to return for life, however they actively discourage those who are no longer competitive from returning to play.

Other tournaments such as the U.S. Open and the British Open have separate qualifying pre-tournaments and criteria that players must meet. The most difficult aspect of the PGA tour is getting a card, then keeping it.

Of the 4 major sports, there are major differences in the contracts and in the collective bargaining agreements that coincide with the sports.

Baseball has guaranteed contracts and a soft salary cap. There is a luxury tax imposed on the teams who spend over the cap. In a year, there will be approximately 750 players in "The Show" at any one time. The minimum salary is $380,000 and the average salary is $2.6 million. Alex Rodriguez has a 10-year $252 Million dollar contract. I read that his agent Scott Boras wanted to include in the contract that he would always have to be the highest paid shortstop in the game. The problem with that language would have been if Derek Jeter had that same clause in his contract then the contracts would escalate to infinity. They also can go to arbitration for disputes.

Football has signing bonuses that are guaranteed. But except for quarterbacks there aren't guaranteed contracts. Peyton Manning and Donovan McNabb have $100 Million guaranteed contracts. Thus an injury can eliminate the earnings potential of a player permanently. There also is a hard salary cap. I remember a statistic that the average lifespan of a running back in the NFL is less than 2 years. Thus Emmett Smith and Ladanian Thomlinson are dramatic exceptions to the rule. Ricky Williams is currently being sued by the Miami Dolphins for his signing bonus because he retired from the game and they want a pro-rata share of the signing money back. Approximately 1500 players are on rosters for a football season. The minimum salary is $260,000.

Basketball has guaranteed contracts and only 360 players. They have maximum salary contracts at $400,000 for rookies and a sliding scale for years of service. Shaquille O'Neal makes well in excess of $25 million per year. Other huge contracts are Kevin Garnett and Kobe Bryant's.

Hockey has suffered the most, especially after the 2004-2005 lockout year. They essentially caved in and gave the owners tremendous leeway. The minimum salaries are $450,000 and the maximum is $7.8 Million. Because the revenue of hockey is far less than that of the other sports their salary cap is the lowest of the major sports. They also have 750 players in the league at any one time.

Ken Smith writes:

The observations on a sport where being in the sport is enough in itself to guarantee superior money returns, without any necessity to be a top performer, is an important story.

Golf is characterized by players who travel to events around the globe to compete for prizes. And just to be part of an elite group of golfers is enough to guarantee winnings that put the golfer in an earnings class way above the average American.

Professional golfers are doing what they enjoy most, playing with a stick and a little ball, getting their exercise on lavish green turfs maintained by establishments at no cost to themselves. Sports in general are like that. Players at the bottom of the status list bring home earnings superior to the average worker or professional in America or Europe.

Alston summed his view by writing:

"You don't have to be the best. You don't have to be famous. Just being good, and being persistent, can really pay off in the long run."

That observation should be encouraging to traders who are not pulling down headline bonuses and profits. Making a living is enough, in the final picture, if passion for this game is your raison d'etre.

Victor Niederhoffer notes: 

I started out with about 10,000 under management.


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