Reading the line on Brexit ~ the impact on European Professional Golf Tours and their golfers
UK voters have exercised their right and decided to leave the EU. What does this means for the professional golf tours, their golfers, and their staff ?
In the short term, there are very real impacts. If today’s market movements are an indication, overnight the prize fund for The Open and the upcoming Womens British have grown, shrunk or stayed the same depending on the home currency of tour golfers who may participate and the base currency of the prize fund. Take a look. Is the base currency for the prize fund in dollars, sterling, or euros ?
In the medium term, when Scotland host the Solheim Cup in 2019 at Gleneagles, the UK will no longer be part of the EU. Scotland may have also made their own in/out vote on the EU and on the UK itself.
Impact on Golfers
UK based tour golfers and caddies will immediately face higher travel costs as sterling retreats against the euro and the dollar. Prize funds abroad will have risen. In the long terms everyone should have questions about how will it impact travel visas, taxes and other aspects which make life on tour easier or harder. For those that have based themselves on the continent, will that still be possible? There is a lot of uncertainty ahead.
EU, US and Asian golfers who aimed to compete in the UK may find it less attractive to play for lower prize funds, but will benefit from lower costs once they arrive.
Impact on the Tours
Both the European Tour and the Ladies European Tour have their operations based in the UK and face the same choices as other internationally-oriented businesses based in the UK. For the LET in particular, it’s a deciding moment since they actually only have two UK events (Womens British and a limited field Scottish Ladies Open). Will they continue to operate from UK soil or should they choose a new base location on the continent ?
Impact on Sponsors
Tour and tournament sponsors will need to take a close look at the currency of their contracted commitments similarly to how they will probably reevaluate their normal business operations. For sponsors, part of that process is always the question of value for money – are they receiving enough value from the event in return for the cash and other resources that are invested.
Media contracts will also be revisited and could impact tour finances. Whether it’s positive or negative again depends on the base currency of an organization’s revenues when compared to the currency of its contractual obligations The currency swings are why banks offer derivatives called “currency hedges” for corporate customers. Derivatives often received a negative mention in the press during the financial crisis, but for sophisticated investors these serve as a form of insurance against big swings in the value of a currency.
These kinds of moments also create opportunities for those that are quick and smart enough to capitalize on them. Maybe the LET will use this moment to approach potential sponsors and rebuild the missing core of its tour schedule on the continent. There are opportunities out there, but it does require a fresh approach and a strong focus on creating value.
This comes at either the right time or a very bad time for recreational golfers. Based on the continent and need a last minute deal ? The UK and its courses look relatively cheap now. Based in the UK and have a vacation booked abroad ? It’s going to get expensive even if prebooked – budget for at least 10% higher costs upon arrival.