Are PGA TOUR Players Underpaid?

Are PGA TOUR Players Underpaid?

Are PGA TOUR Players Underpaid?

TL;DR: No, PGA TOUR players are not underpaid, relative to the minimum, average and median pay of athletes in other sports leagues.

One of the arguments for LIV that is prevalent on social media is that the PGA TOUR underpays its players. After all, the social media “golf experts” say, the NBA pays its players tens of millions of dollars each year. Why doesn’t the PGA TOUR?

Here’s one highly uninformed post:

There is a lot wrong with this — and similar posts all across Twitter and Facebook.

First, the NBA, NFL and MLB do not pay their players $30 to $50 million a year:

  • NBA average annual salary: $8 million
  • NFL average annual salary: $2 million
  • MLB average annual salary: $4 million
  • PGA TOUR average winnings (Top 170 players): $2 million

By that standard, the PGA TOUR on average pays about the same as the NFL.

If you include all 250 players who earned a check in 2021 on the PGA TOUR, the average is $1,485, 000.

grey metal case of hundred dollar bills
Photo by Pixabay on Pexels.com

Minimum Pay

Averages are deceiving, since some players in every league will make very little (or possibly nothing on the PGA TOUR) and a few reap tens of millions.

That is also true of the other sports, though. Lebron James makes $44 million. Other NBA players make significantly less.

  • NBA minimum salary: $925,000
  • NFL minimum salary: $660,000
  • MLB minimum salary: $570,000
  • PGA TOUR 170th player earnings in 2021: $427,268

The PGA TOUR minimum by that standard is just outside a standard deviation of the other major sports.

The 250th player on the PGA TOUR in 2021 collected just $6,090. However, that same player has $2,526,232 in career earnings on the PGA TOUR. That is as much as an average NFL player in an average career.

Median Pay

A more accurate way to look at the pay of professional athletes is to look at the median, which evaluates the central location of data to reduce the effect of outliers, such as Patrick Mahomes’ annual $45 million contract. The median is the middle value of a population.

  • NBA median: $2.5 million
  • MLB median: $1.65 million
  • NFL median: $860,000
  • PGA TOUR median (top 170 players in 2021): $1,496,681

If you include all 250 players that collected a PGA TOUR check in 2021, it drops to $982,847

Are PGA TOUR players underpaid? By either the 170 or 250 player standard, median PGA TOUR players are better paid than median NFL players, and are not that far away from MLB.

Pay In Relation To League Revenue

There is one last factor to consider: league revenues. Even while PGA TOUR players have some degree of parity with the salaries of NBA, MLB and NFL players, the leagues they play for have vastly different revenues.

  • NBA: $10 billion
  • MLB: $9.5 billion
  • NFL: $15 billion
  • PGA TOUR: $1.5 billion

The PGA TOUR’s revenues are 1/10th that of the NFL and around 1/6th that of either the NBA or NFL.

black and white electronic device
Photo by cottonbro on Pexels.com

By that standard, we would expect to see a PGA TOUR player’s salary be 1/10th of the NFL and 1/6th of the NBA and MLB. Yet they are not.

I think the data suggest that it is NBA, MLB and NFL players that are underpaid, relative to the revenues of their sports.

A caveat: It is correct to point out that the PGA TOUR does not directly pay the salaries of the players. In the TOUR’s business model, the sponsors of individual tournaments, acting through the local charities that stage the tournaments, put up money for the purses. The PGA TOUR contributes to some of that, but I have no way to disaggregate those numbers.

For the sake of argument, let us assume that every dime of the $481 million in prize money in 2021 came from outside sources. To be fair, that number should be added to the PGA TOUR revenues. Now a comparison across the sports leagues looks like this:

NBA: $10 billion
MLB: $9.5 billion
NFL: $15 billion
PGA TOUR: $2 billion

Are PGA TOUR players underpaid in relation to league revenues? Even with the outside money, the PGA TOUR players earn far more in proportion to the league’s revenues than the NBA, MLB or NFL.

LeagueMedian SalaryLeague RevenuesMedian Salary As A % of Revenue
NBA$2.5 million$10 billion0.025%
MLB$1.65 million$9.5 billion0.017%
NFL$860,000$15 billion0.0057%
PGA TOUR (all 250 who received a check) $982,847$2 billion0.049%

By this calculation, as a percentage of revenue, the PGA pays roughly twice the NBA, three times MLB and eight times the NFL.

If, as noted below, PGA TOUR players spend roughly half their earnings on expenses, then their median salary as a percentage of revenue is 0.24%, or just under the NBA, but better than MLB and the NFl.

Costs and Overhead

Costs and overhead for each league are of course vastly different. The NBA, NFL and MLB also have more players than the PGA TOUR. I do not know what the costs of helmets and bats and so forth are for the other leagues.

PGA TOUR players do indeed pay their own expenses, such as travel, lodging and meals. Given sponsorship deals, I would be surprised to learn that they pay for their “work clothes,” or tools, such as balls and clubs. They also pay for their caddy and may pay for swing coaches, trainers, mental coaches and agents. Travel is a 100% write off on taxes. Meals are 50%. The caddy, coaches, etc. are a 100% tax write off.

Golfweek calculated that given expenses, a player with $2.7 million in earnings would pocket $1.2 million after all things are considered.

I will point out that most working stiffs also pay for transportation to-and-from work, meals at work, work clothes and the education we received to be able to do that work with no tax deduction.

That said, the other leagues make 6x to 10x as much as the PGA TOUR and presumably have money to spend on such things such as travel and accomodations, coaches and so on.

The PGA TOUR does have expenses related to running tournaments, negotiations with sponsors, managing the overall organization, promoting the TOUR and its players, the retirement fund and so forth.

For what it’s worth, Marketwatch reports that 600 pro golfers have more than $1 million in their PGA TOUR retirement fund, and 114 have more than $3 million. In contrast, Sports Illustrated reports that 78% of NFL players, 60% of NBA players and a large percentage of MLB players are bankrupt within five years of leaving their sport.

Career Earnings

What about career earnings?

The average NFL career is 3.3 years. By age 25 or so, the average NFL player has made all the money they will ever make from the sport: $2, 838, 000 at the median salary.

The average NBA career is 4.5 years. In Major League Baseball, it’s 5.6 years, and one in five have only a single year.

I have not seen statistics on how long the average PGA TOUR career lasts, but Golfweek has reported that the average age of a PGA TOUR winner in 2018-2019 was 33. That suggests that careers are at least a few years longer than in the other major sports.

Are PGA TOUR players underpaid over the course of a career? Making a couple of assumptions about the length of a PGA TOUR career, average PGA TOUR career earnings should be higher than the average career earnings of other pro sports.

What about LIV?

For 48 players, LIV golf does indeed seem to pay better than the PGA TOUR (although we do not know what each of those LIV players is being paid in addition to their winnings). Thanks to an ongoing flow of billions of dollars from Saudi Arabia, LIV can afford to throw $150 million at Patrick Reed just to get him to play their events.

This does not, however, reflect market reality. LIV operates outside the bounds of competitive markets.

Is Patrick Reed worth twice as much as LeBron James as an athlete? James signed a two-year, $85 million contract with the Lakers in 2021. Raw dollars suggest Reed is worth more. But we know that is not true. LeBron is an all time great; Reed not so much.

A hundred and fifty million is more than the career tournament earnings of Tiger Woods. That is a market distortion. If there was more money available to throw at a player, it would have been thrown at Tiger Woods, who even at his worst is multiple times more attractive as an athlete as Reed. Woods also is still worth more to the PGA TOUR than Reed.

The Saudis have every right to spend their petro dollars as they wish. LIV players such as Reed have every right to make as much money as they can. We cannot pretend, however, that LIV represents an accurate reflection of player value in an open market.

Is The PGA TOUR Hiding Billions From the Players?

I think it is unlikely.

Still, many social media “golf experts” seem to believe there is a secret stash of billions that the PGA TOUR collects from sponsors and tv revenues and refuses to give to the players.

To hide billions would require a vast conspiracy not only to hide secret cash influxes from the players but also from the IRS. Surely one of the rotating cast of a thousand PGA TOUR employees would have ratted them out by now — or one of the tens of thousands of employees at the corporations that conspiracy theorists believe are laundering money through TOUR management.

It would be a conspiracy on the level of a fake moon landing.

Conspiracy theories of all sorts are a fad these days. I refuse to participate in them. No one can get five people to keep a secret, let alone thousands.

Could PGA TOUR players be paid more? Possibly. Probably. The PGA TOUR was able to beg sponsors for larger purses after LIV started poaching players. However, logic dictates that there is a limit to how far they can go, as Jay Monahan said. How much is FedEx able to throw at the PGA TOUR. Certainly not as much as the Saudis are able to throw at LIV.

Can the PGA TOUR get sponsors to pony up $150 million for every player who is Patrick Reed’s peer? Not a chance. Golf is a niche sport. The cricket league in India has revenues larger than the PGA TOUR.

Are PGA TOUR Players Underpaid?

By these back of the envelope statistics, PGA TOUR players are not being underpaid relative to their athletic peers. In fact, there is an argument that players in other sports are underpaid relative to their league’s revenues.

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