Players Unsure About Fedex Cup

A New York Times article highlights the fact that the players are unsure and perhaps even slightly unhappy with the Fedex Cup.

A couple of good lines:

Vijay Singh began the 2007 season in January by saying he was already tired of hearing about the points system, which is designed to mimic the format used by Nascar’s Nextel Cup series. Rich Beem said he hoped the FedEx Cup never replaced golf’s major championships as the focus of children’s dreams.

Even in a selfless moment three weeks ago at the Bridgestone Invitational, when K. J. Choi said he would donate the $10 million first-place prize to charity if he won the FedEx Cup, Tiger Woods had to remind him that the money was actually an annuity

.

The annuity payoff is going to come as a surprise to a lot of golf fans, just as it was to Choi. You see, the vaunted $10 million payout is as bogus as a $10 million lottery payout where you get $50,000 a year for twenty years. That takes a lot of the excitement out of it. When I first heard of the $10 million prize, I pictured the winner collecting an actual live pile of cash—or at least one of those big cardboard checks with eight figures on it.

No joy there. And fans aren’t the only ones to realize it. From the Tmes article:

Before Woods’s decision to skip the opening event, the biggest newsmaker was the amount of the first prize and the form in which it will be awarded. The Tour’s policy board, which includes four players, approved the winnings to be paid in an annuity, but the Tour membership has not embraced the idea.

“I may be dead by the time my retirement fund comes around for me to be able to utilize it,” Woods said.

Phil Mickelson seemed similarly disappointed.

“For the last year, I felt it would be really cool if we had this big check or we had cash to pay the winner,” he said. “Instead, guys won’t see it for 20-plus years, so it takes some of the luster out of it. I think it would make it more exciting if we did something like Vegas used to, when they came out with silver dollars, or like the World Series of Poker with piles of cash. I think that would be cool, but it’s just me.”

No, Phil. It’s not just you.

6 thoughts on “Players Unsure About Fedex Cup”

  1. Wayne- that would be really cool, especially if the ante was something like 5% of their money list earnings for the year.  You want to see Tiger nervous on that last putt?  How about if he misses he loses 500k of his own money.

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  2. What I wanna see is an event where the players ante up with their own cash, fill the pot and the winner takes all. Never mind this playing for other peoples money stuff. Playing with their own cash on the line would really catch my attention.

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  3. Not in total disagreement here.  However, wanted to point out that 10 million over 20 years is 500,000 a year, not 50,000.  While Phil or Tiger may scoff at that since they both make that on simple interest if they have their current money in the bank, it would be pretty huge to many golfers on tour. 

    And as someone who runs the powerball pool for my office, I have to say I wouldn’t mind winning 500k a year for myself either.  However, it is in the rules for our pool, and I would do it individually as well- you take the cash value option.  You want to pay tax at this year’s rate, and you want to be able to invest for yourself, you can do better than the interest rate they use for the NPV calculation on the annuity.

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  4. You’re right on the math, of course. I forgot a zero. And in Michigan, we, too have the instant payout option—at much less than the face value of the ticket.

    But in either case, in the lottery, you don’t get the full value of the supposed $10 million in earnings. As far as I’m concerned, if the payout is $10 million, I should get $10 million NOW. Otherwise, call it $5 million, or whatever it really is.

    So I still think lottery payouts are bogus, since you never get the full value of any winnings. (I wouldn’t turn it down, either).

    As for the Fedex Cup annuity, they won’t pay out on it at all for twenty or thirty years. So the annuity is a cheap way for the sponsors to get out of paying a real $10 million. They’ll simply drop a chunk of change into an investment portfolio, and through the magic of the stock market and compounding interest, the $10 million will show up in thirty years.

    So all, in all, I’m not impressed by the whole thing.

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  5. Thanks for this. I got the link from a comment you left at another site and found it to be a great compilation of the story thus far. Here’s praying for the integrity of the trade.

    Reply

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