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PGA TOUR MEDIA CONFERENCE

March 15, 2010

TY VOTAW: Good afternoon, everybody. Thank you for joining us this afternoon. Without any further ado, I would like to introduce PGA Commissioner Tim Finchem and the CEO of Farmers Insurance, Bob Woudstra.
And with that, I would like to turn it over to Commissioner Finchem, who has an exciting announcement for us today.
COMMISSIONER FINCHEM: Thanks, Ty. Good afternoon, everyone, and thank you for joining us today.
We are delighted to be able to share with you that Farmers Insurance will continue as our sponsor of the Farmers Insurance Open in San Diego for the next four years through 2014.
I think most of you are aware that farmers came to the assistance of the tournament following the GM bankruptcy, just a week before the tournament agreeing to sponsor this very fine property in San Diego at Torrey Pines. They did such an outstanding job of becoming fully engaged in maximizing their role as title sponsor, which had a very positive effect on our discussions over the fast few weeks, and we have been able to conclude an arrangement through 2014.
We are now looking forward to working with Farmers on a long-term basis, along with the century club in San Diego, to continue to grow the tournament and impact value being driven for Farmers and for the community.
We take great pride in the quality of our sponsors, and I think it's fair to say that Farmers fits perfectly into the profile of sponsors that not only provide outstanding service but take great pride in giving back to local communities.
A couple of notes. This is a very solid deal financially. We are very pleased with the commitment of Farmers. It will allow us to increase the purse at the tournament starting next year, which will get it directly squarely into the range of purse levels at the time of the year on the PGA TOUR. Their commitment will also allow for growth in the out-years of the purse, and in the meantime, to assist in growing the charitable contributions made to the community.
I think today's announcement also says a lot about the business model of the PGA TOUR; that it continues to be a very solid business model, driving value to our sponsors and maintaining the growth and continuation of the PGA TOUR.
With that, I'll introduce Bob, but let me preface that by thanking him and his team publically for the commitment and the work that they have put into their experience this year at Torrey Pines, and the effort they put into discussing the future and making this commitment.
And with that, I would like to introduce the CEO of Farmers Insurance, Bob Woudstra.
BOB WOUDSTRA: Thank you, Commissioner. And again it's a very big day for Farmers and we are excited about having the opportunity to go forward with that event, and certainly with our parent company of Farmers Group, Inc. being the financial services group have been involved with the Zurich Classic of New Orleans now for several years, so we have come to know exactly what working with the PGA TOUR means.
When this opportunity came up back a few weeks ago for the opportunity for the January 2010 event in Torrey Pines, we were excited about being able to come in and start to participate. And certainly, with only having eight days to get prepared for the event, we couldn't have been more pleased with the help from the PGA TOUR, as well as from the Century Club and with our own group of people from the Farmers Insurance Group and what they are able to make happen in that short period of time.
Southern California has meant a lot to the Farmers organization. Farmers was founded back some 80 years ago back in southern California and has now spread across the United States, but California still represents our largest market.
Again, our whole philosophy in our business is looking to be net givers and not net takers in our business, and as a result of that, this whole event here allows us to participate in obviously helping support a lot of local charities here in the greater San Diego area, which is important to, again, our philosophy of our organization wanting to give back into communities that we participate in.
That was one of the big reasons of wanting to team up with the PGA TOUR and how those events really support so many charities within the communities where these events take place across the country. I think certainly as we all know in the past few years with what's gone on in the economy, businesses have been put in some difficult positions, but a lot of the charities that raise money to support good, worthy things have also had challenges. So it was a good feeling for us to be able to know that we are able to support a lot of those local charities here.
On a national basis, Farmers has been a big supporter of the March of Dimes as the largest corporate raiser of funds for the March of Dimes in the State of California, and we are about No. 2 across the country. So we enjoyed having the opportunity to bring them into this past year with our Birdies For Babies and we were able to raise and contribute I think well over 160,000, 180,000 through the March of Dimes into that event as well.
It's an exciting time for us, and again, certainly I want to take my hat off to the Century Club and to the PGA TOUR in working with us this past year on just making the 2010 event be the best we could make it be for all parties considered. And so it was an enjoyable experience, and obviously that helped pave the way for us wanting to do what we have done here; and that's really to sign up for the next four years, and feeling very good that we might now have eight months to prepare instead of eight days.
So that would be the end of my opening remarks.
TY VOTAW: Thank you, Mr. Woudstra, Commissioner Finchem. With those opening remarks concluded, we are able to get the lines open for Q&A.

Q. I wanted to ask if the PGA TOUR has any information at this point about when Tiger Woods may return to golf.
COMMISSIONER FINCHEM: Well, we have the general information that Tiger is preparing to play, and there's been a lot of speculation about when he might come back out. Tiger has indicated to us that he will give us reasonable notice, because we know we have got some preparation to do.
I don't have the specific date when going to come back, and I could only assume that all of the speculation about late March and early April, if he's going to start back then, we will know soon. Beyond that, I can't help you.

Q. I had a question for Bob. How much did Tiger's history of playing Torrey Pines lead into your decision to sponsor for four years? And secondly, how will the tournament, and by that, I mean I guess, the grounds, look different next year than it did this year?
BOB WOUDSTRA: Well, certainly there's two questions. So on your first question, when we evaluated this, we did not make an evaluation on any one player within the tournament. We obviously know that Tiger is obviously a big force on the TOUR. But really, we looked at it with a lot of the young, upcoming players; and it's never going to be one person that makes or breaks something. So that did not necessarily go into our discussion.
On your second question about the look of the field; well, there's no question now that we will have eight months, and especially after experiencing the event this past year, there probably will be things that we will work with the PGA TOUR and the Century Club and others here to put some of our own personal touch on what we might like to see here. But that will unfold in the coming months.

Q. I wanted to check and follow-up a little bit along the lines of what Doug was asking about Tiger and playing at Torrey. We have looked at the ratings this year in golf, the first ten weeks, they have been down about 18 percent. I wonder as an incoming sponsor, if you could just kind of address the fall-off in the interest in golf without Tiger, and if you foresee a different playing field going forward as far as a sponsor involvement in golf and how the landscape seems to have changed a little bit.
BOB WOUDSTRA: Certainly our opportunity to experience this event in January of this year, and all of us knowing that Tiger Woods was not participating in the event this year; but from a business standpoint, for us, we could tell a noticeable difference in what we could see as a result of just being in this event in this year, and the impact. The pleasing part, the impact it was having positively in our business in southern California, which I guess at some level we expected, but what we are also beginning to see in other parts of the country as well, as well as parts of participating this year.
You might talk about numbers being down, and I'm not following every one of these events across the country with those level of statistics, but the only thing I can tell you is our experience from a business standpoint after participating in January of this year was positive.

Q. And if I could follow-up with another question for Tim. When, and obviously that remains to be seen, when Tiger does come back, can you address at all the security measures, the logistics of it? Sean McManus had said the other day that he thinks his return will be one of the biggest events of the decade. So obviously there will be significant -- if it is a regular PGA TOUR event, I understand if it is the Masters, that's out of your control, but if it were to be Bay Hill, for example, what sort of logistics do you have in place to address his return?
COMMISSIONER FINCHEM: Well, we have a plan for -- it varies. Every sight in golf is different, the capacity to handle media. I think media is the biggest mover. Most of our tournaments sell out from a ticket standpoint, anyway.
I think the media accommodation is the big factor, and you know, how that happens depends week-to-week on which tournaments we are talking about. We saw a huge influx of media here for Tiger's statement three for four weeks ago. We had to create an off-sight accommodation for the number of media. And, you know, there's a possibility that in certain places we would have to do that, because we can only accommodate so much media.
But it will be different. We will know in advance. We will get the word out. As far as a statement goes, we announced it two days in advance, and we had plenty of media here. So it won't be a problem in terms of letting everybody know what accommodations will be made, but we'll be prepared.

Q. Just on the phone with Tom Wilson, the tournament director here, and he was saying that Farmers is getting a substantially better deal than it would have a couple years ago with the TOUR; yet, the purse is going up, and Tom believes there will be more charitable dollars available to the Century Club. How does that jive? Is that because the TOUR is contributing more money, or what? How does that --
COMMISSIONER FINCHEM: No, I think this transaction is very much at market rate, market level and consistent with -- we have announced in the last eight months 15 either new sponsors or extensions to 2014 and beyond. And in every one of those situations, we have had transactions that allow us to grow, whether it's prize money on the one hand or charitable dollars on the other; every single one.
The situation with Farmers coming into this year was very different because one week -- we did the arrangement one week before the tournament, so it was a one-off.
But no, this transaction is squarely in line with other transactions we have done for the last six to eight months. If the trend continues, you know, as we go forward, it will continue the prospects of growth for the PGA Tour. There has not been any change in that.
I know there has been a lot of discussion about Tiger Woods being out. But as Bob said, most companies evaluate their tournament involvement based on the value that is generated after careful analytics. Tiger historically has played in about a third of our tournaments, and yet they have all been sponsored over the years, and there's a reason for that. And that's because there is real value: Business value, advertising value, audience-reach value and value generated from being involved with positive economic impact and charitable giving. That business model is very strong.
It's a sponsor-centric business model that drives value to sponsors, and it's been successful. Today's announcement is just another indication of that.

Q. If Tiger plays at Tavistock, we found a PGA rule that says he must then play in the PGA TOUR in that city where Tavistock is; can you talk about that for a little bit? Obviously Bay Hill is following a few days later.
COMMISSIONER FINCHEM: I don't know what rule you're referring to but I'm not aware of it, and I have no information as to what he's playing. So as soon as he announces what he's going to do, we will know and you will know.

Q. Back on that subject again, I just wanted to see if I could get it clear in my own head how much advance warning you are expecting, for instance, for Bay Hill, are you saying that you would know before the 5:00 deadline?
COMMISSIONER FINCHEM: I'm not going to get into that. What I've indicated is that we are going to have advance notice, and we are going to be in my view comfortable with the notice we have. We already have done contingency planning at a number of weeks of the TOUR. So we will be prepared, and as soon as he tells us, you'll know.

Q. So we should expect the announcement to come through you and not directly --
COMMISSIONER FINCHEM: No. It may come through us. It might come to us at the same time he announces to the world. Once we are told, we will tell you, if it has not already been communicated.

Q. Mike Buteau alluded earlier to the overall weakened TV ratings of the CBS, NBC being down around 18 percent, which does not include last weekend; I don't know what the Doral numbers were.
COMMISSIONER FINCHEM: Yeah, I take issue with those numbers, but go ahead.

Q. I just wonder what your thoughts are on that. And Tiger did not play on the weekend in any of the first ten events last year, so seems like a fairly fair apples-to-apples comparison, sounds like a significant drop to me, wonder if there might be a anti-golf hangover from the Tiger affair, or what other theory you might be able to put out there for me.
COMMISSIONER FINCHEM: I don't have the numbers in front of me, but actually some weeks we have been up this year.
But no, I think that -- I think everybody needs to understand that when Tiger Woods plays, and he's in the hunt on the weekend, he spikes the ratings; that's true. When he doesn't play, we have very acceptable ratings from a sponsor-value standpoint and from an audience-reach standpoint. So you can look at it as the glass half-empty or glass half-full. Our view and our analytics tell us it's a glass half-full, if our ratings spike. But it's off of a very acceptable base.
As a matter of fact, on an average basis, the average PGA TOUR event, year-long, is second in cum. audience reach in sports only to a NFL game; only to an NFL game. We average 23 to 25 million people every week tune in to our tournaments. Now, we are over four days, but that's 23 to 25 million unique viewers.
So we have a significant gross audience reach. And when people like Bob Woudstra and the companies that come to the PGA TOUR analyse the quality of the audience, which indexes higher in almost every upscale category than any other sport, and the total audience, which is significant; that's how they determine value, and that's why we are 100 percent sponsored.
These companies, these many, many companies that spend millions of dollars with the PGA TOUR, also spend significant amounts of money measuring the value that they get. They are smart companies, they are good marketers and they make good decisions.
So I know the Tiger thing is important, and I think he spikes things, but don't turn it and make it a negative when it doesn't need to be a negative. It's very strong story week-in and week-out. And as Bob mentioned earlier, in his analytics of this particular sponsorship, for example, he was more focused on the overall quality of the field and the impact of the tournament; and the experience coming out of a week in which Tiger did not play, in this particular case, Farmers Insurance, concluded that they wanted to move forward.
So, I don't know what else I need to say.

Q. I understand the power of the demographics. I think we have all got a pretty good grip on that. I'm just wondering if you've got a theory as to why the drop of 18 percent.
COMMISSIONER FINCHEM: Well, it has not been 18 percent. But there are a variety of factors.
Now, for example, in an Olympic year, there are three weekends when we are up against the Olympics. It happens every four years. If you go back four years ago when we were up against the Winter Olympics or go back to the Beijing Games in '08, you will see an impact on that. So those things happen in and out of any year or any quarter, and you see movements in the ratings.
But if you compare us in terms of overall audience reach, to any other sporting activity; most companies divide their marketing dollars between some percentage to sports marketing and some percentage to other kind of marketing. We stack up very, very positively, whether it's baseball, basketball, NASCAR or football, in terms of an audience reach standpoint, cum. audience. In addition to that, that cum. audience is a very, very valuable audience. Particularly, with companies that are in the auto area, the financial service area and related areas.
So, there's real value there. So you have to look at the entire picture and do the analytics, and then you come to grips with why we have been successful.

Q. When you're talking about the ratings spiking, but you have an acceptable base, what do you consider an acceptable base, and how do you measure that?
COMMISSIONER FINCHEM: Well, an acceptable base is what you can buy in terms of audience reach with us versus anything else you do. It's the marketplace. And when we perform so well in the marketplace, there's a reason for that. For example, when there's a downturn in the economy, as there's been the last two years, and companies are reducing their marketing budgets, sometimes as much as 50, 60, 70 percent, and we stay in those marketing budgets, in this case, 13 times in the last eight months, companies have extended their commitment to us out to 2012, 2014; in a reduced marketing budget.
And that means that when you compare us, as to when a company sits down and says what do we keep and what do we let go to reduce our budget, and we are staying in those budgets, that means that comparatively we generate value versus the dollars spent. So we are a good value proposition, and it is for that reason that we have been successful.
The cost of our product stacks up very good against other sports opportunities in terms of the value generated, and I think Bob just alluded to that a little while ago.

Q. And this has nothing to do with anything, but just curious if the date has been set for 2011, and was there any type of arrangement that this tournament would stay in kind of that off-week between the NFL Conference games and the Super Bowl?
COMMISSIONER FINCHEM: I think the date may have been set, but the answer is no.

Q. What's the date?
COMMISSIONER FINCHEM: I can't remember.
TY VOTAW: We'll get that to you. With that, this concludes the conference call. We thank everybody for attending and listening in and for those questions and look forward to seeing you down the road.

End of FastScripts

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