CHARLES SCHWAB CUP CHAMPIONSHIP

October 26, 2003

Tim Finchem

Charles Schwab

JEFF ADAMS: Welcome everybody. Thanks for joining us this morning this week at the Charles Schwab Cup Championship. I think we're going to have a special round of golf today ahead of us. I'm joined here by Commissioner Tim Finchem, to my left, and Charles Schwab, the chairman of the Charles Schwab Corporation, to my right. They're here to share some news with you about the relationship and the partnership between the two organizations.

I would like to call on Commissioner Finchem. He's going to provide a brief overview of the past season on the Champions Tour and looking forward and then he and Mr. Schwab will make the announcement for us.

TIM FINCHEM: Thank you and good morning. Good afternoon. I'm on East Coast time. We're all delighted to be here. I just want to start with a couple of brief comments about the Champions Tour. First of all, we're very pleased with slightly better weather this year than we have the last two. No disrespect to your friends in Oklahoma City. But the weather has been delightful. The golf course is one that the players enjoy playing, and we're very pleased with the cooperation we've had from everybody at the Sonoma Club to prepare on relatively short notice to get ready for this championship.

We obviously want to thank all the folks at TWC, Dean Kern and his team, our presenting sponsor, they've done a great job in helping support the Schwab Cup Championship and it's first year here in California.

We obviously think we're finishing our season on a high note. This has been a good year for the Champions Tour, a good solid year. We've had good galleries throughout the year. We have heightened interest. We have had good reaction to the players who are coming out on this tour for the first time this year and we seem to be making terrific progress.

Obviously from a competitive standpoint, it's been really an unbelievable year. 25 different winners in 30 weeks, just a very balanced amount of competition. Each week we seem to have a different mix of players in the hunt. It's a tremendously competitive tour again, which is terrific.

We've had a good reaction to fan features, and I must say that the Golf Channel people have done a terrific job, and especially on the promotion side, as they get ready to take over full production next year. But the promotion this year has been, we think, very, very good indeed. Thus we think we're well positioned to take off next year.

Rick George, the president of Champions Tour, I think he's doing a superb job in providing leadership. We've got a good schedule, which will be coming out to you in a couple of weeks. A couple of more announcements, which are exciting ones, we think, as part of that. And then of course, next year we have got some additional players, Jay Haas and Jerry Pate and Peter Jacobsen, who will probably be at the Craig Stadler level, at least in the case of Jay and Peter, really at the top of their games in the PGA Tour.

That is a continuation of that transition we've been talking about for the last couple of years. It started in 2000 and really runs through 2007, with the players who led the PGA Tour in the 10 or 15 years before Tiger, Ernie and Phil, and all the other stars we have today, but during that 15 years, those players that led that Tour are now coming to this Tour and that will culminate in 2007.

Today we would like to make a special announcement, and that is this terrific relationship we've had with the Charles Schwab Corporation over the last I guess now eight years, six years, and this is our seventh, has been -- we're announcing today we're extending that five additional years through 2008.

And this relationship, just by way of definition, includes Schwab as our official investment firm of the PGA Tour and the Champions Tour. Schwab is a sponsor of our Schwab Cup Championship on the Champions Tour, and because we tie in now the Schwab Cup, beginning this year, to the year-end season finale, the Schwab Cup Championship. This is a relationship which over the last five or six years has helped our players, our tournaments, our charities, and all the elements of the Tour have benefited from this overall relationship that we've had. We've enjoyed this partnership and we're looking forward now to building on it over the next five years.

Our players really appreciate this relationship because of the unique service that Schwab provides for our players in terms of investment counseling and advice. Our charities have benefited as well. But if you look at why we're excited, you just have to go down the list of the unique aspect of Schwab as investment counsel, the position of them as a sponsor of tremendous competitive enhancement to this Tour. To tie the Tour together in year-long competition has really elevated the interest of the Tour over the last couple of years.

The philanthropic charitable aspects of what have been impacted are really the core of the PGA Tour. Giving back is a core value of the PGA Tour. It is the core value of the Schwab Corporation. And as such, when we get together we've done some pretty good things for charity. This week we have benefited not only the Boys and Girls Club, but the new First Tee facility at Harding Park in San Francisco and that First Tee Chapter.

And then lastly I think there is another reason we're excited, and that is, important to the positioning of our sport is to be able, when we have sponsorships, to relate the quality brands, and brands that speak to something. People recognize the Schwab Corporation for what it stands for in the marketplace. It stands for integrity. That's what investors see. That's what Schwab sells. It sells core values and mainly the core value of integrity. To be able to link our sport with that kind of core value representation is important not only in terms of the overall presentation of what we're positioning our sport to be.

It's more than just a game. It's core values, it's image, it's integrity, it's goal setting, it's all those things that now we're trying to teach to the First Tee program. For a whole lot of reasons we're very pleased about this relationship. I want to thank Chuck, the chairman of the company, obviously. Dave Pottruck, the CEO, but also the team at Schwab who works so hard to put it together, Jody Bilney, David Frame, Dave Gimble (ph), who's out here working with our players all the time on both tours. This has been a real team effort by Chuck and everybody involved in the company to make it work, to get us this far, and now to commit to the next five years.

So we look forward to a continuation. We're going to build on it. And with that I'd like to bring up the chairman, former CEO, but now chairman of the Charles Schwab Corporation, our good friend Chuck Schwab.

CHARLES SCHWAB: Thank you very much for that wonderful introduction. That pitch about Schwab, it's all true. First, I would really like to underscore our excitement about the extension of the 5-year contract to 2008. We're really looking forward to the next five years. This is the first year here in Sonoma. The great Valley of the Moon, where great wine is made and so forth. Of course, California represents for Schwab a large part of our clientele. We are national, of course, but this area is particularly important to us.

The Champions Tour, as it's now called, there are just so many things, as Tim has mentioned, that are core to our values and core to theirs. When I look back over this last year, we went to 31 different communities. Each one had their own separate non-for-profit entities that benefit by our presence there, not only Schwab representing the Cup and all that stuff, but the players themselves. They've gotten behind each of those different communities. It's pretty incredible. Those are values that are consistent with our company and with the Tour itself.

We also are in a position to, of course, help so many of these people getting almost second careers or third careers in golf, and they also need help in investment advice, how to hold onto those assets for the rest of their life, to say the least. Of course, Schwab tries to do a great job to show them how to diversify and do asset allocation and all those kind of things.

Of course, going back to the charity part of the thing. The number of people who come out, you walk around here, who donate their time, because they know that we will be extending back to their community. And in the case of Sonoma, it will be the Boys and Girls Club of this valley who will be represented substantially in the gifts, as well as First Tee, which I've been a part of from the very beginning. My special focus is on Harding Park. That redo at Harding Park is incredible. If you haven't played it, go out and play it.

Just to underscore Tim's comments, we like being a part of the Tour, and in particular the Champions Tour, great guys and great values. Tim, thank you very much.

JEFF ADAMS: Thank you, Commissioner. Thank you, Mr. Schwab. We're going to open it up for questions here. Let's have the first couple of questions directed at the announcement of the Charles Schwab Cup Relationship and then the tournament here and then a couple of others.

Q. I know there's some talk of the Tour trying to find a permanent spot for this event. I'm wondering when that could be and what you think of this particular location of getting that permanent spot?

TIM FINCHEM: We think we're off to a good start. We'll definitely be here through 2006. That's our current commitment and then -- which gives us some time to work out some of the operational issues, but things have gone very smoothly this year in a short time frame. As I said earlier, we're very pleased with the start and we look forward to being here for the next three years and during that period of time we'll continue to evaluate the future beyond that.

Q. Can you give us a sense of how the Champions Tour has done in a quantitative way in terms of TV or attendance?

TIM FINCHEM: At most of our tournaments this year, really from the start, our attendance has been up. Our tournament revenues are up. Our charitables will be up for the year. Our players official money and nonofficial money compensation for the players will be up this year. We feel like the presentation -- what we're trying to get to with the Golf Channel, which they've been very enthusiastic about, and we'll see it next year as they take over the entire cable package and really a platform of activity on The Golf Channel, we have so many golfers that go in and out of the Golf Channel during the course of the week and we want to be really present with the Golf Channel and that seems to be working out. So from just a recognition standpoint of what the Champions Tour is, it's viability, we think that is going to be very positive. And of course as part of that, a significant bump up in recognition of what the Schwab Cup is all about, in terms of the year-long competition, and we're doing some things with that next year that we'll be talking about here toward the end of year.

But this has been, again, part of what we set out two years ago, to take advantage of the new players that are coming out, build some new things, focus our efforts a little differently, and we're very pleased with what's happening.

CHARLES SCHWAB: I might add something to that from the point of view from the sponsor. The viewership has grown significantly for us. The response to a lot of our different things, people playing at some of the PGA golf courses, people coming out to this tournament here you can see, it's been pretty spectacular. That's the reason we were so pleased to extend our contract for another five years.

It seems like the slope of this tour is really on the way up. And I've got to also mention the Golf Channel, their support and their backing to what's going on here. About 40 percent of our clients at Schwab, we have about 8 million clients that play golf, some level of golf, and so there's a very important connection here and we couldn't be more delighted from the product that Tim and the Tour are putting out.

Q. Mr. Schwab, do you have a sense of Tom Watson here and how the TV viewership and the public has responded to that?

CHARLES SCHWAB: Tom Watson is a gentleman who, I know is 11 years behind him, I call him a young man. We were both at Stanford a few years apart, and he's been a great representative of golf all his career, and I couldn't be more delighted to have him be winning the Schwab Cup. I think we can assume now he will win the Charles Schwab Cup. No one else has the points that could make up for it. Tonight we'll be awarding him that cup. What a great representative of golf and all the values that he portrays. He's a great guy.

TIM FINCHEM: Actually, to your question, I think there are three or four sort of unique things this year, Watson has had an incredible year. He's a Champions Tour player. And then you have Craig coming out and winning on both tours. So an enormous amount of focus on the Champions Tour and the other Tour. And then you have Peter not only winning but playing well and constant commentary again about the Champions Tour. Those are the kind of things that really heighten the exposure and interest and just added to what otherwise we think a very good year, and we're not quite done yet.

Q. I've noticed a bit of a tendency to go to the old style golf courses on the Champions Tour. Frankly, I think it might be a good move and if things seem to fit like this golf course here, I was wondering if this is something that was planned, orchestrated, what do you think?

TIM FINCHEM: What we're trying to do is, I hesitate to say old golf courses, but old golf courses tend to be courses that weren't built for real estate purposes, so they're easier to walk and they're easier for galleries to walk and they're more fancentric, if you will, to use today's term. So yes, when we can find a golf course that is better for the fans and better for the players, who obviously are being encouraged to walk more and are walking a lot more than they have in the past, it's helpful.

A by-product of that is where we can find a classic golf course -- the difficulty is, these players are big, strong players, a lot of them, and we have to challenge them. So in these cases we have some work to do. But I think last week at Oak Hill and San Antonio and here, we have classic golf courses that really set up for a fun environment on the property. And then if we can add to that and make sure we're competitively challenging the players, although we like to see a nice variety, it doesn't matter, to me at least, if players can shoot the grass off a number of weeks, that's fine, they do it on the other Tour also, but we need a mix of that with good, solid challenges, and as long as we're mixing it up, I think that's what we're looking for and I think that's what the fans are looking for.

Q. The fall was a very difficult time for sports, other than football, particularly on television, even in the newspapers, and a couple of guys mentioned people aren't covering the Grand Champions Tour. I just wonder, do you find holding the co-tournaments, the tournaments together, that the Grand Champions get a little bit overwhelmed or lost because there are so much restrictions on space and obviously everybody is covering the main Schwab Cup, and would they move to a separate venue?

TIM FINCHEM: I'm not so sure how to react to that. I think there are challenges in getting those guys covered. I'm not so sure, however, you would be helping things by moving to a different venue. I think that might be challenging. I think at least at this point we're going to stay the course for another year. It's something we look at every year and we'll continue to do so.

Q. An issue of carts, is there going to be something specifically addressed? Are you interested in making this a walking-only tour, other than medical cases? And what's the situation there?

TIM FINCHEM: It's under lots of discussion. Carts have been discussed heavily since the inception of the Tour and we're about to celebrate the 25th anniversary. Rick George is focused on it. He's going to make recommendations or provide options to our board meeting in a couple of weeks for what we're going to do the next couple of years. I know he's talking to players about it and meeting with the Players Advisory Council, as he should. I'll wait to see his recommendations and then the board will have an opportunity to review those here in a couple of weeks.

I think this year was a nice step because players, we just had less carts out there, which I think from a fan standpoint is a good thing. There are challenges and issues and lots of opinions and I'm not so sure there is a right way or a wrong way, frankly, necessarily, but there has to be a way. I look forward to Rick's recommendations.

Q. Charles, being a Northern Californian, were you interested in bringing this here and are you going to push to maybe making this a permanent spot, given the regional bias you might have?

CHARLES SCHWAB: Definitely. Schwab is across the country, we're in all the cities the Tour does go. We started our company 30 years ago here in San Francisco, so we're very centric Californian, and 30 percent of our client base is from California and probably half that number is from Northern California. This is a fantastic location. We know the weather is going to be highly predictable and wonderful things come along with a visit to the wine country, so we're going to encourage this Tour to maybe think about this for beyond the three years coming up.

Q. Tim, you mentioned challenging the players. Do you think this course needs to be more difficult in any way over the next few years?

TIM FINCHEM: Perhaps, but it would be premature for me to comment on it. I mean we're not done with the tournament yet. I want to see what the reports are from players first and then our staff, our rules officials. We have a lot of data now that we didn't use to have to look at the way the golf course is playing. It's a little unique, I think. It's particularly hotter than even normal here. It's been quite dry. But we'll evaluate it. Certainly there's always going to be limits in terms of what you can do, but we typically have a better feel for it after you actually get these guys out and play the golf course for four days. We'll have a much better feel after the tournament. I wouldn't want to speculate on that, but we'll see what develops in the next few weeks.

JEFF ADAMS: Thank you everybody for joining us.

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