Mike Whan faces difficult task in leading LPGA through uncharted waters
In the wake of last Thursday’s shuttering of three more tournaments on the LPGA schedule, Mike Whan’s most immediate concerns didn’t turn to his most high-profile players.
No, the LPGA commissioner’s thoughts turned to his rookies.
He picked up his cell phone and called them all.
“He said to be strong,” said Patty Tavatanakit, one of 19 tour rookies. “He said we’re all going to get through this together.
“It meant a lot to hear from him. I told him how I appreciated him calling in person, to check up on the rookies. I think it was just a great thing for the commissioner to do. I was touched by that. More than anything, I can’t wait to get out there again and compete. It’s such a special tour.”
These are trying times for the LPGA, a tour that is substantially stronger with Whan’s rebuild over the last 10 years, but a tour that is still more vulnerable to this COVID-19 threat than other sports leagues.
From his stars to his rookies to his business partners and staff, there’s uncertainty as to how the threat of more cancellations and postponements will affect the foundation of the 70-year-old women’s sports organization.
That’s six shuttered events so far, three cancellations and three postponements.
“You should assume that with any event we cancel within the month of when it is scheduled to be played, there is probably a million dollars of some cost, per event,” Whan told GolfChannel.com.
That includes postponed events, like the Volvik Founders Cup, Kia Classic and ANA Inspiration. The infrastructure buildups in those events were all nearing some stage of completion, but it’s all being torn down now. Also, other vendor and business investments are being temporarily dismantled, with rescheduled dates yet to be determined.
“So, you’re going to have to turn around and build it all over again,” Whan said. “Those people get paid. Those are contractual deals. You have all that build, not just the physical build, but the preparation that went into the running the event.
“All those costs are sunk, and there’s no revenue coming in to offset it.”
Founders Cup tournament director Scott Wood said preparation for this week’s event was 95 percent complete when the tournament was postponed last Thursday.
“It was the right decision, but it was a tough decision,” said Wood, who is also an LPGA staffer. “It was going to be our 10-year celebration. It’s a big year. This is our Players Championship. This is what we’ve been growing it to be as we honor our founders and pioneers. We were all kind of in shock, but we understand. It’s the right thing to do.”
Whan’s staff is working through the uncertainty of not knowing how many more events may need to be postponed.
“Do you save some money by not playing? Of course, you do,” Whan said. “But you generate money by playing. I can’t charge a sponsor for a tournament I didn’t deliver.
“Financially, it may not sound like big numbers to the NBA, but those are crushing numbers to the LPGA.”
The cost of tournament operations includes the cost of selling it to TV.
“We’ve got commitments to deliver TV to 170 countries,” Whan said. “We’re trying to make sure we can deliver on all our commitments to these stations around the world, who have sold advertisements to build their telecasts around our stage. We’ve also got commitments to deliver to our official marketing partners, through the course of the whole season.”
Whan’s notable work rebuilding the tour has never been so important. If this happened 10 years ago, when the organization he inherited was floundering, this may have brought about the tour’s collapse.
But Whan built a safety net.
The LPGA began 2020 more financially robust than it’s ever been.
“We’ve built up some reserves,” Whan said. “Some of that is in just how global the tour has become, and how much we’ve generated in television revenues around the world. That really builds us some comfort. I’m not sure this would have sunk the tour 10 years ago, but the level of worry would have been higher.”
Still, Whan isn’t sure how seriously those reserves are going to be tested.
“If this goes on too long, it’s going to be a killer,” he said. “Maybe the NFL, Major League Baseball, the NBA and PGA Tour won’t get there, but almost any other CEO would say, ‘Hey, if this continues for longer than a couple months, we’ve got some pretty tough choices to make,’ because starting in 2021, I want to make sure we’re still the same LPGA we’ve seen.
“If this continues, we’re going to have to make some of those tough choices. I don’t think we are there yet, and we may not be there for a while, but we’re all waiting for good news on COVID-19.”
In the meantime, Whan is thinking out of the box, to cut expenses, maximize revenues and best serve his players and business partners.
He’s exploring the possibility of doubling up postponed events, merging them with each other, or perhaps existing events.
He’s getting creative with possible solutions.
Like creating a kind of super event.
Like a two-for-one, big-purse tournaments.
“Could you have two sponsors come together in one event, so instead of playing each event for $1.5 million, you’re playing one event for $2.8 million?” Whan said. “Yeah, I think you could.”
He’s encouraging his staff to think in exceptional terms.
“This is going to be the year of an asterisk. There’s no getting around that. To say we’ve always done something a certain way is no longer an acceptable answer.
“Everything is on the table.”
Whan is also advocating for his players outside his normal reach. He sent out a tweet last week encouraging companies who endorse players to disregard their normal parameters, provisions that may require players to make 15 or 20 starts to fully collect on their contracts.
“In these strange, strange times, I hope companies understand these athletes aren’t like NBA athletes,” Whan said. “They aren’t sitting on five-year deals with no trade clauses. Our athletes are different. These aren’t athletes who are going to be paid anyway. These aren’t athletes who have guaranteed incomes regardless of how many games they play this year.”
Whan is holding “crisis meetings” with his staff every day. He praised his team for all the work they’re doing to steer the tour through these rough, uncharted waters.
“Luckily, I’m surrounded by some pretty smart and talented people,” Whan said.
The commissioner knows he needs all their help to meet the unique challenges ahead.