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June 12, 2013

Report: USGA to lose $10 million on U.S. Open

Posted at 5:00 PM by Coleman McDowell | Categories: 2013 U.S. Open, Merion Golf Club, USGA

The selection of Merion Golf Club for the 113th U.S. Open was an expensive decision for the USGA. The small size of Merion (just 111 acres) and its location in the heart of a well-populated suburb just miles from Philadelphia forced the USGA to limit ticket sales. According to Bloomberg Businessweek's Michael Buteau, the USGA is set to lose $10 million on the event.

In acknowledging history, the USGA is squeezing a 21st Century event, its fans, sponsors and media into a course built 117 years ago. Merion, in suburban Philadelphia, is about half the size of last year’s U.S. Open host, San Francisco’s Olympic Club.

Ticket sales were limited to 25,000 a day, down about 45 percent from the typical 40,000-45,000. Fewer fans means less revenue from concessions and merchandise. The USGA, which governs the sport in the U.S. and Mexico, is expecting to lose $10 million on the event, according to a person with knowledge of the organization’s finances. The person was granted anonymity because the information isn’t public.

“I don’t think we’ll make up for the loss,” Sarah Hirshland, senior managing director of Business Affairs for the USGA, said in a telephone interview. “Clearly these line items will look different this year.”

In a Q&A published in the June issue of Golf Magazine, Mike Davis, executive editor of the USGA, admitted this year's Open would lose some money due to the size constraints at Merion, but said that money is not the deciding factor in selecting Open venues.

Is it true you'll lose money on this Open?

We've never selected a U.S. Open based on money. We want to be fiscally responsible; we know that's the engine that drives everything we do. I don't want to get off-topic, but the amount of money we put back into the game is significant. If you conservatively look at what the USGA has spent directly back into the game, it's almost a billion dollars in the last 12 years. There isn't anybody putting that kind of money back into the game. So we do need to be responsible.

But will the USGA lose money?

We find that when we go to a big venue like Bethpage or Pinehurst, they make millions and millions of dollars more. You go to a little site like Oakmont, Winged Foot, they will make some money, but after expenses, not a significant amount. And I'm excluding the television rights fee, because with that it doesn't matter if it's a big or a small site. But when you go to an ultra-small site like Merion, it's true, we won't make money -- in fact, we'll lose some money. But we look at it from a standpoint of a five-year period, and we're very comfortable with where we are.

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