Promotion mechanisms on the PGA TOUR.

• Author: Rhoads, Thomas A.
• Position: Professional Golfers' Association

1. Introduction

   With rich contracts offered to the top draft picks in professional team sports leagues like the National Football League and the National Basketball Association (NBA), the newest prospects in these leagues attract increasing amounts of attention before they even step onto the field or the court. But there is considerable uncertainty in these prospects achieving success at the professional ranks. Therefore, it is not surprising that objective means of trying to predict success--such as scouting combines where invited participants' skills are systematically measured--have gained appeal as the stakes become greater and scouts attempt to reduce uncertainty in predicting success.

   But how do the few observations of athletic skill in a setting such as a combine compare to multiple seasons worth of performance statistics in predicting future success? Should we expect good performance in a combine to be a better predictor of future success than putting up good statistics over the past few seasons? Because coaching decisions and team quality can affect athletic performance in team sports, a dose of subjectivity is often used when promoting athletes to the next level. Any test of observation mechanism or length on predicting success for individual athletes in a team sport is therefore likely to include unavoidable distortions.

   But coaching decisions and team quality are generally not factors that affect performance in individual sports. The promotion mechanism for one individual sport league, the PGA TOUR, is the focus of this article. That the PGA TOUR is now promoting more players through a season-long observation of talent via the Nationwide Tour than in a one-tournament Qualifying School (Q-school) suggests more value in predicting future success by using more observations of talent. This article examines promotion mechanisms present on the PGA TOUR (1) with an eye toward how well these mechanisms can assess true player ability and thus screen talent for entrance into the PGA TOUR.

   The payoff to the individual athlete can be substantial on achieving promotion to the top division in any individual sports league that allows for promotion between divisions. The player will compete for larger prizes, and endorsement deals are often more lucrative in the major league. But pursuing this promotion is not without cost since the athlete must demonstrate his or her talent level in an arena that is recognized and will lead to promotion. Because fans desire top talent (2) competing in individual sports leagues, these leagues are expected to, ceteris paribus, prefer promotion mechanisms that have a higher probability of properly assessing talent and predicting success. At least two general types of promotion mechanisms seem natural for an individual sports league--either a short-term or a long-term assessment of talent. A short-term mechanism in golf would generally involve assessing talent in one or a very limited number of tournaments, whereas a long-term mechanism would generally incorporate a series of tournaments. Most evidence suggests that a long-term assessment of talent is a better screening mechanism (see, e.g., Lee 2007) primarily because more observations are collected over a longer period of time; that is, sample size and time period matter. If we assume that a promotion mechanism in an individual sports league is to serve partly as a screening device to identify top talent, an open research question is what promotion mechanism, if any, leads to a higher degree of predicting success for a particular individual sports league--the PGA TOUR.

   Each season, approximately 50 PGA TOUR cards are made available to promoted players. While these players are not granted full exempt status that would allow them to enter any PGA TOUR--sanctioned event they desire, they do not seem to have any fewer opportunities to enter tournaments with this marginally inferior designation on the PGA TOUR. (3) These cards are distributed among graduates of the PGA TOUR Q-school and the top money winners of the Nationwide Tour. (4) Q-school is a long tournament generally played in November or December, stretching six rounds, and includes two stages of regional qualifying for some players. Other players can qualify for the final stage based on their performance in other world tours throughout the year. Even so, this promotion path can be characterized as a short-term assessment mechanism when compared to the long-term assessment mechanism provided by the Nationwide Tour, with its full season of tournaments that players can compete in to attain promotion to the PGA TOUR. Many players enter more than 25 tournaments in the year, designating this path as a long-term assessment of player talent.

   The PGA TOUR has recently allowed an increase in the number of players who are promoted from the Nationwide Tour and a decrease in the number of promotions available through the Q-School. In 1998, the top 35 finishers (and ties) in the Q-school received their PGA TOUR card, down from the top 40 finishers (and ties) in previous years. This continued until 2004, when another change was made to give a PGA TOUR card only to the top 30 finishers (and ties) in the Q-school. In 2007, the top 25 finishers (and ties) in the Q-school earned a PGA TOUR card. In keeping the number of PGA TOUR cards awarded at 50 (or close to it in the presence of ties), this allowed for an increase in the number of promotions awarded to top money winners on the Nationwide Tour. In 1998, the top 15 money winners on the then NIKE Tour earned a PGA TOUR card, up from 10 the previous year. In 2004, this policy was changed to allow the top 20 money winners from the Nationwide Tour to earn a PGA TOUR card. In 2007, the top 25 money winners from the Nationwide Tour earned a PGA TOUR card.

   Except for a few elite players like Tiger Woods and Phil Mickelson, everyone joining the PGA TOUR since 1965 has gone through Q-school at least once (Feinstein 2007). Players go through Q-school to be promoted to either the PGA TOUR or the Nationwide Tour. With only a few exceptions, a player will typically receive a first-time exemption to play on the Nationwide Tour through a middle-of-the-pack finish in Q-school. Top tier finishers in Q-school are promoted to the PGA TOUR, and the second-tier finishers in Q-school become exempt for play on the Nationwide Tour. As this is the way to first become exempt for play on the Nationwide Tour, the entry requirements for Q-school are a necessary part of the entry requirements for play on the Nationwide Tour. Middle-tier finishers in Q-school are therefore in the group that most clearly faces the choice of pursuing PGA TOUR promotion through either Q-school or the Nationwide Tour, and the analysis in this article focuses mainly on this type of player.

   Typically, about 1200 players apply to participate in Q-school and a series of prequalifying, first- and second-stage rounds are held to reduce the field to about 160 players in the final qualifying stage. (5) About 80% of the applicants enter at the first stage, but not all of these applicants are first timers in Q-school, and around 10 of these first-stage entrants eventually receive a PGA TOUR card (Feinstein 2007). The Nationwide Tour is structured very much like the PGA TOUR with similar-sized fields of about 150 players, but only 60 of them make the cut in each event, whereas 70 players make the cut in a typical PGA TOUR event. About 2% of Q-school applicants and close to 15% of Nationwide Tour players receive a PGA TOUR card.

   Because the cost to players and the league of competing on the Nationwide Tour is expected to be higher than the cost of competing in Q-school, identifying a cost-effective talent screening mechanism, if one exists, is optimal. (6) The goal of this article is to test the effect of promotion mechanism on success in the promotion year on the PGA TOUR. Section 2 provides a literature review and describes the data from the PGA TOUR. Section 3 presents a simple model of promotion and the empirical results. Section 4 offers concluding remarks.

2. Literature and Data

   Leagues often implement various policies--such as promotion and relegation--to increase attendance and revenues through achieving an optimal level of competitive balance, but these effects are likely to be different in team and individual sports leagues (Sanderson and Siegfried 2003). Promotion and relegation mechanisms in open leagues tend to lead to more effort while providing few incentives to share resources. Because shared resources can aid in achieving competitive balance, open leagues are generally thought to lead to a reduction in competitive balance compared to closed...