Tiger Woods to come to Oz

Tiger Woods will play in the Australian Open this year in Victoria.  He will be paid $4.5 million for his 3 day effort half of which will be subscribed by the Australian taxpaper.  This is his appearance fee and ignores possible winnings. The event will be held at Kingston Heath and I am already waitlisted for tickets in November.  If I am to be consistent with my judgement on the use of public funds to promote sporting events - I recently attacked Victoria's $47 million payment to a certain dwarfish Grand Prix operator - I should condemn the $2.25 million the public is coffing up for Woods.  I do condemn it - though weakly.  The reasons for my weaker condemnation of the Woods subsidy are that (i) $2-25 million is a lot less than $47 million and (ii) it might indeed be a good deal for Victoria - though the promised $19 million benefit that the Labor Party suggests will eventuate is out there in fairyland.  The benefit will be less than that.  Woods is absolutely numero uno in the world of modern golf and this is the major participant sport on earth.  He is not some racing-car-driving bogan but a gentleman who plays excellent golf.

I assume the PGA are coffing up the other half of the appearance fee. That's a big ask. I hope they do not get seriously into the red on this one.

Woods is a freak. He is the greatest golfer of his generation and, as I have suggested before on this blog, a wonderful person.  A guy with soul and feeling who can play golf with demonaic precision.  I can hardly wait!

Victoria is again seen as the sporting centre of Australia with NSW a distant second. Indeed Woods will not play in the Australian Open held in NSW shortly after the Masters - his appearance at the Masters will drain resources and crowds from the now much less interesting NSW event.  NSW do have Brian Eno to lead the 3 week music festival in Sydney and this should help the no-hopers running that state secure a few Mardi Gras votes. Prejudiced? No, not me.

GPS’s for cars & for golf

I have long-enjoyed my car GPS system. It is a useful device particularly when I travel interstate and hire a car but don’t know where I am going. My knowledge of my former hometown, Sydney, is fading which isn’t surprising – despite visits I have not lived there for 30 years! Now all I need to get around are addresses and my GPS. A few times it has directed me to attempt the impossible but it mostly works well.

Readers of this blog will also know that I play golf. Now GPS technology is being applied here. Golf basically involves hitting a ball with different golf clubs in the direction of a golf hole. The club you select depends on the distance to the hole (and perhaps various hazards) as well as how well you can hit. Distances you need to hit and distances you can hit can both be measured from a pair of satellite signals that can be monitored by a GPS.

Finally, I purchased a GPS for my golf and used it for the second time today. It gives distances from where you stand to the back, centre and front of greens/water hazards/bunkers and so on. It also tells you how far you hit each shot and the composition of your game between various types of shots (fairway, putts, and bunkers) as well as distances hit by club.

Yesterday there were blustery (north-west swinging to south-west) winds so distances were only part of the story in deciding what golf club to use but the device itself worked well. From officially placed pin-markers with a straight trajectory to a green – these define reference distances - the accuracy of the GPS was normally within 2 metres and mostly within 1 metre over 200-450 metres which is better than my imagination.

On one 5 par the GPS told me that the water hazard in the path of my second shot was between 145 and 165 metres out. This was useful information and led to a (cowardly) risk-averse strategic shot.

The golf GPS is a fun gadget that records the details of a subset of 12,000 golf courses around the world. Indeed you can easily record your own ‘course’ or modify the records of a course you play on a lot. You can also work out how far you hit various clubs and receive recommendations on the club you should use. You can finally use it to assess your game.

Like the car GPS my guess is that it will be most useful when I play out of town and don’t have much memory for the local distances. I am playing at Wodonga Country Club over the next week and judging distances there has always been a challenge for me. The course is now on my GPS.  The following week I will be in New Zealand attending an important conference and the strenuous mental efforts I make will certainly call for a relaxing round of golf there. Yes its on my GPS too.

I shot 4 under my handicap yesterday under terrible weather conditions. Today I played in a “Pool” competition at my beautiful golf club and won the money. The GPS definitely helped.

I wonder if I can get paid for this type of testimonial.

Let's hear it for the 'old' guys

After 3 rounds Greg Norman is leading the field in the British Open at Royal Birkdale. At 53 years of age and without having played a lot of golf in recent years Norman has astonished the golfing world.  Good on him - regardless of what happens in the final round it is an amazing achievement. His marriage to Chris Evert undoubtedly improved his game. Cheers too for Rocco Mediate who came within a whisker of beating Tiger Woods at the recent US open - he shared the lead with Norman in the British Open for a while. The likeable, 45 year old Mediate has demanded a rematch with Tiger! 

I never thought I'd come to backing sports people at least partly because of their age.  I agree it is a bit tragic.  But the conditions at Royal Birkdale - high winds and rain - were about as bad as I have seen at a major tournament.  The old guys had the golf skills and the general savy to do well.  They deserve applause.

Update: Norman crashed in the final round with a 77 while his worthy opponents shone with great rounds of 69. The Shark went down and ran a distant third.  He was leading after 9 holes so - Harrington and Poulter must have put in fantastic performances then.  The criticisms of Norman losing his nerve etc have already started. What a sad lot of critics they are.

Tiger Woods again & again

After an extra 19 holes of playoff Tiger woods defeated Rocco Mediate to win his third US Open Golf championship. Wood's rounds included 3 spectacular eagles. It was great viewing on FOXTEL - I have watched all but the final playoff holes which I will view this evening.

Woods played with a severe knee problem that left him wincing in pain throughout the tournament. Mediate is a comparatively old guy (45 years) who hasn't achieved a respectable win in 6 years but who severely challenged Woods. At times I found myself barracking for the older guy - yes I know that is tragic - but still the Woods phenomenon amazes me and I was pleased to see him get his victory.

Update: Woods' knee was in fact in very bad shape. He subsequently announced that he would miss the remainder of the 2008 season as he has a total knee reconstruction. The tremendous torque he generates with his golf swing puts huge pressure on his knees. Its a pity.

Golf: The Masters at Augusta

I've been couch-potatoeing the last few days for long periods as I watched the US Masters Championship at Augusta on Foxtel. There is little doubt that Tiger Woods is a freakishly capable golfer. At 32 years of age he is still in the early phases of a career that may mark him as one of the greatest golfers in history.

Woods is not only an outstanding golfer but an amazing person as well.

Finally, however Woods lost this tournament to an even younger player, Trevor Immelman, aged 28. An interview with Immelman is here. A worthy winner who some claim has a swing that replicates that of Ben Hogan and again a top person - in the early stages he was considered a 50:1 long shot in gaming markets but the late odds on his winning moved to even money. A little more than a year ago he recovered from a nasty cancer scare - the tumour was benign but the hospitalisation transitionally damaged his golf. He is the second South African to win the Masters after Gary Player - Player has mentored Immelman since he first took up the game at age 5.

The final round is on Foxtel this evening - more hours for me slumped in front of the TV.

Some economics of golf

As a keen though not highly-skilled golfer who has just joined a better than average private golf club I am interested in The Age’s discussion of what amounts to golf economics today. Golf courses are finding it difficult to compete with other physical recreations. There are several issues here.

Playing a round of 18 holes of golf is relatively time-intensive. On today’s crowded courses it probably takes you 4.5 hours to actually play a round. That’s excluding preparation and warm-up time, travel time to and from the club and a few drinks in the clubhouse afterwards – on a hot day enjoying the latter might be close to essential!

This time can be reduced by switching to playing 9 hole rounds – not the format of most modern competitions - but the advantage of doing this is offset by fixed costs of getting prepared and travelling to the course. Once I have played 9 holes I want to play at least another 9 given these fixed costs - an instance of the non-irrelevance of fixed costs from a psychic viewpoint.

In addition the modern technology of golf – the probably futile attempts to turn nthe game into a science – means the game has slowed down. Repeated practise swings, multiple views of slopes on greens and careful alignment of golf balls on greens on the basis of pre-drawn ball markings slows things down for other players – an external cost* for them. There have been numerous attempts to speed up the game – adding strokes for slow play for example – but none of these schemes work if you are playing a slow round because the group in front of you are slow.
Many of the costs of running a golf club are fixed costs that reflect land values. One course I know of in Melbourne has recently been the subject of a $100 million buyout offer on the basis of its residential real estate values. There are also considerable labour-intensive costs of golf course maintenance that requires a steady income stream to fund them. Well-run golf courses in convenient locations will inevitably be expensive operations.

It is worth noting that many golf courses provide visual and environmental externalities for the community as a whole which might justify local government restrictions on rezoning them for commercial development.

On the equipment side as I have previously posted, the reduction in golf equipment costs and improvements in golf equipment technology should to some extent boost the appeal of the sport.
Golf clubs are traditionally regarded as instances of what economists call club goods. These are goods which are excludable – you can charge a price that limits the number of participants – only those who pay get to play. But consumption of such goods is also seen as non-rival. Thus in theory once you have joined the club your participation in the sport does not inhibit the participation of other members – in short, there is supposed to be no congestion on a course. Then the conventional way of pricing such services (assuming the club is a non-profit) is to charge an entry fee and perhaps a fixed annual fee for entry to the club to cover the club’s costs but to levy no fee for actually playing a game – to levy a zero ‘green fee’.

This prescription is only valid if the course is not congested by having too many players. If there is congestion then economic theory suggests charging a lower membership and annual fee but some fee each time you play a round.

As an economist I am interested in the fact that many commercially-oriented golf course operations are discarding the whole idea of a membership structure entirely and continuing to be ‘public courses’- Melbourne’s Growling Frog course is an example. Instead of requiring membership any player can play on these courses provided they are willing to pay the ‘green fee’ which seems expensive but which, naturally, has to cover the loss of membership and annual fees. This is a complete abandonment of the club good model – golf is turned into a private good and sold at its market-clearing price.

The advantage of this pricing scheme is that congestion costs can be managed directly by charging a high enough fee. In addition players can vary their choice of club without incurring new membership costs. The disadvantage is that etiquette issues tend to be ignored outside of a club setting. Anti-social behaviour by ignorant or careless players can ruin the enjoyment of the game by others – it can even be physically dangerous if balls are carelessly hit in the direction of other players.

I think of these issues as I had an enjoyable game of golf at a very good regional golf course on Friday that essentially operates as a private course and off to hit a few balls with son William at my local private course today**. I’ll post again on the economics of golf. Wouldn’t it be wonderful if I could pick up a lucrative consultancy in this area that involved some on course inspections!

There is at least one book on this topic (here) while this provides information on the contribution of golf to the overall US economy.

* It is an externality since individual investments of time optimise individual benefits without accounting for costs to others. This is so even if all players choose to play with the same degree of care.

** Update: On the basis of this round the opening description of myself as a 'not highly-skilled golfer' should be modified to 'unskilled golfer'. A disgraceful effort on my part.