Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

CBS Corporation (CBS), The Walt Disney Company (DIS), and The Bizarre Business of the Masters: Handshake Deals and America’s Greatest Sporting Event

The Masters is a golf tournament unlike any other. Leader boards are left up across the year. There are no ugly cart paths to break up the flow of one fairway to the next. Cheese and pimento sandwiches still sell for $1.50 in food tents throughout the course. There’s no gouging of patrons when it comes to parking; that’s free. Also, don’t plan on bringing a camera or cell phone into the tournament; those are strictly banned.

Everything about the tournament is centered on being the ultimate experience for golf purists, both for spectators and viewers on television. It’s hard to imagine a sporting event with such a consistently excellent product and rich history.

The Masters is a sanctuary of golf, steeped in traditions that often seem antiquated. With the Masters, change is slow, and the club has doggedly fought against changes embraced by nearly all major sporting events around the world during the past 30 years. Last year, the club famously and finally allowed women to join, following years of protests.

Source: Wikipedia Commons.

Let’s look at the business of the Masters and how it has managed to thrive while eschewing many of the tie-ins that define today’s big-money sports world.

Less money, better experience
featured a profile of the Masters’ partnerships with both television partners, CBS Corporation (NYSE:CBS) and The Walt Disney Company (NYSE:DIS), in this week’s magazine. Businessweek quotes Pat Summerall’s memoir, which notes that CBS has been on a one-year contract with the Masters since 1956 with no formal written contract. Instead, the two parties have a handshake deal with a known list of areas CBS couldn’t discuss, such as the tournament’s prize money.

You see, winning the Masters is about much more than money. It’s about tradition and joining the small group of champions in the most elite winner’s circle in golf.

The Businessweek profile goes into more depth and is a good read. If you’ve ever watched the Masters on TV, it’s impossible not to note the lack of commercials interrupting programming every 10 minutes. Instead, the Masters has only three sponsors — AT&T Inc. (NYSE:T), International Business Machines Corp. (NYSE:IBM), and Exxon Mobil Corporation (NYSE:XOM) — which split four minutes of commercial time.

The Masters could seek more than double the money it currently collects from CBS Corporation (NYSE:CBS) if it would expand commercial coverage. Instead, it asks CBS how much it’ll need to cover its costs televising the tournament — with a little profit kicked in — and then the three sponsors split the cost to pay CBS.

It’s not about the money more commercials could bring in; it’s about providing a telecast that has no peer.

An experience unlike any other
At each step of the way, we have an organization without any mandate for profit maximization that defines business across America. Because the Masters is solely focused on an experience, it continues to stand out more with each passing year.

The Super Bowl can add more expensive and elaborate halftime shows. It can add stadiums filled with 100,000 fans paying four-figure amounts for their tickets. It stands as a contrast to the Masters — the most successful commercial enterprise in sports versus the most traditional one.

CBS Corporation (NYSE:CBS)Yet with legal troubles hounding the NFL, you have to fear that it’s a product with uncertain days ahead. From the looks of the Masters’ handshake agreement with CBS Corporation (NYSE:CBS), it seems a focus on legal matters doesn’t seem to be something on the club’s mind.

The Masters is a throwback, antiquated in most every way. Some of its decisions understandably have their detractors, such as its aforementioned previous stance of not allowing female members.

Yet if I had a way to bet which one of sport’s spectacles of today would not only survive 100 years from now but still be thriving, the Masters would be my odds-on favorite, even if spectators have to leave their Google Goggles in their hovercar before entering the course.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.