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Unreada Bill

 
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FedEx Cup money is not an annuity...

So I just heard them explain how the $35M from FedEx gets distributed to the players and it appears to be even stupider than I had ever imagined. Its not an annuity, its retirement money paid into a deferred compensation program and it is put into the deferred comp account in FULL at the end of the points race. Here's the crazy part, to me anyway. The players cannot touch this money until BOTH of the following things happen: -they turn 45

- they stop playing on the PGA/Champions Tour regularly.

So, they are basically going to be paying out tens of millions of dollars to the players upfront, BUT they will only allow the players to receive the money if they quit the tour or play an extremely limited schedule. How stupid is that?

Take a guy like Vijay, if he wins why would he continue playing or even consider ever playing a Champions Tour event when he's got 10 million coming to him that he can't get at unless he stops playing professional golf? If you start to imagine how much Tiger will amass in this account by the time he hits 45 and the position he'll be in it gets even sillier.

I really don't get it. And the fact that FedEx is actually putting up all the money upfront makes it even dumber. Why not just give it to the players to do with as they please?

09-06-2007, 04:33 PM   #1
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journeyman

 

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Re: FedEx Cup money is not an annuity...

If that's true, then it is so retarded and bad for golf. What if some rookie had a career (and record) year, won a tonne of tournies and eventually took the cup...he'd be super pissed about having to wait.

However, people like tiger probably don't REALLY care since the money won't affect them very much...BUT, I'm sure they'd obviously prefer it up front since they may use it for charity or whatever.

09-06-2007, 04:39 PM   #2
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TEEJ

 
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Re: FedEx Cup money is not an annuity...

Ugh, it can't be that stupid. Can. Not.

09-06-2007, 04:44 PM   #3
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banned

 

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Re: FedEx Cup money is not an annuity...

Granted, this is stupid, but it is unlikely anyone will retire as a result of having won the FedEx Cup to get at the money. You would already have had to have won $5m+ in order to win the Cup, and would have plenty of money-making opportunities in years to come. Thus, no one would retire immediately and I can't imagine anyone making a huge deal about having to wait, as they will be flush with earnings already.

09-06-2007, 05:06 PM   #4
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veteran

 

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Re: FedEx Cup money is not an annuity...

I'm wondering if we haven't been tricked? In past years, large sums of money have been put into the retirement fund of fully vested (and partially vested) tour players. The amount of money depended on how well the player played, and other variables such as: did you play in more events this year than last year. I don't know if the sum of all this money totalled $35 million, but it wouldn't surprise me. Has the tour found a way to get a new sponsor (fedex) out of money they've been distributing in the past? Is this $35m the total sum of retirement money going into these 150 players retirement fund? If so, nothing has been added to the tour, just reshuffled. As to the retiring at 45 thing,

it's been that way for a long time, and the amount of money these players will get when they do decide to retire would shock and amaze, I'm sure.

09-06-2007, 05:22 PM   #5
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Unreada Bill

 
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Re: FedEx Cup money is not an annuity...

Fire, You have to realize that by the time a lot of guys hit 45 that $10M could easily be upwards of $40M depending on how they allocate it and so forth. I don't care who you are, or if you made a killing back when you were in your 20's, $40M is a TON of money to anybody, especially when you can't have ANY of it until you retire.

Will it drive a lot of 45 year olds into retirement who would/could have been major factors on the PGA Tour? Maybe not, though it could. What it will definitely do however, is kill the Champions tour entirely.

FWIW, Jack Nicklaus was 46 when he won his last major, the Masters in '86. Food for thought.

09-06-2007, 05:23 PM   #6
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TEEJ

 
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Re: FedEx Cup money is not an annuity...

Quote:

09-06-2007, 05:26 PM   #7
FWIW, Jack Nicklaus was 46 when he won his last major, the Masters in '86. Food for thought.
That, and other geezers have competed in majors around 50. I know Julius Boros nearly won the '73 (?) Open at Oakmont, and I think Ben Hogan and Sam Snead both fared well in at least one major around 50. Just give them the money now. Damn.

EDIT: looking at his wiki, Boros actually won the 1968 PGA at the age of 48, so was 53 when he finished T7 in 1973, although he was in contention down the stretch.

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Pooh-Bah

 
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Re: FedEx Cup money is not an annuity...

Quote:

09-06-2007, 05:29 PM   #8
I'm wondering if we haven't been tricked? In past years, large sums of money have been put into the retirement fund of fully vested (and partially vested) tour players. The amount of money depended on how well the player played, and other variables such as: did you play in more events this year than last year. I don't know if the sum of all this money totalled $35 million, but it wouldn't surprise me. Has the tour found a way to get a new sponsor (fedex) out of money they've been distributing in the past? Is this $35m the total sum of retirement money going into these 150 players retirement fund? If so, nothing has been added to the tour, just reshuffled. As to the

retiring at 45 thing, it's been that way for a long time, and the amount of money these players will get when they do decide to retire would shock and amaze, I'm sure.

JTrout,
Could you explain this? The PGA Tour actually has some form of retirement package? How does it work? Does everyone get a bit?   Reply With Quote

Unreada Bill

 
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Re: FedEx Cup money is not an annuity...

For anyone interested, I'm getting this information from todays broadcast of the BMW on the Golf Channel. It is being rebroadcast tonight from 830-midnight EST. They discuss the pay-outs at about the 1 hour mark, just as Justin Rose is putting out on 13.

Nick Flado says the tour is "shooting themselves in the foot".

09-06-2007, 05:37 PM   #9
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veteran

 

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Re: FedEx Cup money is not an annuity...

yes, they have a great retirement package. I can't tell you exactly how it works. When you make 50 cuts as a member of the PGA, you become partially vested.

100 cuts=fully vested.

09-06-2007, 05:45 PM   #10
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old hand

 

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Re: FedEx Cup money is not an annuity...

if ryan moore wins, should he go play the euro tour and the majors and take the 10 million now?

09-07-2007, 02:32 AM   #11
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Re: FedEx Cup money is not an annuity...

wow, this is sick and hurts the best players much more than it benefits the lesser players

09-07-2007, 02:56 AM   #12
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Re: FedEx Cup money is not an annuity...

it's great for john daly who will just gambool it all away

09-07-2007, 05:36 AM   #13
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veteran

 

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Re: FedEx Cup money is not an annuity...

Quote:

09-07-2007, 09:27 AM   #14
if ryan moore wins, should he go play the euro tour and the majors and take the 10 million now?
he couldn't if he wanted to. He can't touch the money until he is 45. But even if he could, the answer would be NO!

The money would be there when he's 45 anyway, and his expectation on the tour is much more than $10m. MUCH MUCH more!

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clever like that

 
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Re: FedEx Cup money is not an annuity...

The present value of his future earnings is not likely much much greater than $10M IMO.

09-07-2007, 11:54 AM   #15
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Re: FedEx Cup money is not an annuity...

I think this guy can help.

09-07-2007, 11:46 PM   #17
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journeyman

 

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Re: FedEx Cup money is not an annuity...

Quote:

09-08-2007, 02:55 PM   #18
The present value of his future earnings is not likely much much greater than $10M IMO.
I think he will pretty easily make over 10 million in his career. Nowdays that would be like 6 seasons of being 80th on the money list.   Reply With Quote

stranger

 

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Re: FedEx Cup money is not an annuity...


What you are missing is the guy that wins has plenty of money now. It goes into the account tax free so instead of getting $6 million (after tax) now which they would likely just invest, they get $10 million to invest. If they are 30 now with normal interest at age 60 it will be worth about $115 to $120 million.

09-09-2007, 03:32 AM   #19
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Re: FedEx Cup money is not an annuity...

What's going to be hilarious is next week when all the media & Tour people are gushing, "OMGodz, Tiger, 10 milsfkjasgfkdzx,mv dollars, what are you going to do with it???", and Tiger, stone-faced, over & over, "Well, I'm not getting the 10 million any time soon..." Whatever we think about the money & what's the best way etc., both Tiger & Phil have made it very clear from the beginning that they want it NOW.

Agreed that if this update is the case, they've ensured that Tiger, Phil & plenty of other guys will never play the Champions tour.

09-09-2007, 05:27 PM   #20
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old hand

 
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Re: FedEx Cup money is not an annuity...

Quote:

09-09-2007, 09:29 PM   #21
Agreed that if this update is the case, they've ensured that Tiger, Phil & plenty of other guys will never play the Champions tour.
That's what I find amazing. This structure is really encouraging early retirements. It's not necessarily that Tiger and Phil may not play the Champions Tour and/or retire early. Those guys will have plenty of scratch and will not have to anyway. If they do play, it will be for the love of the game, records, etc.

It's the very good "journeyman" pros (the Padrag's and the like) that will have a few extra million in the bank and probably not want to play full time. Those will be the real losses come 15-20 years from now.

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