Income Inequality: A Case Study of Professional Golf

Features

  • Author: Ryan M. Rodenberg and Elizabeth A. Gregg
  • Date: 16 Jun 2016
  • Copyright: Image of Adam Scott appears courtesy of Getty Images

Sixteen years ago, Cornell’s Larry Kahn described sports as “a labor market laboratory” (1). We agree. The abundant, publicly accessible data in the sports industry lends itself to answering a plethora of statistics-driven research questions given the access to clear job-related performance measures such as win-loss records, rankings, and earnings.

Here, we answer two questions: (i) what was the level of income inequality among the world’s top professional golfers over the course of 23 years and (ii) how do the genders compare on this metric? With issues of income inequality frequently the subject of media headlines and political discourse, we chose golf—as opposed to some other industry—as a case study for dual reasons. First, golf is an individual (not team) sport, allowing for a cleaner analysis. Second, the genders compete in near-identical tournament formats, yet the labor markets are almost always separated.

thumbnail image: Income Inequality: A Case Study of Professional Golf

To tackle both lines of inquiry, we calculated Gini coefficients for both female (LPGA Tour) and male (PGA Tour) golf pros from 1990 to 2012, a time period where available data allowed for a comparison between the genders. Gini coefficients are a widely adopted, parsimonious statistical technique to gauge wealth stratification among groups. Always between 0 and 1, Ginis indicate relative levels of wealth. A Gini coefficient of zero would be pure communism, where everyone made the same amount. A Gini coefficient equal to one would represent a group where one person made all the money and everyone else earned nothing.

Pro golfers were well-compensated during our sample time period, as Table 1 below illustrates. We complied Top 100 prize money lists from the official archives of the LPGA Tour and PGA Tour and note that such figures only captured winnings based on official tournament play. Off-the-course endorsement income and play during exhibition events—both lucrative options for players that may exceed official tournament winnings—were not included. Given that a prominent list of athletes with the most profitable endorsement deals of 2010 included two professional male golfers in the top 10 (Tiger Woods was number one) and no women in the top 25, one could surmise the wealth disparity has historically been much greater in golf than even career earnings suggest (2).

Table 1: LPGA Tour and PGA Tour Prize Money (in US Dollars)

1995 2000 2005 2010
Rank LPGA PGA LPGA
PGA LPGA PGA LPGA PGA
1 666,533 1,654,959 1,876,853 9,188,321 2,588,240 10,628,024 1,871,166 4,910,477
10 426,957 914,129 585,694 2,169,727 776,924 3,213,375 883,870 3,574,550
25 228,137 723,834 339,112 1,631,695 540,167 2,185,310 436,968 2,559,646
50 124,888 357,658 181,939 947,118 246,280 1,606,185 204,671 1,589,337
100 37,832 182,595 77,144 485,589 61,074 849,891 43,357 954,011

Likewise, we note that the prize money purses in PGA Tour events generally exceed those found in tournaments on the LPGA Tour. For example, in 2010, the total tournament prize money in the four most prominent PGA tournaments (events commonly referred to as the majors and including the Masters, U.S. Open, PGA Championships, and British Open) was $29.5 million. In contrast, during the same year on the LPGA Tour, the four majors (Evian Masters, Women’s U.S. Open, Women’s PGA Championships, and Women’s British Open) offered total prize money of $14.5 million. In addition, there are more tournament events on the PGA Tour compared to the LPGA Tour. For example, in 2010, there were 46 PGA Tour tournaments compared to only 24 LPGA Tour events. Both factors—greater prize money on a per-tournament basis and differing numbers of tournaments per year—are relevant for context here.

Gini coefficients for the LPGA Tour and PGA Tour are in Figure 1 below. There are two major takeaways. First, during the entire 23 year time span of our analysis, the two tours have never overlapped on this measure. The women’s LPGA Tour has consistently exhibited a greater level of tournament earning disparity among its members ranked in the top 100. Second, the gap has generally been expanding since 2000.

Figure 1: Wealth Disparity in the LPGA and PGA per Gini Coefficient

Differences in wages among professional athletes on the basis of gender are well-documented. Variables that highlight the lack of parity in sport include disproportionate prize money and overall compensation (3) and a lack of coverage of women’s competitions in various forms of media (4, 5). Compared to prize money for comparable men’s professional sports, women competed for significantly smaller tournament purses and, in most instances, fewer spectators (6).

These differences are seen in professional golf too, where the average earnings for top players on the LPGA Tour are considerably less than amounts earned by men competing on the PGA Tour. Academic researcher Stephen Shmanske attempted to explain the difference as follows: “Actual attendance and television ratings are lower for LPGA events, and this translates into lower prize funds. …Neither lower attendance nor lower prize funds are proof of discrimination because…higher earnings (and higher attendance) are justified to the extent that men exhibit higher levels of skill” (7).

Our analysis, however, revealed vast (and growing) intra-sport differences in income inequality when LPGA Tour Gini coefficients are compared to PGA Tour measures. Why?

In contrast to the PGA Tour, top LPGA Tour players earned more in prize money vis-à-vis their lower ranked peers. In other words, the LPGA Tour is structured more like a “winner-take-all” format, with LPGA tournament winners earning a higher percentage of the purse compared to the PGA. Simply put, PGA Tour prize money is disbursed more equitably than the women’s tour.

The difference leads to a few key points. First, as pinpointed by a group of researchers almost ten years ago, the wider incongruity in earnings may lead to a “superstar effect” in which the LPGA Tour’s best player was demonstrated to reduce the disbursement of financial revenues to peer tour members (8). Consequently, the presence of a capable superstar on the LPGA Tour can compound the disparity in prize money evident on tour overall.

Second, high levels of intra-sport income inequality may lead to greater competitive imbalance, although we are uncertain whether any such imbalance would be a net positive or negative for the LPGA Tour. We are unsure if there is some optimal level of parity among peers on the LPGA Tour.

Third, wide disparities in relative wealth among peers may lend itself to an increased possibility of some lower-earning players availing themselves of unethical and illegal means to supplement their income. Namely, as was recently seen in the gambling-fueled match-fixing scandal that hit the analogous individual sport of tennis, the vast liquidity of the global sports gambling market has resulted in situation where certain professional athletes can make more money wagering on themselves to lose than making a bona fide effort to win. For example, in 2010, the #100 ranked LPGA Tour golfer only made $43,357 in tournament prize money. Such prize money earnings may not be sufficient to cover travel costs and other expenses. While we are unaware of any lower-ranked golfers being caught purposefully underperforming for gambling-related reasons, we are cognizant of its possibilities.

Women’s golf has experienced increased levels of income disparity within the sport compared to the men’s tour. LPGA Tour executives are likely aware of these trends. With high-profile debates over differences in pay between men and women, the disparity among genders—revealed in our golf inquiry here—remains a sub-issue worth considering too.

References

1. Kahn, L.M. (2000). The sports business as a labor market laboratory. Journal of Economic Perspectives, 14(3): 75-94.

2. Bandenhausen, K. (2011, May 31). The world's 50 highest-paid athletes. Forbes.com.

3. Cozzillio, M. J., & Hayman, R. L. (Eds.). (2005). Sports and Inequality. Durham, NC: Carolina Academic Press.

4. Cooky, C., Messner, M. A., & Hextrum, R. H. (2013). Women play sport, but not on TV. A longitudinal study of televised news media. Communication & Sport, 1(3), 203-230.

5. Fink, J. S. (2014). Female athletes, women's sport, and the sport media commercial complex: Have we really “come a long way, baby”? Sport Management Review. 18(3), 331-342.

6. Flake, C. R., Dufur, M. J., & Moore, E. L. (2013). Advantage men: The sex pay gap in professional tennis. International Review for the Sociology of Sport, 48(3), 366-376.

7. Shmanske, S. (2000). Gender, skill, and earnings in professional golf. Journal of Sports Economics, 1(4), 385-400.

8. Matthews, P. H., Sommers, P. M., & Peschiera, F. J. (2007). Incentives and Superstars on the LPGA Tour. Applied Economics, 39(1), 87-94.

Bio: Ryan M. Rodenberg is an assistant professor of sports law analytics at Florida State University. Elizabeth A. Gregg is an assistant professor of sport management at University of North Florida.

Related Topics

Related Publications

Related Content

Site Footer

Address:

This website is provided by John Wiley & Sons Limited, The Atrium, Southern Gate, Chichester, West Sussex PO19 8SQ (Company No: 00641132, VAT No: 376766987)

Published features on StatisticsViews.com are checked for statistical accuracy by a panel from the European Network for Business and Industrial Statistics (ENBIS)   to whom Wiley and StatisticsViews.com express their gratitude. This panel are: Ron Kenett, David Steinberg, Shirley Coleman, Irena Ograjenšek, Fabrizio Ruggeri, Rainer Göb, Philippe Castagliola, Xavier Tort-Martorell, Bart De Ketelaere, Antonio Pievatolo, Martina Vandebroek, Lance Mitchell, Gilbert Saporta, Helmut Waldl and Stelios Psarakis.