Pro golfer values analyzed in Duff & Phelps/Kroll study

BVWireIssue #226-2
July 21, 2021

valuation methods & approaches
brand value, intangible property, intangible valuation

Everyone who plays golf knows how confounding the game is. One day, you hit fairways and make putts, and, the next day, you’re in the rough and come down with a case of the “yips.” It even happens to pro golfers: One week, they’re on the leaderboard, and, the next week, they miss the cut. Wouldn’t it be great if the golf ball were made of crystal and you could see how you’ll do in the future?

New study: Using statistical analysis and mathematical modeling, Duff & Phelps/Kroll has estimated the present value of over 1,000 pro golfers’ potential earnings through age 50. The calculations account for three sources of income: tournament winnings, endorsement income, and projected earnings from the PGA Tour’s Player Impact Program. The study ranks the top 60 male professional golfers globally, as measured by their future career value (FCV). Rory McIlroy from Northern Ireland earned the No. 1 spot on the leaderboard, with $401 million in FCV, finds the study, “Measuring Their Shot: Study of Professional Golfers’ Future Career Value.”

It’s a fun and interesting study, and it explains the valuation and mathematical modeling principles used in the analysis. A 10% discount rate is used to calculate the present value of a player’s deferred income stream, which implies a low company-specific risk premium (or should we say a player-specific risk premium). Knowing how fickle the game is, some players would opt to take their FCV today and run to the 19th hole.

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