Flash: "Proof! CEOs hurt companies by golfing too much"

CNBC's Jeff Cox files the stunning revelation coming out of University of Tennessee and Alabama labs confirming what we all feared: excessive CEO golfing can lead to weaker returns.

Of course, any CEO who still turns in scores at this point will actually confirm something about them to their shareholders, the researchers dug deep into handicap info to expose this disturbing finding.

Using the records from 363 chief executives in the S&P 1500, the study drew some conclusions sure to scare more than a few of them off the course.

For one, it found that executives who use their time to lower their handicaps also often lower their firms' returns. The study also concluded, not surprisingly, that these same executives who play more often than their peers are more likely to lose their jobs.

"Top traders want to know everything they can about a company before they get involved in a name—down to where its C-level executives dined the night before a big day of investor meetings, for example. You never know how an overdone steak or disagreeable conversation will affect their mood after all, and inadvertently the stock price," New York brokerage Convergex said in a note that unearthed the study from August 2014.

So that's what it's come to, eh? So it's dachshund racing in suits?

In companies where the CEOs played more than 22 rounds of golf a year the return on assets was about 1.1 percentage points lower than firms where the top executives played less frequently. That's significant because the average ROA for the sample was about 5.3 percent, so the performance was equal to about 20 percent lower.

"Some CEOs in the database play in excess of 100 rounds in a year!" the study said. "While some golf rounds may clearly serve a valid business purpose, it is unlikely that the amount of golf played by the most frequent golfers is necessary for a CEO to support her firm."

Here is the deeper analysis from CNBC...

Vanity Fair On The Future Of The Agency Known As IMG

Vanity Fair's William Cohan talks to a lot of heavy hitters (David Geffen, Irving Azoff, etc...) for this lengthy insider’s look at anatomy of the IMG purchase by William Morris Endeavor, with a big focus on superagents Ari Emanuel and Patrick Whitesell.

Since I know many of you lie awake at night worrying about the well-being of golf’s once-dominant-agency-turned-all-things-business, the piece is worth checking out if nothing else to learn that the whole thing really is ultimately a chance for some powerful agents to eventually cash out on an IPO. Oh, and you’ll be shocked to know the assumptions for future revenues were sketchy, but the banks went ahead and loaned them money anyway.

One big question concerned the cash flow the banks were told the combined company would generate. That number was a whopping $448 million—some 88 percent more than the $238 million sum the two companies had reported for 2013. The projection contained a number of onetime adjustments and add-backs of expenses that had occurred in previous years.

For a change, it's not golf that’s blamed for the numbers not coming through.

Around the same time, problems with IMG's college-sports business began to seep into public view. According to someone at a presentation to the banks, Pyne had predicted that it would generate $100 million in cash flow in 2014. “If we do $100 million in 2014, it would be the lowest year we've ever had in college,” Pyne is said to have proclaimed to the banks. But in June, the new company lost a premier multi-million-dollar licensing-and-local-media contract with the University of Kentucky to a rival agency. Then it almost lost its deal with Syracuse University. Only through Whitesell's direct intervention was the contract salvaged. But, according to a former IMG executive, where once IMG had paid Syracuse $3.9 million a year and made around $2.5 million in profit, the new contract called for paying Syracuse $6 million a year and was unprofitable. Then IMG lost its contract with Arizona State and a portion of its contract with the University of Georgia. The wheels were coming off IMG's college business. (A WME/IMG spokesman says it's “only fair to state the wins [for the company] in the last five to six months”: Nebraska, Baylor, and Western Kentucky.)

Ah, good get there with WK!

For his part, Emanuel is undeterred. In 2014, according to a competitor, he asked many WME agents to take more equity in the new company in lieu of a portion of their bonuses. His promise to them is that when WME/IMG goes public they will be rich. But with the equity markets again looking shaky after a long upward run, that promise could be a hollow one, or the money a long way off, especially if the promised financial performance is not achieved. “I hear there's a lot of unhappiness,” says a veteran Hollywood observer. “Ari is having to do a good job of convincing their key people to hang in there for another couple of years, and all they keep saying is ‘I.P.O., I.P.O., I.P.O., and look at all the stock you have, and you'll make eight figures when we go public, and you're never going to make that money as an agent anywhere else in a onetime liquidity event, so hang in there until we get to go public.’ ” (Aside from press speculation, there is no indication the company is planning a public stock offering anytime soon.)

One Southern California Course Closes, One Opens (Again)

Montesoro Golf & Social Club, once known as Rams Hill, has reopened after the beloved-by-all-who-played-it eastern San Diego County course closed due to water issues. Taking its placed on the inactive list is Malibu Golf Club, sitting on old Bob Hope-owned-acreage between the Pacific Ocean and Thousand Oaks, California.

Tod Leonard with the good news on the old Rams Hill (thanks reader Scott), bought for just $842,000 by investor and golf fan Bill Berkley, and resurrected for $10 million after the prior owners allowed the course to go to seed and sold off the irrigation heads.

Why would Berkley invest in such a troubled property?

“It’s just a very, very special place,” Berkley said. “If you play golf here, especially at dusk, and you look up at the shadows on the mountains, it’s such a beautiful backdrop.

“When I leave San Diego, I want to get out of the city and put that in my rear view mirror. Borrego gives you that. It’s those things, combined with a fabulous golf course that I think is one of the best in San Diego County.”

Samantha Masunaga of the LA Times reports on the closing of Malibu Golf Club, an 18-hole public course that has gone through various iterations, owners and visions for the future. The current ownership group filed for bankruptcy after severely over...something.

In its filing in the U.S. Bankruptcy Court in the central district of California, Malibu Associates said it had about $76 million in assets and about $47 million in liabilities. The club, which the company acquired in 2006, was valued at $75.9 million, according to the filing.

The Annual Most Overpaid Golf Association Executives List

The March Golf Digest features Ron Sirak's annual look at the 50 biggest wage earners in golf. But of more interest are the concrete numbers listing executive salaries. Most are based of 501c-3 filings and while coming from 2013 means we miss out on some newer execs or leaps last year, you get the idea at the excess, waste and occasional golden parachutery.

Congrats to Joe Steranka for a 6&5 win over Dick Rugge in the Going Away Package Classic, while Zink and Moorhouse continue to collect generous pay for telling Commissioner Farquaad what a great job he's doing. And that David Pillsbury makes more money than Mike Whan or Mike Davis or Mike the cartboy at TPC Sawgrass is just plain wrong.

Freshen Your Remote Batteries: Rory’s Omega Ad May Run Another Six Months

Even though every golf fan has grown accustomed to leaping for their remote when Omega’s grating “Hall of Fame” ad relentlessly surfaces, it seems the Caddyshack gopher emerged from his hole to see his shadow.

You know what that means? We’ll have another six months of the Guantanamo-ready piece even though it had grown insufferable within days of its debut.

But as Golf News Net notes, if history is any gauge, we'll have another six months to detect some sort of hidden genius behind the campaign since Omega only does one golf ad a year.

Either way, please, please make sure you have fresh batteries all so you never experience the hitting the mute button only to find your remote has lost all juice from repeated MUTE use.

The problem is that the watchmaker only seems to make one ad each year, typically making a big splash associated with the PGA Championship. As a partner of the PGA of America, Omega gets a ton of commercial time, which leads to almost immediate ad fatigue. There’s only so many times someone can hear “Hall of fame!” screeched before you hit the Mute button, or, as with the Sergio Garcia ad the year prior, see a watch gear move quickly in sequence with the Spaniard’s swing before you wish for a digital watch more than anything.