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Canadian Tour struggles with financial issues, reaches out to PGA Tour

The Canadian Tour is in trouble. But how much and what’s the solution?

Well I detail a lot of the issues in a story that appeared on Golf World’s website yesterday. Unfortunately, at least for the time being, you have to be a subscriber to see it. The highlights include a potential bailout deal with the PGA Tour and financial difficulties.

But the details, many of which come from close sources or confirmed by the Canadian Tour itself, are these:

– The tour faces some significant financial challenges as it lost money on three tournaments last year, including a large amount on its event in Winnipeg, which seemed like a success on the surface. The tour uses independent contractors to run and sell local sponsorships on its tournaments. The Winnipeg event apparently had significant losses — or cost overruns depending on who you speak with — that the tour had to cover. Other events that lost money included Seaforth, Saskatoon and Windsor. Canadian Tour commissioner Rick Janes says he understands what led to the issues and they won’t happen again.
– Overall the tour’s debt load was upwards of $700,000, sources close to the tour say, leading to what commissioner Rick Janes characterized as the biggest challenge of his career. The tour went to RBC, its banker, to attempt to shore up its financing. It even called Mike Weir to see if he could help by making some inquiries on the tour’s behalf. Weir did so: “I know quite a bit. I talked to Dan and Rick. I know a little bit – they are trying to become the PGA Tour of Canada. I was trying to be as helpful as I could,” Weir said. “The Canadian guys who play the Canadian Tour – you are playing a tour with four rounds – a competitive tour. I tell these guys don’t get used to playing these mini-tours where you are jumping on a cart and playing two rounds and playing for your own cash. That won’t get you anywhere.”

– Prior to recent developments, at least two player directors – Alan McLean and Kent Fukushima – were seeking to have Janes removed, blaming him for the tour’s recent struggles. With the tour’s financial uncertainties, the pair backed off saying they couldn’t afford to remove Janes anyway, and his contract with the tour ends next year.
– On the financial situation, Janes said: “We announced at our annual meeting that we were looking at a substantial deficit. We have had a number of initiatives in place to deal with that. That’s literally what we are working on right now.”
– Janes added: “That’s money we hadn’t planned to lose in the last 60 days of our fiscal year. For a small not-for-profit company, that ate away at our reserves.” Some sources told me the tour wouldn’t last long in its current financial state, but Janes said the short term cash flow problem was resolved.

The situation might have a solution: The PGA Tour. Just like the Latin American tour, which the Canadian Tour has partnered with in the past, has become PGA Tour Latinamerica, the Canadian Tour is seeking to become partnered with the PGA Tour. That’s the concept the Golf World story is based on.

Janes wouldn’t confirm what was going on, saying, “I cannot talk about the PGA Tour at all. I’m bound by confidentiality agreements not to talk about anything going on in Latin America or any discussions we’re having with them,” later adding, “The PGA Tour knows everything that there is to know about the Canadian Tour and has looked at our books going back 10 years. I can tell you that categorically. It is a process of due diligence that has going on for some time.”

After that interview, I spoke with Jim Kabrajee, the lead independent director of the Canadian Tour, who confirmed discussions with the PGA Tour were ongoing, though he wouldn’t disclose the details. So there’s something going on with the PGA Tour, but the extent of the negotiations is unknown. In the meantime, the final CanTour event is up and running in California and Janes is in Eastern Canada trying to nail down new sponsors. There’s also been talk of events in Ottawa and Kingston, as well as an IMG-backed event in Cape Breton. Those events are significant since Seaforth has disappeared, leaving the tour down to seven Canadian events. That’s not enough to draw many players to qualifying school – which Janes said accounts for a large percentage of the tour’s overall revenue.
Janes insists the Canadian Tour must remain, well, Canadian: “I think the Canadian element of the Canadian Tour is critically important. I think that’s central to this. It’d be like the NFL taking over the CFL,” he says. “The CFL does well because of its Canadian-ness.”

I agree. I suspect if the PGA Tour offers to help out – and I can’t confirm that is the case — it will continue to allow CanTour operations to be run from Canada. In fact, a PGA Tour of Canada could be a stronger sell to sponsors, making it easier to fill out the schedule.

Why should you care? Because if the PGA Tour goes forward with its reworking of qualifying school, the Canadian Tour could become a feeder system that leads to the Nationwide Tour and ultimately to the PGA Tour. It could become an even more important cog in the machine that creates the best professional golfers.

Regardless, it is interesting days for the Canadian Tour. For what it is worth, I think the Canadian Tour is an important franchise in Canada and I have a lot of respect for many of the people who work there. It isn’t a big tour — there are only six full-time employees — but it does provide a valuable resource for professional golf. Just ask Mike Weir, or Matt Kuchar, or Stuart Appleby.

We’ll see if its fortune changes in coming months.

 

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Jeff Lancaster

Jeff Lancaster is the Publisher of CanadianGolfer.com.

3 CommentsLeave a comment

  • The Canadian Tour has to remain Canadian. That’s the uniqueness of the Tour. The PGA Tour would definitely bring a positive element and would certainly spike interest back to both players and potential sponsors. I hope the rumours are true, because Canada can’t afford to lose this great Tour. We have to much talent that would end up suffering.

  • Nice piece / commentary, Robert.
    It seems that the Canadian Tour has been struggling along every since I have been in the industry. Its biggest problem is that there are 3-4 solid events and a revolving door of 4+ wobbly ones. I found it surprising that a deal was done in Latin America before a deal was done here. Just like the image saving Golf Channel Deal (put together by the somewhat unfairly maligned Jacques Burelle), you would think that current Canadian Tour officials would have jumped on an opportunity to tie-in with the PGA Tour years ago. Better to have a Tour on long term solid footing where influence, control or even ownership resides elsewhere than the careening roller coaster we are on now.

  • How can the tour continue playing events when they still owe golf clubs from past events this summer?? How can the tour not have reacted to the known loss of revenue from losing the Golf Channel 10 year?? How can the tour go from a tour that used to have 10 plus events to now having 7 and possibly 6??
    Time to start pointing fingers at the top personal that run this tour and quit looking.

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