The Determinants of Annual Earnings for PGA Players Under the New PGA’s FedEx Cup System

There have been numerous studies that examined the earnings determination of Major League Baseball (MLB) and National Football League (NFL) professional athletes, but relatively little attention has been paid to the earnings determination of professional golfers. The important difference between the two is: the earnings of MLB and NFL athletes are determined by past and expected future performance, while the earnings of professional golfers depend strictly on their current performance. In this paper, we reexamine the structure and determination of the PGA golfers’ tour earnings in the new era, which started with the introduction of the FedEx Cup Championship in 2007. We use two determination models – the first with a set of traditional skill variables, and the second with the skill variables along with two additional variables which reflect the monetary and psychological effect of a player’s timely performance at the majors, and the measure of a player’s consistency and persistency throughout the regular season. Overall, the second model appears to be a superior model, explaining the earnings determination of PGA players better.