In the early days of the pandemic, leaders of major sports organizations from the NFL and MLB to the PGA Tour announced they would take pay cuts. More precisely, they announced they would take a salary cut. Roger Goodell, the NFL commissioner, for example, announced in April 2020 that he would slash his salary to zilch. PGA Tour boss Jay Monahan made news by eliminating his salary temporarily.
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These were viewed as moves to convey that the leaders of sports would feel the pain of the pandemic’s economic devastation and that they understood their businesses were suffering. But what they did not say is that little of their compensation is paid in salary, but instead in incentives, bonuses and benefits packages like retirement accounts. These elements were unaffected by the high-profile salary-cutting.
The general thesis for commissioner pay is “base salary and a significant amount of bonus, probably up to six to eight times what your base salary is,” said Jed Hughes, vice chairman with executive recruiter Korn Ferry where he oversees the sports practice.
The New York Times reported last October that Goodell earned $63.9 million in the 2019-2020 fiscal year (and again in the 2020-2021 fiscal year when he took his pay cut). Similarly, Monahan announced in March 2020 that he would forgo his salary, other PGA executives would see their pay cut and the rest of the more than 1,100 employees would have their pay frozen at 2019 levels.
PGA Tour Commissioner Jay Monahan. (Kyle Terada / USA Today)A review of the tour’s tax return filed for 2020 shows Monahan is actually credited with earning $14.1 million, by far the largest package he has received in his tenure — Dustin Johnson was the only golfer on tour who made more that year. Other PGA Tour executives earned healthy seven figures in 2020, including Ron Price, chief operating officer, who is listed on the tax form as earning $8.6 million. The PGA paid out $130.5 million in 2020 in compensation to its staff, including executives, according to the 2020 tax return (the figure was $123.3 million in 2019).
Goodell is paid by team owners, so any gripes about his pay won’t trouble him unless it comes from them, but Monahan and his officers are paid by a players-run organization, so it is the golfers’ call how to compensate their tour staff.
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“The commissioner’s compensation is determined by the Management Development and Compensation Committee of the PGA TOUR Policy Board,” Price wrote in an email. “This committee utilizes an independent compensation consultant to advise them in determining the appropriate amount of compensation for the commissioner based on the competitive market … a substantial portion of the commissioner’s annual compensation (approximately 90 percent) is at-risk and subject to his performance against objectives established by the Management Development and Compensation Committee.”
Monahan is paid less in total than the big sports league commissioners, though as a percentage of revenue he is likely at the top. The NFL, for example, is at around $16 billion of revenue, while the PGA is around $1.5 billion.
The PGA Tour is structured as a nonprofit, so it is required to disclose its tax return, which includes breakdowns of the top compensation paid to top executives. The NFL and MLB shed their league office nonprofit status in the last decade, in part to shield executive pay figures from the public. Media reports about MLB commissioner Rob Manfred taking a pay cut in 2020 pegged his pay at $11 million, though a source said he is now earning at least twice that.
The NBA has never filed as a nonprofit, so the pay of its executives has not been public, but one source said commissioner Adam Silver’s pay is well north of Manfred’s.
Monahan’s $14.1 million sum listed in the tax return includes $2.8 million of incentives that were scheduled to be paid out after 2020 if he achieved certain business metrics and an actuarial estimate of $3.1 million earned in post-retirement benefits.
As a result, the tour said while IRS rules require it to disclose all the numbers under 2020 compensation, the truer amount of his pay is $8.2 million. Only $805,583 of that is salary, the category that was affected by his pay hiatus during the pandemic. The rest is almost all incentive pay and bonus. Similarly, just under $620,000 of Price’s package is salary, with the remaining bonus and retirement benefits.
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Korn Ferry commissioned a study in 2018 of top sports leaders’ compensation, Hughes said, and found nearly all leading professional sports organizations paid their commissioners and top executives largely with bonuses and incentives. Goodell’s first deal in 2006 was structured this way, Hughes said, and the packages have just become more incentive-laden since (in 2017, Cowboys owner Jerry Jones rallied against his commissioner’s next contract, which made the current deal even more incentive-reliant).
As a result, Goodell was paid handsomely in 2020 and 2021 for spearheading a new collective bargaining agreement and the league’s new media deals. And under Monahan in 2020, the PGA was one of the first to return after society all but shut down in March of that year.
Those events largely did not have spectators, leading to revenue losses. According to the tax return, revenues slipped from $1.54 billion to $1.16 billion. The organization’s net assets held steadier, however, sliding 3.4 percent to $1.19 billion as expenses also declined.
The PGA forecasts in 2022 it will top $1.5 billion of revenue, of which $716 million will be consumed by expenses.
Commissioners’ bonuses are usually structured so some of it is pegged to a financial metric, such as revenue, and the remainder discretionary, meaning a compensation committee decides.
Sports like the PGA and NFL are in the entertainment universe, Hughes added, so their CEO-type pay has to reflect how organizations from that sphere, like Walt Disney or Viacom, pay their top brass. When Korn Ferry wrote its report in 2018, the sports CEO pay structure was stacked up against their peers atop the media conglomerates and found largely the structures were similar.
Public companies can also pay their CEOs with equity, so top sports organizations have to overcome that deficit with lucrative bonus structures to keep top talent.
(Top photo of Roger Goodell: Gary Vasquez / USA Today)
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