Monday, June 8, 2015

A Global Handicap System: An Idea Whose Time Has Not Come

A column by John Paul Newport (“The Handicap May Finally Go Global,” The Wall Street Journal, May 15, 2015) describes the USGA’s effort to establish a uniform handicap system.  Newport dutifully transcribed everything John Bodenhamer of the USGA told him, but a strong case was never made for implementing a global system.[1]  

Combining a number of systems into one can sometimes make sense.  Having a common currency seems efficient unless one of the countries is Greece.  Having a standard railway track gauge would have benefits unless your neighbor is Germany.  Having one ruling body for a sport would be efficient unless that ruling body is FIFA.  These examples demonstrate standardization is not always a good thing.  It creates monopoly power which can lead to less independence and higher costs for participating members. 

Any global handicap system should meet three requirements to be cost/effective.  First, there should be important benefits attributable to combining handicap systems.   Second, the global system should be so much better it warrants the disruption and suppression of regional systems.  Third, cost savings should benefit the participating parties.  Before examining whether a proposed system meets these requirements, we first hypothesize what a global handicap system will likely look like.

What Would a Global Handicap System Look Like?

It seems clear the USGA will be advocating for its handicap system to become the world standard.  Newport calls it by far the “most sophisticated” in the world.   It is not.  The USGA’s Course and Slope Rating models are flawed and have never been empirically verified.   Nevertheless, the USGA is heavily invested in its handicap system and is unlikely to accept major modifications in the interest of global uniformity. 

The USGA can also argue its system is already used in most parts of the world.  To ensure the global system does not have a Made in America stamp, Bodenhamer only suggests incorporating a Daily Course Rating (DCR) which currently exists in both the Australian and CONGU handicap systems.[2]

Another reason for believing the global system will closely resemble the USGA’s system is monetary.  The two major handicapping systems (USGA and CONGU) are different and incompatible.   In creating a global system, one of the systems will have to go.  The USGA’s system is designed to make handicaps available to as wide a population as possible.  Any organization can become a USGA licensee and sell handicaps if it meets minimal requirements.  Some of these organizations do not hold tournaments on a regular basis, if at all.  The CONGU handicap system bases a player’s handicap only on tournament scores.  Once a player has established an “exact handicap,” his handicap will increase, decrease, or remain the same based on his score in each tournament.  

It seems doubtful the USGA could ever accept a system similar to the CONGU System.   The casual player would have no reason to maintain a handicap if it was based on tournaments in which he rarely played.   If a CONGU-like system was adopted, it would result in a large decrease in handicap sales.  Such a drop would be catastrophic to golf associations who depend on the profit from selling handicaps to subsidize their other operations.[3] 

For the reasons of “pride of authorship,” widespread use, and monetary considerations, the USGA could only accept a global system that closely resembles its current system.  Without the USGA there is no global system.  Therefore, it is assumed a slightly modified USGA handicap system becomes the global handicap system.  Next, the global system is examined to see if it passes the three tests for a cost/effective system listed above.

Are There Important Benefits to the Global Handicap System?

Newport relates the following story to demonstrate the benefit of a global handicap system:

Say you meet a 12-handicap golfer from Australia on the first tee at St. Andrews in Scotland.  If your U.S handicap index also happens to be a 12, you might suggest a friendly money game, with no strokes given.  Bad move.

The bet is not a “bad move” as Newport argues, but it is an ungracious move.[4]  I have been paired with hundreds of strangers all around the world and have never asked or been asked to play a match.  It would reinforce the image of the ugly American if I immediately requested my foreign playing partner to pony up for a $5 Nassau.  One of the great benefits of golf is meeting people from all walks of life on the first tee.   I have always assumed my new partners are there to enjoy the golf and consider the course, especially St. Andrews, to be the competition.  Are there a sufficient number of encounters between players of different countries to justify the myriad of costs associated with a global handicap system?  It appears unlikely.[5]  

Is the Global Handicap System Really Better?

Adding a DCR to the USGA handicap system has the illusion, if not the substance, of increased accuracy.    It will cost an unknown amount to implement a DCR, but the benefits may be ethereal.  Here are some reasons why:
·         A round played under adverse conditions will probably not be among a player’s best ten (best eight in Australia) scores used in calculating a player’s index.   In which case, it would have only a marginal effect on a player’s index (e.g., it could push out a low score from the last 20 scores).
·         Conditions often change between the morning and afternoon as demonstrated repeatedly on the PGA Tour.  If conditions were benign in the morning but rough in the afternoon, an algorithm using the DCR would estimate the morning players to be better than they really are.
·         Australia has had a DCR for some time.  Golf Australia (Australia’s equivalent of the USGA) has not published any research showing that the DCR has a significant effect on a player’s index.  I suspect Golf Australia does not test the efficacy of the DCR for the same reason the USGA  never tests the efficacy Slope System—neither may like the results.[6]
·         Going to a DCR will introduce even more errors into the beleaguered handicap system.[7]   There will be model errors (i.e., does the estimating model accurately reflect reality?), sampling errors, and conversion errors in making Stableford scores consistent with stroke play scores.   

A USGA style handicap system has much looser controls on the malevolent player.  In the USGA handicap system, a player can play alone, post a score, and not turn in a scorecard.  His non-tournament scores count the same as his tournament scores.[8]  He is also allowed to take a high number on a hole (e.g., a seven on a par 3 for a 10-19 handicap).  Peer review is also non-existent at many affiliate clubs (i.e., clubs without a course) where members may not even have a nodding acquaintance.[9]  If these USGA controls are incorporated into the global system, it would be difficult to argue the new system is more equitable than the present CONGU handicap system.

The true value of many golf statistics (e.g., Course Rating, Slope Rating, and a Player’s Handicap) cannot be measured.  This makes it impossible to determine if a global system actually reduces the estimating error in a player’s Index.    If there were two systems for estimating a player’s weight, for example, the more accurate system could be found by seeing how close each system predicts a player’s true weight.  If a global handicap system estimates a player’s Index at 11.6 while the old system puts him at 11.9, there is no way to determine which system is better since a player’s true index is unknown.  The USGA will argue the global handicap system should give a more accurate estimate since it incorporates more variables, uses complex models, and costs a lot of money.  In truth, the USGA will have no idea if accuracy is improved and if so by how much.    

Are There Cost Savings Benefiting Participating Parties?

The global handicap system does not appear to generate any major cost savings.  If it is administered centrally, having every golf score whizzing around the world in order to have a DCR for every course, is a costly use of the telecommunication spectrum.  If the global handicap system is administered on a country-by-country basis, then there certainly are no economies of scale to be had.  It is even probable costs would increase.  
While costs are not going to be lower, they can be shifted.   Bodenhamer makes an economic argument for various associations to adopt the global handicap system when he states the USGA and R&A will jointly bear the costs for maintaining and updating the system.[10]   Newport does not make clear who will benefit from this subsidy.  If regional associations no longer have to pay for handicap services they could be a net beneficiary.  Handicap costs, however, are a relatively small part of the budget of most associations.  Eliminating this cost is a small economic incentive and is unlikely to be a major determinant in deciding between a global handicap system and the status quo.

Summary and Conclusion

A global handicap system appears to have only a small benefit, may not increase the equity of competition, could be costly, and is sure to infuriate many who like their present system (i.e., CONGU).  In essence, there are no strong arguments for a global handicap system.   The movement for a global system does not appear to come from players, but rather from the bureaucracy.  It could be part of the USGA’s continuing quest for hegemony over the world of golf.  The USGA is now the dominant partner in rules and equipment specifications.   A logical next step would be to add handicaps to its portfolio.  If centralizing control of the handicap system is the USGA’s objective, it needs to explain why such a move would be in the best interest of the game.

[1] John Bodenhamer is the Senior Managing Director of Rules, Competition, and Equipment at the USGA.  Note the absence of “handicapping” in his title.  In fact, none of the USGA’s senior leadership team has “handicapping” in their job title. This gives the impression handicapping is not all that important within the bureaucracy of the USGA.
[2] CONGU stands for the Council of National Golf Unions and is the handicap authority in Great Britain and Ireland.
[3] A typical golf association charges around $40 for a membership which includes a USGA handicap.  It probably costs $2 to provide the handicap leaving the association to spend $38 as it sees fit.
[4] Had Newport examined the Australian handicap system, he would have known this was not a “bad move.”  A player’s Golf Australia handicap is the same as an Index in the U.S.  If both players have the same Index, the U.S. player is better than the Australian Player.  There are four reasons for this.  First, Australia uses the best eight scores while the U.S. uses the best ten scores in computing a player’s index.   If the two players had the same scoring record, the Australian’s Index would be lower.  Second, Golf Australia decreases the average of the eight best scores by .93.  The U.S. decreases the average of the ten best scores by .96 (i.e., the Bonus for Excellence).  Again, with the same scoring record, the Australian’s index would be lower.  Third, equitable stroke control is much tougher in Australia.  Australia uses Stableford scoring to compute a player’s index.  That means the highest score an Australian can take is a double bogey.  So if both players took a 7 on a par three, the Australian would post a 5 while the American would (if he was between a 10 and 19 handicap) post a 7.  The Australian then gets the lower index even both players scored the same.  Fourth, Golf Australia computes a Daily Course Rating.  On a tough weather day, the Australian has his handicap differential reduced.  The American does not.
[5] George Peper in his book Two Years at St. Andrews (Simon and Schuster, New York, 2006) documents his travails with the differences in handicap systems between the United States and Scotland.  Nowhere in the book does Peper argue for a global handicap system.  He probably realized he was not in Scotland to win matches, but to enjoy the experience.  He adapted to the Scottish system and flourished.   
[6] See Dougharty, Laurence, “The Selling of the Slope Handicap System: The Big Con?” www.ongolfhandicaps, March 24, 2015.  A small sample of players was used to examine the effect of the Slope Rating on a player’s scoring differential.  The effect was small and statistically insignificant, but that may be due to the small sample size.
[7] The USGA Handicap System contains many self-admitted biases.  There is sampling error in using only 20 scores.  The handicap estimate is also a lagging indicator of a player’s current ability.  There are numerous rounding errors made in the calculation of a player’s index and his subsequent course handicap.  There are errors in the estimates of the Course and Slope Ratings that in turn lead to errors in the estimate of a player’s handicap.  Then there are the errors caused by the dubious character of some players (sandbaggers).
[8] In theory, Sec. 10-3 of the USGA Handicap System reduces a player’s Index for exceptional tournament performance.  In practice, however, this section is ineffective.
[9] See Dougharty, Laurence “The Pacific Amateur Golf Tournament: If You Go,” www.ongolfhandicaps, December 5, 2014.  A player from an affiliate club won the Pacific Amateur two years in a row but never posted the championship round from either year.
[10] There are also legal and economic consequences to a global system that incorporates a DCR.  Under the DCR, a player’s index is influenced not just how he plays, but by how others play.  This means the services of many private companies that provide handicaps services to various golf associations and individuals will be will be forced out of the market.  An example would be MyScorecard which provides handicaps under a USGA license for $14.95 per year.  A player uses the internet to send MyScorecard his scores, and MyScorecard uses the USGA’s formula to calculate the player’s index.  Under the proposed system, MyScorecard could no longer provide an independent handicap service because it would not have access to the scores of other players.  The proposed system must of necessity create a worldwide monopoly that controls scoring data—basically a super GHIN.  The USGA lost a court case when it tried to restrict who could use its handicap formula.  The proposed system is a more subtle form of restricting trade.  Anyone can use the proposed formula, but no one outside of the monopoly will have access to the data to implement the new system.  Therefore, the business model of organizations like MyScorecard would be dead.  How the courts will view this restraint of trade is anyone’s guess. 

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