As an Amateur player (advanced) who's played for 10+ years and the last 9 or so in events, I understand both sides of the argument of amateur payout vs. trophy only. My skill level (945-ish rating) leaves me in a tough place - I can't expect to compete at the pro level (not much time to practice) as most of my rounds are within 2-3 shots of my rating. Sometimes I "cash" and sometimes I don't. I prefer pick-your-own-payout so that I can try out new discs, and maybe grab a few for friends. If it's not pick-your-own or if there is nothing there I'm looking for, I'll sell them and use those funds for the next event. I've often donated my payout back to the event when I needed to leave quickly and it was only $10-20 of winnings.
As an amateur, I don't "expect" to make money when I play well enough, it's more of a bonus. I can't honestly say whether I would play in more or less events if they were trophy-only. But I'm okay with the merchandise payout system for a few reasons:
1. Ball golf events do this - however most of the prizes are donated by the manufacturers/retailers/other sponsors, and there is generally not a deep payout scale
2. Considering that the margin between wholesale and retail covers event expenses and pro cash sponsorship, it does have positive aspects. I would even be fine if TD's took a reasonable cut for their effort.
3. It's an avenue for promoting new products (discs, bags, etc.). Yeah, this is more of a win for the manufacturers, but generally events seem to have the best selection of newest gear rather than traditional brick-and-mortar retailers.
I personally don't think that the system is out of control. No one is making a living off of winning Amateur prize payouts. Most events that I play have a top Amateur prize of around $100, and it's usually less than a third of the top Pro prize. I'd say a bigger problem is that there just aren't enough people that play pro. I don't think the Amateur payout system is solely to blame for this; I think it's more a lack of Pro sponsorship. Since the Pro entry fees are generally $20 or more higher, it's understandable that someone who has VERY little chance at competing in that division would rather play in a lower division. I can even see where only offering trophy-only Amateur divisions that further separate the entry fees between Amateur and Pro would even make it tougher to draw more Pro players.
There are a couple of options that I think can be done that wouldn't adversely affect the Amateur player field:
1. Higher player pack value coming out of the entry fee. Usually it's $15 for the events I play. Make it $20 or even $25.
2. Pay a deeper % of the division (although personally I think 50% is a fair % if you're going to have any payout).
3. Withhold more of the entry fees from the payout purse, and use it for course improvements, pro sponsorship, compensating the TD's, charity, etc.
I also think that disclosing how the entry fees will be used should be provided upfront. I know this isn't always possible as it is generally based on how many players attend the event, but I think it's okay to show how the finances work - the fees/expenses that are fixed (i.e. PDGA fee, parks fees, etc.) vs. fees that are variable (value of player's packs, amount allocated to pro sponsorship, and payout purse funding, charitable contributions). This might affect how some people choose the events they'd like to attend.