“The situation needs to be fixed, and the situation is unsustainable,” Rory McIlroy, one of the faces of the PGA Tour, said in Texas last week.
“And it needs to happen quickly,” LIV Golf star Bryson DeChambeau said in Florida. “It's not something that takes two years. For the sport to get better, it needs to happen sooner rather than later. Too many people are losing interest.”
While more money than ever is flowing through the sport, dueling pro circuits are fighting for relevance. They are tweaking or overhauling their business models in hopes of increasing their return on investment, and are looking to funnel unprecedented amounts of money into players while building profitable businesses. At the same time, there are growing calls for some form of reconciliation.
This week, 13 LIV players will compete against players from the PGA Tour in the Masters. They are distinguished only by the LIV team gear they wear in golf's most sacred places. Range Goat Bubba Watson. And for four days, fans have been wondering both what today's match is not, a unification tour where the best players always play against each other, and what they hope it will be like again. It will remind you.
The sustainability debate consists of two aspects. In other words, can the sport remain relevant and appealing to fans even in a state of disintegration? And is the sport financially viable enough to support the current pace of spending?
“I think with all the battles and everything that's happened over the last few years, people are really tired and it's turned people away from men's professional golf,” McIlroy told reporters last week. “And that's not good for anyone.”
More than 10 months have passed since the PGA Tour announced plans to partner with Saudi Arabia's Public Investment Fund, which owns LIV Golf. The teams continue to finalize details past the Dec. 31 deadline, but a deal is not imminent.
LIV Golf continues to pour money into talent on and off the course, even though its product has yet to reach critical mass, especially in the United States. And the PGA Tour continues to incur its own expenses in response to LIV's flurry of activity, with new spending seemingly outpacing new sources of revenue.
Since last year's British Open, fans have endured a lackluster tournament field and a memorable Sunday finish, as the game's top players haven't played each other in an individual event. LIV's linear TV ratings have not been released, but LIV officials say they are pleased with early streaming viewership numbers, with viewership on the CW network up 40% from last year. . Television viewership for the PGA Tour, which has a much larger domestic audience, is down more than 15%.
“Ratings fluctuate from year to year,” said CBS Head of Sports Sean McManus. “As we all know, it's largely about who's on the leaderboard and how close the tournament is. …But advertisers and sponsors seem to be happy, so it's a little early to predict viewership trends.”
Neither circuit's big stars shine from week to week, with last weekend's winners being 22-year-old Akshay Bhatia on the PGA Tour and South African Dean Burmester on the LIV. And the headlines focus on off-the-track intrigue and uncertainty in the sport. future.
“We talk a lot about how important it is for players to be in the right place mentally, but I think distractions are prevalent on the PGA Tour, whether it’s greed or It doesn't matter how you try to solve a nearly unsolvable problem,'' Golf Channel analyst Brandel Chamblee said. “I think they're very distracted.”
After transitioning its business from a non-profit model, the tour now pays taxes, rewards players who want more money, and TV executives and advertisers who expect a product that will surely attract huge audiences. In addition to the Lord, we have to cater to investors who seek profits. audience.
Following the initial investment plan, PGA Tour officials have put together a plan that is completely independent of PIF. The tour received a $1.5 billion investment from a group of American sports owners known as the Strategic Sports Group. The amount can be doubled. That money helped the tour launch PGA Tour Enterprises, which oversees all commercial operations.
“Prior to creating PGA Tour Enterprises and accepting outside investment, there was always a natural conflict between the organizational goal of maximizing player returns and growth investments.” said Jay Madara, the tour's chief financial officer. . “If you compare it to this month's payroll calculation, [or] There is nothing left to invest this quarter. …Even if there was something that made strategic sense that would generate long-term returns, we just didn't have the patient capital to do it. ”
The tour's 2022 revenue was $1.9 billion and expenses were $1.87 billion, according to its most recent tax filings, both numbers having steadily increased over the years. The tour has a big deal that will see sponsors pay out $4 billion in media rights by 2035 and $5 billion in media rights by 2030, but it also has new costs.
With an ambitious plan to give golfers a stake in the tour and tournament funding that has more than doubled in the past decade, tour officials are looking to create new revenue streams and expand existing ones. We are trying to expand. While the broadcast rights deal runs through 2030, the organization plans to open its own 70,000-square-foot production studio next year, which will allow the tour to create and distribute even more original content.
The tour is also aiming to generate more revenue from its weekly tournaments, and has overhauled the way it funds its events. The tour relies on local organizations to run most of its tournaments, but it generates revenue by hosting six events of its own, with the potential for more. The tour recently acquired a golf cart company and a logistics company that will make hosting tournaments easier and more cost-effective.
In one of its boldest moves to make ends meet: The tour notified event organizers this week that they will soon be collecting hosting fees. Next year's full-field event will cost $250,000, and the signature event will be double that at $500,000. The tour also expects organizers to kick back a portion of hospitality sales (1 percent next year, increasing to 2.5 percent in 2027).
Tour events traditionally include a philanthropic element, and the new initiative has raised concerns that such fees could eat into charitable donations, but tour officials said He said he was confident the money would not be compromised.
“It's something that's important to our tradition, our honor, our heritage. It's an issue that we have to balance as we move forward, also from a new organizational perspective,” Madara said.
LIV does not appear to face similar financial pressures, thanks to its deep-pocketed Saudi backers, and officials say it is ahead of schedule financially.
“The key for us is to create new value through all of this,” said Jed Moore, senior consultant at LIV. “People misunderstand investing in players. They misunderstand investing in the Asian Tour. They misunderstand why golf needs to find a way to create its new value. Sustainable economics in sport has become paramount as it is now an asset class.”
LIV officials consider their product to be similar to F1. This means fewer events and top-level athletes traveling between major cities around the world. And one key cornerstone is the team-based format that LIV hopes will inspire fan loyalty and drive value.
Although LIV owns a 75% stake in each of the 13 teams, each team functions as an independent entity and generates revenue as it sees fit. Moore said some are already turning a profit. None of the assets are nearing maturity as assets, he said, but the company could take on investors at some point or sell them outright.
“Can you imagine how much Golden Bear would be worth if Jack was here?” [Nicklaus] Did you perform in the form of LIV in your heyday? Ernie's Army, the Big Easys, the Bunting Sharks? ” He said. “Imagine those teams.”
LIV products have been slow to catch on with golf fans in the United States, but officials are pleased with the level of interest in Singapore, Hong Kong, Australia and other countries.
LIV's season debut in Mexico had the highest TV ratings ever. The final round was watched by 432,000 people on The CW, and more than 3.5 million people streamed portions of the three-day event on YouTube or the LIV app. Although less lucrative for advertisers, the direct-to-consumer streaming option has become a valuable indicator for LIV officials, who say they are targeting younger viewers. (The final round of last year's Masters, won by Jon Rahm, averaged more than 12 million viewers.)
And while many thought LIV's lifespan was over when PIF agreed to partner with the PGA Tour last June, it only continues to grow. Signing Rahm before this season was a major coup, with LIV making four senior hires this week as they work on their 2025 schedule.
Even LIV's biggest critics (see McIlroy, Rory) have reluctantly come to accept LIV's place in the golf ecosystem. LIV was launched in 2022 without a corporate sign at the event, but already this year he has announced more than 20 global partnerships, including Panini and Google Cloud. The team has individual deals with more than a dozen corporate sponsors.
LIV officials said the plan is in no way meant to replace the PGA Tour, just as F1 is not trying to replace U.S.-based auto racing circuits. They think touring can coexist. Different leagues come together for a major championship, similar to the Super Bowl or World Series.
Things left unsaid: While LIV expands and the PGA Tour adopts a new business plan, what will happen to its jaded fan base? The sport has more participation than ever before. According to the National Golf Foundation, about 45 million Americans swung a club last year. Professional athletes have never been richer, but fans want more.
“Right now we're in a state of confusion,” Phil Mickelson, one of the first to join LIV, said last week. And when it's all over, it'll be much brighter. But while we are going through it, it is difficult. But we will get there. ”
