If you thought Tuesday’s bombshell golf news could be an abandoned plot point from HBO’s Succession, you’re not alone. The jokes hit social media shortly after the PGA Tour and DP World Tour announced they were merging their commercial rights with those of their archrival, Saudi-backed upstart LIV Golf.
The announcement immediately brought to mind a short speech that Logan Roy, the show’s billionaire antihero, gives at the end of a Season 2 episode. “Money wins,” he says, raising his glass in a joyless toast. “Here’s to us.”
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The PGA Tour will retain a lot of operational power within this new entity, but for LIV Golf and Saudi Arabia’s Public Investment Fund (PIF), the so-called “Golf War” never appeared to be about the sport itself. It was about the money. And in that regard, PIF is the merger’s big winner.
Not only is the sovereign wealth fund making an unspecified investment to seed the venture, but the agreement gives PIF exclusivity on all further funding. The Saudis have right of first refusal on any capital invested into the new entity, “including into the PGA Tour.” While full deal points aren’t yet public, it’s not a stretch to say that the Saudis—first through LIV and now this new entity—have bought themselves a significant equity stake in professional golf.
That’s a dream exit for a money-first approach that felt at times over-hyped and possibly doomed to fail, despite being backstopped by a group with $620 billion under management. Almost exactly one year after LIV’s debut, PIF went from funding a money-losing entity on the sport’s periphery to being the sole outside investor in global golf’s commercial hegemon.
For those not paying close attention, this approach is suddenly viable in many other sports. Every U.S. league except the NFL now accepts institutional investors (some NBA teams are courting investment from sovereign wealth funds), and nearly every major European soccer league has considered spinning off its commercial rights in order to raise large pools of capital. Spain’s LaLiga took that approach last year, as did international rugby’s most dominant brand. Even NCAA conferences, the same ones clinging to their amateur roots, have considered doing the same. Global sports are always for sale.
Still, it can be shocking to see the money win so abruptly, and so unnecessarily. The PGA Tour and its European counterparts probably could have waited out LIV Golf. After the initial shock of LIV’s arrival and the defection of major champions like Phil Mickelson and Dustin Johnson, the power dynamic seemed to shift back toward the 94-year-old circuit.
Loyalists Rory McIlroy and Tiger Woods publicly backed the sport’s establishment (the PGA Tour is an 18% stakeholder in their new pro league), and the Tour responded by adding roughly $140 million in payouts, a 33% jump. LIV golfers were losing sponsors and voicing frustrations. LIV’s first Sunday broadcast on the CW drew 291,000 U.S. viewers, while the PGA Tour’s Honda Classic drew 2.38 million that same day. Even the contentious legal battle between the PGA Tour and LIV Golf, mutually abandoned in the merger, was tilting toward the former.
Then there’s the public perception. PGA Tour commissioner Jay Monahan and his supporters spoke often about the moral authority of the sport’s establishment, making allusions to the murder of journalist Jamal Khashoggi and Saudi funding of global terrorism. Speaking in a televised interview last June, Monahan offered a hypothetical question to the golfers who left to join LIV: “Have you ever had to apologize for being a member of the PGA Tour?”
Monahan, who will be CEO of the new combined commercial venture, didn’t respond to an email asking him what changed, but the financial benefits are obvious. PIF was committing billions to LIV’s disruption of professional golf. Now that war chest belongs collectively to Monahan and his newfound business partners. In the stroke of a pen, the PGA Tour became the voting majority in a global golf entity with no real competitors and virtually unlimited backing.
In exchange, PIF becomes more essential to the global sports economy. The fund gets to provide that backing, because when you’re willing to lose billions of dollars, there are very few limits on what you can acquire.
This is happening in soccer on a parallel track. Earlier this week the fund announced that it had assumed ownership of Saudi Arabia’s four biggest soccer teams, including Al-Nassr, the club currently paying Cristiano Ronaldo a reported $200 million per season. According to The New York Times, PIF plans to spend more than $1 billion to lure other top-tier players to Saudi Arabia’s domestic league. The opportunity offers little beyond money, but sometimes that’s enough. Real Madrid star Karim Benzema is already on board.
The next few days and weeks will likely produce a string of stories about blindsided PGA Tour pros, and corporate partners curious about the future. The golfers and sponsors who refused to align with LIV for moral reasons (yes, there were some) now face a hard truth—there is pretty much no way to stay in professional golf and not at least tacitly endorse the Saudi backing.
But here’s another truth. This new for-profit commercial empire is going to do monster business. Sponsorships will become more valuable. Player compensation will rise. My guess is that even this new entity’s most avid opponents will eventually find a way to rationalize their role in its future.
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