Golf’s New World Order, Part 1: The Business of the PGA Tour and LIV Golf

Part 1 of a 7-part, ~25,000-word series about the upheaval taking place in pro golf (and the wider world) in 2022.

This is Part 1 of a 7-part, ~25,000 word series about the upheaval taking place in pro golf (and the wider world) in 2022. The only agenda here is exploration: through the act of reading and watching what’s happening, and challenging what I’ve read and watched, and and writing about it all, and challenging or being challenged on what I’ve written, I wanted to gain a better understanding of what’s happening. I hope by doing this that you might gain a better understanding of what’s happening too.

I have to thank a number of people for reading early drafts of these essays. Tim Owen, Carter Schmitz from Scratch Golf Training, Mike McCafferty of the “In the Footsteps of Giants” golf podcast, Andrew Johnston and Feral Golfer were all kind enough to spend time with the first drafts and to offer feedback, encouragement and disagreement. Their time has made these essays much better than they would otherwise have been.

These, and all pieces on The Wedge, are “essays” in the literal sense of that word: they are an attempt at greater understanding. Nothing more and nothing less. If they succeed in that attempt, great. If not, I’ll try again the next time.

If you enjoy this piece and the rest of the series, please do subscribe, and share with anyone who might be interested. Right now The Wedge is a free and sporadic series of essays on the business, money and mystique of golf. In the near future I hope to invite readers to subscribe to support the work.

Table of Contents

• The Week the Golf World Changed

• The Making of a Revolution

• Part 1a: The PGA Tour

  • “There were a lot of trails to blaze”

  • How money has always been at the heart of the PGA Tour

  • The players, the prize money and the people who foot the bill

  • Stuck in a moment that they can’t get out of

• Part 1b: LIV Golf

  • The speculation

  • The agencies

  • The people

  • The media rights

  • The start-up phase

The Week the Golf World Changed

At around 7pm on Saturday, June 11th 2022—or just after lunch in the Eastern Time Zone inhabited by so many of golf’s established kings and kingmakers, a thousand miles stretching from the PGA Tour’s headquarters in Florida to the United States Golf Association in New Jersey via Augusta National in Georgia, the home of the Masters—something both momentous and eerie happened at a golf club 25 miles north of London, England.

Charl Schwartzel, the mostly unconsidered South African, earned himself a slice of history by winning the richest tournament in the long and storied history of golf.

Until that weekend, Schwartzel was one of those bit-part players who come along every couple of years, become fleetingly famous for an unlikely victory at a Major tournament, and then drift back into the game’s middle ranks or below.

Even during the era of golf’s greatest domination, when Tiger Woods won 12 Majors from 2000 to 2008, guys like Shaun Micheel, Ben Curtis, Todd Hamilton and Trevor Immelman walked away with victory at the year’s biggest tournaments.

In the decade after that, Lucas Glover, YE Yang, Danny Willett and Jason Dufner did the same.

This was the group to which Charl Schwartzel, Masters champion in 2011 after the final round four-hour carcrash suffered by the overnight leader Rory McIlroy, belonged: golfers for whom the stars aligned for four bright days, the long stretch of their careers before and after becoming a mere footnote to the week of their lives.

That is, until June 11th, 2022 changed everything for Schwartzel, and promised to change everything for the game of golf itself.

---

First place in the LIV Golf Invitational at the Centurion Club, combined with victory for the all-South African “Stinger” quartet in the team competition, raked in $4.75 million in earnings for the 37-year-old Schwartzel.

Under normal circumstances, his world ranking—he’s now number 126—could be expected to get a major shot in the arm after such a big-money win.

But these are not normal circumstances. 

For one thing, there are no Official World Golf Ranking (OWGR) points available for LIV tournaments, and the pathway to rankings may be fraught by procedural intricacies, legal battles and boardroom conflicts of interest. (The board of the OWGR includes the heads of both the PGA Tour and European Tour—now known as DP World Tour—both of whom are now firmly and bitterly in opposition to LIV.) 

OWGR apart, many would say there’s nothing much available for LIV tournaments: no cut (and so, the argument goes, none of the jeopardy that’s so intrinsic to pro golf), no competition, no honour, no glory, no history. “No juice,” as the hosts of the influential No Laying Up podcast eloquently put it. Not much of anything at all, except a bottomless pit of cash.

The smile on Schwartzel’s face, both on the final green at Centurion and in the champagne-doused prize ceremony afterwards, suggested he could hardly believe what had just happened.

He was not alone.

The Making of a Revolution

It was easy enough to laugh at the first LIV Golf event from afar. Wacky team names (with wackier logos), a few tens of thousands watching live on the YouTube stream, a long list of golfers unknown by even the most fanatic of observers, the absence of something so central as a working leaderboard on its website, a weird name abbreviation pattern that made household names almost unrecognizable (was it obvious to everyone else that MIK is Phil Mickelson?)

Revolutions rarely feel like revolutions while they’re happening. It’s only afterwards, with the perspective of hindsight and history, that we see how everything has changed. 

When history is written, will the events of summer 2022 be seen as a golf revolution?

If the Majors are the jewels in golf’s crown, it’s probably fair to say that the PGA Tour—the day-to-day and bread-and-butter of golf’s elite players—is the crown, and has been for half a century.

It is the tour where all the best players played, the tour where everyone who aspired to be the best had to play. 

In the space of just 10 days or so—from the announcement of the field for the first LIV tournament, to the champagne at Centurion and the realisation that Schwartzel had just won more in three days than he had in four years and 67 tournaments on the PGA Tour—all that seemed to change. 

(Analysis by The Wedge. Data from PGATour.com)

And if the PGA Tour is not dead yet, there are many who believe the clock may be ticking quickly down on its demise, as each week brought another announcement of another player to cross the bridge from established Tour to LIV upstart.

The defection of Phil Mickelson, the six-time Major winner, was expected: Mickelson had taken three months out of the game after quotes from a conversation about his intentions to join the Saudi Arabia-backed breakaway tour were published by journalist Alan Shipnuck in February.

But notwithstanding his memorable sixth Major at the PGA Championship of 2021, Mickelson is 51 now and already eligible for the PGA Tour Champions, the tour for the game’s older statesmen.

It was the players who followed him out of the PGA Tour who sounded the real warning signs: Dustin Johnson, the 2020 Masters champion, world number one the same year and the only man with a perfect 5-from-5 record at the 2021 Ryder Cup, was the biggest domino to fall before the first LIV event. 

His Ryder Cup teammates Bryson DeChambeau and Patrick Reed followed, two separate announcements landing during the LIV tournament broadcast on YouTube, before four-time Major winner Brooks Koepka followed suit in the days after the US Open.

If it’s not yet a revolution, it’s without doubt the deepest of schisms.

Whatever happens over the next few months and years, there are a couple million cards to be played and a couple billion dollars to be handed out before we know which way the world will turn.

Beyond then, we may be able to reflect on how this great global political game has gone. 

We may reflect that the PGA Tour has been able to protect its position, seeing off the sternest of challenges, rebuilding itself as a stronger, more robust unit and paying attention to why some of its leading players were lured so quickly away.

Or we may observe that golf is now a global entertainment product, split between multiple promoters and performers, with honour and corruption lying down together as the frequent uneasy bedfellows they are.

Or we may accept that America’s place at the top rung of golf’s ladder, like America’s place at the top of many other ladders in the great cultural history of the world, has gone, and gone forever.

We know none of that right now.

All is still to be played out, and the battle-lines are still being drawn.

This series, published over the next six days, will try to take deeper dives into some of the general and long-term questions surrounding the events of this summer, and where they might sit in the wider context of society and human nature.

In Part 1 (below), I go into the history and business of the PGA Tour and chart some of the tendrils that have taken us to this point, and take a look at the business of the arriviste LIV equivalent.

Part 2 will offer a take on the geopolitical and macroeconomic environment of the 2020s, and where the United States and Saudi Arabia sit on that spectrum.

Part 3 is an attempt to investigate the realm of “sportswashing”: what exactly it might be, who stands to gain from it and how—as well as who might stand to gain from casting sportswashing accusations at others.

Part 4 explores the psychology of the past half-century or so, from the “Me Decade” of the 1970s to how the Internet has profoundly changed everything from the way we see each other and ourselves, to what we value, to why we do the things we do—and why that might be relevant to developments in golf right now.

Part 5 will try to gaze into a crystal ball, learning from developments in other sports to offer some forecasts about what lies ahead for golf’s professional elites and the millions of people who regularly tune in to watch them.

And in Part 6, we aim to complete the circle, asking and trying to answer some of the most fundamental questions about the game of golf: why we play it, why we watch it and why we go to golf tournaments.

But let’s start by looking a little more at the PGA Tour, where it came from, where it’s gone, and what it stands for right now.

Part 1a: The PGA Tour

“There were a lot of trails to blaze”

In the tech revolution of the past 15 years—and it’s clear that this certainly was a revolution, a wholesale upheaval of the way we do everything from how we work to how we travel, from buying groceries to ordering at McDonald’s, from checking books out of the library to how we read them when we do—the one recurring buzzword has always been “disruption”. 

Every stale industry, no matter how great its dominance, became ripe for technological disruption from upstarts as high on financial backing as they were on entrepreneurial opportunism.

The one thing about industries and their incumbents is that they don’t get disrupted unless they’re ripe for it.

And while we don’t yet know which way all this will go, one thing looks certain even now: the PGA Tour was ripe.

If golf administration is your thing, you’ll likely have heard of Deane Beman, but it’s fair to say that the most average golf viewers, even most avid golf viewers, are not much into golf administration, and so Beman may be a fresh name.

And that’s understandable. It is, after all, almost thirty years since he was head of the PGA Tour. 

A couple of recent YouTube interviews (total combined views: 2700; golf administration is niche) give an insightful look at Beman’s legacy in the game.

First, he was interviewed on the Golf Channel show Golf Today in March 2021; second, in June 2022, came a wide-ranging conversation with Matt Adams of Fairways of Life.

On Golf Today, Beman reflected on the PGA Tour that he inherited when he started in the Commissioner’s job in 1974, admitting that it was so archaic and uncommercial that it didn’t even have a name, never mind a team of staff whose job it was to market it.

“You gotta remember back then the PGA Tour wasn’t the PGA Tour. It didn’t have a name that was marketable. The name was the “Tournament Players Division of the PGA of America”. That was our name. 

So we didn’t have a name. We didn’t have a brand. The brand for golf for 50 years until I started was the players. The most important players—[the likes of Sam Snead and Ben Hogan before the 1960s golden wave of Arnold Palmer, Gary Player and Jack Nicklaus]—were what the Tour was, not the Tour itself. The players were the PGA Tour. We didn’t really have anything to market.”

Even if they did have something to market, they didn’t have any resources to market it with. As he outlined in detail in the Fairways of Life interview, the resources were almost laughable compared to those available to pro sports today.

“Golf had no marketing. We didn’t have a marketing staff. The PGA Tour existed to schedule golf tournaments and officiate the tournaments they scheduled. We didn’t operate any golf tournaments at all, nor did we have any staff that were involved in operating golf tournaments. It was only the officiating and scheduling. So we had no marketing plan.”

[On Golf Today 15 months previously, he’d said, “In 1974, there were only 1-2 employees at any of our tournaments. They weren’t run as a business … [When I arrived] there were a lot of trails to blaze.”]

A few stories tell the bigger picture about how the PGA Tour came from nothing to become golf’s biggest money spinner.

The venue

Beman had an idea that the PGA needed a flagship tournament venue, one that could become an iconic beacon of golf far into the future.

Sawgrass, in the PGA Tour’s HQ of Ponte Vedra Beach, Florida, became that venue. Almost half a century on, its status as an iconic destination is long established courtesy of the annual Players Championship, played there every March and which this year—in one of the money-laden salvos in the battle between golf’s power-brokers and their challengers—set a then record for the richest golf tournament ever staged with a total prize purse of $20 million.

The purchase of Sawgrass took all of Beman’s political and financial nous to make it happen. 

As he told Fairways of Life: 

“We were looking around for a property [but] the policy board said, ‘You can do that but we’re not gonna put any money in.’ {So] I had to find a way of developing a tournament facility with no money. Developers Paul and Jerome Fletcher had 4000 acres [at Sawgrass]. It was a bad time in the real estate business. They owed a lot of money to the banks. So I convinced them to give us 415 acres for a dollar.

“If we built the golf course, we would enhance the value of their property 2 or 3 times. They thought it would work. The only problem was they couldn’t even get the bank on the phone.

“Back then if a bank had a loan that wasn’t paying interest they didn’t have to foreclose like today. This was the dark ages of banking. So I went to New York and sat down with the bank and explained to them that if we built this golf course there and they took 400 acres of the security for a loan they’re not getting any interest on, that we could enhance the value of the property. In the end they agreed that it probably would work.”

The structure

Sawgrass, the Players Championship, the PGA Tour being known as the PGA Tour, the PGA Champions Tour for the over-50s and the Korn Ferry Tour for the game’s poorest and hungriest rising stars … all these are part of Beman’s legacy.

But perhaps the most important thing he brought about was to change the legal status of the PGA from for-profit corporation to nonprofit organization.

It happened early in his tenure (Beman was just 30 when he started in the job) and it laid the foundations for the incredible success of the Tour over the next half century.

And, you guessed it, such a move took more of Beman’s glorious manoeuvrings.

Again, on Fairways of Life: 

“I became Commissioner on January 1st, 1974 [but] I really didn’t become Commissioner until March. I was in Washington and the offices were in New York. I commuted three days a week and read everything in the office. 

One of the first things I read was the book on incorporation. The PGA Tour was a Delaware for-profit corporation, and of course the PGA Tour is just a pass-through—we accumulate things and pass through to the players. Some of the money stayed with the sponsors locally. A lot of it went to promoters who ran the tournaments. So I looked at that.

I was in the life and group pensions business and I did the first deferred comp programme for nonprofits, so I understood 501(c)6, 501(c), those kinds of corporations. So I asked our attorney in New York, ‘Why aren't we a 501(c)6 like the NFL was. All sports are nonprofit associations, why are we a profit-maker?’

The attorney in New York said, ‘Okay son, you go and run tournaments, let us take care of the big stuff’. 

I went back to Washington and talked to a tax attorney I used, and asked why can’t we be a nonprofit, and he said no reason at all. But he said the problem is you’ve been paying taxes for five years and no local agent is going to say okay [to it]. They’re gonna want to keep your revenue. 

You’re gonna have to go to court, file, it’s gonna take a couple of years and cost you a couple of hundred thousand bucks but you’ll ultimately win.

I told the board I was going to do that and they approved it. I’m on a flight to Phoenix reading the papers that are gonna be filed.

I got off the airplane and put a quarter in the slot—we didn’t have iPhones back then—and called the attorney. I said I’d read it all. [Then] I asked what would happen if somebody decided to have a new tour and go in competition with us.

He said they’d be able to do it, no problem at all.

I said go ahead and do that. You put papers in for a rival organization, make it nonprofit, put your secretary and yourself on as board of directors. 

Once you get it approved we’ll just transfer it over. He said, ‘We can do that.’ 

So he filed the papers with some phoney name.

In 30 days we got approval without even an interview. And once we did that we transferred the board over to that.

So instead of spending $250,000 [and taking years] I think we spent $2,500 and got it done in a couple of days.

How money has always been at the heart of the PGA Tour

This change—nonprofit status for the PGA Tour—allowed two narratives to emerge.

The first narrative is that, as a nonprofit, the PGA Tour could become the benefactor for hundreds of charities. One claim is that $3 billion has been filtered through the PGA Tour to local charities. In that Fairways of Life interview, host Matt Adams ended the conversation with mention of the “tens of millions of people” who had been positively impacted by the Tour’s charity largesse.

The second narrative is different. It states that the nonprofit legal structure was nothing more than a convenient ruse to keep vaults of cash out of reach of tax authorities. 

In 2013, ESPN’s Outside the Lines writer Paula Lavigne investigated the PGA Tour’s legal structure.

Her report estimated that the Tour’s nonprofit status had helped to save $200 million in federal taxes over 20 years. 

And not just that. The report declared:

[The PGA Tour’s] philanthropy has been bolstered by millions of dollars of annual tax breaks for the PGA Tour and its tournaments, which often are run by charities that spend far more on prizes, catering and country clubs than they do on sick kids, wounded vets or economic development. 

In one case, running a PGA tournament actually caused a charity to lose money—more than $4.5 million over two years, the analysis found.

The report continued that it had:

“… analyzed the tour's US-based tournaments that received charitable tax exemptions in 2011 and found they spent, on average, about 16 percent on actual charity. That figure is far below the minimum 65 percent that charity watchdog groups say makes for a responsible charity.

“One of the groups, Charity Navigator, gave a "zero rating" to each of the tournament charities it reviewed … ‘The lion's share of the money is going to big prizes, cash prizes for athletes and all the promotion around it, so it's really pathetic, actually,’ Charity Navigator president Ken Berger said. ‘Every single taxpayer in this country ultimately is bearing the burden of having to pay the taxes for this wildly inefficient organization that's giving so little to charity.’

Whether the PGA Tour’s nonprofit status is an efficient vehicle to redistribute philanthropic funds to deserving charities, or a trickster model constructed to exploit tax loopholes, the clear bottom line right now is this.

Money has always been at the heart of the PGA Tour, so it should be no surprise that the battleground for the future of professional golf now is dominated by money—and everyone from administrators to players to media know it.

Jay Monahan, Beman’s latest successor as PGA Tour Commissioner, in his letter to PGA Tour members to announce the suspension of 17 players who had teed it up at the LIV Golf Invitational in London outlined (presumably in hopeful tones) that he was “certain our fans and partners … are surely” [emphasis here and below is mine] “tired of all this talk of money, money and more money”.

In a press conference before his victory at the RBC Canadian Open, Rory McIlroy, one of the leading opponents of the breakaway tour—and therefore, by default, one of the leading supporters of the PGA Tour—admitted that several of his erstwhile PGA Tour colleagues and opponents had been lured to LIV by “boatloads of cash”.

And ESPN’s Kevin Van Valkenburg, who is perhaps to American sportswriting what McIlroy is to the PGA Tour, tweeted: 

If I were Monahan and I was in meetings asking "Ok, what are our options?" I wouldn't dismiss anything as dumb. You're in a fight for the future of your business with a superpower that can outspend you forever. Better start considering bold measures.

The players, the prize money and the people who foot the bill

With the 20/20 benefits of hindsight, it was unfortunate that the season-ending article published on the PGA Tour’s official website in November 2021 started as follows:

“With the final official event of 2021 having concluded Sunday, the PGA TOUR turns its focus to a new year that will continue its unprecedented momentum.”

There is momentum, and it is unprecedented, but it’s not in the direction the PGA Tour would like.

That article, we shouldn’t be surprised, was all about the money. It outlined the developments that 2022 would bring in prize money for the players:

• The Comcast Business Tour Top 10 fund would double to $20 million.

• The Players Championship total purse would go up 33% to $20 million

• The FedExCup bonus would increase 25% to $75 million

• The average purse would go up more than 14% to $9.1 million

• The FedEx St. Jude Championship and BMW Championship (the first two events of the FedExCup Playoffs series in August) would each have total purses of $15 million (increases of approximately 50% each from 2021)

• The prize for the FedExCup winner, awarded to the winner of the season-ending TOUR Championship, would get a 20% injection to $18 million

All these hikes were primarily influenced by two things: firstly, a new and greatly improved TV rights deal agreed in 2020 kicked in at the start of 2022, and secondly, the murmurings of a well-backed alternative tour were already being heard loud and clear in the PGA Tour corridors of power.

As this graph shows, the hikes were significant compared to the year-on-year prize money differences of the previous decade.

(Analysis by The Wedge. Season-by-season prize money data from PGATour.com)

Such a hike in prize money for 2022 was, the PGA Tour’s announcement was keen to stress, something to celebrate. (In a memo sent to Tour players before that announcement, Commissioner Monahan stated that the Tour is “stronger than at any time in our history”.)

Overall, though, given the meritocratic nature of prize money, it shouldn’t be a surprise to anyone that the massive increases in prize money in 2022 have gone mostly to the top handful of players.

As of June 20th—following the US Open, or approximately three-quarters way through the season—the top 10 on the PGA Tour have average earnings of almost $6.9 million, already above the $6.7 million the top 10 averaged in last year’s full season. (Remember, the three-quarter-mark of the season means all the FedExCup season-ending-moneybags-bonanza is still to come.)

In the 2020-21 PGA Tour season, eight players won more than $6 million in prize money. Seven have already passed that figure this time around.

But of course, there’s more. Because we must also remember the initiative—or as others call it, the bribe—of the Player Impact Program (PIP).

The PIP was introduced in 2021 and by the end of ‘22 would ringfence $90 million for the game’s top players.

The 10 players to make the most “impact”—as defined by a complex PGA Tour algorithm which took in everything from time-on-TV to social media engagement—would share the dividend; Tiger Woods, despite not playing a single official event between the delayed Masters in November 2020 and the same tournament in April 2022, was awarded $8 million for topping the inaugural PIP standings at the end of 2021.

Writing on the Sports Illustrated website last November, long-serving golf journalist Mike Purkey was forthright in his views about what the PIP amounted to (emphasis mine):

“Under the guidance of Jay Monahan, the commissioner with the power of the electronic wire transfer, the PGA Tour is pouring in millions of extra dollars, starting in 2022, for the players both in increased prize money, along with awards and incentives. 

In essence, it’s a bribe, plain and simple. The effort is designed to prevent the top PGA Tour players from jumping to the super golf whatever that Greg Norman is fronting that has a near-endless pot of money provided by Saudi Arabia’s Public Investment Fund. And to keep the lads at home, you, the golf consumer, will be required to pay a major portion of the freight and no one asked you.

How, exactly, do the consumers pay?

Directly and indirectly, it turns out.

A new nine-year TV rights agreement was agreed between the PGA Tour and the TV networks in 2020, and 2022 was the first year that came into play.

As an article in Variety magazine in 2020 put it, 

The membership fees for TV’s golf club just got a lot more expensive.

Variety reported that the rights negotiation was approximately $280 million (or approximately 70%) more than the previous $400 million deal. 

And a key part of the deal—maybe the critical part of the deal—is that 70% of the available ad space is “pre-sold” to Tour sponsors. 

In effect, the deals with long-term sponsors like FedEx, Mastercard and John Deere and new backers like IT services provider Amazon Web Services, sports tech wearable Whoop and sports betting company DraftKings are believed to be underpinned by clauses that compel those companies to purchase the bulk of the TV channels’ ad space during PGA Tour coverage.

As Sean McManus, chairman of CBS Sports, one of the three US broadcast partners of the PGA Tour (NBC and ESPN are the others), told Variety: 

“It’s important to remember that the Tour delivers to its broadcast partners roughly 70% of the advertising in its underpinning deals with title sponsors and FedEx. We know each year that 70% is pre-sold, if you will, and that’s a real advantage. It helps unwind any risk we would have and enables them to have a significant but fair rights increase.”

The date of the Variety article about the TV rights agreement is also worth noting: March 9th, 2020. 

Most people have stark memories of that particular point in time.

March 9th was about 48 hours before the corporate western world woke up to the true extent of the coronavirus pandemic. 

The Players Championship, due to start on March 12th, was the first tournament to be cancelled. Tour golf would not return until June, and it would be a further eight months before fans were allowed back to tournaments.

Against that backdrop—a global pandemic that brought an overnight stop to normal commerce, leading to at least 12 months of business-as-unusual—the new TV deal takes on a new significance.

When some of the world’s most renowned corporations find themselves tied into big deals at the same time as normal business rules come to an end, the only absolute certainty is that they will find some way to get their money’s worth.

For anyone who has followed golf Twitter, the relentlessness and volume of complaints about TV coverage is obvious.

Golf has become a painful experience for American TV viewers, and it’s not hard to draw a line that connects the magnitude of the TV deal, the effects of the pandemic on normal business and the absolute need to extract as much value as possible from the great unwashed, the millions of men and women out there on their sofas being subtly won over (or not-so-subtly cracked on the head) by the relentlessness of TV ad breaks paid for by corporate sponsors.

Back to Purkey in SI:

“Who picks up that tab? Whoever buys the products and services of the companies who pay more to entertain clients so the tournament’s title sponsor can generate more revenue, so they can pass the increase on to the PGA Tour, who can give 55 percent of it to the players, mostly the guys at the top of the rankings … Are you following along?

“If you’re happy to give a percentage of your yearly budget, entertainment or otherwise, to the already fabulously wealthy best players in the world, you’re the type of golf fan the PGA Tour wants but doesn’t really care about. If not, that’s too bad because in some form or another, you’re paying, anyway, whether you watch professional golf or not. Your choice.”

Stuck in a moment that they can’t get out of

The PGA Tour is in a bind.

In response to the general talk of breakaway pro golf tours over the past two years, the Tour made that $90 million injection into the PIP. 

Ten players shared $40 million last year, and that fund was increased to $50 million for 2022, but the boon was not enough to satisfy four of its 2021 beneficiaries, Phil Mickelson, Dustin Johnson, Brooks Koepka and Bryson DeChambeau, who shared $15.5m in bonuses between them.

The bind the PGA Tour finds itself in is this:

1. They no longer control the things that move the needle

The needle-movers are prestige and money, and the Tour is outmatched in both.

First, the USGA, the R&A, Augusta National and the PGA—an organization related to but separate from the PGA Tour—control the most prestigious tournaments, the US Open, the [British] Open, the Masters and the PGA Championship respectively, and there is as yet no certainty that those four organisations will come to the PGA Tour’s rescue. 

For all that the Players Championship might have grown to become one of the prime events on the golf calendar, it could never really become the “fifth Major” that many had tipped it to be, and with many of golf’s biggest games now suspended from PGA Tour-sanctioned events, its prestige is likely to be further diluted in 2023 and beyond.

Second, the Saudis have more money. As Monahan said in the days before the second LIV event which started on June 30th at Pumpkin Ridge near Portland, Oregon, 

“I am not naive. If this is an arms race and if the only weapons here are dollar bills, the PGA Tour can't compete. The PGA Tour, an American institution, can't compete with a foreign monarchy that is spending billions of dollars in an attempt to buy the game of golf.”

2. A “Strategic Alliance” with the European Tour could irrevocably damage its main ally

Less than 18 months ago, the PGA Tour signed a so-called “Strategic Alliance” with its counterpart in Europe, and that alliance has been strengthened in the face of LIV’s progress.

But many in the game would argue that the European Tour—which gained such ground in the 1980s when Nick Faldo, Seve Ballesteros, Ian Woosnam, Sandy Lyle and Bernhard Langer were all among the world’s greatest players—possesses little real clout in the world game right now.

First, the European Tour effectively celebrated its own funeral with a major rebrand this past winter; it's now known as the DP World Tour, after its title sponsor, the United Arab Emirates-based global transport conglomerate DP World. 

Second, the European Tour has been neck-deep in Saudi manoeuvrings in golf for a few years now. The Saudi International tournament built a reputation as one of the calendar’s most lucrative prizes as a European Tour event. (In 2022, as part of the LIV Golf plan, the event was moved to the Asian Tour.) 

Those ties to Saudi were evidenced by an excellent report by Bunkered.co.uk, which detailed a meeting in Malta in July 2021 involving the European Tour, its DP World sponsors and Saudi representatives of the soon-to-be LIV tour. The piece outlined how Keith Pelley, Commissioner of the DP World Tour, was happy to consider doing business with the Saudis “inside the golf ecosystem”—i.e. inside the established European and PGA Tours—but was opposed to a breakaway tour.

And third, the strengthening of the “Strategic Alliance” with Europe threatens to decapitate it completely in the medium- to long-term. 

One of the key terms of the new arrangement (which will run until 2035) is that 10 players each year will gain PGA Tour status by dint of their performances on the DP World Tour. The DP World Tour itself declared that this provided a clear pathway for European players through to “the very pinnacle of the men’s professional game on the PGA TOUR”.

Critics of the deal suggested that the new arrangement cast the once-proud European Tour fully and finally into the role of a feeder tour to its American counterpart. That “second division” status was clearly in evidence just this weekend at the Irish Open, a once-great European Tour tournament: while 10 of the top 12 in the OWGR world rankings were in Ireland at the weekend, none of them played at the Irish Open. (They were all there to take part in the two-day JP McManus Pro-Am in Limerick before crossing to Scotland for the Scottish Open and the 150th Open Championship at St Andrews.)

3. Some people are just gonna cash in

The Tour has already pumped hundreds of millions of dollars into the bank accounts of the game’s top players, and despite further injections over the past 12 months, it still isn’t enough to prevent at least some of them jumping ship for even more obscene amounts of money elsewhere.

While many of the LIV defectors cowered under carefully orchestrated messaging like “innovative formats” and “grow the game”, Bryson DeChambeau was more straightforward. Speaking before the US Open tournament began in Brookline, Massachusetts in June, he said, “It was a business decision.”

Whether “greed is good”, as Gordon Gekko declared in the movie Wall Street, is debatable. 

What is beyond debate, though, is that greed is real.

4. Bans seem to hold little power

Threats of bans (or legal action) require leverage. For bans to work, you need to want the thing you’re banned from. 

If the trickle of high-profile players defecting becomes a flow, the question could well be asked: “What exactly are you banning me from?”

5. Time ticks slowly, then suddenly

The PGA Tour is a venerable organization and sometimes, the sands of time drop quickly. 

The Soviet revolutionary Lenin said about revolutions: “There are decades when nothing happens and there are weeks when decades happen.” 

In some ways it feels like a decade has happened these past few weeks, as the Tour finds itself holding a musket against an enemy with A-bombs.

Part 1b: LIV Golf

The speculation

For this part, I won’t try to dwell for too long on the specifics of what LIV has invested or pledged to invest to date.

The primary reason for that—and, it must be said, also a reason for the animosity many have felt towards LIV these past few weeks—is that much of the information about the economics of LIV is not in the public domain, leading to wild speculation in the media and on Twitter.

There have been widespread reports about the volumes of cash which have changed hands in LIV’s Gold Rush-like early days.

Those reports have suggested sign-up fees alone that collectively stretch well over the half-a-billion mark:

• $200 million for Phil Mickelson

• $125 million for Dustin Johnson

• $100 million for Bryson DeChambeau and Brooks Koepka. 

• Even $10 million was mentioned for Pat Perez, a 46-year-old who is currently 95th on the 2022 PGA Tour money list, has never made a US team for the Ryder Cup or President’s Cup and has not been inside the OWGR Top 100 since 2019. (Whatever he received, Perez, in his own forthright way, was happy to declare that it had already arrived in his bank account: “Mine is in. I got it all. It’s fucking incredible,” he was quoted in a joint Golf Digest / Firepit Collective piece by Alan Shipnuck.)

The agencies

That piece by Shipnuck, titled “An inside look at how the money works on LIV Golf”, suggested that at the heart of the upheaval has been the work of aggressive sports agencies intent on maximising returns for their clients and themselves.

Most notable among those is GSE Worldwide, a New York-based sports management firm that represents the business interests of seven LIV stars: DeChambeau, Spaniards Sergio Garcia and Eugenio Chacarra, South Africans Louis Oosthuizen and Branden Grace and Mexican pair Abraham Ancer and Carlos Ortiz.

Another agency, Endeavour, often still called by its former name of WME IMG, either represents or has represented in the past several of those who have signed with LIV, including Patrick Reed, Martin Kaymer, Lee Westwood and Ian Poulter.

Adding further intrigue to all this is the identity of some key personnel who have been involved on either side of the sports/media divide: 

• Guy Kinnings spent almost 30 years at IMG, where he rose to the positions of Senior Vice President and Global Head of Golf, and is now the Deputy CEO of the DP World Tour and Ryder Cup Director, and has had conversations in the past with now LIV golfer Lee Westwood about the prospect of Westwood becoming Ryder Cup captain

• Will Staeger, now the Chief Media Officer of LIV Golf who is heavily involved in media rights discussions, spent more than seven years with Endeavour / WME IMG and has also been an executive with WWE wrestling and the ESPN sports network.

But apart from intrigue there is nothing a whole lot more concrete here: sports agencies are notoriously secretive about their dealings.

These are firms whose business model lies far away from the ego-massaging world of PR and LinkedIn likes. They deal in high-powered negotiations behind closed doors, and when they want to get the biggest cut for their clients—and by extension the biggest commission fees for themselves—it does not pay for those on the other side of the negotiating table to know too much about your priors.

By a search engine results pages (SERPs) analysis, just 16 pages of the wmeagency.com website are listed in Google (and several of those are terms of service, cookie notices or privacy policies), IMG.com has just 11 listed pages, and the words “golf” or “golfer” appear nowhere on either site. 

The people

If reliably true and accurate player sign-on fees are difficult to find, we do know something about the LIV business model, and the aims of the Saudi Public Investment Fund (PIF) behind it.

I will be going into the Saudis’ wider aims in more details in the next part of this series, so will keep this part to LIV.

The headline figure so far has been $2 billion—the investment LIV CEO Greg Norman announced in an interview with BBC Sport in May.

Whether that $2 billion from the Saudi PIF was an additional investment on top of the $255 million already pledged in prize money for the eight LIV Invitational tournaments in 2022, and $300 million previously pledged by LIV to the Asian Tour International Series, we do not really know.

What we do know is that, on top of committed prize money and player signing fees, LIV have been hiring pros to assist in developing the business.

Per SportBusiness, Staeger is joined by Sean Bratches (LIV chief commercial officer, formerly of Formula 1 and ESPN), Atul Khosla, (LIV chief operating officer, formerly of Tampa Bay Buccaneers) and David Hill (LIV broadcast consultant, previously president of Fox Sports).

There was also an intriguing analysis published by self-styled “The Punk”, UK YouTuber Paul Nicholson, who in a half-hour video drew out the links between the Saudis, the UK advertising and marketing agency Performance 54 and the growth of several well-known golf influencers including Rick Shiels, Peter Finch and the Jazzy Golfer.

The media rights

SportBusiness also announced in June that broadcast rights had been agreed with a host of broadcasters across the world, including Germany’s Sky Deutschland, SuperSport in Africa, UK sports streaming service Eleven Sports, rising Singapore-based streamer SPOTV, which has been gaining market share across Asia, and DAZN, a rapidly growing sports streamer now available in more than 200 countries globally.

These rights deals are so far non-exclusive—LIV has also been streaming the coverage for free via YouTube, Facebook and its own website—but they do show that while established traditional media companies in the US and the UK especially (NBC, CBS, ESPN and Sky Sports, for example) might have some well-developed moral opposition to the LIV product and its backers, broadcast partners are absolutely willing to deal with the new tour.

And the more attention the LIV product gets in the coming months, that appetite will only grow.

The start-up phase

Taking that $2 billion figure at face value, and also considering Norman’s comments about LIV’s current business phase—in his BBC interview, he said, “Twenty-two and ‘23 are our beta years. We are a start up, basically”—it’s worth drawing a comparison with other start-ups in other industries.

The research company Disfold published a list of the top 30 best-funded US startups, a list topped by The We Company—a.k.a. WeWork—at an eye-popping $22.5 billion. (WeWork, once valued at $47 billion, now trades, as July 4th, at a market cap of less than $4 billion, which, even if LIV goes to zero in the coming years, will still mark it out as nowhere close to the least profitable investment in history.)

Were we to insert LIV Golf on that Disfold list of best-funded startups, it would slot in at joint-13th.

Many would argue that such a position is crazy for a new sports league with little in the way of revenue so far. (The funding places it alongside Palantir, the 19-year-old software company founded by Peter Thiel, which trades on the New York Stock Exchange and is currently valued at $19 billion.)

Others would look at the list and argue that LIV is just another well-funded startup in a world of well-funded startups, none of whom are ever guaranteed to succeed or become sustainably profitable.

One big factor, and something that has been floated regularly by those opposed to LIV, is the suggestion that LIV never has the pressure to turn a profit, as it’s just part of a massive, multi-year brand marketing campaign by the Saudi’s PIF. 

Whether that’s true or not, we can say with some degree of certainty that traditional business models—profits and losses and balance sheets—have been completely blown out of the water by the events of the past two decades: the debt bubble of the post-dotcom boom and bust, leading to the global financial crisis, leading to nationalisation of private debt across much of the world, bringing austerity measures that decimated several European economies, and followed most recently by the Covid-19 pandemic response and further unprecedented spikes in Government spending.

In this regard, the comparison between LIV and its fellow T13 on the funded startups list, Palantir, is maybe not crazy: despite revenues that stretch into the billions, Palantir is still not profitable, having made a net loss of more than $500 million in the 2021 financial year. Some have suggested that its business—the deep analysis of all the world’s data, sold to surveillance organisations and governments—is as shady as shady comes, and that the ultimate goal of the company and its founder is much less regular old financial profit and much more New World Order.

All this to say that getting concerned over a couple of billion dollars of investment in a new sports media venture is in danger of seeing a tree but missing the forest.

The financial world has been off the charts crazy for at least a couple of decades, is getting more and more off the charts crazy by the day, and many analysts—including hedge-funders Michael Burry and Hugh Hendry, both of whom made a fortune betting on the collapse of 2007-8—believe there is certain to be a price to pay for the current madness.

Are the Saudis committed to LIV in the long run irrespective of whether it ever becomes profitable?

Will the Saudis’ money ever run out?

Will they get a return on the investment before it does?

Or, to that point, what exactly does a return on their investment look like?

Who knows the answers to these questions, but watching them play out in whatever financial world will develop in the coming years will be fascinating. 

Provided you and I are able to put enough food on our tables in the meantime.

That’s it for Part 1

Part 2 will get a little away from the specifics of LIV Golf and go into the geopolitical and macroeconomic environment in which the USA and Saudi Arabia now sit. (Also, Parts 2 to 6 are all a good bit shorter than this one, so if you’ve read to the bottom of this one, that might be a relief, for both of us.)