Last Rites For LIV Golf?

I have written about the LIV Golf Tour several times in these pages over the four years it has been in existence.

LIV was formed in 2022 with financial backing by the Saudi Arabian Public Investment Fund which is the sovereign wealth fund for that nation.

LIV offered players big signing bonuses to join its tour as well as no-cut events in which every player was guaranteed a portion of a purse that was significantly larger than most PGA events.

LIV ultimately attracted high profile names to its tour including Bryson DeChambeau, Brook Koepka, Jon Rahm, Patrick Reed, Cameron Smith, Dustin Johnson and Phil Mickelson among others.

From the outset, it was difficult for me to figure out what the Saudis saw as the end game in all of this so that they would see a return on what looked liked a couple of billion dollars of investment.

Was the expectation that they were going to force a merger with the PGA Tour where they would get a large share of the equity or a big pay off through some type of legal settlement?

This has usually been the outcome when other upstart professional leagues (AFL, ABA etc) set out to compete with established pro circuits.

However, it was difficult for me to see there was enough money in the game to justify the high upfront payments that LIV was paying to its players.

I predicted that LIV was likely to be a failed enterprise due to the fact that while it may have talented players, it appeared that it did not have a good path for distribution of the product.

Content my be king. However, distribution is the kingdom.

Think of the traditional music or movie business. You could have the greatest song or film (content). However, if no one had the ability to hear the song on a radio station or see the film in a movie theater (distribution) it meant nothing. 

LIV started with no tv deal the first season. LIV gradually improved its tv deals but almost no one watched anyway. Attendance at the international events drew pretty well but the U.S. events struggled. 

If no one is watching your product, you have a hard time attracting sponsors for tv and tour events.

I suggested at the outset that if LIV was not able to convince any of the big name, big spending PGA Tour sponsors such as FedEx, Schwab, RBC, AT&T. Coca Cola etc. to spread some of their money around to LIV it was not likely to live.

It never happened.

I wrote this in "Will The LIV Golf Tour Live?" as the new golf tour was just getting started four years ago.

If sponsors decide to start spreading their marketing dollars to include LIV, the PGA Tour is going to have problems.

However, until that happens, LIV's prospects are not good.

As for LIV's players, I hope they got the money upfront and have good investment advisors to invest the money for their futures.

Their future in golf is likely to be irrelevant going forward.

Some of these guys may have (or could have) been kings of the game.

However, the fact is that they don't rule the kingdom.

And those who control the majors and PGA Tour do right now.

Saudi Arabia and LIV want a piece of that kingdom.

LIV may get some type of monetary settlement from the PGA Tour in the end.

Perhaps a couple of LIV events will be incorporated into the PGA Tour when this is all over.

The PGA Tour may lose its tax-exempt status due to the scrutiny it will be under.

The charities that the PGA Tour supports may end up with less.

However, I will be shocked if an independent LIV Golf Tour exists in three years time.

I am not betting on LIV living long term.

All that I wrote four years ago was pretty much on target. 

However, my prediction on how long LIVE would last was off by a year.

Why? 

I could not conceive that the Saudis would pour as much much money into a failing enterprise as it did before pulling the plug.

The Saudis invested a reported $6 billion into LIV since its inception as it was never able to build any other sustainable revenue sources.

Last week, the Saudis said they would stop funding LIV at the end of the current season.

Even rich Middle Eastern oil sheiks apparently have their limits.

Source: https://www.wsj.com/sports/golf/liv-golf-pga-tour-bryson-dechambeau-3abf7b85

The Saudis will have spent that $6 billion on the venture while apparently having nothing to show for it.

There was no monetary settlement.

There was no merger.  There was a lot of talk and negotiating but no deal was consummated.

The PGA Tour did restructure and established a for-profit entity as a holding company for the tour events that still benefit charities as a tax-exempt entity.

The PGA Tour did attract additional capital investors that solidified its financial position and gave its players the ability to become equity owners.

Top tier PGA Tour players saw tournament purses grow for so-called Signature events with limited fields that gave them more opportunity to fatten their bank accounts.

Brooks Koepka and Patrick Reed saw the writing on the wall and left LIV earlier this year and have found a path back to PGA Tour status.

Other star players such as DeChambeau, Rahm and Cameron Smith now face a more painful road back.

As I pointed out four years ago and repeated above,

"I hope they got the money upfront and have good investment advisors to invest the money for their futures."

These were the reported financial penalties associated with the eventual reinstatement of Brooks Koepka to the PGA Tour.

Source: Google AI Overview

Bear in mind, this was a one-time "preferential" deal offered to former major champions earlier this year.

DeChambeau and Rahm did not take the PGA Tour up on the offer.

This would suggest that the road back to the PGA Tour for those two and others who bolted to LIV will be very painful indeed.

There is a lot of resentment that PGA Tour regulars carry because of the defections of their fellow players to LIV.

That is particularly true for DeChambeau and Rahm.

Bryson joined an antitrust lawsuit against the PGA Tour that cost millions and millions of dollars in legal fees to defend.

Rahm was not in the original group that went to LIV but joined for the 2024 season when LIV was already showing signs that it might fail or be forced to merge with the PGA Tour.

As a result of the timing of Rahm's defection, LIV and the Saudis were infused with a new sense of optimism that undoubtedly extended the entire drama by at least another year over what it should have,

PGA Tour players and the PGA Tour Board will not forget either instance when considering the futures of DeChambeau and Rahm.

Newly appointed PGA Tour CEO Brian Rolapp told The Wall Street Journal recently that plenty of people at the PGA Tour have "scar tissue" regarding everything to do with LIV, the lawsuit and the defections. All of these will factor into how painful the road back will  be for individual players.

You also have to wonder about the future of Yasir Al-Ramayyan, the head of the Saudi Arabian Permanent Investment Fund, who was the mastermind and catalyst for LIV Golf. 

Al-Ramayyan stepped down as the Chairman of LIV on April 30. 

Yasir Al-Ramayyan
Source: https://www.chroniclelive.co.uk/sport/football/football-news/newcastle-united-told-pif-funding-33863040

Could his PIF duties also be at risk? I can't imagine the Saudi royal family is happy at the loss of $6 billion. Then again, it is just a drop in the oil bucket considering where oil prices are today.

In the aftermath of the loss of the Saudi PIF funding, LIV stated that there were developing a "strategic path forward" searching for new investors.

Perhaps LIV can find someone with money to burn to continue its golf tour in 2027.

I probably have a better chance of beating Scottie Scheffler in a $5 Nassau bet on the golf course.

The best strategic path forward for LIV right now appears to me to be this.

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