AUBURG, Ga. — The biggest word in golf right now, before its biggest event, has nothing to do with technique, gear, or any of the stars who will be at Augusta National this week. The hot topic right now is sustainability, or more specifically, how unsustainable people think the current situation is. For example, the world’s best pros are playing on separate tours, and their long-awaited alliance is still uncertain. Also, more people are joining a sport that wasn’t there before.
One of the stars of the PGA Tour, Rory McIlroy, said last week in Texas, “Things need to be fixed, and things can’t go on like this.”
The LIV Golf star Bryson DeChambeau said in Florida, “And it needs to happen quickly.” “It won’t last two years. For the sake of the sport, it needs to happen as soon as possible. A lot of people have lost interest.
There is more money in sports than ever before, but the two professional leagues are competing to be the most important. They are changing and tweaking their business plans to try to get a return on investment. They are also trying to give their players unheard-of amounts of money while still making their businesses profitable. At the same time, more and more people are asking for some kind of peace.
Thirteen LIV players will compete at the Masters this week along with PGA Tour players. The only thing that will make them stand out is the LIV team gear they’ll be wearing on golf’s holiest grounds—Sergio García, the Fireball; Bubba Watson, the RangeGoat. Fans will remember for four days what the game isn’t (a uniform tour where the best players always play against each other) and what they hope it could become again.
There are two parts to the talk about sustainability: Can the sport keep people interested and involved even though it’s broken up? Also, is the sport profitable enough to keep spending the way it is now?
Following the fighting and other events of the past few years, McIlroy told reporters last week, “I just think people are just getting really tired of it, and it’s turning people off from men’s professional golf.” “That’s bad for everyone.”
It’s been over 10 months since the PGA Tour said it would work with LIV Golf, which is owned by Saudi Arabia’s Public Investment Fund. The deadline was December 31, but both groups missed it. They are still working out the details, but a deal is not likely to happen soon.
The people who work for LIV Golf are still getting paid a lot of money, even though its product hasn’t reached a critical mass yet, especially in the US. And in response to LIV’s busy schedule, the PGA Tour went on a spending spree of its own, with new costs seeming to be rising faster than new income streams.
Since last year’s British Open, the best players in the game haven’t played against each other in an individual event. As a result, fans have had to deal with boring tourney fields and forgettable Sunday finishes. Officials at LIV say their numbers on the CW Network are up 40% from last year and they’re happy with early streaming viewing, but their linear TV ratings aren’t made public. The PGA Tour’s TV ratings, which include a much bigger audience in the United States, are down more than 15%.
Sean McManus, head of CBS Sports, said, “Ratings change from year to year.” “We all know that a lot of it depends on who is in first place and how close the tournament is.” But advertisers and sponsors seem happy, so it’s too early to say where the numbers are going to trend.
Last weekend’s winners on both the PGA Tour and LIV were 22-year-old Akshay Bhatia on the PGA Tour and South African Dean Burmester on the LIV Tour. The news is mostly about what’s going on off the course and the sport’s uncertain future.
A Golf Channel analyst named Brandel Chamblee said, “We talk a lot about how important it is for players to be in the right frame of mind, and I just think there’s an epidemic of distraction on the PGA Tour, whether it’s greed or trying to solve problems that are almost impossible to solve.” “I just believe they are very busy.”
The tour no longer runs as a nonprofit, so it has to pay taxes, give players more money, and answer to investors who want a return. It also has to answer to TV execs and advertisers who expect a product that will always draw a lot of people.
Officials from the PGA Tour have made a plan that doesn’t count on the PIF following through with its early investment plans. A group of American sports owners called Strategic Sports Group put $1.5 billion into the tour. That amount could double. That money helped the tour start PGA Tour Enterprises, which will be in charge of all of its business activities.
According to Jay Madara, the tour’s chief financial officer, “before we set up PGA Tour Enterprises and took on outside investment, we’ve always had this natural conflict between an organizational goal to maximize player earnings with growth investment.” “I compare it to having to pay everyone this month or this quarter and not having any extra money to invest.” There wasn’t enough patient capital for things that made strategic sense and would pay off in the long run.
The tour’s most recent tax returns show that it made $1.9 billion in 2022 and spent $1.87 billion. Both of these numbers have slowly gone up over the years. Four billion dollars in sponsorships are due by 2035, and five billion dollars in media rights are due by 2030. The tour has also taken on new costs.
Officials on the tour have been trying to find new ways to make money and grow the ones they already have. They have a big plan to give golfers a stake in the tour, and event purses have more than doubled in the last ten years. The organization plans to open its own 70,000-square-foot production studio next year. This will allow the tour to make and share more of its own material, even though its broadcast rights deals don’t end until 2030.
The tour also wants to make more money from its weekly matches, so it has changed the way it pays for events. Most of the tournaments on the tour are run by local groups, but the tour gets money by putting on six events on its own. It could add more events if it wanted to. A logistics company and a golf cart company were recently bought by the tour. This will make it easy and cheaper to hold tournaments.
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One of its bravest attempts to balance the books: This week, the tour told event managers that they will soon have to pay a hosting fee. Next year, the fees will be $250,000 for full-field events and $500,000 for signature events. In 2026, the fees will be doubled. The tour also wants the organizers to give back a portion of the money made from hospitality sales. This number will start at 1% next year and rise to 2.5% in 2027.
Traditionally, tour events have had a charitable aspect. People are worried that the new effort will cut into charitable donations, but tour officials say they’re confident that donations will not go down.
“It’s important to our history, honor, and tradition.” “We also have to keep this in mind as we move forward with our new structure,” Madara said.
LIV doesn’t seem to be under as much economic pressure because it has wealthy Saudi donors; in fact, officials say they’re ahead of plan financially.
A top LIV consultant named Jed Moore said, “The most important thing for us is making new value through all of this.” “People have the wrong idea about the money that was put into players.” They don’t understand how much money was put into the Asian Tour. They don’t understand why golf had to find a way to add that new value. “Sustainable economics in sports is now very important because they are an asset class.”
LIV officials see their sport as similar to Formula One: there are fewer events, and the best athletes travel between big towns all over the world. And a key foundation: a team-based model that LIV hopes will keep fans coming back and increase value.
LIV owns a 75% share in each of its 13 teams, but they all work as separate businesses and make money in their own ways. Moore said that some are already making money. He said that none of them are close to being fully developed as assets, but that one day they might be ready to be bought by buyers or sold for cash.
“Think about how much the Golden Bears would be worth if Jack [Nicklaus] had played a form of LIV back in the day.” “What about Arnie’s Army, the Big Easys, and the Great White Sharks?” “Think about those teams.”
In the United States, golf fans have been slow to adopt the LIV product. But officials are happy with the interest they’ve seen in places like Singapore, Hong Kong, and Australia.
More than 3.5 million people watched some part of LIV’s three-day event on YouTube or its app, and 432,000 watched the final round on the CW, which was the show’s biggest TV audience to date. The direct-to-consumer streaming options are useful for LIV officials, who say they’re trying to reach a younger audience, but not as much for marketers. More than 12 million people watched the final round of last year’s Masters, which Jon Rahm won.
Since the PIF teamed up with the PGA Tour in June of last year, many people thought LIV’s time was up. But LIV has only grown. It was a big deal for LIV to sign Rahm before this season started. This week, the league is hiring four senior-level execs and working on its 2025 schedule.
Even the golfers who don’t like LIV the most (like McIlroy and Rory) have come to accept its place in the game. When LIV first started in 2022, its events didn’t have any corporate signs. But so far this year, it has announced more than 20 global partnerships, such as ones with Panini and Google Cloud. More than a dozen companies have agreed to support its teams in different ways.
The LIV says it never meant to replace the PGA Tour, just like Formula One isn’t trying to replace car racing tracks in the United States. They think that the tours can work together, with teams from different leagues competing for a big title like the Super Bowl or World Series.
Didn’t say: What will happen to tired fans while LIV tries to grow and the PGA Tour starts a new business plan? About 45 million Americans hit a club last year, according to the National Golf Foundation. The number of people playing the sport has never been higher, but fans have never been happier. Professional golfers have never been richer.
“Right now, we are in the disruption phase,” Phil Mickelson, who was one of the first players to leave for LIV, said last week. It will be a lot better when it’s all over. It’s hard while we’re going through it, though. We’ll get there, though.
