Conventional wisdom says LIV Golf is a rich kingdom’s folly. But it’s not. It’s a function of basic economics.
While a lot of attention has been paid to LIV Golf paying richer purses and more guaranteed money to golfers than the PGA, that’s not why LIV Golf is here to stay. The PGA has behaved like a stale monopoly for many years. It has caused some of its players to grumble about a lack of financial disclosure, paid its executives too much and failed to deliver for its customers, who often don’t even know where their favorite golfers are going to play.
As Gregory Bresiger reported in June, the PGA took in $1.5 billion in total revenue in 2019—the same year PGA Commissioner Jay Monahan received compensation of $8.9 million. Had he been a player on the tour, Bresiger wrote, Monahan’s income would have ranked him second in official PGA Tour money winnings behind Brooks Koepka’s $9.7 million and ahead of Rory McIlroy’s $7.8 million.
In 2020, the PGA, a “nonprofit,” posted net income of $87 million on revenue of $1.16 billion, with its executives pocketing $34 million in compensation. But its annual report provides little disclosure on details. As far back as 2013, golfers like Greg Norman (now the commissioner of LIV Golf) complained about the PGA’s byzantine record-keeping. “I’ve been asking for an independent audit for years to make sure there is full financial transparency, and it has never been done,” Norman said.
The guaranteed purses offered by LIV Golf have a distinct advantage for golf fans and sponsors over the PGA beyond dollars and cents. They know who is going to be playing every tournament. As one top golfer recently suggested, create 12-14 big events a year where the stars are guaranteed to show up and the tour will look more attractive to sponsors, TV networks and fans. “The era of maximum playing opportunities needs to go and the era of the best against the best more often needs to start,” the golfer said. LIV Golf also has a different tournament format.
The PGA’s first reaction to LIV Golf was to ban its newly signed members from PGA events and start a lobbying effort against the Saudi-backed league. The move was dumb and screamed of hypocrisy, given that many of the PGA’s sponsors do business with Saudi Arabia and the LPGA is backed by Aramco, a Saudi energy and chemical company. The Saudi Public Investment Fund behind LIV Golf even owns a stake in the PGA Tour Fan Shop.
The PGA may have finally awakened from its long slumber. The association has just announced that it will increase its prize money to a record $429 million.
The only thing missing for LIV Golf—albeit the big piece—is a substantial media deal. The PGA recently signed nine-year agreements with CBS, NBC and ESPN+ to broadcast coverage of events through 2030. It’s reported to be worth $700 million a year, amounting to more than $6 billion over the course of the contracts. There’s no reason why LIV Golf shouldn’t get something comparable.