Going to go out on a limb here and say that I believe Rory McIlroy will not win the US Masters in 2024.
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Scottie wins the Masters
Some really insightful predictioneering here
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https://twitter.com/business/status/1776656452062429249?t=ESEr_o7WxUAToU71jR27wQ&s=19
On the morning of March 18, 2024, a Cessna 750 Citation X departed from St. Augustine, Florida, carrying professional golfers from the PGA Tour to a summit in Nassau, Bahamas. This meeting was a key development in the battle between the Tour and its insurgent challenger, LIV Golf. The tour wars had spilled from the sports page to the business page to the front page because of a juicy mix of geopolitics, cartoonish money, courtroom battles, brand-name protagonists and high-profile trash-talking on Capitol Hill.
Awaiting the Citation’s arrival was probably the most powerful man on the planet who’s not a head of state: Yasir Al-Rumayyan, chairman of Saudi Aramco (the world’s most profitable company) and governor of the Saudi Arabian government’s Public Investment Fund, or PIF, which has an $860 billion war chest to alter economies and disrupt industries. That the PIF has poured billions of dollars into professional golf, of all things, owes much to Al-Rumayyan’s obsession with the game; the Bahamas was chosen for this gathering, in part, to accommodate Al-Rumayyan’s tee time with Tiger Woods, a player-director on the PGA Tour board who likes to spearfish in the Caribbean Sea from his 155-foot yacht Privacy.
Upon LIV’s noisy launch in June 2022, much of the golf establishment painted Al-Rumayyan as a shadowy, malevolent force hellbent on destroying the Tour, a proud American institution. Last June he roiled the sports world with a stunning armistice, agreeing to drop the antitrust lawsuit LIV had filed against the Tour and, through a vaguely worded “framework agreement,” pledging the PIF as a minority investor in a new for-profit business that would come to be called PGA Tour Enterprises. This entity would transform the Tour, historically a 501(c)(6) nonprofit. Among other benefits, PGATE would be able to dole out equity as a reward to the players who’d stayed loyal while many colleagues were lured away by LIV’s lucre.
The framework agreement has yet to be consummated, however, which has left professional golf in a state of deep uncertainty and forced each side to move weighty pieces on the chessboard. In December 2023, LIV stole reigning Masters champ Jon Rahm in a deal worth a reported $300 million, and three months later PGA Tour Enterprises played a bolder gambit by taking $1.5 billion in investment (with the ability to access another $1.5 billion) from the Strategic Sports Group (SSG), a consortium of American sports franchise owners and private equity heavyweights. With the fragile peace crumbling, the confab in the Bahamas was the first time all six PGA Tour player-directors would come face-to-face with Al-Rumayyan. Tour bureaucrats were there, too, as were a handful of SSG representatives.
The meeting took place at Woods’ condo at Albany golf club, a short drive west of Nassau. It’s a sterile space with not a hint of his Hall of Fame golf career. Al-Rumayyan was flanked by dour advisers in suits and ties, but his golf togs matched his casual demeanor. “Finally meeting him was very demystifying,” says Peter Malnati, a 10-year Tour veteran who recently won his second career tournament. “Yasir was very real, very human, very approachable and easy to talk to. He seemed like a real human being rather than some mysterious, potentially scary threat to our livelihood. That was nice! My biggest takeaway is that there is a tremendous amount of work ahead of us to find points of overlap in our vision for the future of professional golf and the future of the PGA Tour. But you could sense a hunger on his part to be a part of the Tour moving forward.”
And so all of golf’s stakeholders watch and wait, to see if a deal can get done to reunify the game or if LIV and the PGA Tour will go back to being bitter enemies pitting their fan bases, and deep-pocketed investors, against each other. This week brings the Masters, the first time since last July’s British Open that the best players from LIV and the PGA Tour will perform on the same stage. As a fractured sport faces this moment of inflection, it’s hard not to think of something Malnati said: “Sitting in these meetings with very powerful businessmen and businesswomen, listening to Tiger Woods talk about equity stakes and things like that—it’s very surreal. It’s like, how the heck did we get here?”
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In the 1980s and ’90s, the PGA Tour was just one complementary part of the global golf ecosystem. The European Tour produced a series of stars who made occasional cameos in the US. Tours in Japan, Australia and South Africa flourished. England’s Lee Westwood recalls that in 1998 he earned more for his victory at the Dunlop Phoenix Tournament in Japan than his win that same year at the PGA Tour stop in New Orleans. But tectonic change was coming. Woods’ epic victory at the 1997 Masters, which established him as golf’s biggest star since Arnold Palmer, came just as the PGA Tour was negotiating its next long-term TV deal, and access to Woods created a bidding frenzy. When that money kicked in for the ’99 season, purses skyrocketed from an average of $1.7 million per event to more than $3 million. Inexorably, the best players in the world flocked to the PGA Tour. Every other global tour withered. “‘Monopoly’ is a good word for what the PGA Tour had,” says Westwood.
This lack of competition showed in the uninspired Tour product. Drunk on the notion of making golf more mainstream, then-PGA Tour Commissioner Tim Finchem bloated the schedule to four dozen events, even though Woods—an independent contractor like all his peers—played in fewer than half of them. (And all but one of the tournaments were the same four-day, 72-hole slog, with half the field cut—that is, sent home—after day two.) The new World Golf Championships franchise became an oxymoron, with the tournaments dropping anchor in cosmopolitan outposts like Akron, Ohio, and Tucson, Arizona. Despite an army of highly paid executives, the Tour struggled to adapt to the changing media landscape: The TV coverage featured little innovation and a crushing commercial load, and for commentary relied on senior citizens whispering clichés. As social media developed, the Tour’s offerings were bland and sanitized; as streaming took hold, the options were glitchy and confusing.
Watching all this from afar was a London lawyer named Andy Gardiner. He was an obsessive golf fan with some connections to the professional game. Informed by conversations with players, agents and executives, Gardiner began filling notebooks with ideas on how to rethink professional golf. By 2018 he’d produced a painstakingly detailed 116-page prospectus, and early the next year branded his ideas as the Premier Golf League, or PGL. Gardiner sought to create a jazzier product geared to a new generation of fans. Fields of only 48 top players would compete in 54-hole tournaments with shotgun starts—that is, every group of three starts at the same time, on different holes—to condense the action and ensure that all of the protagonists were on the course at the same time. A team element as well as an individual leaderboard would stoke rooting interests. Every player would be contractually obligated to play in every competition, as in other sports. To buy this loyalty, Gardiner envisioned tournaments with $20 million purses. The PGA Tour average at the time was less than $8 million.
The PGL proposal was impressive enough to get Raine Group to commit $500 million. (The money couldn’t be accessed until certain benchmarks were met, like the signing of top players and the securing of a TV deal.) Gardiner found another eager investor in Al-Rumayyan. The Saudi International tournament made its debut on the European Tour schedule in February 2019, four months after the killing of journalist Jamal Khashoggi at the hands of a commando unit answering to Al-Rumayyan’s boss, Saudi Crown Prince Mohammed bin Salman. Amid the backdrop of Western governments and business leaders ostracizing MBS, the playing of the Saudi International helped crystallize that golf could be an effective way to “sportswash” the reputation of the Saudi regime. Golf had other benefits as well. MBS had staked his reign on Vision 2030, his bid to remake the Saudi economy and society. Sports and tourism were two pillars of this vision, and golf could buttress both. So the PIF pledged $500 million to the PGL, and its representatives began making the scene at the Los Angeles Open, the Masters and other high-profile golf gatherings.
Yet the PGL was unable to sign any top players—Gardiner says they were put off by the “reputational risks” associated with joining a breakaway league. In June 2020 he changed tack, seeking to forge a partnership with the European Tour. Negotiations were hot and heavy until PGA Tour Commissioner Jay Monahan swooped in and persuaded the establishment to band together against the upstarts in what came to be known as the “strategic alliance.” It cost the PGA Tour $100 million of its reserves, used to purchase 15% of European Tour Productions, a quiet moneymaker that produces the television feed of tournaments broadcast to dozens of countries. The PGL was dead in the water.
The Saudis decided to go it alone. During the spring of 2021, in a move that will forever be studied in business schools, Monahan ignored overtures by Al-Rumayyan’s deputies, who wanted to meet with the Tour to forge a partnership. To his board of directors, Monahan declared, “We are at war.”
The Saudis responded by recruiting two of Gardiner’s top lieutenants, Jed Moore and Gary Davidson, and essentially cutting and pasting the PGL’s format and business plan into their own league. (The Times of London reported this winter that the PGL’s lawyers have been in protracted negotiations with the PIF, trying to forge a settlement to avoid taking the fight into the courts; a PGL investor tells me they’re seeking $470 million.) Suddenly free agency and a new wage structure had come to professional golf. In a sport that had always required players to kill what they ate—if you miss the cut, you go home with nothing—the Saudis were now offering signing bonuses, salaries and equity in the teams of what had come to be known as LIV Golf. (LIV is Roman numerals for 54, theoretically the perfect score in a round of golf if a player birdies every hole. But what if the course isn’t a par 72? Eh, never mind.)
LIV conducted its first tournament in June 2022, and by the end of that summer had signed a polarizing Hall of Famer (Phil Mickelson), two future Hall members (Brooks Koepka, Dustin Johnson), a bevy of major championship winners (Bryson DeChambeau, Sergio Garcia, Patrick Reed, Henrik Stenson, Graeme McDowell, Louis Oosthuizen), Ryder Cup stars (Westwood, Ian Poulter, Paul Casey) and the reigning British Open champ (Cameron Smith). The biggest names secured compensation packages into nine figures, on top of whatever they could scoop up from the $25 million purses for each event. For a boutique sport, the money was, in the words of LIV signee Pat Perez, “f—ing incredible.”
Monahan tried to hold on to his stars by villainizing the Saudis, asking on national TV, “When have you ever had to apologize for being a PGA Tour member?” When that failed to stop the exodus to LIV, he tried to appeal to his players’ sense of history, noting that the Tour is about “legacy, not leverage.” That flopped, too. As one prominent agent explained, “What you have to understand about professional golfers is that they are all whores. That is the starting point.”
It took a player uprising for the Tour to finally fight back. At the BMW Championship in August 2022, Woods and his wingman Rory McIlroy invited 21 of the other cool kids to a secret meeting in which the players agreed on a plan to reshape the Tour, turning a dozen existing tournaments into marquee events with $20 million purses. Some would have limited fields and no cut, mirroring the LIV product. A chastened Monahan couldn’t say no. The Tour was finally fighting dollars with dollars, and so for the 2023 season Al-Rumayyan and his helpers couldn’t lure a single blue-chip player to make the leap to LIV. For the first half of the season the warring tours settled into an uneasy stalemate. One problem: Neither business made sense, and they appeared to be on a path to mutually assured destruction.
“None of this makes sense, except that sports trades like art—the value is in the eye of the beholder”
Since its inception, LIV has had dizzying turnover among its leadership. Commissioner Greg Norman has managed to survive, but his role is largely to interface with the media and his players. The key people in the day-to-day grind are Andy Gardiner’s former collaborators, Moore and Davidson, Brits who each carry the title senior adviser. Moore and Davidson rarely do on-the-record interviews but consented to two long conversations in March. “What people fail to appreciate,” says Moore, a big man who has the air of Harry Potter’s uncle Vernon Dursley, “is that we are only 20 months into this. It is still in its infancy.”
The PIF has sunk billions of dollars into LIV, yet revenue remains minimal. While ABC, CBS and ESPN pay the PGA Tour $700 million annually to televise and stream tournaments, LIV gets nothing upfront from the CW Network, just a revenue share from the infrequent advertisements. (LIV’s various—and excellent—streaming options are free to fans, but so far the audience has been only a fraction of those for the worst-performing Tour telecasts.) Each of the 13 team franchises is a business within the larger business, actively pursuing corporate sponsorships. Despite middling play, the Majesticks—co-captained by Westwood, Stenson and Poulter—have had the most success in the marketplace, signing deals with five UK-based companies.
But again, the money is modest; when I asked a LIV executive if the Majesticks’ revenue touches $10 million annually, they sighed, “That would be nice … but no.” So how can the PIF possibly hope to get its money back, let alone turn a profit?
“Formula One is a really good comparison,” says Moore. “Five, six years ago, none of the teams were profitable. Look at the team valuations now, with perhaps 50% of teams being profitable. Many of the teams are now valued north of the billion-dollar mark. That movement of sports as an asset class, that movement of private equity seeing it as a safe haven, the escalation of different commercial streams …”
“This is golf, so it’s global,” interjects Davidson. “There is a massive amount of peripheral opportunities that don’t exist in other sports: fan participation being one, real estate being the other. Looking at scarcity [of only 13 LIV franchises] … that’s primarily how this delivers value.
The PIF owns 75% of each franchise, with the remainder of the equity claimed by the team captain, who can dole it out to recruit other players. In the original PGL prospectus, Gardiner forecast a value of $500 million per franchise. If LIV could command anywhere near that, the PIF would have an avenue to getting its investment back and then some.
Are PE firms or bored billionaires really going to pay mid-nine figures for the Crushers or 4Aces? Speaking about institutional investors’ sudden interest in golf, Joe Ogilvie, a former PGA Tour player turned partner at the hedge fund Wallace Capital, told me in February, “None of this makes sense, except that sports trades like art—the value is in the eye of the beholder.” In March, Ogilvie was named to PGA Tour Enterprises’ board of directors.
Its seemingly endless cash reserves allow the PIF to play the long game. “We’ve had interest in teams,” says Davidson. “If we had needed to sell portions of teams, we could have. We’re waiting to maximize value.” He also notes that the league has room to add two more expansion teams.
Real estate is also part of LIV’s business plan. Each franchise is currently scouting for a home venue, either an existing course that could be purchased or raw land that could birth a new design. The vision is a multiuse facility with a team headquarters, practice facilities, a teaching academy to cultivate young talent and space for corporate entertaining. Housing subdivisions are on the table. The LIV schedule would visit each venue, allowing the host team to set it up for maximum home-field advantage. Westwood is 49, and while he’s still a preeminent iron player, he’s lost pop with the driver. His ideal design for a Majesticks course: “short, with small greens.” DeChambeau, by contrast, is the longest hitter in the game. PGA Tour venues top out at about 7,500 yards in total length. It’s easy to imagine DeChambeau building for his Crushers team the world’s first 10,000-yard course.
Senator Richard Blumenthal, a Democrat from Connecticut, would no doubt take a keen interest should LIV teams begin gobbling up swaths of American soil. Last summer he called congressional hearings about the framework agreement, expressing concern that the Saudis are using golf as a beachhead to buy into other US sports and assert influence on related industries. Separately, the Department of Justice has been scrutinizing all the machinations between the PIF and the PGA Tour. Nonetheless, Monahan sitting side by side last year with Al-Rumayyan on CNBC’s Squawk Box to announce the framework agreement was a signal to the golf world and corporate America that it’s now OK to do business with LIV. “All of a sudden we have a level marketplace,” says Moore. “To think what we had to go through to get here.”
The first of the PGA Tour’s new $20 million tournaments was played in January 2023, sating the stars who were ravenous for LIV-like paydays. But Monahan was writing checks he would not be able to continue cashing. As LIV’s Perez diagnosed in his imitable way, “The PGA Tour’s whole model is f—ed because it is dependent on squeezing more and more money out of corporations that are already tired of getting squeezed. We don’t have to worry about that out here. Our money comes out of the ground.”
High-profile desertions of title sponsors such as Honda Motor Co. and Dell Technologies Inc. hinted at the rebellion Monahan was facing as he demanded $25 million to sponsor a four-day golf tournament. (Tour representatives are quick to point out that the renewal rate with sponsors is over 80%, and the average length of those relationships is more than 13 years.) In its battle with LIV, the Tour was also getting crushed by legal fees running into the tens of millions of dollars. The framework agreement stopped the bleeding and gave the Tour’s executives room to rethink the entire business. The creation of PGA Tour Enterprises to manage all the commercial rights was the result. (The old 501(c)(6) endures for tournament operations and to dispense the charitable money that’s generated.) “We had a natural conflict based on our structure,” says the Tour’s chief financial officer, Jay Madara. “There was no ability to raise or deploy growth capital for project financing or acquisitions that would generate revenue over the long term. Now, with the changes to our business, we have the capital to invest and diversify.”
As it became clear that the framework agreement was merely aspirational—that it had no binding provisions or penalties should one side back out—sharks from Wall Street, Silicon Valley and Hollywood began to circle. There was so much of what Madara calls “inbound traffic” that the Tour brought in the investment bank Allen & Co. to manage the process. Twenty parties signed nondisclosure agreements, and ultimately 11 submitted bids to invest in PGA Tour Enterprises, though it was unclear (and still is) whether this money would augment or supplant the PIF. Soliciting offers may have just been a bargaining ploy by the Tour, but the Strategic Sports Group, led by Boston Red Sox owner John Henry, made an offer Monahan couldn’t refuse. In January 2024 it was announced that SSG was putting $1.5 billion into the Tour for an unspecified equity stake. (Sources tell me it’s 11.5%.) The Tour can access as much as an additional $1.5 billion by selling more equity to SSG.
The Tour is now better capitalized than at any point in its history. The first order of business has been to make whole the top players who stuck with it, many having turned down blockbuster offers from LIV. Equity grants totaling $750 million are currently being rolled out to 36 marquee players, with a complex algorithm assessing a player’s past performance and popularity to determine who gets how much. Another $105 million will be distributed to 121 of the rank and file, in addition to $75 million for 36 all-time greats who helped build the Tour. The size of the individual grants will not be made public. “Tiger is at the top, obviously, and I’m No. 2,” says McIlroy. “Phil [Mickelson] would have been second, but he’s not anymore.”
“Guys want to be paid like an NFL quarterback, but we don’t create the same value”
The equity grants are an effective retention tool, but the larger questions hanging over the SSG investment are how the restructured Tour will innovate and if this big bet will pay off for SSG. “The key is increasing revenue,” says McIlroy, “and to do that we gotta commercialize the shit out of the product. We need to attract new fans, and that means Tour stops need to look more like [the rowdy WM Phoenix Open] … more of an event than a golf tournament. You have to make it fun, with music acts, this and that.” You can practically hear LIV loyalists rolling their eyes, as that tour has been widely criticized for leaning in on entertainment aspects like … playing music on the tournament grounds.
McIlroy also points to a fundamental flaw in the Tour model: “We don’t own enough of our tournaments.” Indeed, only six events are owned and operated by the Tour; the rest are run by local foundations in the host cities. SSG money will allow the Tour to become more vertically integrated (like LIV!). “There’s a real estate play here,” says McIlroy. The Tour already has an established brand it can grow, the Tournament Players Clubs, a network of 31 public and private facilities. Various options to expand into gaming are also being explored. Given that the competition runs four days a week, dawn to dusk, the Tour is already a favorite among gamblers.
The fans have largely been an afterthought in this ongoing battle of the haves and have-mores. Many of the best ideas to engage golf lovers bump up against institutional resistance. PGA Tour player Joel Dahmen recently enthused, “Me and Geno”—his trusty caddie Geno Bonnalie—“have solved this whole thing: Make every player and caddie wear a mic for every round, and put it on a feed where nothing is censored. All the sickos at home would pay a ton of money to subscribe to that. We could literally double the Tour’s revenue. But the players will never do that because there would be too many divorces.”
Clearly, the PGA Tour has a long way to go to reinvent itself. Its new investors are being patient, for now. “SSG was adamant throughout the process that they’re in this for long-term value creation,” says Len Brown, the Tour’s chief of golf business ventures. “They’re not looking for a return next quarter or the quarter after.” Good thing, because the bonanza might have to wait until 2031, when the next media rights deal kicks in.
For the first three months of 2024, the PGA Tour winners were mostly a collection of journeymen, to say nothing of an Auburn University undergrad. TV ratings sagged accordingly. The big personalities, the antiheroes, rascals, muckrakers and trash-talkers have largely gone to LIV, leaving the Tour anodyne and diminished. But many fans remain indifferent, if not downright hostile, to the alternative. The splashy signings of Rahm and wayward bad boy Anthony Kim have done little to increase LIV’s tiny audience. A commonly voiced sentiment from fans on golf Twitter is that they’ve grown wary of the professional game’s bitchiness and endless talk about money and have stopped paying attention to both tours. McIlroy helped usher in this epoch of wildly overpaid players with his invite-only meeting that reshaped the PGA Tour, but now he’s voicing buyer’s remorse. “Guys want to be paid like an NFL quarterback, but we don’t create the same value,” he says. “The ratings for the final round of the [season-opening Tournament of Champions] was 1 million, and for the AFC Championship Game [on the same day] it was 50 million. If that’s not a wake-up call, I don’t know what is.”
The obvious solution is for the framework agreement to be completed and implemented and the PIF to invest in PGA Tour Enterprises, creating a bridge between LIV and the PGA Tour so all of the best players can compete against each other more often, juicing interest in both circuits. But money, ego, pride, bitterness and vengeance are a combustible mix in a boardroom. Folks at LIV who have spoken recently with Al-Rumayyan report he felt jilted that the Tour did a deal with another suitor ahead of the PIF. Meanwhile, the sober number crunchers at SSG and on the PGA Tour Enterprises board are wary of LIV’s track record of profligate spending and management chaos. A player representative with clients on both tours says, “These guys at SSG are smart American businessmen with a track record of success in the sports world. Why in the world would they turn to this motley crew? The PIF has a very immature business perspective, because they can buy anything and anyone. You take a culture of authoritarianism and add to that a complete misunderstanding of American sports, and it has led to an unrivaled arrogance.”
And yet, in less than two years, LIV has proven to be a disruptor for the ages, taking a tired sport and ushering it into a new era awash in institutional money. Professional golfers are now making more dough than they ever dreamed possible. The unresolved question is, can their sport survive all of this good fortune?
Golf has basically eaten itself.
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I don’t understand what the LiV lads wanted to. Invariably sport washing is trying to be more popular. Why didn’t they just pump a load of money into the tournaments? Sure everyone would love them then.
Instead they just ruined the whole lot. Nobody is really watching Liv golf. Most of the players have been forgotten about and the pga tour is crap.
It seems so strange.
I don’t know enough about the various motivations but i was always interested in the majors and now I’m not.
It should have made the majors better but a lot of Liv lads just have so much money I’m not sure there arsed even practising tbh.
Hard to see any of them challenging the leaders on the back 9 on Sunday. I fear their golf stamina has been adversely affected by playing such light schedules & 3-round tournaments cc @Raylan @gilgamboa.
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Was it not golf stamina was Lowry’s problem according to yiurself that time? That he was too fat and unfit to do it of a sunday ?
It’s basically a disaster for golf that a large portion of the best golfers in the world have decided less
Golf is better.
I doubt any of them are genuinely any happier either.
Wtf? Loads of them are happier. They’ve swapped a handy number for an even handier outrageously paid number.
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I’ve never heard one of them complain since they signed up
Always loved Augusta and would always book the Monday after it off. But you’re right. I might not bother with it this year
Thought Brooks or some of them wanted to come back to the PGA.
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It’s a bit disappointing still though. Even in soccer lads haven’t all taken the Saudi money. Competitive pride still holds out.
With golf they just ruined it with the money.
As @BruidheanChaorthainn alluded to, the likes of Benzema seem completely miserable in Saudi despite the £$¥. It’s quite reassuring that nobody follows the football & the rare clips I see on social media look completely grim. LIV golf is along the same lines.
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You look at what the Middle East has brought to professional sport and it’s not positive on the whole.
Football has been ruined by it. City owned by a Gulf State and going for their 6th title in 7 years, in what is supposed to be the most competitive league in the world. Going for back to back trebles without breaking a sweat. 115 charges hanging over them but because of the political influence they have they’ll escape with a small punishment, possibly years down the line.
In golf, not all the best players are facing each other regularly. A huge split that has nearly killed the sport. Obscene money thrown at players. As with city, it’s just all so sterile and emotionless. They’ve so much money, power and influence they are never told no.
It’s seeping into other sports too as they branch out.
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