Jun 9, 2022 - Economy & Business

PGA Tour facing threat that could upend the business of golf

PGA Tour member Tiger Woods celebrates a putt in front of a PGA Tour sign.

Photo: Jamie Squire/Getty Images

A full-scale battle has erupted between an upstart Saudi-funded golf series and the PGA Tour, potentially throwing the future business of golf into question.

Why it matters: Major broadcast networks have invested over $6 billion for the rights to air PGA Tour events through 2030, with additional commitments coming from corporate sponsors for players, the tour and its individual events.

  • But the newly formed LIV Golf series is luring top players with massive appearance fees and weekly purses, forcing the PGA Tour to fight to retain talent — and putting players, sponsors and fans in conflict given the Saudi kingdom's poor human rights record.

While tension has been brewing for months, the PGA Tour today suspended 17 golfers who participated in LIV Golf's inaugural event this morning in the U.K., citing their failure to secure required conflicting-event and media rights releases.

  • The suspensions include some of the world's top players and those drawing the kind of fan interest that fuels the money pouring into the PGA Tour itself.

Details: Phil Mickelson, Dustin Johnson, Sergio Garcia, Ian Poulter and Lee Westwood top the list of golfers "suspended or otherwise no longer eligible to participate in PGA TOUR tournament play," the PGA Tour wrote today in a memo to its members.

  • The organization was vague on whether and when they could return.

Yes, but: The names of players who have not left the PGA Tour are, at this point, equally notable. They include Tiger Woods, still the game's biggest draw, who's popularity changed the economics of golf immeasurably over the last two decades.

What's happening: Money. The average purse (prize money) for a weekly PGA Tour event is about $9.1 million, distributed among roughly 70 players.

  • The LIV series is promising $4 million to the champion alone — almost double that of a regular PGA Tour event winner — as part of a $25 million purse for each of the 7 events it has scheduled.
  • Any golfer in a LIV Golf event this year will make more money than they would finishing in an equivalent place in a PGA Tour event.

By the numbers: CBS Sports, NBC Sports and ESPN signed a nine-year rights deal with the PGA Tour in 2020, valued at around $680 million per year.

  • Corporations also pay to be title sponsors of the weekly tournaments, while others pay to be marketing partners of the tour itself.
  • LIV Golf, by contrast, is currently funded primarily through a $2 billion commitment from Saudi Arabia’s Public Investment Fund.

State of play: At the moment the LIV Golf series is toxic for sponsors given the Saudi connection.

  • And many corporate sponsors have long-standing relationships with the PGA Tour and its events.
  • Royal Bank of Canada dropped its sponsorship of Dustin Johnson after his decision to play in the LIV Golf series opener, citing its partnership with the tour and sponsorship of the RBC Heritage and the RBC Canadian Open events.

The intrigue: YouTube and Facebook are streaming the LIV Golf event this week, but it remains to be seen whether any traditional broadcasters will look to secure rights deals in the future.

What we're watching: Whether the LIV Golf series continues to bleed talent away from the PGA Tour, and expands its schedule to compete more directly with its calendar.

  • If it does, the PGA Tour and its members could be looking at a very different market when it negotiates its next media rights deal at the end of the decade.

Go deeper: Everything you need to know about the Saudi-backed LIV Golf series

Go deeper