The leadership of LIV Golf likes to position itself, in Silicon Valley terms, as a “startup” business. And for a startup, it has had a mostly successful year so far, aside from the usual bumps and bruises.
It certainly got its brand out there, in and out of the golf community. LIV Golf signed Phil Mickelson, Dustin Johnson, Bryson DeChambeau, Brooks Koepka, Cameron Smith and more than 40 other golf professionals from around the world. It induced Henrik Stenson to forfeit his Ryder Cup captaincy. And, perhaps most importantly, it forced the PGA Tour to fundamentally change its structure.
However, LIV comes up short of the classic startup model in two key respects.
First off, startups need what is called “proof of concept.” That means that there must be some degree of evidence of product viability. Judging by the first four events, LIV does not have such proof.
To be sure, it has invested countless petro dollars on players, staffing, host venues and tournament infrastructure.
However, the galleries at the first four events have been, to be generous, paltry. This, even though tickets in the markets practically have been given away. If you can’t sell tickets at a reasonable price to big-time professional golf during the summer in London, Boston and the New York metropolitan area, you have a problem. Something is wrong with the product.
The problem is compounded downstream. Without a meaningful number of on-course spectators, LIV will not find an American television partner. I mention “American” because that is where the big money lies. Without TV, golfers are not going to sample the product, and corporate financial support will not materialize. It’s a vicious cycle that begins with poor attendance and lack of consumer interest.
LIV knows it has a problem. And that is why it recently joined the federal antitrust lawsuit against the PGA Tour, known as Mickelson et al v. PGA Tour, and filed in the U.S. District Court in Northern California.
Startups typically don’t throw themselves at the mercy of the American judicial system, but that is what is happening in this instance.
Some of the language in the amended complaint was eye opening. LIV claims that absent a favorable outcome from this litigation, its “ability to maintain a meaningful competitive presence in the markets will be destroyed.” LIV knows that the business model with which it launched is in trouble, and so it is pleading with the court to save the day.
This comes even though Judge Beth Labson Freeman expressed skepticism about the underlying premise of the suit. In her written statement released two days after the August 9 hearing, at which time she denied the temporary relief sought by three former PGA Tour players, Freeman indicated that the antitrust claims by LIV were dubious. Attorney Gerald Maatman, an antitrust expert with Seyfarth and Shaw in Chicago, told Global Golf Post: “It was a really good day in the courtroom for the PGA Tour. I guess you could say that the PGA Tour made a birdie and the plaintiff made a bogey or a double bogey.”
One is left to wonder what happens to LIV Golf if the court does not grant a favorable ruling. It’s unlikely that the Saudi Public Investment Fund, which is bankrolling LIV Golf, will get cold feet and move on to something else. LIV has come too far, and it’s still early in the match. More likely is an all-out effort to seek compromise with the golf ecosystem.
Two big determinants ultimately will decide the future of startup LIV Golf: Will the league get Official World Golf Ranking points, and how will the four men’s majors treat LIV players next year?
Both topics will keep LIV in the news in 2023.
Top: Australians Cameron Smith (left) and Marc Leishman are two of LIV's latest talent acquisitions.