While golfers may have different and very deeply felt views of the year-long battle among the PGA Tour, DP World Tour and LIV Golf and the bickering and back-and-forth, there is little argument in the business community about how the virtues of the proposed agreement announced Tuesday likely will benefit golf.
“It makes it even more of a global sport, with events scheduled all over the world with the best players participating,” said Casey Alexander, managing director and equity analyst for Compass Point Research & Trading and an astute follower of the game. “The inference is that golf will push harder to penetrate underserved geographies and grow the game through increased exposure in new markets. Over time, we would expect golf to have great uptake in these newer or less exposed markets, adding to the global population of golfers and golf spectators.”
Those developments cannot help but bolster the game as well as the bottom lines of the biggest businesses in the golf industry.
“Growth in demand and sales will come to Topgolf Callaway and Acushnet and also TaylorMade and Ping without their having to do anything different because of their size and the fact they hold 80 percent of the world market,” Alexander said. “They will have already absorbed their fixed costs, so then it is only a matter of covering their variables, which means they will do very well even if there is as little as a 1 percent increase in global golf sales.”
“We see no downside to the new agreement and the merger of the tours. And for those who have hated LIV – and there are plenty of them – it is important to remember that you cannot let hatred intrude on making good business sense of a situation."
Casey Alexander
The fact that this new and as-yet-to-be-named tour will be coming to market with a slew of built-in rivalries will only elevate interest, especially given that professionals who have developed visceral distastes for each other will no doubt be paired in tournaments time and time again.
Increases of equipment sales that come with the game being seen and played by greater numbers of people is but one way golf will benefit from this brave new world. Consider also the inevitable proliferation of off-course entertainment venues, especially Topgolf, which dominates that category and already has an overseas presence that it hopes to grow in years to come.
“Currently, the company has 10 international locations but has identified a potential for 250 others,” Alexander said. “The international model at Topgolf Callaway is a franchise model. And the greater exposure of top-level golfers in international markets could accelerate the adoption of the franchise model in these spots, thus accelerating revenue growth from the Topgolf division without requiring additional capital outlay.”
The increased overseas presence that will come with the PGA Tour-LIV Golf business-interests deal also dovetails nicely with the grow-the-game aspects of golf in the Olympics as it works with the Asia-Pacific and Latin America Amateur championships in spreading the gospel of the game in those regions.
“And forget about golf going anywhere as an Olympic sport,” he said. “The sport is already doing well in that event and will only do better going forward.”
Then, there is women’s golf, which has been receiving support from Saudi Arabia through its Aramco Series – and which is likely to see both the LPGA and Ladies European Tour become part of this new and different alliance now that the major men’s tours have broken the ice.
“We see no downside to the new agreement and the merger of the tours,” Alexander said. “And for those who have hated LIV – and there are plenty of them – it is important to remember that you cannot let hatred intrude on making good business sense of a situation. And this move is good for the business of golf.”
John Steinbreder