It’s time to be honest about the LIV Golf situation. It is on life support, and the patient is going to die.
The fact is that LIV Golf is a distressed asset and does not have a viable business model. LIV leadership claims that it will remake the business and raise new capital, and has reportedly retained a consulting firm to help toward that end.
But finding new capital is a pipe dream. There is no rational capital out there for this entity.
Put yourself in the shoes of a private-equity investor. Let’s say LIV gains a meeting with you, which just by itself would be remarkable, given the drumbeat of negative news that has come out in recent weeks.
What is their pitch to you?
It would go something like this: We have this business, but one of the largest sovereign wealth funds in the world cut off our funding. The leader of that fund is no longer involved in our business at all.
Our league has lost multiple billions in its four-year existence. We are on record as saying that profitability is at least five years away, and likely more than that. Our single best-known player is under contract only for the rest of this year, and he is expecting a massive payday going forward. Our next best-known player is under contract through all of 2027; we don’t know what he will do after that. The rest of the players on our roster are not brand names, even though most of them are very skilled golfers.
While we have had success in certain markets, the United States is not one of them. We don’t have a meaningful media-rights deal in America, and we are not going to secure one any time soon, if ever. We just don’t deliver anywhere close to the number of eyeballs needed.
We have some sponsorship support, and it is growing, but it is not nearly enough to keep the operation afloat without a lucrative media deal.
One key factor is too often overlooked when analyzing the situation, and that is the so-called “framework agreement” that the PGA Tour, DP World Tour and Saudi Arabia’s Public Investment Fund reached in 2023.
Given all that has been written about our business model, venues and vendors are now requiring us to pay all fees and costs in advance.
Oh, and one more thing. Our season begins next February. So we need to move very quickly.
Other than that, we have a bright future and a long runway.
This would be a very short meeting.
Simply stated, LIV Golf cannot be financed at almost any valuation. It has too much baggage, and time is the enemy.
There are lots of reasons LIV finds itself in this situation. High player costs, limited Official World Golf Ranking points, expensive events, minimal U.S. fan interest, and so on. They all have been discussed to death. But one key factor is too often overlooked when analyzing the situation, and that is the so-called “framework agreement” that the PGA Tour, DP World Tour and Saudi Arabia’s Public Investment Fund reached in 2023.
This pact intended to merge the three parties’ commercial activities into a for-profit entity. PGA Tour commissioner Jay Monahan was to be the CEO of what was then called “NewCo,” and PIF governor Yasir Al-Rumayyan was to become the chairman. The PGA Tour was to have operational control of the new entity, and the PIF also agreed to invest an undisclosed sum.
Jimmy Dunne was a key player in PGA Tour-PIF negotiations.
MIKE MULHOLLAND, GETTY IMAGES
Deftly negotiated by PGA Tour board members Ed Herlihy and Jimmy Dunne, the deal never reached a final definitive agreement. But it did accomplish two things.
First, it stopped the PGA Tour’s financial hemorrhaging in connection with the 2022 antitrust lawsuit LIV filed against it and the tour’s subsequent countersuit. Many suspect that the PIF/LIV strategy was to sue the tour into submission. It almost worked. Shelling out tens of millions of dollars in annual legal fees was simply not sustainable. With the framework agreement, the legal dispute ended forever, and LIV lost most of its leverage.
But here is the other less-discussed result of that agreement; it caused LIV to have to focus on its actual product and compete in the real world. No longer could it hope for a lenient judge in some jurisdiction to rule in its favor, thus allowing the players LIV recruited to play in LIV events as well as PGA Tour events. That situation would have resulted in a free for all, and it’s conceivable that the PGA Tour would have had to merge with LIV on unfavorable business terms.
Forced to compete, LIV’s product proved unviable. It was so from the start. All the “golf but louder” shenanigans masked this simple fact.
It is hard to overstate the importance of that framework agreement. Everything that followed – the Strategic Sports Group’s investment in the PGA Tour and the resulting creation of the for-profit PGA Tour Enterprises, the hiring of Brian Rolapp as CEO, the tour’s workforce reduction, and the possibility of a two-tier tour all came as a result of it.
The imminent death of LIV is just another unforeseen consequence of the now-famous but never-finalized agreement.
Top: Jay Monahan (left) and Yasir Al-Rumayyan
ROSS PARKER, SNS GROUP VIA GETTY IMAGES
