After two years of fighting between them, the PGA Tour has agreed to merge with Saudi-backed rival LIV Golf. While today was a historic day for the sport of golf, whether the deal will be remembered as famous or infamous depends on who you ask.
Let’s lay the groundwork for those unfamiliar with the sport and this story. 👇
LIV Golf is funded by Saudi Arabia’s Public Investment Fund (PIF), which is designed to take the country’s vast oil riches and diversify them into other assets. The country, which has been expanding its footprint aggressively, was looking into the sports world for its next venture. So, it set its eyes on golf about two years ago.
It founded LIV Golf, named after the Roman numeral for the number 54, representing the number of holes its tournaments will have. That’s 18 fewer than a typical PGA event. Anyway, it was in discussions with the U.S. Professional Golfers’ Association of America (PGA) Tour to collaborate in some way, shape, or form. Oh, and the PGA Tour is North America’s leading golf organization registered as a not-for-profit entity.
Despite LIV’s efforts, discussions went nowhere since the PGA and its stakeholders were concerned about where the LIV’s money came from. Saudi Arabia’s human rights record is not good, and arguments remain that its push into sports and other Western parts of culture was an attempt to cover up the country’s issues. 👎
Since no progress was being made, LIV Golf decided to launch its own tournament in 2022 and lure some of golf’s biggest names away from the PGA Tour with massive paychecks. Increased prize money, fewer tournaments per year, and smaller fields with three rounds instead of four in each tournament also incentivized players to switch sides. 🤑
The PGA Tour sued LIV Golf for a variety of things and discouraged players from switching over, with several big names choosing the moral high ground over the mountain of money they were offered. And despite the heavy funding, early indications were that it was failing to gain significant traction with viewers.Â
However, that all changed today, given the news. The PGA Tour (including the DP World Tour) announced it would merge with LIV Golf, surprising many players who learned of the decision at the same time as the public. 🤯
The two entities will combine their commercial businesses and rights into a new yet-to-be-named-for-profit company. The PIF is reportedly prepared to invest billions of new capital into the entity, which it hopes will unify the sport globally. And lastly, the merger will end all pending litigation between the two as they iron out the final details in the coming weeks.
Ultimately, this is a massive story for sports and business fans alike. Over the last few years, money has flowed aggressively into sports teams, their streaming rights, etc. It’s clear that global consumers love sports, and big business is looking to capitalize on their passion. 🤑
We’ll have to see how this all plays out. But as usual, incentives remain at the core of human decision-making. And money talks…especially when talking about an oil empire’s worth of it. 💰