LIV-PGA merger: a global opportunity with strings attached

News of Saudi Arabia-backed LIV Golf’s merger with the US PGA Tour and the European DP Tour points to the creation of an F1-style global organisation for golf, but the deal’s opportunity for brands threatens to put them in a tricky spot.

Why it matters

It may be at a geopolitical level, but fundamentally this comes down to brands and branding, part of a larger story about the Saudi Arabian Public Investment Fund’s (PIF) increasing involvement in the world of sport as a branding exercise. But buying teams and buying entire sports are very different moves, with serious implications for golf’s sponsor brands, players, and the ecosystem that surrounds them. 

The news

Sources tell the FT that the cash infusion from Saudi Arabia’s PIF could be as much as $3bn to make the deal. As the DP Tour and the PGA had previously banned any players that dared to join LIV, while enjoying the loyal support of major players, there is deep tension about the news.

• The deal will see a joint entity to manage both commercial operations – the PGA will continue to exist as a governing body – and is intended to bring to a close a flurry of lawsuits, including a knotty antitrust case against the PGA. Each party had sued, and the other had countersued, and there was no end in sight.

Saudi involvement in global sport

In the UK, Saudi Arabia’s engagement with sport has taken the shape of the acquisition (as part of a consortium) of the Premier League football team Newcastle United, while in the more rarefied world of golf, the PIF attempted to launch a whole new league and organisation, LIV.

Largely because of the association with the oil-rich kingdom, which was held responsible for the 2018 assassination of the regime-critical journalist Jamal Khashoggi, LIV struggled to attract sponsors or TV network partners, and some golfers who joined the organisation lost sponsorship.

Despite this, it’s likely that a lot more money is going to flow into the game of golf. Certain major organisations in the sport, such as Augusta National and Royal & Ancient, have welcomed the “harmony” it will bring to the otherwise divided sport. 

Where next?

Where this leaves a post-merger golf company, which has the potential to become a global business in the style of Formula 1 or the ATP Tour, is anyone’s guess. Some of the PGA’s golfers have openly criticised the move as shameful and a betrayal.

“I recognize that people are going to call me a hypocrite,” PGA Tour commissioner Jay Monahan said, in comments reported by the Wall Street Journal. “Anytime I said anything, I said it with the information that I had at that moment, and I said it based on someone that’s trying to compete for the PGA Tour and our players.”

What it means for brands is similarly complicated: the tussle for the soul of golf really points to a tussle over the lucrative commercial opportunity that has long attracted major business-to-business, finance, tech, and luxury brands – can they weather the association? If the experience of Newcastle United or, more successfully, the Abu Dhabi-owned Manchester City are a guide, it’s possible that the furore will diminish.

But buying a team is very different from buying a sport in its entirety. The PGA, which is under investigation by the US Department of Justice, is now attracting political pressure from both Democrats and Republicans.

Story by SPT

Sourced from the FT, WARC, The Athletic, AP, WSJ, Golfweek