Lots of money, stables like in Formula 1 or the equivalent of a fantasy league. The origin and future of the spectacular Saudi LIV Golf project

To date, many fans and experts have not been able to understand what exactly the strategy behind the new LIV Golf project, which is subsidised by the Saudi Arabian state. How can the investment of hundreds of millions of dollars be recouped while the tournaments of this (so far) golf midget with great potential can be found for free on an ad-free internet stream? The answers to many of these questions lie much deeper than meets the eye.

Tough questions, but with partial answers came Golf Digest’s U.S. editors Joel Beall and Dan Rapaport, who interviewed roughly 30 people connected to the PGA Tour and LIV Golf.

To understand the strong desire to dominate world golf, we have to understand that it is not a passionate golfer who is behind it, but a few rich men from Saudi Arabia who have so much money at their disposal that you couldn’t count it in a lifetime.

“Mohammed bin Salman – 36 years old, is the Crown Prince, Deputy Prime Minister and Minister of Defence of Saudi Arabia. His father, Salman bin Abdulaziz, is the country’s king, but bin Salman is considered the de facto ruler. His rise to power over the past decade has transformed social and business life in the kingdom while strengthening the country’s position on the international stage as a geopolitical power,” is how Golf Digest describes the very pinnacle of the whole process, called LIV Golf.

The entire project is part of the grand Vision 2030 programme, which was just unveiled by Bin Salman. In a way, it is a grand project to make Saudi Arabia one of the most powerful players in the world. It is a strategic framework for reducing Saudi Arabia’s dependence on oil, diversifying its economy and developing public service sectors such as health, education, infrastructure, recreation and tourism.

Sports should also be among the other catchment areas of this project. This should be done in such a way that it has as global an impact as possible. That is why the Saudis’ major sports investments also include Formula 1 and Newcastle United football club.

Let us return for a moment to the Vision 2030 project, of which Neom is to be a part. Imagine a place on earth that is literally a dream for business and life for everyone on the planet. A home for people who have big dreams and want to be part of building a new model of sustainable and prosperous living.

It is to become home to over one million people and to think of everything. Including establishing a new model for urban sustainability, setting new standards for community health, environmental protection and the efficient and productive use of technology.

From an investment perspective, LIV Golf is a small business compared to other Vision 2030 projects. LIV Golf is to be built at an estimated investment of $3 billion. For context, Neom has an initial budget of $500 billion and additional developments over a 75-mile area are expected to cost $1 trillion and take 50 years to build.

Now I may have gone off the original beaten path, but that’s just to give you an idea of the whole context and especially how ridiculously high (if you want low) the investment in golf is, compared to the other plans that LIV Golf is going to be a part of, like a small puzzle piece, ideally fitting into the whole puzzle.

Part of the sports campaign is Golf Saudi, led by Yasir Al-Rumayyan, who is part of bin Salman’s inner circle. Golf Saudi has been trying to break into the market alongside the PGA Tour European Tour as part of Vision 2030. There are finally some signs of cooperation from the European Tour, which is part of the DP World Tour, at this point after all. However, not from the American PGA Tour.

From the very beginning, however, the PGA Tour has refused any discussions with the Saudis about a possible collaboration. In a way, one could say that such a strategy will completely close the Saudis’ plans. But when it comes to bin Salman, the situation is a little different.

“He’s not used to losing or being beaten back. When he fails somewhere, he tends to try harder and cut himself up for his cause,” says Karen House, a former Wall Street Journal columnist.

And so his doggedness eventually led to the creation of a project with an original connection to Saudi Golf, now called LIV Golf. Yet Mohammed bin Salman knew from the start, and made it clear, that the collaboration would benefit everyone financially, including the PGA Tour. Whether on moral or business principles, the PGA Tour with its Commissioner Jay Manahan has always been against it.

And as for the moral principles of funding today’s LIV Golf, the PGA Tour is also sponsored by several large companies that are directly connected to Saudi Arabian money. So it’s hard for Monahan to believe that the origin of the money is the most significant issue for him and those around him.

Another sentence by a journalist who wrote succinctly, “We buy oil from them, so why can’t we buy golf from them?” fits the context

Let us move on to the next question. Where does bin Salman find the inspiration to achieve his dreams? The answer is video games. “The reason he believes he can do anything is because anything is possible in the world of video games,” House said.

HOW DOES LIV GOLF WANT TO BREAK THROUGH?

It’s been a long few months since the idea for the project began. LIV Golf is hitting the golf world ecosystem very hard these weeks, and it’s clear that it will have irreversible consequences. Whether they will be more positive or the opposite in the final reckoning is a question that cannot be answered at the moment.

Another person who is currently trying to drag the LIG Golf project to the top is Atul Khosla, a 33-year-old former NFL team manager. He is very experienced in the field of sports management. He too is at pains to explain that LIV Golf is a business that fully plans to make a profit.

“If you look at the investment portfolio of our primary investor, who is investing in the entire Vision 2030 project, they have invested all over the world in incredibly large businesses that they believe will be profitable,” Khosla says.

LIV executives consistently refer to their venture as a startup. They believe this entire inaugural year is essentially a beta test of their final product. They plan to make changes on the fly and react to what works and what doesn’t. The fact that their main investor is patient with this style of business helps them a lot.

As for LIV Golf, it has been designed from the start as a long-term project, even though it is now at the very beginning of a very long journey. Moreover, it is far from just an investment of hundreds of millions of dollars for players like Phil Mickelson, Dustin Johnson and others.

But the fact of the matter is that life and financially, their life at LIV Golf will be much easier than at the PGA if they can get past the hatred of many fans and former friends from the course. According to the new venture’s businessmen, it’s also about the seemingly small things, but they play a big role in the big picture.

For example, the LIV pays players guaranteed money, but the PGA Tour hasn’t so far. They pay for players’ travel and accommodations, but the PGA Tour does not. They pay for caddie travel and lodging, but the PGA Tour does not. The same goes for agents, coaches and players’ families – all of which players on the PGA Tour have to pay for out of their own pockets. Let’s not be surprised at some dissatisfaction if you’re not one of the PGA Tour’s top players. Golfers like Phil Mickelson fight for them, too. They want a simpler playing field throughout the ecosystem.

Plus, the LIV pays each host site a fee to take over the property for a week. They pay the full number of executives. They pay musicians to play gigs at tournaments. It pays for bleachers, hospitality tents, or broadcast production. It even provides free parking for fans at tournaments, including an extensive on-site entertainment program.

But the LIV does all this with virtually no revenue to offset these huge costs. Tickets to two U.S. events were literally just a few dollars. It’s broadcast for free on YouTube, with no ads. Not a single corporate logo (other than LIV’s) was present at Pumpkin Ridge or Trump Bedminster. Yet LIV executives still talk about the future. About a vision.

LIV Golf, they say, hasn’t even properly started yet. These no-profit costs are, in a way, part of the business plan. A sharper program with some logical steps is planned for next year, but the LIV Golf Tour should not be in full swing until 2025.

LIKE A FANTASY LEAGUE OR FORMULA 1

I’m sure you’re wondering, as I am, how the whole project can actually work profitably in the future. It doesn’t seem like it at first glance, but Formula 1 is a big inspiration. Yes, golf and motorsport is like comparing apples and pears. They’re both sports, but they’re not the same.

It’s just that LIV Golf also has teams. On the face of it, it’s just an afterthought at tournaments, but at its core it’s perhaps the key factor in the whole business. There will be 24 events next year, with 48 players hitting each one, split into teams of four. These teams will be together for the entire season.

Ron Cross, who worked at both Augusta National and on the PGA Tour before becoming LIV’s director of events, describes the idea: “I would look atit the way I would want to look at it. We compared ourselves to the Formula One model and other LIV managers compared themselves to it,” he outlined the path of golf’s future. But let’s be more specific.

Ten teams compete in Formula One, each owned by a different corporation:: Red Bull, Ferrari, Mercedes, Alpine, McLaren, Alfa Romeo, Haas F1, AlphaTauri, Aston Martin and Williams. Each team has two drivers under contract.

The drivers have agreements with each specific team, but not with Formula 1. This seems to be the vision of LIV Golf after all – to have twelve distinct teams, each with its own ownership group, each with the power to sign and trade its own players.

In the ideal scenario, which is still a long way off, each team would operate more like a traditional sports franchise with its own players and corporate sponsorship. Currently, all twelve teams are owned by LIV and some players (e.g. Mickelson, DeChambeau, Koepka) have equity stakes in teams in which they are also captains.

LIV’s goal is to develop these franchises into brands with identities and fan bases and then sell them to either corporations or wealthy individuals who essentially want the latest and greatest toy.

According to LIV representatives, there is no shortage of billionaires who love golf so much that they would theoretically be willing to pay a tidy sum to be closer to the action.

It’s not just about playing in pro-am exhibition tournaments alongside the big stars, but perhaps throwing parties with them or joining Dustin and Pauline Johnson aboard a boat, for example, Golf Digest reports.

As one agent of a top 20 player says, value is driven purely by demand. Sports ownership is a highly desirable space if you can build a league with real revenue. “It’s like a real fantasy league,” he explains. While that may not be the case, it’s quite humorous to think that Salman’s connection to video games is purely coincidental here.

Only, of course, there’s more than one catch, as Patrick Rishe, founding director of the sports business program at the University of Washington, for example, also believes. “Until significant media coverage deals are made for LIV Golf, the values of LIV teams will be stunted,” he believes.

Evidence of this can be seen in the viewership on the YouTube channel or Facebook page of former US President Donald Trump’s last tournament at the Bedminster course, which was watched by an average of just 74,000 viewers. By comparison, the PGA Tour broadcast of the Rocket Mortgage Classic on CBS attracted an average of 2.5 million viewers, and it is far from the most-watched event on the PGA circuit.

Reportedly, however, the folks around LIV Golf say a larger deal for broadcast rights is close. Where it’s distributed, or more specifically on what platform, could reportedly have a bigger impact on the sustainability of LIV Golf than any mega-star player it signs.

This topic around TV rights would all come out in one more very lengthy article, so we’ll just mention that to this point all the major TV affiliates in the US have shown little or no interest in LIV Golf, according to Golf Digest sources.

“It’s incredibly hard to get awareness and exposure without a solid TV or streaming deal,” Rishi added on the subject.

One way to target a larger yet younger audience is to have a unique format that makes do with a four-hour broadcast format instead of the traditional 12-hour televised golf broadcast, as all players on the course start play at the same time, each pairing on a different hole. These advantages, in fact, were discussed some time ago by Phil Mickelson, who explained the reasons why he, too, believes LIV Golf has such a bright future.

Should one of LIV Golf’s broadcast scenarios come to fruition, the operation can start attracting legitimate sponsors, knowing that their support will be seen by far more than 74,000 viewers.

In addition, given the right conditions, LIV Golf could be broadcast without commercials, which many TV fans would appreciate as they are already getting quite fed up with the amount of commercials during golf tournaments.

WITH OR WITHOUT PGA?

It is absolutely crucial for the future of global golf whether or not LIV Golf will eventually come to some sort of synchronisation of the playing calendar with the PGA Tour. Whether they will eventually find common ground so that it does not further damage and divide the sport of golf as a whole in the future.

For now, the whole situation stands right in the middle of a black spot, with lawsuits already thrown in. Already the arrival of the LIV has caused a lot of confusion, but even more may come when the LIV manages to get its spectacular business off the ground in 2025.

Commissioner Jay Monahan and his staff believe they are right and that their current actions are moving in the right direction. Players, agents and others throughout said ecosystem, however, see the American Tour under siege, and assume that peace – or at least detente – will eventually have to be made lest the consequences for the PGA Tour be fatal in the final showdown.

Even if Monahan and Co. don’t see it (or don’t want to see it), there are reasons why cooperation could work for both sides. LIV Golf would get what it originally wanted, with Saudi Arabia and Vision 2030 getting the blessing of a globally recognized institution that moves them closer to a perception of a modernized culture.

The members of LIV Golf would get to keep the huge sums of money they have earned and get the freedom they once had on the American tour to choose their plans for what to do with their careers.

There are, after all, other events like the Ryder Cup (USA versus Europe) or the President’s Cup (USA versus the rest of the world – outside of Europe) that have earned incredible viewership around the world over the years. Perhaps because these are probably the last events in professional sport that are more about prestige than money. It’s just that these tournaments have earned their prestige among fans by pitting the best of the best against each other.

With the current status of the PGA Tour, this will no longer be the case, which may cause even these great traditional events to lose their luster irretrievably. The very popular majors are also at stake. If the best players in the world are unable to qualify for these events in future years, it will never again be a battle of the best players on the planet. After all, whatever the sport, these events attract the most attention from fans around the world, so logically they also attract the most interest from sponsors.

Counting on LIV Golf to one day spontaneously combust and go bankrupt would be a very risky act. Yes, it can happen, but counting on it is tantamount to business suicide.

As Golf Digest writes, whether it’s fair or not, it’s up to the PGA Tour to hold it all together. The whole ecosystem could collapse in a few years, mainly because a few rich guys wanted to keep their business the most prestigious in the world, but at the same time, with the growth of competition, they put on blinders and continued down a relentless path of just following their dreams.

Source: PGA Tour, LIV Golf, Golf Digest