Understanding the “H2H” Matchup of Old and New

LIV Golf has already disrupted the PGA TOUR.

On August 24th, 2022, the PGA TOUR announced its partnership with TMRW Sports to create “TGL” (The Golf League? Tech Golf League? The acronym remains unclear at this point…) which is a new venture co-founded by Tiger Woods, Rory McIlroy, and former Golf Channel President Mike McCarley. TGL brands itself as “next evolution within professional golf”, according to Tiger Woods. This announcement appears suspiciously timed with another venture already claiming to be the next evolution for golf tours: LIV Golf.

Earlier in August, Tiger was reported to have rejected an offer to join LIV Golf for between $700-$800 million, and perhaps this latest announcement explains why.

For many players (including Phil Mickelson, Dustin Johnson, Bryson DeChambeau, and Brooks Koepka, among others), LIV has been making offers that they can’t refuse.

In response, the PGA TOUR has indefinitely suspended those in mutiny, which has since resulted in a lawsuit led by 11 LIV golfers.

While litigations (and many public tensions between LIV joiners and detractors) remain up in the air, the PGA TOUR has already made tangible changes as a response, including:

• an increase in the FedEx Cup prize winnings from $10 million to $18 million,

• an increase in the Player Impact Fund from $40 million to $100 million; 

• The discussion of additional “elevated events”; and

• the development of TMRW Sports / TGL

 

A Brief History of LIV Golf

 

The founding (and funding) of LIV

LIV Golf saw its official backing and funding in October of 2021 (less than a year ago) when Greg Norman was also announced to be its CEO. The new tour positioned itself as a reinvention of golf entertainment while raising more than $400m in seed money (according to Front Office Sports) from Saudi Arabian funding.

The Kingdom of Saudi Arabia’s Public Investment Fund controls more than $620B in assets, so $400 million may sound like an enormous investment for what some consider a “dying sport”, but it represents pennies on the dollar. Was this investment made with genuine “ROI” in mind? It appears unlikely, given that LIV events are roughly as affordable as PGA TOUR events, and it has yet to strike a TV broadcasting deal (at least in major markets) or mass appeal. 

So, why invest $400m initially in October 2021 on top of an additional $2B throughout 2022?

Consider that this investment purchases influence in a sport that is played by 90% of Fortune 500 CEOs while having inextricable ties to key business opportunities, financial capital, social capital, and – let’s hope for the sake of humanity – natural capital. While some consider this strategy a form of “sportswashing” or geopolitical money laundering, this investment asserts that golf is a valuable lever for social change.

 

The Format of LIV

LIV Golf aims at “supercharging the professional golf landscape and creating new value for fans and players alike”. It does so through unique fan village experiences (including an Eco Village) and live music, providing something more akin to a musical festival than a golf event.

In 2022, LIV has launched 8 events (4 of which have been played as of this article’s release), comprising an unprecedented $25 million each in total prize purse (or $7.5 million more than the largest prize total on the PGA TOUR: the US Open).

Furthermore, key players who joined have had the opportunity to own a stake in their teams or hopeful “franchises”, which are led by the likes of Phil Mickelson, Dustin Johnson, Bryson DeChambeau, and most recently, world number-2 Aussie golfer Cameron Smith. 

Summary: Timeline of LIV

(Note: for a fuller discussion of timeline, check out this great article by Golf.com)

 

November 1994 – Greg Norman (#2 in the world at the time) presents the concept of an 8-event “World Golf Tour”

December 1994 – PGA Tour pushes back, the WGT ship stays grounded

September 1995 – The FTC investigates the PGA Tour for anticompetitive bylaws, but imposes no charges for restraint of trade

October 1997 – “World Golf Championships” develop as a consolation to the WGT concept

Late 2010’s to 2020 – discussions develop around a “World Golf Series” (borne out of this concept was the structure of a 48-player, 12-team league) which is later conceived as the “Premier Golf League”

May 2021 – as many as 11 leading tour pros are rumored to have been offered between $30-$50 million to play in the PGL

October 2021 – Greg Norman announces his position as CEO of LIV Golf Investments, which has $400 million in seed funding from majority stakeholder KSA Public Investment Fund

November 2021 – Jay Monahan and the PGA Tour announced a 16% increase in total purse to now $427 million in 2022

February 2022 – Jay Monahan meets with players to suggest that leaving the Tour might result in a lifetime ban (after months of rumors that Phil and others would join LIV)

March 2022 – LIV announces its official slate of 8 events for 2022

May 2022 – Norman announces that Saudis have invested an additional $2 billion in LIV, while 19 of the world’s top-100 players have joined. It’s also announced later in the month that Dustin Johnson is the header of LIV’s first event, signing for a reported $125 million.

June 2022 – Phil Mickelson has officially signed a multiyear contract with LIV and the Saudis worth $200 million. Jay Monahan officially declares that the 17 players with PGA Tour affiliation playing in LIV’s first event in London will be suspended indefinitely from the Tour. Charl Schwartzel wins the first LIV event at the Centurion Club in London, along with its nearly $5 million prize amount that exceeds US Open winner Matt Fitzpatrick’s prize from that same month by nearly $2 million. Brooks Koepka, Bryson DeChambeau, and Patrick Reed also join that month. 

July 2022 – The Euro Tour fines players who have competed in LIV events without approval while also preventing them from events co-sanctioned with the PGA Tour. Poulter, Grace, Adrian Otaegui and Justin Harding earn their way back into the Scottish Open via Scottish court. The R&A also asks Greg Norman not to make an appearance at the Open Championship, which is won by Cameron Smith, who will soon join LIV Golf (as he had been rumored)

August 2022 – 11 LIV players file an antitrust lawsuit against the PGA Tour. Cameron Smith’s $100 million contract with LIV is made official. The PGA Tour announces 12 “elevated events” with purse winnings of $20 million, and a “TGL” partnership between the Tour and “TMRW Sports” is announced.

Why this Matters

Golf is changing -- faster than one might expect for such a previously stuck and traditional industry. Within the next year and half, we will have two tours in a fresh format competing with the traditional PGA, Euro, and LPGA Tours for attention.

Meanwhile, major golf leader Callaway also recently rebranded itself as “Topgolf Callaway Brands” to reflect its ongoing strategic priorities. Its new ticker symbol on the NYSE is “MODG”, as in “Modern Golf”. For golf OEM brands, this marks a beginning of true differentiation (from the mass content of “#1” and “best in golf” claims). Moreover, Topgolf entertainment venues now represent nearly half of its business.

Still in its nascence, LIV Golf has already elicited major responses from the TOUR while structurally increasing player compensation through larger bonuses and prize. Its disruption has also been met with some disdain from those who chose not to join.

Those who joined thus far seem to be at peace with their choices. Open Champion Cameron Smith said about the recent Boston Invitational that “it feels like the course has a bit of a heartbeat”...

…a “heartbeat”... That to me resonates as a key word choice for a sport desperately wanting to attract new audiences with a more updated and energetic product. H2H typically stands for “Head-to-Head” matchup, implying a zero-sum game in which there is one winner and one loser. Under the right conditions, the competing tours may find themselves in an infinite game that redefines H2H as “Heart-to-Heart”, where the ultimate result is an unparalleled growth in interest for the game, attracting new demographics and markets with products and services fit for the 21st (and hopefully 22nd) Century. 

In this case, the “head” represents rigid rules, identities, and traditions of the game, whereas the “heart” represents the core experience and “soul” of golf. For a closer H2H comparison, let’s have a look at the branding, value proposition, and sustainability of both tours.

 

H2H Matchup: LIV Golf vs PGA Tour

 

Which one has the better marketing?

LIV Golf presents itself boldly as “Golf, But Louder”. From early reports of its first four events, this motto holds true. LIV has been described as a “three-day music festival with golf” and a “college football tailgate”, while LIV is focusing intentionally on the spectator experience.

While its source of funding lead some to question its moral foundation, LIV provides people with an alluring forbidden fruit, as further symbolized by its season-ending event to be staged at Trump National in Doral, FL (a venue banned by PGA Tour events). Even if controversy escalates, we may ultimately see this new tour as LIVing proof that “no publicity is bad publicity”.

The PGA Tour remains the PGA Tour. It hasn’t really made voluntary and proactive changes to be more innovative outside of the fortunate changes that landed in its lap (e.g., one of the “GOATs”, Tiger Woods, bursting onto the scene for 25 years and evolving the performance of pro golf). Recently, thanks to LIV, the PGA Tour is being forced to adopt changes that LIV CEO Greg Norman hilariously roasted in a “homework” meme.

Winner: LIV Golf

 

Which one creates more value for fans and everyday golfers?

In the short-run, at the events themselves, LIV clearly places a greater emphasis on fan engagement in all the ways that one can engage fans. It reminds me of what happens to the Tour during Happy Gilmore when he starts winning tournaments and attracting rowdy environments. Because LIV Golf is not shackled by traditions, it has completely disrupted the format of pro golf to provide 3-day events (54-holes, hence the name “LIV”) and uses a shotgun-start format that provides a quicker and more suitable tournament experience. Concurrently, LIV engages fans through fan village experiences that it continues to roll out in this 2022 “beta stage” of experimenting.

Winner: LIV Golf

 

Which one creates more value for touring professionals?

LIV Golf has been making offers that top players can’t refuse – except for one man: Tiger Woods. Tiger reportedly shut down an offer of between $700-$800 million. For one, this might be because Tiger already has more money than he knows what to do with, and thus cares most about preserving his PGA Tour-led legacy. From another angle, this may have been at odds with his plan-in-the-works to co-found TMRW Sports and TGL to control the market of televised alt-golf experiences. While TGL could help players gain visibility and brand themselves in front of a live audience and primetime television, the format doesn’t bode well for the average Tour professional or up-and-coming Korn Ferry Tour players. If TGL succeeds in its aim, it will be driving eyeballs away from traditional tour golf and toward a primetime structure that limits player participation to 3v3 matchups. Will those matchups include Joel Dahmen and Kevin Streelman, or will they flow attention (and money) to those who already have it, such as Tiger, Rory, and other key stars?

LIV Golf is paying enormous sums to those brave enough to jump the PGA Tour ship early. Meanwhile, these early stages of disruption have directly led to recent changes in the PGA Tour that are creating undeniable value for touring golfers (listed above but worth reiterating):

• an increase in the FedEx Cup prize winnings from $10 million to $18 million,

•  an increase in the Player Impact Fund from $40 million to $100 million; and

•  the development of TMRW Sports / TGL

 

Winner: Clearly, LIV Golf

 

Which one is better for golf?

No one can deny the role that the PGA Tour has played in popularizing the game. It may even be said that Arnold Palmer was one of the first official sports stars, and one of the inventors of sports marketing. The entire world of sports and entertainment has much to thank for the PGA Tour. However, in recent years, the Tour has done little to create an exciting and differentiated product, and it focuses heavily on a sponsorship model that pushes equipment deals and gadgetry. Will a “digital future” truly improve the golfer’s experience? 

There remains a gap in connecting golfers and fans to the nature upon which the game depends, and the experiences for which they long. People want connection, and they want memorable experiences that provide meaning and belonging, along with sustainable spectacle.

Winner: Most likely LIV Golf, but it depends who can redefine “H2H”, engaging “heart” more than “head”. LIV Golf appears to be positioning itself with that intention.

 

Which one will ultimately last?

To last over the long-run is quite literally to “be sustainable”, which includes all layers of social, environmental, and financial or economic responsibilities being met over the long-run. Both tours are positioning themselves for where the world is going. While LIV Golf appears to be emphasizing fan experiences and re-envisioning golf, the PGA Tour does the same with its TGL tech-venture, albeit focusing on a more “tech-infused” format. At the moment, it seems hard to imagine LIV Golf paying significant rates of return on its $2.4 billion early investment if those returns are coming from $115 per weekend grounds fees that are limited for just under 6,000 attendees per event. Meanwhile, thanks to its established broadcasting partnerships, brand recognition, and sponsorships, the PGA Tour claims about $1.5 billion per year in revenues.

Winner: Both? But much remains TBD, and we will keep track of these ongoing developments.

 

 

A Hopeful Takeaway

“Best for the World” = “Best in the World”

This equation holds true when the competitive dynamics of capitalism meet sustainable design and purposeful intention. Some might refer to that as “Conscious Capitalism”. For many, no amount or direction of investment from Saudi Arabian funding may be considered conscious. The country and its wealthy Public Investment Fund have been accused of “sportswashing”.

For better or worse, one key statement is now backed by $2.4B of investment from the Saudi Arabian Public Investment Fund (which represents a minusculeminiscule 0.4% of the fund’s $620B total wealth):

Golf is a vehicle for change and influence. 

LIV is presenting consumers with choice. Brand image matters a lot more in a landscape where consumers (in this case, golf fans) have a choice. When brand image matters, even conservative companies are likely to care about variables like sustainability and social impact.

Unlike the golf equipment business (which, however, Callaway appears keen on changing), let’s hope this competitive golf tour landscape can be defined by optimizing net social impact and providing experiences of genuine connection rather than selling technology and gadgets.

 

Further Reading

LIV Golf timeline: How we arrived at pro golf’s civil war

Who is playing LIV Golf?

The inside story of LIV Golf vs. the PGA Tour: Money, innovation and loyalty

Topgolf Receives Top Billing, Plus Tiger And Rory Launch High-Tech TGL

Video: Introducing TGL

LIV Golf Invitational signals a dangerous evolution in Saudi Arabia’s sportswashing (Opinion Piece)