June 8, 2022
The inaugural LIV Golf Series tournament backed by Greg Norman is set to kick off this weekend from June 9-11, 2022 at the Centurion Club in London. The Saudi-backed golf league has received much criticism over the last few months given its backing and Government’s association with human rights violations. I am not here to analyze the ethical obligations or decisions of the athletes, but rather offer perspective into what this tour is, along with posturing predictions as we move through the summer.
How We Got Here
Phil Mickelson recently came under fire for comments he made in an interview regarding the Saudi-backed league. Again, we are not here to discuss those comments nor do we condone them of course. But outside of this event, how has this Series gained so much traction as quickly as it has?
Players have complained about the PGA tour for years. Mickelson is one of the more outspoken players who has postured the Tour holds all media rights of the players, which is different from other professional leagues (for reference, the media rights of professional golfers has been estimated as high as $20 billion). In other leagues, the players take home a share of media rights. More recently, reigning PGA-champion Justin Thomas complained about how expensive the Tour makes the event for fans to attend. Sure, part of that statement might be to help his image with fans, but if you read into the context of that statement, one could argue he is asking the Tour as to why if the event is so expensive to attend, do the players not make more money. Sergio Garcia took it even further, most recently stating, “I can’t wait to leave this tour.” Yikes, PGA.
Some players have shown frustration with the league. In our view, this sentiment has been exacerbated by the PGA Tour’s harsh outlook on the LIV series. The Tour has announced that players who defy the PGA Tour’s rejection to compete in the LIV series face unspecified discipline, and there has been speculation for months that the punishment could include banishment from the PGA Tour. The full list of players who have joined the tour as of now can be found here. Most notably, former World No. 1 Dustin Johnson, Louis Oosthuizen, Sergio Garcia, Phil Mickelson and Lee Westwood. If more elite players make the jump, will the PGA Tour maintain its “we wish you well” attitude? If so, they can expect a large decrease in viewership moving forward.
LIV Series Format
The LIV series has an interesting format that professional golfers have never seen before. To start, each tournament consists of 54 holes with no cut. At the end of the 54 holes, the player with the lowest score wins. However, there is an added team-element as well. Every tournament consists of 12 teams, which are decided on the Tuesday prior to each event. The teams are decided by each one being appointed a LIV team captain who will select their 3 open team positions via a snake draft format. The captain will also be one of the four starting players. Seven events will take place over the course of LIV Golf’s four-month regular season. The eighth event will be the team championship in late October in Miami, where teams compete against one another in a match play format to see who earns the inaugural LIV Golf team trophy.
The team dynamic is one of the more drastic differences between the LIV Golf Series and PGA Tour. The captain for each of the 12 teams will select their team in the aforementioned prescribed manner for each tournament. Each team has a unique logo, color and team name, which can be found here. During the first two rounds, only the best two scores from each team will be used to quantify where they rank. However, on the the third and final round, that number rises to three scores used. If you are a player, this gets interesting because even if you are out of the tournament individually, your four-man team could carry you towards points overall. What event am looking most forward to the most? The eighth and final tournament, which consists of a four-day, four-round match-play knockout bracket. Could this perhaps be the new Ryder Cup?!
So we have learned the format is intriguing, but what about the pay? Each regular season tournament, of which there are 7, features a $25 million purse–sheesh! By way of reference, that means every tournament consists of a larger purse than each tournament on the PGA Tour, even The Players Championship at Sawgrass. The first $20 million is split between the 48 golfers who played in the tournament: winner earns $4 million, last place earns $120,000 (see the full breakdown per player here). I am sure you noticed $5 million remains…the team aspect as previously mentioned comes into play! The remaining money is dispersed among the teams that finished in the top-three places: $3 million for the winning team, $1.5 million for the second-place team and $500,000 for the third place team. If you are playing in the tournament and have a terrible week, don’t worry, your team can bail you out! This must be a refreshing thought for a professional sport where its athletes are so used to placing the full burden on themselves 24/7.
Many people are critiquing these golfers for making the jump over to the LIV Golf Series, but take a second to look at it from their perspective. I mentioned there was no cut, so for the first time EVER, professional golfers have access to guaranteed pay. In professional football, basketball, baseball, hockey, etc. all of these athletes have guaranteed pay worked into their contract. In fact, it is typically the first figure you see when breaking contracts are released to the media. For the first time, if golfers show up and play in the event, they receive money as long as they finish. This is a colossal step for the financial security of professional golfers and their families.
Not only are they guaranteed pay from entering and playing in the tournament, but there are extra incentives as well. After the individual events have concluded, whichever players have participated in at least four events will divide a $30 million bonus pool. The individual champion will net $18 million, the second-place golfer $8 million, the third-place finisher $4 million, and so-on.
On the team side, the winning team after the season will win $16 million. By way of reference, that figure rivals The Tour Championship earnings, but again, this $16 million is just a bonus…you still have to account for what the player earns from the tournament from an individual and team perspective. Lastly, regardless of where each team finishes in the standings, every team will bring home a chunk of change. For example, the last-place team will bring in $1 million in tournament earnings. Again, a huge opportunity for these athletes, their families and loved ones.
This is going to get a lot worse for the PGA Tour before it gets better. We predict more high-profile golfers are going to leave the PGA Tour to pursue these hefty purses. Why wouldn’t they from a financial perspective? The best golfers in the world are getting nine figure offers simply to come play in the tournaments. If you are a fringe PGA player, why wouldn’t you make the jump to this tour? You are guaranteed a spot, but more notably, you are guaranteed to make at least $120,000 per tournament. If you do the math over 7 tournaments, that is $840,000…oh yeah, not even including the money you get from team play!
Sure, as a player you might lose sponsors because they do not want to be associated with a Saudi-backed league and I understand that. But from a financial perspective, this tour offers players a way to acquire generational wealth for generations to come. At the end of the day, yes these players are professional athletes, but they play this game to provide for their loved ones. I am not saying Tiger Woods is going to join the LIV series, but I see more Top-30 players joining in the coming days so they too can ride this waive to generational weath.