Inside The Business Of The New Saudi Golf League

With limited revenue, astronomical signing bonuses and enormous purses, LIV Golf has run up quite a tab. But the real surprise is that Saudi Arabia’s nascent golf super league isn’t just “sports washing.” It could turn a profit—and soon.

As he walks the grounds of Pumpkin Ridge Golf Club, a few miles west of Portland, Oregon, LIV Golf CEO and commissioner Greg Norman is showered with praise. “Great job, Greg!” a fan yells. “My wife will kill me if I don’t get a picture with you,” says another, leaning over the ropes for a selfie with the man who was the world’s No. 1 golfer for 331 weeks. Others simply thank him for bringing elite golf back to Pumpkin Ridge, where in 1996 a 20-year-old Tiger Woods collected his third consecutive U.S. Amateur title days before turning pro.

Here, Norman is a hero. But he’s a villain just about everywhere else. Norman has been taunted by Rory McIlroy, criticized by Woods and blasted by golf analyst Brandel Chamblee throughout LIV Golf’s inaugural 2022 season. He even managed to get himself disinvited from the British Open’s pre-tournament festivities, a huge slap in the face since Norman won the event twice.

“I’m the piñata to a degree, right?” Norman says.

Maybe it’s just the price of disruption. If so, it’s one that Norman, 67, will pay willingly. For nearly 30 years, he’s chased the dream of a breakaway super league in golf, with the best players on the planet competing on a global schedule for enormous prize purses. LIV, which has enticed ten of the world’s top 50 players to defect from the PGA Tour with huge signing bonuses and promises of playing less golf for more money, has made that dream a reality, but not without cost.

The upstart tour is backed by the $620 billion (assets) Public Investment Fund of Saudi Arabia. It plans to spend at least $2.4 billion on the league over the next four seasons, an unheard-of sum in the world of professional golf. LIV guaranteed six-time major champion Phil Mickelson, who is 52 years old, an estimated $200 million to join its tour. He is now the highest-paid athlete in the world, with an estimated $138 million in earnings before taxes and agents’ fees over the last 12 months. With no major sponsors, no U.S. TV deal and few ticket sales, LIV’s business model seems to make zero sense. Indeed, the league has been widely dismissed as an attempt to “sports wash” Saudi Arabia’s dismal international reputation, which has only grown worse since the murder of Washington Post columnist Jamal Khashoggi in 2018.

“We have the luxury to have a very long outlook. We are not in the market to go raise another fund in the next couple of years which requires an exit strategy.”

But what if it’s not? What if LIV is a legitimate attempt to dislodge the PGA Tour as the sole purveyor of elite professional golf—and what if it could make money while doing it?

“LIV is the future of golf,” Norman says. “Why? Because you have these tremendous opportunities for us to go down, from a sponsorship standpoint, a production standpoint, from a gaming standpoint, from every aspect that’s never been done in the game of golf before.”

He’s not wrong. If LIV weren’t backed by barrels of dirty petrodollars, nearly every commentator on the planet would be applauding its assault on the PGA Tour’s seeming monopoly on the sport and its iron grip on the best players. The PGA Tour, which is structured as an umbrella nonprofit overseeing 48 independently run events, has responded heavy-handedly to the LIV threat, banning golfers (technically independent contractors) who play in a single LIV event from competing on its tour. That overreaction has resulted in an antitrust investigation from the Department of Justice and a lawsuit from 11 LIV players, including Mickelson, alleging the PGA Tour’s monopolistic behavior has damaged their earnings potential.

LIV contends that its pro-golf remix—faster 54-hole tournaments held in a party-like atmosphere—could be break-even in as little as three years. To do that, it must continue to sign up the best players and produce marquee broadcasts that appeal to a younger crowd. (PGA Tour viewers are typically over 45, industry experts tell Forbes. LIV is targeting Millennials and Gen-Z.) One twist: LIV tournaments have a team element, and the hope is that those teams will eventually generate revenue from their own sponsorships, merchandising and media deals.

But here’s the rub: None of that is going to happen without a major U.S. broadcast deal. It’s typically the biggest revenue stream for any sports property, and it’s hard to see an opening for LIV. Except for Fox, all the major U.S. networks already have golf deals with the PGA Tour.

Televised golf is a big business. The PGA Tour reportedly earns roughly $700 million annually for its media rights in the States. In the U.S., LIV Golf is streamed over YouTube. But maybe patience—and signing up more elite players—is the key.

“PIF is not classic private equity,” says LIV Golf president and former Tampa Bay Buccaneers executive Atul Khosla. He adds: “We have the luxury to have a very long outlook. We are not in the market to go raise another fund in the next couple of years which requires an exit strategy.”

Hundreds of fans roar as former President Donald Trump approaches the first tee at his country club in New Jersey for LIV Golf’s Bedminster Invitational. Dressed in a white polo and a red “Make America Great Again” hat, he waves, takes pictures and signs autographs, even pointing to the crowd when one fan asks if he plans to run in 2024. The excitement is palpable as the leading group, which includes the former world No. 1 golfer Dustin Johnson, prepares to tee off on the tournament’s final day. Outside, there’s a much different tone. Protestors have sweltered in 80-degree July heat for days, just to register their discontent with the money behind LIV.

“I’ve known these people for a long time in Saudi Arabia, and they have been friends of mine for a long time,” Trump had told reporters earlier that week. “They’ve invested in many American companies. They own big percentages of many, many American companies, and frankly, what they are doing for golf is so great, what they are doing for the players is so great. The salaries are going to go way up.”

“I don’t wake up with any fear about what LIV is and where LIV’s going to go because LIV is the future of golf.”

The money may be flowing, but that doesn’t change the reality that LIV’s long-term sustainability will come down to “broadcast revenue followed by sponsorship revenue,” Khosla says. LIV executives say they’re keeping their options open, and outside of the major TV networks, a streaming deal with a big-tech company, like Apple or Amazon, might be an option as well. Khosla acknowledges that the conflict with the PGA Tour has “definitely impacted our ability to go to market with every sponsor that’s out there” but stresses that the process is going well and usually happens over a nine-month sales cycle.

A broadcast deal would help in other ways, too, like lessening the need for the massive sign-up bonuses LIV has offered to recruit players from the PGA Tour. In part, those have made up for diminished endorsement income. Many LIV golfers, including Johnson, Mickelson and 2020 U.S. Open champion Bryson DeChambeau, have lost sponsorship deals when they left the PGA Tour, partly because of a lack of TV exposure.

“My job is about trying to create opportunities and exposure for players, right?” says Kevin Lynch, an agent at Empire Sports Management, which represents LIV golfer Turk Pettit. “If it’s only 48 guys playing and they are showing more golfers, then they’re getting more exposure. The problem is they’re not really getting more exposure because there is no network deal or streaming deal where it’s easy to find.”

LIV Golf is not the first breakaway entity to upend a professional sport. In the early 1980s, the USFL emerged to fill the void left behind by the NFL during the spring months, with new rules, budding stars and deep-pocketed owners, including Trump, who owned the New Jersey Generals. The league found early success, but then it attempted to move to a fall schedule and filed a Trump-led lawsuit against the NFL, accusing it of being a monopoly. The USFL won the battle but lost the war. Days after a jury ruled in its favor, in August 1986, the league ceased operations.

Eight years later, in 1994, Greg Norman had his own vision for the game of golf: the World Golf Tour, which like LIV would have smaller fields and bigger purses. It got some traction, even securing a ten-year, $250 million media rights deal with Fox. But the PGA Tour took notice. Then-commissioner Tim Finchem threatened retribution and potential legal action for any golfers who participated, as well as demanding a promise of loyalty from his players, according to the Washington Post. Norman, still at the peak of his playing career, ultimately backed down.

“It was a no-brainer for golf because it was what the fans wanted, it was what the players wanted, and it was what the global reach of golf wanted,” Norman says. “But it all fell in a basket because of the PGA Tour and monopolists trying to shut us down.”

The idea, however, refused to die. In 2020, a London-based entity called the World Golf Group unveiled the Premier Golf League, a brand-new 18-event global tour. The plan? Secure a war chest to lure the best players on the planet and have them compete for massive prize purses in a modified league format. It even had the interest of the Saudis, which was in talks to commit $490 million to the enterprise, according to a source with knowledge of the deal. The PGA Tour snapped back immediately. Commissioner Jay Monahan emailed players warning them against the upstart series. The PGA Tour also announced its Player Impact Program, a bonus pool of $40 million to be awarded to players who generated the most fan interest and engagement.

But the PGL decided it would prefer to offer players equity in the business rather than enormous signing bonuses. The Saudis moved on. In June 2021, LIV Golf incorporated in both Delaware and the United Kingdom. Norman joined that August. (The PGL still aims to debut in 2024.)

Originally, LIV’s plan was to launch later in 2022, or even 2023, presumably with a strong core of elite players and broadcast and sponsorship deals in place. But then Mickelson shot off his mouth, publicly dismissing Saudi Arabia’s human rights record in exchange for a “once-in-a-lifetime opportunity to reshape how the PGA Tour operates.” Mickelson took a break from pro golf—and talking to reporters. LIV rethought its plans.

Rather than back down, PIF governor and LIV Golf chairman Yasir Othman Al-Rumayyan made a counterintuitive move. Instead of launching a fully formed product, LIV would proceed—immediately, in the summer of 2022—as a limited invitational series of eight events. Exposure, not revenue, was now the No. 1 priority.

“Without actually having something to touch and feel, it is hard for a lot of individuals,” Khosla says. “So, the decision was made, the only way we’re going to convince people is to build it.”

LIV debuted in June at Centurion Club outside London with stars like Mickelson, Johnson and Sergio Garcia, all three of whom appeared on Forbes’ 2022 list of the world’s highest-paid golfers thanks to their lucrative signing bonuses from LIV. Sponsors were scarce, with a trio of local beverage makers chipping in: Ballygowan Water, 6 O’Clock Gin and the London Essence Co. (ginger beer). The event streamed on YouTube, peaking at roughly 95,000 average viewers on the first day of the three-day event, according to Apex Marketing. (Meanwhile, the RBC Canadian Open, the PGA Tour event held the same weekend, peaked at nearly three million average viewers on its final day.) Viewership for LIV’s second event, at Pumpkin Ridge Golf Club, was much the same, even as the field continued to get stronger with the additions of golfing superstars DeChambeau and four-time major winner Brooks Koepka.

The rush to market meant LIV’s earning potential would suffer. The organization declined to disclose its financials, but Forbes estimates it will generate less than $75 million in revenue this year, compared with $1.5 billion for the PGA Tour.

“We could not be perfect, and I don’t know if we ever will be, but we had to start,” Khosla says. “That meant some compromises along the way.”

Its revenues may be tiny, but it’s hard to ignore the impact LIV has already had on the sport. The PGA Tour is raising total prize money for next season by 19% to a record $428.6 million and increasing the Player Impact Program bonus pool to $50 million. It’s also returning to a calendar-year schedule in 2024, trimming the fields for the FedEx Cup Playoffs and introducing a handful of international events that, like LIV events, have no “cut.” (In most PGA Tour events, half the field doesn’t play the final two days and makes no money for participating in the tournament). The PGA Tour also raised its stake in the DP World Tour—a.k.a. the European Tour—to 40% in June, from 15%.

The Department of Justice is now looking into whether the PGA Tour’s move to ban LIV golfers from competing in its events is a violation of the Sherman Antitrust Act of 1890. The tour’s bylaws dictate that player releases are at the discretion of the commissioner, which generated a similar complaint from the Federal Trade Commission in 1994 that was dismissed shortly after. “This was not unexpected. We went through this in 1994, and we are confident in a similar outcome,” a PGA Tour spokesperson tells Forbes.

In a victory for the PGA Tour, a trio of LIV golfers lost in court this week after seeking an injunction to participate in the FedEx Cup Playoffs. Still, if the case goes to trial and additional lawsuits from players pile up, it could cost the tour as much as $10 million annually in litigation expenses.

“We’re a free-market economy,” says Craig Seebald, an antitrust lawyer at Vinson & Elkins who is not involved in the current litigation. “Competition is good, and that’s what the antitrust laws are trying to protect.”

LIV says it wants peace with the PGA Tour. Whether the two will have to co-exist likely depends on whether LIV players are granted official world ranking points, which is largely how golfers qualify to compete in the four majors. (The organization that oversees the world rankings is run by a coalition that includes PGA Tour.) This summer, LIV golfers were allowed to compete at the U.S. and British Opens, but what happens next is unclear.

Norman isn’t worried.

“I don’t wake up with any fear about what LIV is and where LIV’s going to go because LIV is the future of golf,” he says. “What I do wake up in the nighttime: worrying about how the players have been treated. Simple as that.”

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