Inside the PGA Tour-PIF negotiations: What does LIV’s future hold?

It was Fox News’ 6 o’clock hour when Jon Rahm, clad in a black LIV letterman jacket and a sheepish smile, made his shocking departure from the PGA Tour official. In doing so he sent two conclusions swiftly cascading through the golf world.

The first conclusion was that LIV had solidified its future. The nine-figure, multi-year Rahm signing showed that the Saudi Public Investment Fund (PIF) was willing to cross its would-be-allies at the PGA Tour by stealing the Masters champion and World No. 3 just as their negotiation was nearing its deadline. Could it have been a leverage play meant to demonstrate Saudi seriousness and bulk up its bargaining power? Yes! But it seemed to be more than that, too. LIV had been trying to make other behind-the-scenes moves, including (thus far unsuccessful) plays at young stars like Viktor Hovland and Ludvig Aberg. The league had already set its 2024 schedule and had begun signing contracts for 2025. They’d doubled down. The Rahm signing made it official. The show was going on.

The second conclusion of Rahm’s departure was, well, the opposite: the PGA Tour (and its partners at the DP World Tour) now knew its future, too. With Rahm at LIV, it was time for the Tour and the PIF to finish off the deal initially sketched out in their framework agreement. Surely the latest mega-contract would remind the Tour of the PIF’s raw power. Surely now the Tour would cut the Saudis in on their new for-profit enterprise. LIV already had several of golf’s most popular players; now it had the defending green-jacket holder at the peak of his powers. A talent split in a niche sport is good for nobody. With the Rahm signing, a deal became inevitable.

But there was a problem: The conclusions were fundamentally incompatible. LIV cannot exist in its current form and also fold into the PGA Tour, because LIV has too many events for pros to bounce between both tours and loses too much money for anyone besides its current operator to run it. (I’ll say this a bunch: at least for now.) Something has to give — in a big way.

It’ll just be a little longer until we find out what.

In the coming days, the PGA Tour and PIF are expected to extend their negotiation deadline, either officially or unofficially, as talks continue to progress. Despite PGA Tour commissioner Jay Monahan and Policy Board member Tiger Woods’ insistence that they were determined to reach an agreement by year’s end, the sides have too much to work through. (Adding to the complexity: the PIF talks are also intertwined with the deal the PGA Tour is expected to reach with the Strategic Sports Group, or SSG, a consortium of investors led by Fenway Sports Group.)

So where is pro golf going next — and on whose terms? Here’s an outline of where things stand, based on a number of conversations with people across the golf business.

I. THE ATTENTION ECONOMY

Who’s watching the PGA Tour vs. LIV — and why?

From a ratings perspective, it was no surprise that the PGA Tour outperformed LIV head-to-head in its first full season on TV. But it was surprising to see the size of the gap between the two products. In weeks that LIV events on the CW ran up against Tour events on CBS and NBC, the Tour averaged some 1.89 million viewers, roughly nine times the viewership of LIV, which averaged roughly 200,000 viewers — and reportedly dropped in viewership as the season went on. Even the Tour’s lead-in coverage on Golf Channel, which is available in less than half the households of the CW, averaged 575,000 viewers, roughly three times LIV’s viewership.

LIV backers would argue that the CW numbers don’t tell the full story, and that’s true! There are a few markets in the United States where LIV airs on non-CW stations, which aren’t reported in the Nielsen data cited above. But if those inaccuracies were considerably underselling LIV, the league could easily clear up any confusion about its TV ratings by releasing its internal viewership data. To date, it hasn’t.

Of course, over-the-air networks are only one piece of a LIV’s overall viewership “story.” There are also streaming options available that include the CW and LIV apps, although those numbers have also not been made publicly available. The PGA Tour has a streaming story to tell as well; from January through August it was the “most-streamed content” on ESPN+, thanks in large part to a programming schedule of 4,300 hours.

Why such a massive advantage for the PGA Tour? After all, LIV plucked some of golf’s biggest names and highest-profile stars from the PGA Tour, including Phil Mickelson, Brooks Koepka, Bryson DeChambeau, Dustin Johnson and Cameron Smith. One TV executive I spoke with laid out a helpful framework for thinking about what makes a sports product work. 

A media asset has value, he said, when it has star players in a meaningful event at a storied venue. Layering those attributes on top of each other — the players and the event and the place — combines to give an audience an incentive to watch. In recent months we’ve heard talk about how the PGA Tour is the players, and that’s true, but that’s probably discounting the institutional advantages built around those players, including decades-old events held at famed courses like Riviera and Pebble Beach.

It’s easy to dog on the Tour for miscalculating LIV and losing players. It’s easy to dog on it for simpler structural stuff, too, like having too many events that do not meet the three-pronged threshold mentioned above. That’s all fair! The Tour can be big and bulky and boring. But with big and bulky comes stability, and with stability comes value.

The value of the Tour is in its established brand, which is built into people’s weekends and seasons and years. Even as schedules shift and sponsors change, Tour events of today share the same competitive DNA as events that Rory McIlroy won 10 years ago and Tiger Woods won 20 years ago and Jack Nicklaus won 30 years ago. “History” and “legacy” can be boring buzzwords, but they’re also very real. Familiar courses — think Torrey Pines, Muirfield Village, TPC Sawgrass — serve as the setting for familiar dramas, which serves the dual benefit of adding significance to an event’s past and present. This is partially why LIV’s efforts at building “rivalries” have largely fallen flat; its teams haven’t existed for long enough to hate each other or for fans to feel much of anything at all.

Even TV coverage can affect fan perception. Familiar networks with familiar voices — i.e., the dulcet tones of Jim Nantz — help viewers at home settle into the feeling that what they’re watching is both big and meaningful and therefore worth their time and emotional investment. While the Tour unquestionably misses the big names that left for LIV, there’s enough star power left to establish the feeling of watching golf’s most competitive, significant league. It’s a self-reinforcing cycle.

Despite LIV’s promises of greener pastures and a more entertaining broadcast, the truth is that viewers also haven’t really ditched the PGA Tour. This year’s ratings were generally flat or up for big-time Tour events, same as the year before it.

Why have LIV viewers been lukewarm? I won’t pretend to have a complete understanding, but a combination of factors seems likely. Some fans are turned off by LIV’s Saudi funding, sure. But others just haven’t bought into the product. LIV’s format is new and golf on the CW is new and LIV’s tournaments are new and many of its venues and players are unfamiliar. In the sports TV business, that’s generally not a good recipe.

LIV tournaments are fun-focused and fan-centric on the ground, and the league deserves credit for trying different things — but its events still feel like exhibitions, and viewers don’t care much about exhibitions, certainly not on a recurring basis.

II. ‘PRODUCT VS. PRODUCT’

One year later, how viable is each league?

In the first week of 2023, PGA Tour commissioner Jay Monahan laid out the stakes for the Tour’s competition with LIV over the coming year. 

“We’re at a point now where it’s product versus product,” he said.

Monahan was right; 2023 was LIV’s first full season and at least half of its events ran directly against PGA Tour events. For all the leagues’ differences, they shared a few fundamental similarities: stroke-play tournaments played largely in North America on weekends on cable TV. Their broadcast windows often overlapped. Some PGA Tour events finished within minutes of LIV counterparts.

So, after a year of head-to-head competition, where do the products stand?

The Tour’s financial future is pretty stable. (And again I say: so far!) As Monahan likes to point out, the Tour has $10 billion in contracted revenue through 2030. Half of that comes from $5 billion in media rights contracts with CBS, NBC, Warner Bros. Discovery and ESPN. The other half comes from $5 billion in sponsorship deals with big-time corporations like FedEx, AT&T and Mastercard. These deals aren’t immune to change — more on that in a bit — but there’s some big-time revenue lined up for a proven business.

LIV, by contrast, has very little revenue stacked up against its significant costs. LIV’s own attorneys admitted the league had “virtually zero” revenue for its inaugural 2022 season, while Sports Illustrated reported costs of $784 million. The league was expected to spend another $1 billion in 2023, and that was before Rahm’s sizable signing bonus. (Per the New York Times, LIV’s initial bankroll was $2 billion, a number the league has at least approached if not exceeded.) While some sponsors have come through the door for some teams, like 4 Aces clothing outfitter Extracurricular or Fireballs sponsor Mexico Infrastructure Partners, it’s not clear that the league has secured a considerable investment from sponsors other than those connected directly to the Saudi government or its investment fund. (And, if such an investment has cleared, it hasn’t come from the kind of Fortune 500 partner that most pro sports leagues chase after.) Sources told GOLF that total revenue for the 2023 LIV season was under $100 million — not even enough to offset Rahm’s guaranteed money.

How is that possible when the PGA Tour gets $700 million-plus in annual rights fees from broadcast partners? In part because LIV wasn’t paid by the CW for its media rights. Unlike a traditional sports-media rights structure — in which a broadcaster pays a “fee” to a league for the rights to its events, then profits off revenues generated from advertising — LIV and the CW instead agreed to a revenue share for their broadcasts in 2023. Based on viewership estimates, multiple TV experts estimated LIV’s 2023 TV revenue didn’t exceed $2 to $3 million. And while Adelaide is trumpeted as the model for LIV’s in-person potential, most of its events haven’t drawn enough spectators to generate significant revenue. That affects the TV product, too, and the TV product’s significance, which affects the value of future media rights and, in turn, the franchise valuations that LIV is banking on becoming a significant piece of its long-term business.

(In fairness, the PGA Tour is hardly immune to this phenomenon; the poorly attended events on its schedule are decidedly lackluster, less-watched and less valuable to the overall brand.)

Does Rahm change that calculus? From a competitive standpoint, definitely. The PGA Tour is worse off from a competitive standpoint if it’s missing the No. 3 player in the world. And I’m sure there are sectors of Rahm fans who will follow him to LIV. (For one thing, the league’s 2024 event in Spain is likely to be overflowing.) But if Mickelson, Koepka, Smith, DeChambeau and Johnson didn’t draw eyeballs on a significant scale, should we expect Rahm to be LIV’s savior?

III. WHERE THE PLAYERS PLAY

Who’s got ‘em?

For all the talk of stability and legacy, there’s undeniably a tipping point where the PGA Tour’s brand plummets due to lack of talent. Rahm’s signing means we’re closer to that point than we’ve ever been. Take a peek at a list of recent major winners and you’ll note that LIV has a whole bunch of ‘em. There are plenty of LIV pros playing well, too: The last month has reminded us that LIV pros are perfectly capable of winning non-LIV events, with Joaquin Niemann winning in Australia and Dean Burmester and Louis Oosthuizen combining for four DP World Tour wins in South Africa.

That tipping point would come when the value sponsors get from attaching themselves to PGA Tour events is less than the cost of their sponsorship — and there is some concern that the Tour is approaching that point. The event formerly known as Honda Classic just lost its title sponsor after 42 years, one casualty of a too-crowded schedule. The Wells Fargo Championship, a well-attended Signature Event in Charlotte, N.C., is losing its title sponsor, too, after a massive purse increase led to a hike in sponsor expense that Wells Fargo wasn’t interested in.

Something curious happened with LIV’s 2024 schedule, too: After dodging the PGA Tour’s biggest events in 2023 it’s taking ’em head-on this time around. LIV’s opening event at Mayakoba runs up against the Tour’s Signature Event at Pebble Beach. Its Las Vegas event will compete with the WM Phoenix Open down the road in Scottsdale. Its Hong Kong event is the same weekend as Bay Hill. Its Houston event is the same week as the Memorial. Its Nashville event is the same week as the Travelers (also a Signature Event). And its regular season finale runs up against the first round of the FedEx Cup playoffs — with the possibility that the team championships (still TBD) compete with the FedEx Cup, too. How fans divide their time during those big weeks is among the most intriguing subplots of the 2024 season.

It’s still too early to say whether a PGA Tour sponsor exodus is actually coming; Cognizant stepped in to take over the Honda’s sponsorship and folks at the Tour say there remains plenty of interest for Signature events. But after this season we’ll know more about event value and fan interest and sponsors’ willingness to pay up for the years to come.

That’s a long way of saying we’re not at that tipping point…yet. The highest concentration of current top talent clearly remains on the PGA Tour. Even if you ignore the OWGR, which has yet to award points to LIV events, the folks at DataGolf (who include LIV in their rankings) have the top non-Rahm LIV player at No. 28 (Bryson DeChambeau), with Joaquin Niemann (No. 30), Cameron Smith (No. 36) and Brooks Koepka (No. 43) next in line. The TUGR, a startup ranking that LIV actually used to determine its most recent field, isn’t much rosier; behind Rahm (No. 5), DeChambeau is next at No. 20 while Smith (No. 27), Gooch (No. 28) and Koepka (No. 30) round out the top tier.

There’s also a regenerative aspect to the PGA Tour that has survived LIV’s arrival. Ludvig Aberg is the latest young star to burst onto the scene, and his decision to remain with the PGA Tour was a significant signal to the market. While LIV did capture a young talent in Arizona State’s David Puig, he remains a relatively anonymous (though well-compensated!) figure in the mind of the casual golf fan. LIV has signed stars, without question. But it hasn’t yet created stars. That still happens on the PGA Tour and in major championships, both of which would be off-limits to a young gun joining LIV.

IV. THE UNCERTAINTY PRINCIPLE

Why LIV remains an X-factor.

Rahm’s signing had another notable effect on the pro golf world: It delivered a giant dose of uncertainty. If, in just four months, Rahm could go from insisting he never liked LIV’s format to insisting the format was one of the reasons he joined, well, what couldn’t LIV do? Suddenly the rumors surrounding Hovland and Tyrrell Hatton and Tony Finau felt much more credible. LIV is an agent of chaos; it thrives in uncertainty and rumor and the unknown.

The biggest unknown with LIV remains its bank account and the man controlling those strings. As a product, it is wildly unprofitable and will continue to be unprofitable for the immediate future. From that perspective, the PIF would benefit from LIV merging with the PGA Tour and compromising on the future structure of its team events — a move that would both stop the bleeding financially and give LIV a much-needed dose of reputability. The future of LIV’s current format and, more broadly, team golf, is believed to be a significant sticking point in negotiations.

But there are more important motives for merging, too. If LIV is a vehicle for improving Saudi Arabia’s financial and cultural station in the world, inking a deal with the PGA Tour that includes direct access to some of the most influential scions in American sports and industry seems like a pretty nice perk.

Ultimately, it’s a massive risk for either side to leave without a deal. 

Could LIV press on without the PGA Tour? Sure. There’s a world in which the PIF unleashes several billion dollars more to spend on any Tour pro willing to take their calls, demonstrating PIF governor and LIV chairman Yasir Al-Rumayyan’s absolute determination to make LIV work at any cost. Perhaps that allows LIV to strike a deal with a big-time network or streamer like, say, Greg Norman’s old friends at Fox. A bigger audience could create more legitimacy and a more engaged fan base, in turn boosting the value of each team franchise. That’s the most optimistic blueprint. But it’s a risky and expensive proposition that requires doubling and tripling down on a product that doesn’t yet work. Would the PIF continue funding new contracts while re-upping the bulky fees promised to its existing stars without seeing any legitimate ROI? Al-Rumayyan didn’t get this far by throwing good money after bad.

On the other side, could the PGA Tour press on without the PIF involved in the deal? It could. Despite the news cycle and the LIV defections, the Tour still has the stronger product, the stronger players and a strong institutional advantage — plus it has all but secured a major investment from the SSG. Still, shutting out the PIF would mean making the bet that the Saudis wouldn’t double (or triple, or quintuple) their investment in an effort to crush the existing pro game. Is that a bet the Tour feels comfortable making? Would you want to play a game of chicken with one of the largest sovereign wealth funds in the world?

The most immediate consequences of these stakes come at the negotiating table. Any deal would be structured around the finance and business health of LIV and the PGA Tour. How much is each asset worth? The Tour is a fully-fledged product with an existing proof of concept and guaranteed future revenue, making a valuation relatively straightforward. As for LIV’s value? Even for a startup, that’s difficult to put a number to. It has the rights to several top-tier pro golfers and has access to one of the most powerful pools of money in the world, but its standalone business value is a massive unknown.

V. THE DEAL

What could the future look like?

Some have speculated that Al-Rumayyan loves LIV too much to shutter it. I won’t pretend to know that whether that is true. But even if striking a deal with the Tour meant collapsing LIV’s vision, Al-Rumayyan could still claim a massive win. Getting in business with the PGA Tour? Getting a seat at the table? Potentially increasing the Tour’s investment in team golf? Increasing the legitimacy of Saudi investment in big-time sports? And doing all of that in, like, three years? That’s head-spinning stuff.

Through that lens, the PIF doesn’t stand to benefit from wrecking the Tour because it needs the Tour. It needs the Tour’s legitimacy, its infrastructure, its broadcast partners and blue-chip, big-money sponsors. Meanwhile, the Tour — or at least several powerful constituencies within the Tour — wants the PIF on its side so it can get back some of its biggest names and, most important, eliminate the threat of player poaching.

So, how would this future look? There’s a world in which the PGA Tour and the PIF come together and agree to integrate team golf into the Tour’s ecosystem in some lesser way. The Tour’s affiliation and approval of the TGL has already shown its willingness to lean into the team side of things; perhaps there’s a way to do so on a more global schedule.

Any deal will need the approval of the players on the PGA Tour’s Policy Board, a shrewd group that includes Tiger Woods, Jordan Spieth and Patrick Cantlay. They’ve made it clear they won’t be left out of the decision-making process again. They’ve also made it clear they’re interested in the best deal for the players, though they’ve stayed understandably mum on the specifics. Thus far, publicly, they’ve presented a unified front. Time will tell what they’ll approve behind closed doors.

So what’s a best-case scenario that could come from all of this? I’ve been wondering if we got any sort of hint from a man who’s been in the middle of this from the start.

“If we can create a perfect golf calendar, what would it look like?” ex-Policy Board member Rory McIlroy mused to Golf Digest’s John Huggan last month. “And I don’t think it would look like it looks right now.”

That’s an open-ended vision for the future of the sport that clashes with the words of LIV CEO Greg Norman. But of course it does; this is a story chock-full of contradictions.

“I knew that LIV was always going to exist,” Norman told SI after the league’s season finale.

It’s hard to “know” much of anything. “Always” is a long time. But even those of you rabid enough to read this far are desperate for something to exist next. If the currency of sport is meaning, entertainment and significance, a sport stuck in limbo would do well to escape that state.

Dylan [cautiously] welcomes your comments at dylan_dethier@golf.com.