Saudi-backed LIV Golf is forcing the PGA to pay players fairly: Adam Minter

The PGA Tour and Saudi Arabia's LIV Golf are merging, ending years of rivalry and moral debates over Saudi Arabia's human rights record. With LIV's backing, golfers gained higher payouts, guaranteed contracts, and equity stakes in the PGA's new commercial arm. While the alliance sparks ethical concerns, it also revolutionizes player compensation, reflecting their true value in the sport. Golf's future is evolving, but at a contentious cost..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here..The seventh BizNews Conference, BNC#7, is to be held in Hermanus from March 11 to 13, 2025. The 2025 BizNews Conference is designed to provide an excellent opportunity for members of the BizNews community to interact directly with the keynote speakers, old (and new) friends from previous BNC events – and to interact with members of the BizNews team. Register for BNC#7 here..By Adam Minter___STEADY_PAYWALL___.For nearly four years, the world's two most prominent professional golf tours battled over players, the moral high ground and outright survival. Now, the feud appears to be ending..Earlier this week, Bloomberg News reported that Saudi Arabia's Public Investment Fund, owner of the upstart LIV Golf, is nearing a deal to acquire a roughly 6% stake in the Professional Golfers' Association's commercial arm, PGA Tour Enterprises..Many fans will find it difficult to accept the two organizations coming together because it will require lovers of the sport to move on from a clash that was often about Saudi Arabia's abysmal human rights record, not golf..And as the country continues to face accusations that it uses sports as a PR ploy to distract from its troubling reputation, there's another uncomfortable truth to acknowledge: Without the presence of the Saudis, professional top golfers would've continued to be undervalued by the PGA Tour..The PGA Tour as we know it today was established in 1968 and has grown into a commercial juggernaut. In 2023, for example, it reported $1.82 billion in revenue, much of which was derived from multi-billion dollar media rights deals. The money enriches golfers, especially the top ones. That year, Rory McElroy earned $24.9 million in PGA-related compensation. It makes for a great payday. But McElroy shouldn't be completely happy with it, either..Unlike an NBA player, he isn't a salaried employee. Instead, he and other PGA Tour athletes are independent contractors who are only compensated if they make the cut at a tournament (finish in the top 65 golfers). And even then, their pay is determined by how high they finish. A top slot is typically worth millions; a bottom finish can be worth the price of a used car..It's an absurd system that — unlike other leagues — doesn't compensate athletes for the value they bring to the sport and its broadcasts. Let's stick with the basketball comparison here. Golden State Warriors superstar Steph Curry will earn $53 million in guaranteed money this season. The hefty payout shows that the NBA recognizes his performance and the value that he brings to the league every time he's on the court (regardless of whether he has a bad game)..Contrast Curry's $53 million with the $0 that Tiger Woods earned for missing the cut at the 2024 US Open. He may not be the old Tiger, but he still draws a lot of viewers to televised golf, and he's objectively worth more..Getting it has been the hard part (in fairness, Tiger hasn't publicly asked). One main reason is that the PGA Tour has never faced meaningful competition or pressure from its athletes to do better. Then came the PIF, with nearly $1 trillion in assets, announcing LIV Golf in 2021. The first season cost $784 million. The second season was reportedly slated to cost $1 billion..Read more: Ramaphosa tells SA expats Eskom has failed and SA has to move towards green energy – Geoff Johnson, Nedbank Charity Golf Day founder.Much of that treasure has been spent on revolutionizing how much — and how — pro golfers are paid..In LIV's first year, every tournament paid a purse of $25 million, and even the last-place golfer was guaranteed to take home $120,000. Meanwhile, the 2022 PGA Championship had a comparatively paltry purse of $15 million. It's worth noting that LIV also includes fewer players than the PGA, allowing for each to earn more..Yet LIV's biggest innovation was to tilt away from prize money and bring in multi-year, guaranteed deals. Most notably, Jon Rahm received a multi-year contract reportedly worth $300 million, and even lesser players on the back ends of their careers received eight-figure deals..The move pulled athletes away from the PGA Tour. To survive, it had to pay up. So far, it has. In 2021, it paid just under $400 million in prize money; in 2023, it paid out $560 million. That year, it also set up a $100 million pool to reward players who "generate the most positive interest in the tour." Tiger Woods received $12 million in 2023..But the most critical development has been to recognize that the PGA Tour can't survive if its only tactic is to try to top the guaranteed cash and prizes offered by the deep-pocketed LIV. Instead, it needs to offer something that other professional leagues typically don't: player equity in the league itself..Before LIV, the idea might've been dismissed out of hand by the conservative golf establishment that the PGA Tour represents. Similar to other professional leagues, it likely views player ownership as a threat to its authority and survival. But PIF's money has changed the risk calculus..So, the tour created PGA Tour Enterprises in January to manage the league's commercial activities. A group of investors led by John Henry's Fenway Sports Group funded it with $1.5 billion. Player equity grants worth roughly $930 million in total will be distributed to players based on their tenure in the tour and their records in its championships. The grants will vest over the years, providing an incentive to stay, win and promote the tour..It's such an attractive idea, so full of growth potential, that PIF is investing its own money into it and settling its grudge. If the tour's commercial prospects appreciate, as they surely will, PIF can always sell at a profit..Of course, there are still details to work out and regulatory approvals to receive. But even at this stage, the grants stand as a critical means of ensuring that athlete earnings properly reflect the value that they bring to their league and sport..That value isn't nearly as important as ensuring human rights in and around sports. But players looking to thank someone for the advance might want to give a friendly nod to LIV, PIF and the Kingdom of Saudi Arabia..Read also:.🔒 Money can't buy the future of golf – with insight from The Wall Street JournalNew Zealand's golf tourism: A billionaire's bet on 'Lord of the Rings' paradiseDrawing the teams for the David Carte Memorial Golf Challenge 2024 at BNC#6.© 2024 Bloomberg L.P.

Saudi-backed LIV Golf is forcing the PGA to pay players fairly: Adam Minter

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