The staggering cost of bankrolling LIV Golf and why PIF could be ready to cut ties
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Is the balance of power in golf’s civil war tipping after the Saudi Public Investment Fund’s investment in LIV Golf is revealed?
At the height of the breakaway tour’s influence in late 2023, it was unclear who had the better hand at the negotiating table.
Golf’s most recent major winners were defecting on a whim to Greg Norman’s promised land of team golf, where they could show a bit of leg while tapping along to K-pop on the first tee.
The boatloads of Riyal were just a nice bonus, obviously.
A $450 million one in the case of Jon Rahm, LIV’s biggest coup to date, making the Spaniard the world’s highest-paid athlete at the time.
PGA Tour commissioner Jay Monahan intervened with the introduction of $20 million Signature purses in a bid to stem the treachery and buy the time needed to “unlock golf’s worldwide potential” and reunite the world’s best in weekly battle.
Meanwhile, the performances of LIV’s exempt stars at major championships have been largely underwhelming, the obvious exception being Bryson DeChambeau and his proven capacity to raise his game on the world’s biggest stages.
Bryson is one of the few who appear buoyed up by his breakaway tour status when teeing it up with his former adversaries, and is undoubtedly LIV’s Trump Card (in more ways than one), perhaps doing more to help grow the game than anyone else in the sport at present.
Few would argue DeChambeau’s signature shouldn’t be valued on par with Rahmbo’s.
And we have all been led to assume that, should he demand parity, the Saudi PIF’s pockets will simply continue to stretch.
But is this the case indefinitely? Or is there a stop loss?
Money in Sport revealed this week that PIF’s cumulative investment in LIV Golf now stands at a staggering $4.58 billion, an increase of $1.9 billion since January 2024.
The capital investment in 2025 is predicted to reach $1 billion by the summer, pushing the PIF’s total outlay to in excess of $5 billion by the end of the year.
Eye-watering sums, made all the more ludicrous by the fact that annualized estimates of LIV’s revenues from a full 14-tournament season amount to a mere $100 million.
The 2023 Ryder Cup alone brought in $134.
Even for the Saudis…these numbers can’t continue to fly.
Balancing the books, particularly in the wake of crashing oil prices, is showcasing a failing business model like never before.
It’s likely why future $330 million bailouts are set to be conditional on meeting three financial objectives, as discovered by an additional document included in the January share capital increase.
The “Conditions,” as documented, state:
- The Board providing approval of six events for the 2025 Season, subject to finalizing venue hire agreements.
- Reported consolidated (Teams and Leagues) revenues of at least $82 million for the 10 months to October 2024.
- Having an executed term sheet, with the approval of the Executive Committee, for a US broadcasting deal with Fox Inc. and its subsidiaries for the 2025 and 2026 Seasons.
With regard to the first condition, Money in Sport estimated total costs associated with the opening six events to be in the ballpark of $380 million, while generating approximately $50 million, hence the $330 million funding request.
It’s hard to imagine the Board reflecting on this as a tick in the box moving forward. Only LIV Golf Adelaide and Miami are thought to have pulled in over $10 million in revenue.
The second condition’s stipulation for $82 million of revenue for the period January to October 2024 is the first time a consolidated revenue figure for LIV Golf has been publicly disclosed.
We can assume this target was hit, given the funding sign-off, although struggling to reach the $100 million mark across a 14-event season can only be viewed as a major disappointment given the star power on show.
The DPWT Tour brings in $423 million alone, begging the question as to why PIF has not gone harder in attempts to acquire the established global tour.
The announcement of LIV’s broadcast deal with Fox in January secured the final nod for the purse strings to be loosened once again.
LIV Miami encouragingly drew a record viewership on the final day, with 484,000 tuning in to watch Marc Leishman come through a stacked leaderboard that had DeChambeau, Rahm, and Garcia in contention.
Worryingly, though, despite the firepower on show at Trump Doral, the concurrently running Valero Texas Open on the PGA Tour was commanding 3.5 times as many eyeballs.
And not for a Scheffler-McIlroy showdown, but to watch Brian Harman ease to a comfortable three-shot win ahead of Andrew Novak, Ryan Gerard, and Maverick McNealy.
Whether LIV’s future funding “Conditions” are to become more ambitious remains unknown for now. Only time will tell as to how long the Saudis are willing to let the experiment run.
In light of the impending $5 billion investment milestone, perhaps it’s time for PIF to cut their cloth and get a deal done to reunify the game once and for all.
Thankfully, it’s now looking more like a case of ‘when’ and not ‘if.’
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How much longer is PIF willing to bankroll LIV Golf?
