8 June 2023
The PGA Tour and LIV Golf, the Saudi-backed newcomer that disrupted the industry last year, have reached a merger agreement, effectively bridging the rifts that have characterized the organizations in recent times. The newly formed entity will receive a significant minority investment from the Saudi Public Investment Fund, which backs LIV Golf. The exact details of the stake and its valuation are currently being fine-tuned.
The agreement represents an unexpected resolution to a dispute that has divided men's professional golf and led to players who joined the Saudi-backed league being banned from participating in PGA Tour and DP World Tour tournaments. The US government has also launched a federal antitrust investigation into the PGA Tour, while the PGA Tour and the LIV are suing each other in federal court in California. LIV Golf, founded in 2021, aims to become the leading professional golf organization in the world. It is backed by the Public Investment Fund (PIF) of Saudi Arabia, a major US$600 billion sovereign wealth fund controlled by Crown Prince Mohammed bin Salman. By offering substantial cash rewards and guaranteed payouts that exceed what players can earn in the established market, LIV Golf has successfully lured several PGA Tour players into its ranks, including major champions Phil Mickelson and Brooks Koepka.
The PGA Tour is the leading professional golf organization that organizes tournaments around the world. It was founded in 1929 and hosts four major championships: the Masters, the U.S. Open, The Open Championship and the PGA Championship. The tour culminates in the FedExCup playoffs, which offer substantial prize money. Legendary golfers such as Jack Nicklaus, Tiger Woods and Rory McIlroy have made their mark on the tour, making it a prestigious and lucrative platform for top players around the world.
Golf Digest magazine reports that the PGA Tour, which has a turnover of US$1.5 billion, derives its main revenue from five sources: tournament revenue (US$660 million), domestic and international media rights (US$634 million), Tournament Players Clubs (US$142 million), corporate licenses (US$65 million) and investments (US$21 million). In contrast, the European Tour reportedly generates approximately USD 144 million from its 39 tournaments.