In his playing days, Greg Norman always stood out on the golf course.
Nicknamed “the Shark”, the Australian spent 331 weeks as the game’s number one ranked player in the 1980s and 90s. With his signature straw hat and aggressive style of play, Norman was a distinctive figure in an otherwise stuffy and conservative sport.
Now, with the backing of funding from Saudi Arabia, he intends to shake up the ancient game again. Last month, Norman was named the chief executive of LIV Golf Investments, a new company majority-owned by Public Investment Fund, the $450bn Saudi sovereign wealth fund.
The company’s self-proclaimed aim is to revolutionise the sport, luring the world’s best golfers to a string of new tournaments and challenging its existing power structures.
Just as the Indian Premier League and shorter T20 format have energised cricket with the creation of a new tournament that generates billions of dollars in media and sponsorship revenues, LIV and its backers believe that golf is ripe for the disruptive forces of new ideas and money.
“The commercial side of golf is growing, the broadcasting side of golf is growing, but golf has been stuck in the same box for [more than 50] years,” says Norman. “Competition is the best thing in the world for everybody.”
Norman’s appointment was announced alongside the LIV’s $200m commitment to invest in the Asian Tour, the body that runs golf tournaments in its continent. The sheer size of the investment sent shockwaves throughout the game, given that the Asian Tour previously felt like it was the “younger brother” to its bigger rivals, according to Cho Minn Thant, commissioner and chief executive of the Asian Tour
It sets up a powerful new competitor to the sport’s existing giants, the US’s PGA Tour, the world’s leading and richest circuit, and the European Tour.
LIV’s investment comes at an opportune time for golf. After years of declining participation in key markets like the US, UK and Japan, the pandemic has spurred a newfound interest in an outdoors game that can be played while socially distanced.
With one eye on the IPL cricket tournament — which has been built around a series of completely new team franchises — Norman says that LIV is considering a plan to introduce more team formats into a sport that is largely based on individual competitions.
Although some leading players are believed to be considering joining such a contest, rumours about a potential Saudi Golf League have been met with hostility by some in the sport. Irish star Rory Mcllroy criticised the prospect of a breakaway league as a “money grab”.
LIV represents the latest of a series of sports investments by Saudi Arabia, part of its efforts to diversify the oil-rich kingdom away from fossil fuels. PIF led the £305m acquisition of Newcastle United, the English Premier League football club, while the inaugural Saudi Grand Prix in Jeddah this December will help to determine the winner of this year’s Formula One car racing world championships. Elite boxers, footballers, and golfers, have all competed in the country in recent years.
Critics say Saudi Arabia is following a playbook adopted by its Middle Eastern neighbours, the United Arab Emirates and Qatar, of using the world’s favourite games to “sportswash” its reputation, distracting from the country’s record on human rights, the killing of journalist Jamal Khashoggi by Saudi agents in 2018, and its military operations in Yemen.
Grant Liberty, the human rights organisation, estimates that Saudi has invested $1.5bn on sport in recent years, all “to wash away the stench of murder and brutality that hangs over the MBS regime”.
Norman insists that his involvement with LIV is rooted in a desire to grow the sport. “No, I have not been used for sportswashing because I’ve been to Saudi Arabia, and I’ve seen the changes that have taken place,” he says. “Every country has done horrendous things in the past . . . just look at America with racism, for example, it’s just so embedded here, it’s just ugly.”
Whatever the motivations, the Saudi-backed venture has launched a battle to shape the future of the game that pits a blazer-wearing golf establishment against well-funded rebels. In one sign of the sharp competition that is emerging, players in the US-based PGA Tour have been warned that they could receive lifetime bans if they join breakaway competitions.
“You’ve got some very strong-willed people who are very interested in protecting what they believe is the position, and the [Saudi-backed] disruptors,” says Chip Brewer, chief executive of Callaway, the golf course and equipment company. “I don’t think it’s even cold, I think it’s just a hot war.”
The Old Course at St Andrews is the world’s oldest golf course, widely considered to be the “home of golf”. The first written record of the game in Scotland is a document from 1457 in which James II, King of Scots, banned the sport because it was a distraction from archery.
The Royal and Ancient Golf Club of St Andrews, golf’s governing body outside the US and Mexico, still has a significant role in the sport. The R&A writes rules and organises the Open Championship, which began in 1860 and is the oldest Major championship in the game.
Martin Slumbers, chief executive of the R&A, argues that the game can grow within the existing structure. “I do not believe we need a disruptive event,” he says.
He distinguishes between LIV proposals for breakaway golf leagues and initiatives such as oil company Saudi Aramco’s sponsorship of the Ladies European Tour, the women’s golf group of which Slumbers is a board member. “I think there is a difference between wanting to invest and support within the current structure and wanting to be a disruptor,” he says.
The other power base within global golf is in the US, which hosts the Augusta Masters, the US Open, and the PGA Championship — the other three of Golf’s four “major” championships. The first US Open took place in 1895 and the sport grew in popularity throughout the 20th century, particularly after the second world war.
The US PGA Tour was created in 1968 and has grown into the sport’s pre-eminent tour. Structured as a tax-exempt charity in the US, its annual revenues grew from $3.9m in 1974 to $229m in 1993, and it is forecasting revenues of $1.5bn for next year.
The PGA Tour is competing hard to preserve its status as the preferred destination for players, increasing prize money and other financial incentives, while also warning players about the consequences of playing for breakaway competitions. In a memo sent to members on November 22, Jay Monahan, commissioner of the PGA Tour, said the tour would increase annual prize money by 16 per cent to $427m in 2022. In total, the tour expects to direct 55 per cent of its revenues next year back to players.
“The PGA Tour is stronger than at any time in our history and the game of golf has unprecedented momentum,” Monahan said in an emailed statement. “We are positioned to grow faster in the next 10 years than at any other point in our existence.”
Previously, the PGA’s only real challenger was the European Tour, a rival tournament circuit. That dynamic fundamentally changed when the two groups announced a new strategic alliance in November 2020, with the PGA Tour agreeing to invest a 15 per cent stake in the European Tour’s media production company for $85m, providing some much needed post-pandemic capital.
“Overnight, they went from competitors to partners,” says Keith Pelley, chief executive of the European Tour, who described the deal as “opportunistic” rather than defensive. “It’s just the beginning.” In a move designed to attract and retain top players, Pelley has also signed a landmark naming rights deal with DP World, a longtime sponsor, that will allow it to increase its prize fund to $140m.
One casualty of this has been the Asian tour — which for the last two decades has tapped the sport’s growing popularity in the region. The growth in the Asian tour had been helped by a strategic partnership with the European Tour, which was first signed in 2016 but which will lapse at the end of the year.
“For the longest time we were aligned with the European tour,” says Thant. “And it was all about protecting the rest of the world from the PGA Tour. Now it’s been turned on its head, where the European Tour and the PGA Tour are working together.”
The shifting alliances within global golf have given the Saudi-backed efforts an opening. “We felt like standing on our own two feet, working with an investor in the Asian region,” says Thant.
A team sport?
Norman first proposed a breakaway World Golf Tour in 1994, but the project received little backing at the time. “Nothing has really happened” in the way the game has been structured in more than half a century, he says.
That could change with LIV’s investment, which is backing a series of 10 lucrative events to be held on the Asian Tour over the coming decade and says it is looking at “making strategic investments” across the sport.
Bigger plans could soon follow. One idea that LIV is exploring is team-based formats. Golf already operates a small number of successful team-based events, including the Ryder Cup, which is run by the PGA of America and Ryder Cup Europe. The Solheim Cup, the women’s equivalent, is organised by the Ladies European Tour and the US Ladies Professional Golf Association. In both tournaments, teams representing Europe and the US compete against each other.
But the structure of golf means teams cannot be bought and sold. Unlike in football and basketball, golfers are individual contractors. They work for themselves, while the tours run competitions, aggregate media rights and monetise the coverage. Despite the apparent independence of players, they typically require permission from their member tour if they are to play on rival circuits.
Norman argues that this model is a missed financial opportunity. “You look at that value that’s been generated through other sports, for other players and other franchises,” he says. “Golf has never recognised that or had the ability to capture that market.”
The world’s biggest sports teams can be valued in the billions of dollars. Manchester United, the English Premier League side, trades on the New York Stock Exchange at around $2.5bn. Norman says the Indian Premier League, which was launched in 2008, shows how new sports franchises can quickly grow in value when backed by huge broadcast deals and surging audiences. Last month, private equity firm CVC Capital Partners and Indian tycoon Sanjiv Goenka spent a combined $1.7bn to buy the two new teams that will join the competition next year.
“It would be stupid of us not to be taking a look at that,” says Norman of investing in team competitions. “We see what sport as an asset class has done for franchise values, owners and fans . . . but to go down that course you have to change gears big time.”
Prominent players such as Justin Rose, Bryson DeChambeau and Phil Mickleson have reportedly been approached to participate in the new projects, but few have spoken publicly about whether they would join.
The risks are high for any player considering joining a breakaway competition — they could find themselves excluded from leading events in the PGA Tour or European Tour, or the Ryder or Solheim Cups.
“You go back to what happened in Europe with the European Super League in football,” said McIlroy earlier this year, referring to a failed attempt by elite football clubs to create their own competition and control the revenues.
“People can see it for what it is — a money grab — which is fine if what you’re playing golf for is to make as much money as possible,” he said. “I’m playing this game to try to cement my place in history and my legacy and to win major championships.”
Executives on rival tours argue that creating teams goes against the essence of what it is to be a professional golfer. The notion that they would be “beholden to someone who owns the team, an employment construct rather than independent contractors” is the main reason it’s so hard for leagues to convince players to join them, said one person close to the PGA Tour.
It’s not the first time initiatives have been suggested in the sport. The European Tour held talks with the Premier Golf League, a separate group pushing a team-format project, until deciding to partner with the PGA Tour. The PGL, which says it does not have Saudi funding, still hopes to convince the PGA Tour to work with it.
Despite the heated opposition, Norman and his backers believe the windfall of cash they can bestow on the world’s best players and the excitement of new formats will convince many to break away. That is what will be required to get millions of dedicated golf fans to watch its events.
Norman says professional golfers, particularly those not based in the US, have always wanted to be able to play all around the world and to be genuinely independent.
“We had a huge amount of restrictions put on us,” he says. “Nearly four decades now we’ve been fighting for this right to be able to go be a member of the PGA Tour, the European Tour, the Asian Tour, and still have the right to go and play wherever else you want to go play.”
Disrupting golf: the Saudi-backed plan to shake up the sport Source link Disrupting golf: the Saudi-backed plan to shake up the sport