The Business Side of the PGA Tour Has Gotten Weird

00:00:00
Speaker 1: I miss a green, for example, I'm already upset. When I find my ball in the bunker, I'm really upset. And when I find my ball.

00:00:06
Speaker 2: In a bride egg Friday egg, the dreaded Frida Egg Frida Egg, Frida egg, Brian Egg Frida Egg, Bride egg Lie, I'm about ready to run off of the hump. Welcome to the Friday Golf Podcast. I'm Jarrett Morrison, and today we're talking about the weirdness of the business side of the PGA Tour. There's been a lot going on on this front. I frankly don't understand all of it. I'm trying to understand more of it, and this episode is part of that. Basically, everything that's going on with the business of the PGA Tour right now has to do with the tour trying to pay for its fight with Live and with the Saudi Arabian Public Investment Fund or the PIFF. Right this is an extremely well funded rival. You could hardly get a better funded rival, and the tour is just having enormous difficulty retaining its members and spending enough to remain viable in this new professional golf ecosystem. And one of the reasons that's difficult for the tour is that it is a nonprofit member organization and that has worked for the PGA Tour quite well so far, but lately it hasn't been working as well. So one of its strategies, one of the tour strategies has been to explore forming a for profit company funded by the public Investment Fund itself along with an array of wealthy investors and private equity types. This new entity is going to be called PGA Tour Enterprises. As far as I know, this is is it's such a significant and interesting move, but it can be a little bit hard to wrap your mind around right away. What you need is a good sports business reporter to explain it to you, and fortunately that reporter exists, and his name is Josh Carpenter. Josh is an assistant Managing editor at Sports Business Journal, and his recent reporting has really focused almost exclusively on golf, which is very fortunate for all of us in the golf world. He has broken several big stories related to the PGA Tour's recent business dealings. I have a bunch of things I want to get into with Josh, that you know, I want to get into the negotiations between the PGA Tour and the PITH, the effect of John Ram's lives signing, the tour's changing relationship with sponsors, and just you know, whether everyone is spending way too much money on a sport that isn't anywhere near as popular as football or basketball or socker. So all of that is coming up. But first, if you enjoy the Fridagg Golf podcast, if you listen to our sister podcast, The Shotguns Start. If you like what we do on social media and in our newsletter, you might want to check out CLUBTFE. CLUBTFE is our membership program. It's one hundred and twenty dollars a year and you can sign up at the Frida egg dot com slash membership. In addition to all the benefits that members get, like an ongoing discount in the pro shop and early access to Frida Egg golf events, the big thing about CLUBTFE is exclusive content. We do a weekly design notebook feature that gives people an update on what's going on in the world of golf architecture. We do a weekly course profile. These are in depth analyzes of great golf courses with photography and illustrations, and we have a monthly member video made by the great Cameron Hurdis. We are really proud of the content that we're doing so far, and we're planning on adding more as we go along. No specific teasers yet, but we've got things in the works that we're planning on bringing out very soon. And oh yeah, I forgot to mention that we have a monthly member hangout where members of the Frida Egg team get together and talk in a casual way with members present in the chat basically, and those are really fun as well. So lots of stuff going on in CLUBTFE again, it's at the Frida Egg dot com slash membership. Go see what it's all about. We would love to see you in the club. All right, with that, let's get to my interview with Josh Carpenter. All right, Josh Carpenter, welcome to the podcast.

00:04:51
Speaker 1: Thanks Jerret. I appreciate you guys having me on.

00:04:54
Speaker 2: Yeah, of course, you know, just to give people a picture here, I'm at my usual setup at home, wearing hoodie, you know, looking like a bum. And Josh is in a professional studio at Sports Business Journal where he works, very very nicely dressed and just looking really classy. So so I appreciate the effort that has gone into this, but this is a good representation of how the two of us approach our jobs.

00:05:18
Speaker 1: I think only only my best for the Friday guys.

00:05:22
Speaker 2: All right, so let's get into it. You know, there's so many I was when I was trying to plan this interview. I there are so many different ways, different entry points, and I mean, it's it's just a mess right now. The business side of the PGA tour, that the media stuff that's going on around the PGA Tour, the stuff that basically you cover. Maybe we could just start with what do you think is the current state of the negotiations between the PGA Tour and Saudi Arabia's Public Investment Fund.

00:05:51
Speaker 1: It's hard to say exactly where they stand. I would say, you know, in my opinion, I think the fact, I know, we all know the December thirty first deadline you know, came went and there was no deal. I certainly saw it as a positive that they continued talking and said they were going to continue on in negotiations, rather than just both of them throwing up their hands and saying, you know, we're going to take a few months off and then come back to the table. You know, they said we're going to continue negotiating. I know the tour itself did not give a date of when it hoped to have an agreement in place by I know, I think the Telegraph and James Corgan over there reported, you know, by the Masters was a timeframe. So I think that's overall positive. There aren't obviously a ton of details about who's doing what and what stage they're at, Like is a deal eighty percent complete? Is it thirty percent complete? Like? Not too much detail around that, But overall, I would say it's a positive that they're still talking at least.

00:06:51
Speaker 2: Right, you know, And that's sort of a counterintuitive interpretation of what happened, which is that a deadline passed right. The framework agreement said that December thirty first, this is when we're going to have this figured out. They don't have it figured out. But you're saying, basically, at least they're still talking.

00:07:09
Speaker 1: Yeah, at least they're still talking. And honestly, Garrett, like, if you look at December thirty first, you know, June sixth happened, they say December thirty first. If you break open and kind of peel back all the layers of how this deal has to work. December thirty first was an extremely optimistic timeline, I think, and it was, you know, a self imposed deadline, so it's not like it was a you know, set in stone and if there's no deal by then, it doesn't happen. So yeah, I certainly think extremely complex to get this done. I mean, there's a ton of stuff about it that I don't even know how it's going to play out. Most people in the industry that I talk to, they have no idea what's going to look like what, and so I think for them to try and figure that out in six months was gonna be tough. So yeah, I think it's I think it's positive that they're still talking.

00:07:54
Speaker 2: And they've shown an ability to keep things secretive too. I Mean, one of the most amazing things that has happened in this story is the fact that nobody knew that June sixth was coming, and that Jay Moonahan and Yasser al r Mayan of the Public Investment Fund, We're going to show up on TV talking about an agreement that they had just struck. Nobody knew that was coming, and that's highly atypical when it comes to deals of this size in the sports landscape. So if we don't know much right now, then that's probably by design. You know. That doesn't mean there's nothing going on.

00:08:28
Speaker 1: I suppose was it Yeah, No, I wouldn't say so. It was it Rory who said a few weeks back that leaks sink ships or something to that effect. Right, So, like, and these guys, you know, PIFF and the Tour, and then you add in the SSG group. These are guys who have done a lot of deals around sports teams with billions of dollars at stake, so they know how these things go. And I think the fact that there aren't a ton of leaks is a good sign. That means that everyone really wants to get this deal done. You know, from SSG to the Tour to the PIFF really wants to do this deal. I think that's a good sign that, you know, and the fact that there's not a lot of information doesn't necessarily mean that they're just not talking and nothing's happening.

00:09:09
Speaker 2: And when you say SSG, you mean the kind of consortium of investors and private equity folks who are investing in this new for profit entity alongside the PITH. What does SSG stand for again, is that's something.

00:09:24
Speaker 1: Yeah, it's the Strategic Sports Group and that has that has a lot of you know, big time sports owner Fenway Sports Group, which owns the Pittsburgh Penguins, of Boston, Red Sox, Liverpool. They're part of it. Steve Cohen who owns the Mets, He's part of it. Mark Lazri who owned the Milwaukee Bucks, He's part of it. Mark Attanasio, if I'm pronouncing his name right, he owns the Milwaukee Brewers. Like, there are some really Arthur blank in there, owner of the Falcons and the Atlanta Drive, of the Atlanta Drive, GC of the TGL, he's part of that. So there are some really high ranking sportsw part of that group, which I think is a pretty good example of why the tour decided to keep negotiating with that group specifically.

00:10:09
Speaker 2: Yeah, not a bunch of jimokes, I suppose. And I've never used that word before. Actually that's that's the first time. So one big thing that happened in the run up to this miss deadline between the PGA Tour and the PIFF was that John Rahm signed with Live and there were a number of interpretations out there that I saw about what this move meant, whether it meant that they were farther apart than ever or closer together than ever, whether it was a good thing for the future of a partnership between the PIFF and the PGA Tour, or whether it was a bad thing. How did you interpret all of that.

00:10:49
Speaker 1: You know, it was a little bit surprising if you look at some of John Rohm's comments since all this has happened. Now he has played it a little bit down the middle. He hasn't been super critical of Live. He had, you know, it was still surprising if you see some of his comments talking about being about legacy, about not loving the format. From that standpoint, it was surprising to see him go to Live. At the same time, I think John has made it very clear he's a historian of the game, and he cares very much about his legacy, his own legacy in the game. And I think, you know, my kind of vantage point. My view on this from when this happened is that this was a big negotiating tactic by the PIFF to say, if we can get John rom we can get anyone, right, So we're going to get John ram You guys have to do this deal with us, and from John's vantage point, I think I think he probably still and this is just my opinion. He likely still has some issues with the format, the shotgun start and all that. But thinking about his legacy, maybe John rom thought I'm gonna do this deal with Live and that's going to be the first domino that's going to fall and cause this deal to happen for the golf world to come back together, and then thirty years down the road, people are going to look at me John Rahm as the person who brought the golf world back together and that's going to be his legacy. So that's kind of how I've approached it, how I see it. Some intel on that, but a lot of it's just kind of my personal opinion. But there are people who feel that way in the industry.

00:12:25
Speaker 2: That's sort of the optimistic interpretation, And I suppose the sense of it is that by leaving to Live, he kind of forces the PGA Tour's hand a bit because where the PGA Tour was moving in the time between June sixth and the end of the year was reducing the piff's involvement in the future of the PGA Tour. You know, it started off with the impression that the PIFF would be the main driver or the sole driver of this new for profit PGA Tour Enterprises thing. But then by the end of the year we had all these other people that you mentioned earlier entering the mix, and it seemed like the PGA Tour was like, Okay, maybe we don't need you Piff as much, and by leaving John ram is kind of almost forcing them back to the table. Is that the strategic interpretation there, I guess.

00:13:19
Speaker 1: I think so. I think so, And you know, a lot of the talk up to John's signing would live was there's not much happening, talks are slowing, there's not going to be a deal, and if you look at a lot of the stuff that's come out since, then again there's not a ton of intel being leaked by the parties involved, but it's been that there's some progress being made at least toward a potential deal. So again that's the optimistic take. I tend to be a little bit of an optimist. I know a lot of people said, well, this is just going to divide things further and it's going to be twenty twenty six and we're still going to be talking about all this war between between both sides, So certainly could be that, but I just think I think that's how it's going to play out. I think we'll see a deal. I think John Ram is going to come back to the PGA Tour in a couple of years, maybe twenty twenty five and just be I don't know, three hundred million dollars richer.

00:14:14
Speaker 2: Yeah, not a bad situation for rom. I mean, you know, another interpretation of this that I find fairly persuasive, And I think that John's reasons were probably manifold, right, But one could be that he kind of felt undervalued by the PGA Tour. And he's somebody who has a lot of pride and that is part of what drives him more so than money, it seems like, and so because he felt undervalued, he was like, Okay, here is something big I can do to have an effect. Right, Roy's the boss right now. It seems like, well, guess what if I go to live then all of a sudden, I'm sort of the boss.

00:14:54
Speaker 1: Yeah, one hundred percent. And some of John's comments or you know, you go back and you watch that Ryder Cup press conference, where John was. He was mad, he was a judge. You know, John had a comment at some point in the last year about I think he was playing in the same group with Rory and he said he couldn't walk because the microphones were in his way or something something to that effect, you know. So, yeah, I think there's part of that to it as well, and he thinks he can be seen as a as a leader and really valued as someone with an opinion though. I mean, to me, it's it's startling that December seventh Live announced you know, John ram as a as a signee, and here we sit, you know, January tenth. Live season starts on February second. We don't know what team he's playing for. We don't you know, we don't know is he playing on a current team, is there a new team? Like it's just it's been a little bit, you know, I know, there's a lot going on, a lot to filter through, but it's surprising to me that were, you know, three weeks away essentially from their season start, and there's there's not been a lot of info that's come out about what his plans are.

00:15:56
Speaker 2: Is there even a team for rom? I mean, it seems like a lot of the the equity and the leadership positions on those various teams have been hoovered up by players who are less significant than John Rumm in this day and age and golf.

00:16:10
Speaker 1: Yeah, and you do have two So of the twelve Live teams, you do have two that do not have team owners that are fully owned. But so the Cliks and the Ironheads both are fully owned by the league. The other teams all.

00:16:24
Speaker 2: Have If I had to guess which teams didn't yet have an owner, I would probably have gone with the Claks and the iron Heads.

00:16:29
Speaker 1: The other teams each have a captain which has an equity stake in the you know, in that team. Those two teams do not, And so that was kind of the speculation that, Okay, John will probably join you know, the Claks, and he'll be that team owner. I think it's been leaked out that there's a third member that's been added to that team. But still there's a lots of there are a lot of unknowns around kind of what the structure of Live's league is going to look like here in a few.

00:16:56
Speaker 2: Weeks now, the DP World Tour is all a party to these negotiations happening with the PGA Tour and everybody else. What do you see as the DP World Tour's role in this? Are they just kind of like hangers on? Do they have any influence? Like what's what's what's going on with them? And why are they a significant party to these negotiations?

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Speaker 1: I mean they are a significant part of these negotiations just because of I think their global nature obviously, like you know, formerly the Europeans who are now the DP World Tour, like they are truly a global tour. I think they have to be involved in some way. Now how that looks, I don't know if you look, if you look even at I think Rory's comments this week in Dubai we're interesting just because he sat in on all those board meetings for all those you know, all that time. I feel like some of what he said has to be something that was at least discussed, if not said, all right, let's do this. You know in some of those board meetings, you know, his comments were really geared toward it being you know, adding that global nature to this new anti right, talking about an Australian open, talking about these national opens in Australia, South Africa, Singapore, those areas. So I think if if the PGA Tour, PGA Tour enterprises were to kind of go to that model where it's more of a global tour than a US based tour, then what does that do to the you know, Sunshine Tour events in South Africa that Louis us stays and won a few weeks ago, or what does that do to some of the some of the events in Asia that they play. That's one of those unknowns. That's just it's unknown, right, We just don't know what that looks like. But I think, you know, based on Rory's comments, like he wants to see a tour that plays twenty to twenty two events with seventy to the top players. So then if you've got that, then you've got the corn Ferry Tour and the rest of the lower level PGA Tour guys, you've got the DP World Tour. So how does that all shake out? I think that's one of the big questions we're all kind of asking around these negotiations.

00:18:59
Speaker 2: Well, let's talk about that. These are recent comments from Rory that he made to John Huggen of Golf Digest, basically saying that he hopes the outcome of all this is something like a world tour.

00:19:13
Speaker 1: Now.

00:19:13
Speaker 2: He's made no secret of this desire of his In the past, He's mentioned like the world tour is the obvious direction for the world of golf. That's where I wanted to go. I want it to be twenty two events or so. I wanted to consist of some of these national opens that have history and real weight to them. So we're just not conjuring events out of thin air like we did with the you know, with past iterations of a world tourish idea. This is where he wants to go with it. There are some objections to this right which we're being raised on social media yesterday by some PGA Tour players, by Michael Kim, for instance, who's very active on Twitter. His response to this was basically, like, the money's in the US right now? Are these US com company is going to want to support a bunch of events overseas? A bunch of the players on the PGA Tour, and the most significant players on the PGA Tour are at this moment, especially now that a lot of international players have left for live A lot of the most significant players are Americans. They and they might not want to travel to the extent that a world tour schedule might force them to travel. And so you know, when when the idea of a world tour comes up like this, thinking it through with your business reporter or brain, are there some real difficulties in actualizing this kind of structure?

00:20:37
Speaker 1: Yeah, there are. I mean, I think there's some of the things you just mentioned there. But at the same time you look at you know, surely there are some global partners, some global sponsors that would love to title sponsor an event in Japan, like think of the Also you already see the Zozo Championship over there, right, but think about you know, even look at look at Live Adelaide and how popular that was. You know, there's a big Australian brand or a brand from somewhere in that part of the world that we'd love to sponsor an event down there that's got seventy players, that's a national open. So I think there's a possibility from a sponsor standpoint. To me, it's like, how do you structure the current the way the current TV deals are, they're around the PGA Tour being a US based tour, right, NBC and CBS they love that three to six window on Sunday afternoons. I love that window. I'm a golf nut, like I love that window. I'll admit it's gonna be tough watching an event in Australia that's finishing up at I don't know, two in the morning, right.

00:21:43
Speaker 2: So Australia is like the worst time for Americans. It is obviously it's the best time for Australians. So there you go.

00:21:50
Speaker 1: It is and I hate it because, like, you know, based on whatever once I've never been to Australia, but every golf not who loves Australian golf, like it just sounds like amazing and something you'd want to just sit and watch every day. But I got to sleep, and so it's tough to you know, unless you DVR and watch it watch it back later. I think that's one of the big keys, one of the big obstacles. It's like, how do these TV networks do that? If you're going to have a National Open that has the same point of emphasis that you know, a big tournament on US soil is going to have, how do you do that? Like, I don't think a major golf tournament in Australia is going to air on the CBS network at two am? Is it? I don't know what CBS air is at two am because I'm never awake for that time.

00:22:38
Speaker 2: So I mean, they don't want to do that. They can't want to do that. And I wonder if the media rights deal that currently governs the way the PGA Tour is broadcast in the US has some sort of provision about that. I don't know, like right now, that media rights steal goes through twenty third yep. And so would it even be possible would you just have to like scrap that deal somehow in order to create a world tour.

00:23:10
Speaker 1: Yeah, I don't know if you scrap it. Like I said, I haven't seen the contract obviously, so I don't know if there may be a clause in there that's.

00:23:17
Speaker 2: I haven't either. Maybe this is the part of what we start to need to do, is like read this contract, if it's available everywhere.

00:23:22
Speaker 1: If you've got to send it over to me, Garrett.

00:23:24
Speaker 2: Yeah, exactly. I know that's not going to be coming out publicly.

00:23:27
Speaker 1: Right so, you know, but maybe that is part of this investment. If you see seven billion dollars, you know, put into this PGA Tour enterprises, Like, surely that's enough that you could tweak these contracts to say, well, ex event in Australia is going to be on this network or this or that. I don't know, but I think that's one of the big things, like the media aspect of this PGA tour enterprises and where that money goes to when you know, you've seen all the talk about enhancing broadcasts and cutting out commercial load and all that. Like, that's one of my biggest things that I'm kind of watching is like, how does that money affect the fan experience from a TV standpoint? Right?

00:24:06
Speaker 2: Yeah, And you know where does the money come from? Because right until this point, so much of the money is coming from that US media rights deal that was the big thing in twenty twenty. You know, j Monahan sitting there while COVID was causing Marcus to go down that but what was happening there was Jay was announcing a huge new media rights deal that is inflated in the way that so many sports media rights deals have been inflated in the past decade or so. Right, the combination of the continuing profitability of the cable bundle though that's going down and you've got these tech competitors coming into the mix. All that competition is just driving up the money. Golf got a big piece of that because they they negotiated that deal at exis exactly the right time, right twenty twenty before COVID was kind of the time to do that. That's going until twenty thirty. That was supposed to be the big funding source for the PGA tour. Now if you're going to replace that, you can only replace that with a huge amount of money from private equity and from the PITH basically, So I guess the new idea would be that, Okay, instead of getting everything from this media rights deal, we now need to get everything from rich investors.

00:25:32
Speaker 1: Yeah, maybe so and maybe And again I'm not an expert expert on the media that the contract side of it, but maybe there's you know, money that comes in from the investors. Maybe there's still money that's coming in from the networks. I'm sure I would think, you know, the networks aren't just going to be sitting on the side and not you know, investing on this. So yeah, I think it's I think that's the big question is like where's the money coming from and how's it going to be dispersed. Yes, you know, to a PGA Tour, a golf product that, let's be real, Garrett, like golf is a niche sport. You know. I've been very like outspoken about that. I'm not knocking golf. It's just it is what it is. It's a very bloated sport. And I think it's you know, since Live's arrival and you've seen these twenty million dollars persons and winners winning four and a half million dollars, Now we just kind of I don't think twice about a guy winning a golf tournament winning four and a half million dollars. But I remember when Live first arriving, we said we're gonna pay winners four and a half million dollars. It was like, Wow, that's a ton of money. And now the perse sizes have gone up so much, I don't even think about it anymore. But you know, one of the comparisons I kind of drew is that, like, there's so much money in golf these days, and if you look at PGA Tour final rounds last year average two point two million viewers on CBS and NBC, which that's that's decent, right, it's decent. It's not bad for golf. It's not Tiger numbers. But NASCAR, by comparison, averaged almost three million viewers for its race telecast on Sunday afternoons, similar time slots, you know that sort of thing. So that's you know me, I get in my kind of golf bubble and I think it's the most important thing out there, and everyone's interested in wanting to know what's going on. But I sometimes forget that it's it's not and there are other things out there. So like, is this current model with all this money is sustainable? And I wonder a lot about that.

00:27:35
Speaker 2: Yeah, it sure doesn't seem like it. And that's kind of what I'm thinking towards in my questioning here, because like, I don't know if the next media rights deal for the PGA Tour is going to be like the one they got in twenty twenty, because it looks to me like the cable bundle and everything that that created for sports is kind of going away. Tech companies are entering the arena and there's not going to be as much competition for these media rights in the future. I don't know if like twenty thirty is going to be the biggest deal in the world for the PGA Tour given the viewership numbers that you're mentioning, and so in order to keep up the way that they're paying players right now, they would just need to find a completely different source of money. Because yeah, as you say, it's just ridiculous, right, this is just just way out of proportion. And that brings us to PGA Tour Enterprises, this for profit thing that I don't really understand, and I'm just going to throw it to you. I know that you can't. Nobody knows that much about it, And you know, what do you think this for profit entity would look like? And what purpose would it serve for the PGA Tour? What do you know so far about that?

00:28:56
Speaker 1: I don't know about what it would look like necessarily all throughout. Like some questions I have is like, obviously, it's there's gonna be a ton of money in this. You're gonna have the for profit side, you'll still have the nonprofit side, But like where does that money go? Like we've like we've spoken about like does it go to and I'm sure it's going to be spread, you know, throughout, but how does it impact TV? How does that impact current sponsors who have signed You know, there are various sponsors who have signed on through twenty twenty seven under the current model. Well, how does all this influx of new cash change that? Right? Do they renegotiate all of those deals that are through twenty eight and twenty nine and some of are signed on through twenty thirty. Cognizant just came on to sponsor the Palm Beach event through twenty thirty. I would imagine they probably they were already a PGA Tour sponsor through the President's Cup. I have to imagine they wouldn't sign that to you without having some kind of inkling about like how this will play out, right, because they obviously know it's going to change. But that's one of my big questions. How are sponsors gonna going to play out? What's the leadership going to be like for this new entity? Like we know there are some names that we can't really haven't reported yet because it's not totally confirmed, But there's some pretty high profile names in the sports business, not necessarily golf, but in the sports business that have been kind of targeted to help lead this this entity. You know, I've written about the tournament funding model on the tour where the tour is basically coming back to these events and saying, hey, we need more money to cover you know, person increases like you know, does that model go away now that PGA tour enterprises coming along? You know, there's a ton of questions about it, not a ton of answers at this point, but I'm hoping, I'm hoping we can find some here in the next few months.

00:30:47
Speaker 2: Another question I have about it is the issue of how players get paid through it. You know, Obviously, one idea for this new company is that it would help prop up these ridiculous persons sizes that have emerged in the era of competition with Live. But another idea that's been floating out there is that players will have equity in this company, and that's going to be a big source of compensation for them. Now, I'm really dumb about this stuff, So I apologize if this is like a one.

00:31:22
Speaker 1: Oh one, I am true, Garrett, But how would this work?

00:31:25
Speaker 2: How do players have equity? Would would all the equity kind of get get dominated by this this current generation of players, and there wouldn't be much left for future players. I mean, how does equity turn into something that continues to be appealing for players in the future. I mean, I get like, if you give Tiger Woods a certain percentage of equity right now in this company, that might be very lucrative for him. But how how does this become an ongoing thing for players on the PGA tour.

00:31:57
Speaker 1: Yeah, and Jay Monaghan spoke about it that the New York Times that that deal books someone about a month ago, and he brought this up. And there's some there's some sort of scale that takes into you know, account you know, you know, I'm is Jack Nicholas going to get some equity and PJ.

00:32:13
Speaker 2: For enterprises, Arnold Palmer's estate.

00:32:15
Speaker 1: Is right, is some you know, ten year old who's out there grinding on the range. Now he's going to be a stud and in ten years is he going to get equity? I mean, I'm sure he will. But that's that's one of those things that's just not not really known yet. You would imagine obviously a guy like Tiger is going to get a ton of equity, a guy like Rory's going to get a ton of equity in it. It's there's so many layers to it, right, Honestly, Leah, again, not trying to give you a non answer, but I just I just don't know at this point.

00:32:45
Speaker 2: No, I think it's good. I think your approach to this, what questions are we asking about it is the right approach because that at least clarifies what we're going to be looking for in the future. Yeah, a lot of details we don't know yet about PGA Tour and prizes. Let's get back on some ground where you've been doing some real like fact based reporting. A big reason the PGA Tour is pursuing this model is that basically they can't pay for the purses right now. The purses are too big. It seems like they're running out of money. And one thing that you reported recently, a scoop that you got in November, is that the tour will now expect tournaments and title sponsors to put up an extra fee to fund these purses. Could you just take me through that story. What's happening here?

00:33:32
Speaker 1: Yeah? So in order and this again, this all kind of ties back to Liv's arrival. You know, if you let's use Wells Fargo as an example that Turnabout had a nine million dollar perse three years ago and then before last season had jumped to twenty million dollars in one year. And again, like dealing with in sports business and all these numbers, you're kind of like, eh, whatever, eleven million, it's eleven million dollars an increase. It's a lot of money, right, a lot of money for these tournaments to put up, and it just happened in such a short amount of time. And so what the tour has done is they've come up with this new kind of funding model where it's it's an increasing scale starting in I think it starts in twenty five, and again I'd have to go back and look at the starts in twenty five and then goes through twenty seven. And there's a certain fee that they're going to be asked to be pay to pay in twenty twenty five, it's going to increase in twenty twenty six, and then going on it'll stay it'll stay flat. But so they'll pay like fifty percent of the fee in twenty five and then one hundred percent of it in twenty six. And that number it depends on the type of event. So a signature event fee is going to be more than a full field. So like the Sony Opens, this week, So the Sony Opens not going to pay as big of a fee as the Travelers Championship. And then you have the Fall events are going to pay an even smaller fee than those full field events. So there's that fee, but then you also have, on top of that, there's a small percentage of revenue that the tour is asking the tournaments for on top of that fee, and so it might I think it's I think it topped out of like two percent. They're not gonna ask for more than two percent of revenue, which again you might say, Okay, it's only one or two percent, that's not that much. Uh, two percent of revenue for the Phoenix Open is going to be a lot more money than two percent of revenue for the Butterfield Bermuda Championship. Right, not to knock that tournament, but they're two totally separate events, and so the tour is asking, asking, telling these tournaments that this is coming. There are a lot of tournament organizers that were not happy with this. When they first heard about it, they started saying, you know, it's going to take from our charity dollars. It's gonna you know, and again, if you look at it, it's like, Okay, a million dollars or two million dollars here there. It doesn't seem like a lot, but when you break down every little single thing that a title sponsor or a tournament pays to put on, it's quite a bit of money. And so a lot of tournament officials organizers were pretty upset with us. I think they they've come around to it a little bit and they're I don't know if they're okay with it, but they're more open to it, at least from the standpoint of thinking, all right, PGA Tour Enterprises is coming along, what money is gonna come from that? And the tour you know, has been there for a lot of these tournaments over the years. During COVID, the tour you know, came in and helped out a lot of tournaments, kept them going through that. So there have been some people I've talked to who are kind of like, all right, let's let's wait and see how this plays out, but certainly like you know, that, coupled with defees that they're you know, the title sponsorships are are commanding, have led to some to some sponsors saying, we're not sure about our future with the Tour. You know, you saw the news of Wells Fargo saying after twenty twenty four, we're gone on RBC has come out and said they're on one year deals for twenty twenty four and they're going to assess and see if it's worth sponsoring those events in the future. There are a couple other events that you know, I've been told are on one year deal for twenty twenty four and are doing the same thing, taking await and see approach. Because of that, you know, the tour has been asking for these signature events, asking them for twenty five million dollars a year to sponsor that golf tournament, which if you look at that compared with the you know, ratings numbers we talked about earlier, do they really equate? Is it really worth it? And I think a lot of the sponsor and again it's not just based on ratings. There are a lot more things that come along with being a title sponsor of a PGA Tour event, not solely based on ratings. But I think a lot of those sponsors are starting to say, you know, is this worth it?

00:37:53
Speaker 2: And you have to wonder. I mean, so basically they're waiting and seeing if PGA Tour Enterprises becomes a thing, then maybe it will still be worth it. But right now, do you think they're looking at other ways to use their money? Like we could go sponsor some other sport or you know, and get a much bigger return on our money for that as opposed to this. You know, one week a year, this tournament that very few people watch, we have our name on it, and then we get all these benefits like the pro am and whatever else and the charitable component which is significant. But ultimately they might be looking at other opportunities, right yeah.

00:38:35
Speaker 1: I think that's if you use Wells Fargar for an example, Like Wells Fargo obviously can afford twenty five million dollars a year, right, they have enough money to do that, But it's like, is this our best? Uh? Is this the way we want to spend our money? Right? A lot of these tour sponsors, they're huge companies and they can afford it, but it's just like do you want tough? I've used this example a lot. Caesars signed a twenty year deal with the Superdome in New Orleans for one hundred and forty million dollars a year a couple of years ago. I think, so Caesar's has there. You think about one hundred and forty million dollars over twenty years. You can do the math. It's less than twenty five million dollars a year. They've got their name a fixed to that building which hosts the Final Four, it hosts NFL games, you know, ten times a year, it hosts concerts. You know, it's like I said, it's a fix to that building. You're flying a plane over the Caesar super Dome, you see that Caesar signage over that. You know, Wells Fargo here in Charlotte, if you fly over Quail Hollow Club right now, there's not Wells Fargo, you know signage plastered all over the place. So there's a lot of that that goes into I think what these sponsors are are looking at.

00:39:49
Speaker 2: Are there some sponsors title sponsors who are worried about the potential impact on charitable contributions of all this, because you'd have to think the tournaments are organized as charitable organizations five oh one C three's I think right. The PGA tour is a is a nonprofit, member run organization. That's a different designation. The tournaments themselves are constituted as nonprofit charitable organizations that that is really their purpose. Are there some who are worried that this this new fee, these these this new revenue sharing might cut into what is supposed to be their purpose, which is charitable contributions.

00:40:35
Speaker 1: Yeah, I think I think they have to be a little bit, right. That was some of the from talking with tournament organizers who obviously deal with the sponsors on a regular basis, that was a lot of their initial concern was about this charity money. And you know, if you look at the PGA Tour over the last forty years, like one of the biggest you know things about the PGA Tour is how much money they give back to their communities through these sponsorships. So yeah, I would have to say that's that's got to be a concern for some of these sponsors. Is how was it, you know, anytime he's anytime on the service, if it says, hey, this is going to cut out charity dollars, that's a bad look, right, And so I think, yeah, the sponsors have to be thinking about that as they kind of navigate how they want to proceed forward.

00:41:19
Speaker 2: And I guess the larger question is you know, what do you think about this general move from nonprofit to for profit. This is a major change in the history of the PGA Tour, which since the time of Dean Beeman, has defined itself as a nonprofit organization, and now that is all shifting. I wonder whether you think that this is the this is the only move that they can make, and what you think the general effects of going the for profit direction might be.

00:41:53
Speaker 1: I don't know. I don't know what the effects of moving to four. I mean, if you look at the PGA Tour has got to be one of the only major sports organizations leagues that's a that's a nonprofit, right, I can't think of.

00:42:04
Speaker 2: That's the thing? Yeah, I guess, I guess to give you something specific to address with that, Do you think it changes the incentives of the organization at all? Right? Because it occurs to me that one thing about the PGA Tour as a nonprofit in its nonprofit era is that it was a little bit complacent, right, and to an extent, a little bit divorced from reality. There wasn't much of a motive to innovate with its product. I don't know, maybe maybe just a little bit of good old fashioned capitalism. Right, if it's suddenly a for profit driven kind of organization, then is there more motive to improve the product and to actually attract people to it.

00:42:43
Speaker 1: Yeah, certainly there could be. And if you look at I mean, you could say, you know, Live Golf has done a lot of damage to the PGA tour. But if Live Golf arrives and then all of a sudden you look five years later and there's a for profit model and there's seven billion extra dollars in the you know, in the tour or enterprises, whatever you want to call it, then yeah, I think there could be incentive. And listen, these investors are not investing to just lose money, right. There's been some reporting out there about how this isn't you know, typically a strategic investment like this. They might be looking for that return and that ROI pretty quickly. And I think this group that they've gone with, as at least from the reporting that's been out there, they're willing to take a longer term approach, so that it might be ten fifteen years down the road where they're wanting to see that return. But yeah, there's going to be a huge incentive to make sure that this is a profitable, you know entity. So yeah, I think there's a lot of incentive there.

00:43:39
Speaker 2: And do you think that this was the only possible move. Was the PGA tour kind of backed into a corner here it had to go for profit?

00:43:47
Speaker 1: I think so. I mean, if you look at the way, like I said, the model that's that they've kind of gone through, and the purse increases and all that. I don't know how much money the PGA's or has it in its reserves, but I don't know if that model sustainable long term. So I think that's kind of I think that's kind of the direction that they had to go in. And that's why I think they want to get this deal done.

00:44:10
Speaker 2: Right, Yeah, they want to get to get to this potential future as quickly as possible. I guess. You know, all of this is happening because of the PIFFS entry into into golf, right, That's that's the inciting event of all of this. Now versions of this same thing are happening in a bunch of other sports as well. I believe your publication recently named Yaser al Romayan the most influential person in sports business, or something to that effect. So what is the argument that Yaser and the Piff are the most influential movers and shakers in sports in general, right now.

00:44:51
Speaker 1: Yeah, I mean, if you look at you know, it's not just live golf, it's you know, tennis playing events in Saudi Arabia. And you've seen Saudi Arabia to be mentioned with women's golf, right, You've seen these you know, global superstar soccer players go and sign deals with Saudi Arabian teams. You've seen you know, sovereign wealth start to come into the NBA a little bit, right, You've seen you know, obviously Saudi Arabia has invested in Formula One and Premier League soccer like, and the PIFF is kind of at the heart of all that, right. You know, three years ago you would say that Saudi Arabia wasn't invested that much in global sport. And now you look at you know, and there were all the questions about human rights issues and all that, and justifiably so. But now you look and you've got sovereign wealth almost across you know, global sports, right, and the PIFF was kind of the first one, I think to jump into the boat there. So Yaser being the governor of the piff. You have to look at him as a pretty influential guide all this happen. Right.

00:46:01
Speaker 2: Yeah, he's got the strings to the single biggest person in the game right now, and he's obviously very very smart with it, to a degree that probably the PGA tour didn't anticipate. I think Yaser has probably been severely underestimated by a lot of people so far. Maybe no longer, but he has made a lot of very very smart moves with a lot of money.

00:46:27
Speaker 1: Yeah. I mean, you know, jay Monahan I think said, or I think it was Jay or one of the PGA too a luminaries, whether there's Jimmy Dunn or one of those guys you know, back in the summer said listen, we can't compete with this. I forget, maybe I'm making this up. I think some one of them called it a war chest with the amount of money that.

00:46:43
Speaker 2: Yeah, Jayon had said something to the effect that the at the Canadian Open that you know, we can't if it's if it's a matter of spending, we can't do it.

00:46:51
Speaker 1: And so maybe it took them until this summer, this past summer to realize that, but certainly like yeah, it's seven hundred billion dollars. There's a lot of money.

00:46:59
Speaker 2: Yeah. Well, so, you know, when we think about this general effect on the sports world, I guess I have two questions here, and I'll ask you the first one, which is, do you think that these questions about Saudi Arabia's human rights record and the initial aversion the lot of people, especially in the West, especially in the US, had to Saudi Arabia's entrance into golf and its initial forays into like soccer, into the Premier League right there. There was a lot of pushback obviously in golf, which I which I was part of and I'm still part of. I still don't feel good about it personally, but that's just my own opinion. And there was a lot of pushback with the I think it was the Newcastle soccer team.

00:47:46
Speaker 1: Yep.

00:47:46
Speaker 2: Do you think that that is going to kind of go away as the PITH gets involved in more and more sports.

00:47:55
Speaker 1: Yeah, I mean, I think it's it'll be interesting to see how it happened and if they invest in, you know, anytime I think they were, if they do invest in a new sport, a new league or something like that, there will be that blowback. But I think just if you look at the way it's gone with the PGA Tour. You know, there was all this blowback when Live first launch, and now, like Garrett, do you ever hear that brought up at all?

00:48:22
Speaker 2: Really, people don't say the word sports washing very much anymore.

00:48:26
Speaker 1: But we don't talk about sports watching that much anymore, we don't, you know that that's just you know, the Live guys at their tournaments. They're not being asked in their pre tournament press conferences about the blood money and all this anymore, right, So yeah, I think it's you know, again, if they enter into a new league or a new sport, you'll see it bubble up for a short time and then it'll probably die away because cash is king. Right.

00:48:53
Speaker 2: It's a little depressing to think about, but at a certain point you just get exhausted with it, right because it's like, oh my gosh, they're invested, the PIFF has invested in like every single sport. They're in F one, they're in soccer there, there's starting to be in tennis. I mean, it's just everywhere, and at some point you just get tired of objecting to it because it's it's the world you're part of. And if you want to be a sports fan, then this is this is part of that now and it's it's just yeah, it's just a thing now. The other the other question I have about it about this general influence of the PIFF on sports is you know, do you see a general trend in how this changes the sports themselves. I mean, we've talked a little bit about how it's changing, how it might change golf, right, it might. It might create kind of this more global tour, a little more concentrated, uh, you know, tournaments at kind of the elite level, right, a packageable television product. Is that influence? Is there kind of a similar type of influence that's happening in other sports where things are kind of being centralized or you know, basic what's the what's the effect of this kind of money as an interest sports in general?

00:50:05
Speaker 1: Yeah, I mean I think there's got to be a positive. Again, I'm not the closest follower of Premier League soccer, but I think by all accounts, like Newcastle has kind of turned it around since since the PIF got involved with them, Right, I think Formula one now Formula one you could say, okay, that success, is that a byproduct of of PIF money coming in or is it a byproduct of you know, drive to survive launching right when COVID hit and everyone's.

00:50:31
Speaker 2: Liberty media news. Yeah, but it's an interesting question as to whether the PIFFS money kind of enabled some of those moves.

00:50:38
Speaker 1: Yeah, so I think it's you know, you just look at that and you know again that that reserve of seven hundred billion dollars, you've got that to put into anything. I think it's if you think about some of the ways that the golf product might be enhanced, you know, with that money, and then you just think about all the opportunities with those other sports. I mean, are we going to see you know, final rounds on sundaysmmercial free sponsored by a Ramco. As a golf fan, I would love that. I know there are a lot of golf fans out there who would so think about that example and then how that would span across across global sport, and yeah, you would think it would be a pretty positive impact on the fan experience.

00:51:16
Speaker 2: At least it would be the ultimate bittersweet moment to see a final commercial free final round sponsored by a Ramco. That would be that would be like the embodiment of the Larry David Gift where he's just kind of well, yeah, all right, one last quick hitter here. You covered the TGL quite a bit last year. I think you were more kind of knowledgeable about what the TGL was doing than anyone. You know, it was going to be a big piece of the puzzle in the first couple of months this year, and then suddenly it wasn't. And to me, it's just so strange that it went away because there arena clover night. Yeah, it just went away. And and was that was that all there was? That they that they they had a problem with the arena and they just couldn't couldn't do it or were there other underlying issues here?

00:52:15
Speaker 1: Yeah? I don't know if there were other underlying issues. I mean I think certainly, you know, having your arena deflate and having it be unusable, like if that's where you're gonna play and it's not. You know, we sit here on January tenth. January ninth last night was supposed to be the launch date of the TGL, and so if you you know, I thought about it last night, like looking back at some of those photos of that arena, like would it have been ready bye last night. I don't know, I don't know what it takes to construct that sort of thing, but I think you could kind of read into some of the comments by players. You know, Tiger himself said at the Hero that he thinks that you know, again I'm paraphrasing, but he basically said that it would give them, you know, delaying it by a year would give them some time to iron some things out. Several other players had similar comments, and so, yeah, I think that's the main thing, right, is that if you don't have a venue that's going to be based around technology that's supposed to be played indoors, and how are you going to do it right? But I think with with anything, a year of planning and tweaking and this and that like that should help, right, get things more in line. And frankly, it was a pretty aggressive timeline from when they launched everything coming together right, So there were still a lot of you know, various things that we didn't know about, whether it would be team names or something like that. You know, we're out there. So yeah, I think I think it's got some It's got a year to go before before launch, and you know, we'll see what happens.

00:53:48
Speaker 2: Are you still pretty bullish that it can be a successful television event.

00:53:54
Speaker 1: I think it can be. I think it can be again with this hit negotiations and what happens with with PGA tour enterprises. I think we'll just have to kind of wait and see what happens.

00:54:05
Speaker 2: Yeah, all right, Josh, thank you so much for being on the podcast today. We'll talk to you again soon.

00:54:10
Speaker 1: Thanks, Erret, We appreciate you having us.

00:54:21
Speaker 2: This episode of the Frida Egg Golf Podcast was produced by Matt Ruschis. If you have a moment, go give us a rating and review wherever you happen to be listening to this podcast. These ratings and reviews are a really good form of support for the Frida Egg Golf Podcast. They help us find new listeners and continue to improve what we're doing here with the podcast and with our company. So thank you for listening, and we'll be back with another episode early next week.