How Will LIV Golf Recoup Its $1 Billion Investment?

The arrival of LIV Golf resulted in one of the most disruptive moments in recent sports history. With the flashy prize money, the controversial funding, testing of the players’ loyalty, lawsuits, and the end number of controversies, the lucrative Tour had more action off the course than on the field. With nearly a billion of the amount invested in the Saudi-funded Tour, how will the new Tour earn money?

Last year, after struggles with reputation and criticism from the golf world, Greg Norman and Saudi Public Investment Fund finally showed the green light to kick start the inaugural season of LIV Golf. To prevail over the PGA Tour, the breakaway Tour signed the top names of their nemesis.

But signing extravagant names comes with a price. Most golfers were paid 9 figure deals apart from the on-course earnings. With so much expenditure incurred by the newfound Tour, how much did they spend in less than a year?

How much did LIV Golf spend?

The guaranteed money from each event for the golfer is a plus point for the player. It has been a key factor for defectors to make the jump. In its inaugural season, the Saudi-funded Tour distributed $255 million in prize money. According to Sports Illustrated, they spent $784 million in the first season. However, the upcoming season will see a total of $405 million in prize money, a rise of 63 percent.

Apart from the exorbitant prize money, all players are guaranteed to earn another absurd amount of money. Phil Mickelson, the most legendary golfer on the Tour, signed a $200 million contract. Meanwhile, other former PGA Tour stars such as Dustin Johnson, Bryson DeChambeau, Brooks Koepka, and Cameron Smith also signed a nine-figure contract.

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Another massive expense made by the 54-hole Tour is traveling. LIV Golf’s mantra of ‘Grow the Game’ takes them to different corners of the world, which will result in hectic logistics for the Tour. All the costs last year were incurred by Saudi Arabia’s Public Investment Fund, which is expected to spend at least $2 billion in the first two years.

However, as the Tour hopes to grow its wings, it wishes to be self-reliant and is finally seeking for return on investment. With nearly a billion spent last year, let’s take a look at how the Saudi-funded Tour will earn money.

LIV and its earnings

For many months, Greg Norman and his fellow top-level executives have been searching for a broadcasting deal for the lucrative Tour. Their scouring finally concluded at the start of 2023 as they signed a multi-year deal with CW Network. According to Forbes, the broadcasting network will pay LIV Golf a rights fee, and also share the revenue generated from ADs.

Moreover, the breakaway Tour will also foot the bill for production fees. Though the figures of the deal are still unclear, it will bring a helping hand to the lucrative Tour’s reliability on PIF. Similar to its struggles of finding a broadcasting deal, LIV Golf’s search for American sponsors was also met with a challenge.

According to Terry Lefton of Sports Business Journal, no American-based company wants to shake hands with the Saudi-funded Tour since most sponsor the PGA Tour in the battle of wars. However, the Greg Norman-led Tour may find it much easier to sign deals with offshore companies. And after signing a broadcasting deal, LIV Golf is expected to earn $120 million annually from their sponsors.

Finally, the biggest asset that the breakaway Tour has is its teams. Each golfer in the invitational is part of a team, which at the end of each year will compete for the team competition. In the future, once these teams will be worth valuable, they will be sold as franchises, resulting in massive profits. This projected move will reportedly recoup the almost $2 billion investment LIV Golf will make in its first two years.

Nonetheless, as the Tour looks to take over the golf world, their constant urge of spending spree is imminent. But as time goes on, their ultimate objective is to lighten the burden on Saudi investors and make big moves from their own pockets. And for that, we’ll have to wait and watch.

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