Phil Mickelson Sheds Light on LIV Golf Business Model

Phil Mickelson Sheds Light on LIV Golf's Business Model

The central question surrounding LIV Golf remains unchanged from its early days in 2022: How will the tour become profitable? Compounding this is whether the Saudi backers, the sole financiers of LIV, are concerned about turning a profit.

Phil Mickelson, a key figure in LIV Golf, shed some light on these questions during his appearance on ‘The Pat McAfee Show.’ He discussed LIV’s business strategy, particularly its shift in focus.

The Saudi Public Investment Fund (PIF), with a valuation of approximately $700 billion, has invested heavily in LIV Golf, attracting top players like Jon Rahm, Brooks Koepka, Cam Smith, Dustin Johnson, and Mickelson away from the PGA Tour. Despite this hefty investment and the costs of operating LIV events, revenue sources such as ticket sales and broadcasting (with events shown on the CW Network) seem limited, raising doubts about the venture’s sustainability.

Initially, LIV Golf had to finance event locations, battling controversy and threats. However, according to Mickelson, the business model is evolving. LIV Golf is now being paid substantial sums to host tournaments in various countries. These payments are part of the countries’ tourism budgets, intended to attract high-level professional golf as a means to boost their economies.

Mickelson pointed out instances like Hong Kong and Singapore paying significantly to host LIV events, with amounts running into tens of millions of dollars. This shift has seen countries leveraging their tourism budgets to invite LIV Golf, recognizing the economic impact these events can have.

Regarding the substantial player contracts rumored in LIV Golf – with Rahm’s deal speculated at $600 million and others like Mickelson and Johnson over $100 million – Mickelson indicated that while tourism board funding might not cover these amounts, it does sufficiently cover the event purses. For context, the team championship purse in 2023 alone was $50 million.

Mickelson also noted his absence from merger discussions between the PGA Tour and Saudi PIF. He is set to start his 2024 season with LIV Golf in Mexico on February 2.

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