The Capitalist Investor - Episode 130

Money talks and this week we’re talking golf. There’s been a lot of rumblings over the last couple years from PGA Tour players and how they make their money. When the opportunity to join a new league, make more capital, and earn a stable income appeared for many of these golfers, it’s not shocking that some of them took it, despite the consequences. In Episode #130 of “The Capitalist Investor,” Mark, Derek, and Luke go off script and break down the battle between LIV Golf Tour and the PGA Tour. 

Outline of this Episode:

  • [1:00] Poaching players from the PGA
  • [3:50] Prize cuts aren’t cutting it
  • [7:45] Big dollars and capitalism at its finest
  • [13:40] Ego moves to money moves

LIV Golf is using big dollars to create a competition against the PGA

This past year, LIV Golf was rumored to be offering lots of money to some major professional golfers in hopes that they break their ties with the PGA and play in LIV Tours. Recently, those rumors proved true as some major professional players announced their departures from the PGA and new relationship with LIV. 

Dustin Johnson, Phil Mickelson, and Sergio Garcia are the latest and biggest players that have been poached from the PGA. 

Sports history has shown us that every time a competitor rises against a bestowed league –– like the NFL –– it never succeeds. But something is different with LIV; it has the money and financial backing that the USFL didn’t have when it went up against the NFL. 

Billions of dollars are going into this league in hopes to create some real competition against the PGA and the traditional game of golf. But the question is: will LIV be able to sustain a competition against the PGA Tours? 

Money talks and players are listening

Fortunately for LIV, the PGA doesn’t have complete control of the entire golf market like the NFL has for football. This new golf league already has more of a legitimate advantage than the USFL had back in the day. 

They also have the money. 

For years, PGA players have talked about the lack of compensation they get from the tours. They compete only for the tour prizes every week, they pay for their own travel and practice time. They aren’t on some sort of team or part of a franchise that supports them. Each individual player is their own franchise that makes their own decision. 

But their presence alone makes a lot of money for the PGA –– money the players don’t ever get to take home. The players want to be paid more and LIV is using that to its advantage. 

It was reported that Dustin Johnson would receive $125 million just for signing up to play in the LIV Tour. While making roughly 70 million in his career with the PGA so far, a deal with LIV doubles his salary.  

LIV is trying to create an actual competition with the PGA Tour and its money is talking to these players. But still, some aren’t biting. 

Decisions, controversies, and Tiger Woods

If a player strikes a deal with LIV, they have to withdraw from the PGA. It’s either they stay or resign and play on the LIV tour. If we’re talking money, it sounds like a simple decision but essentially there is some controversy surrounding LIV’s startup and where the money is coming from. 

The new LIV golf circuit came about from a Saudi Arabian Public Investment Fund and has linked sponsorships with Saudi Arabia. There isn’t much known about the relationship other than the Saudi government increasing their involvement in Western sports and that they are willing to funnel in a lot of money to get players to join. But for some players, it’s not about the money. 

Reportedly, Tiger Woods was offered a high nine-figure salary, $750 million maybe? But he declined joining the league and will be sticking with the PGA Tour. 

Today, owning a sports team isn’t what it used to be. It’s all about making money and getting people to watch. While it used to be an ego move to own a team, it’s a money move and a way to make a profit. 

With the LIV Tour, Saudi Arabia now has an ego move here in the US. Whether people watch golf or not, they will still stop and watch the tour. 

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