One other weird thing about the PGL offer is that it is to PGA Tour, Korn Ferry Tour, DP World Tour players at a single moment in time which I guess is TBD. If you happen to be a member of those tours at that moment: big windfall being offered. If you get on that tour next year: Too late, you get nothing. If you fall off the tour after that moment: you keep your windfall. It is purely to buy their way to the PGA Tour PAC table offering a crazy amount of money to do so.
Do you have any idea what a reasonable valuation of the PGA Tour would be right now? I know they are a non-profit vs these for-profit alternative leagues (PGL specifically) but it’d be interesting to think through how far off the PGL is from a valuation expectation to realistic revenue opportunity. I think what you’re saying is, their only revenue source would be a TV contract and the PGA Tour is already getting $700MM for their product. If the PGL were to get the same contract (unlikely), no way they would be valued at $10B. Am I thinking of that right? Have no clue what a reasonable revenue to valuation multiple would be for a league though. Thanks!
Hey Erik - it's a great question, and something I thought about while writing this piece. I couldn't begin to guess what their valuation is. In the most recent 990 - they had stated assets of over $3 billion. I'm not sure if non-profits value 'Goodwill' the same way. But if they did, it would be under assets. I bring this up because their brand, logos, and name recognition is enormous and would play a big impact in their valuation.
The PGA Tour is essentially a "not for profit" as all the net revenues are to go to the players through purses, pensions and other benefits. There aren't shareholders who will get dividends or shares to sell to cash out. PGL would have to have a very strong track record of very large profits payable to shareholders to get to a $10B valuation.
One other weird thing about the PGL offer is that it is to PGA Tour, Korn Ferry Tour, DP World Tour players at a single moment in time which I guess is TBD. If you happen to be a member of those tours at that moment: big windfall being offered. If you get on that tour next year: Too late, you get nothing. If you fall off the tour after that moment: you keep your windfall. It is purely to buy their way to the PGA Tour PAC table offering a crazy amount of money to do so.
Well said - and I agree regarding the PAC!
Very informative thread Jared!! Will be interesting to see how it all plays out
Thanks Andrew!
Do you have any idea what a reasonable valuation of the PGA Tour would be right now? I know they are a non-profit vs these for-profit alternative leagues (PGL specifically) but it’d be interesting to think through how far off the PGL is from a valuation expectation to realistic revenue opportunity. I think what you’re saying is, their only revenue source would be a TV contract and the PGA Tour is already getting $700MM for their product. If the PGL were to get the same contract (unlikely), no way they would be valued at $10B. Am I thinking of that right? Have no clue what a reasonable revenue to valuation multiple would be for a league though. Thanks!
Hey Erik - it's a great question, and something I thought about while writing this piece. I couldn't begin to guess what their valuation is. In the most recent 990 - they had stated assets of over $3 billion. I'm not sure if non-profits value 'Goodwill' the same way. But if they did, it would be under assets. I bring this up because their brand, logos, and name recognition is enormous and would play a big impact in their valuation.
The PGA Tour is essentially a "not for profit" as all the net revenues are to go to the players through purses, pensions and other benefits. There aren't shareholders who will get dividends or shares to sell to cash out. PGL would have to have a very strong track record of very large profits payable to shareholders to get to a $10B valuation.