Premier Golf League - a PGA Tour Threat?
Breaking down the 18 event, $392 million proposed golf tour.
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Hey Golfers -
When the USGA and R&A announced the local rule to cap the driver length at 46 inches, Phil Mickelson took exception.
Rumors slowly circulated on social media that Phil may have an ulterior motive: playing in the Premier Golf League. I was curious and dug into the Premier Golf League to learn more.
Let’s take a look at the Premier Golf League proposed business.
For those that are not aware, the Premier Golf League is a proposed alternative professional golf league to the PGA Tour and European Tour. The Premier Golf League is financially backed by the World Golf Group, a British organization. Interestingly, the Premier Golf League makes it very clear they are not the Super Golf League (SGL) and do not have Saudi funding.
The Premier Golf League thinks golf needs to continue to evolve - highlighted by the graphic below.
Quick facts the Premier Golf League is proposing:
The first season starting in January 2023
Eight-month season with a four-month break
18 events per season
12 events in the United States
Six events in Asia and Europe
Player relegation & promotion
The Premier Golf League is adopting a Formula 1 model. Emphasizing a global tour, individual, and team events. Leveraging that model could prove significant for business. Formula 1 has seen staggering growth.
77% growth in the 16-35 age demographic
20% overall growth
United States viewership is up 56%
United States averaged 946,000 views per race
A vital component of the Formula 1 model that the Premier Golf League is incorporating individual and team play in one tournament.
Each team will have a team owner. The unit economics of the team structure is unclear right now - although it does appear the team owners will have a financial stake involved. The Premier Golf League has proposed 50% of the ownership will be distributed to the below groups.
Professional Golfers
Tournament Operators
Fans
The remaining 50% will be split between Premier Golf League founders and shareholders.
Let’s break down the tournament details:
48 players
Three-day tournaments
Friday start - no-cut events
Shotgun starts
The proposed Premier Golf League prize money is significant.
$20 million purse prize each week for individual events
$4 million first-place each week for individual events
$20 million end of season winner take all team prize
$1 million first-place prize each week for team events
$15 million individual bonuses
The Premier Golf League will pay out an astonishing $392 million in aggregate prize money in each of the first three seasons.
The Premier Golf League plans to spend $13 million per event in infrastructure - an additional $234 million per season.
Even crazier, the Premier Golf League plans for an Initial Public Offering (IPO) following the league's launch. This is in contrast to every major professional golf organization in the United States that runs as a non-profit.
How does the Premier Golf League stack up against the PGA Tour?
PGA Tour:
50 events
$392 million in total purse money
$60 million bonus pool
$40 million PIP bonus
Largest event purse - The Players Championship: $20 million
It is rumored the PGA Tour signed a 9-year, $680 million TV contract with CBS, NBC, and ESPN in 2020. The prior contract was $400 million, a significant increase for the PGA Tour. Why is this important? For the Premier Golf League to be viable, they will need TV contracts in place. As of right now, they do not have a contract in place.
It will be fascinating to see if the Premier Golf League comes to fruition. One can argue that the players have seen a positive impact by the PGA Tour introducing the $40 million PIP bonus and raised purses.
Do you think we will see the Premier Golf League in action? Comment below!
Have yourself a Monday, talk to you next week!
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Some heady stuff (and $). Of course golf will never have near the audience of F1, so finding broadcast partners will always be a challenge. Plus, how many high profile players make the jump, even if the league does get off the ground? Will be interesting.