Can sponsors LIV with this contentious PGA Tour merger?
The recent merger between the PGA Tour, DP World Tour and LIV Golf has sent shockwaves, forcing brands to take public stances on what’s been dubbed one of the most flagrant examples of sports washing ever.
McIlroy describes himself as PGA's sacrificial lamb / The Golf Channel
Golf's top sponsors are weighing up the value golf brings to their brands against the long list of human rights crimes committed by Saudi Arabia, whose Public Investment Fund (PIF) owns LIV Golf and, as of last week, a significant stake in the PGA Tour. For sponsors, the increasing investment of Saudi money into popular sports and entertainment properties is presenting a brand safety challenge.
Marketers were surprised by the initial announcement – but now they have to draw a line in the sand or pragmatically embrace the PIF's growing influence.
Tim Maddin, account director at Pitch Marketing Group, said that golf was once a “safe bet” but the merger has taken sponsors into “new territory when it comes to reputational concerns”.
They now have to ask themselves how comfortable are they promoting their business alongside the PIF and "how much of a business risk is it to be associated with a country maligned for its human rights records.”
A prevailing voice in this debate will of course be the players themselves who have all largely taken some stance whether it's ardent disgust as the new influencer of the sport, or the paycheck that injects fresh energy into it. There are even calls for PGA Tour commissioner Jay Monahan to resign for seeing the deal through.
But Maddin believes it's time for players to pride to one side, “get behind the proposition and take advantage of the financial opportunities coming their way before its too late.”
Rory McIlroy long stood against LIV. He now describes himself as a “sacrificial lamb” as a result of PGA – which had encouraged more players to follow his lead in dismissing LIV – sneaking through the deal last week with no notice. Pros that don't have his stature will lose out in the long run for taking a stance against the Saudi money but it is also worth pointing out that despite the lucrative financial incentives that were offered to PGA ditchers, sponsors remained tepid on the pull of the unproven LIV. It ran its inaugural season without much in the way of commercial backing.
The battle has been so long and contentious, from the comms rooms to the courts, that it is hard to believe it is over. Last year, Monahan said: “I would ask any player who has left or any player who would consider leaving, ‘Have you ever had to apologize for being a member of the PGA tour?’” Meanwhile, critics were playing up Saudi links to 9/11 as an additional worry for casual fans. Will Monahan have to apologize for merging with the LIV? His future remains in the balance.
With all this considered, Pitch’s Madden said that the merger that is not a merger (according to the PGA Tour) can be no doubt that this is a victory for Yasir Al-Rumayyan, governor of the PIF. Whether the LIV brand lives on or not, the PIF now has a stake in the sport.
“This was always its end goal.” He adds: “It is a win in the sportswashing category and I expect it to continue. As the song goes, Cash Rules Everything Around Me.”
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The waiting game
Louise Johnson, chief exec of Fuse, revealed that for now, sponsors are waiting while “questioning the commercial future and structure of the sport”.
She could see a new model allowing for global PGA tour partners, as well as individual Tour partners, which would unlock new opportunities. But she points out that the competition afforded by LIV and PGA could have lowered sponsorship prices and instead “the new entity will have the monopoly on golf and global audiences”.
Until the commercial structure is announced, we will hear little from sponsors. She said: “They’re likely waiting, assessing if there is any reputational risk from the merger and this could cause some to potentially rethink their investments or press pause for the time being.”
But for now, it is business as usual. Sponsor and broadcast contracts will be respected. Once these run down there will be more vocal chaos and market movement.
Echoing these sentiments, Geoff Miller, senior director of client services, Interbrand agreed that it is a win for PIF. The LIV saw lackluster sponsor demand until the merger muddied the waters. Now any brand wanting a foothold in golf has to work with Saudi Arabia on some level.
One example of this in the wild is Mastercard, in 2022 pausing endorsement deals with LIV golfers Ian Poulter and Graeme McDowell. But it recently extended sponsorship of the PGA Tour. Now it has to consolidate these two opposing stances in public.
Brands will have to make a choice. But they must make sure they are on solid footing when they do so, as Miller said: “The turmoil at Bud Light in recent months demonstrates that attempts to take a stand on a particular issue without clear internal alignment on a brand’s purpose, values and ethics – as well as those of its customer base — is fraught with risk to reputation and bottom line alike.”
All things considered, Maddin thinks the merger could lead to a healthier sport, more effective sponsorships, and “leaves golf in a better place” – especially if the newly formed entity can convince fans that Saudi money is improving the sport.