Following their victory in last week’s LIV team final in Miami by Bryson DeChambeau’s Crushers GC, the tour added a subtle but significant twist to its messaging regarding the $14 million first prize. Yes, DeChambeau, Anirban Lahiri, Charles Howell III, and Paul Casey received handsome compensation for their efforts, but the Crushers team—in which DeChambeau has an ownership interest—received 60% of the money instead of the players. It’s obvious that LIV wants to get out the word that the teams are more than just promotional vehicles. These are brands with distinct business strategies supporting them.
The foundation of that model is the team component of LIV and the potential to sell teams to affluent investors. The arrogance? Giving ownership stakes that would likely increase in value as the teams started to make money and gain popularity was another method used to entice elite players like DeChambeau, Dustin Johnson, and Brooks Koepka (who owns a portion of Smash GC) to move to LIV. The majority of the ownership in teams is held by LIV, but players have the option to retain ownership and receive ongoing payments or cash out some or all of that equity in order to receive a larger payout.
In what precise terms might a prospective investor assess a LIV franchise? What is the potential return on investment for that investment in comparison to other professional sports teams? Integral Ventures, a California-based advisory firm that assists investors in assessing opportunities such as these, is run by Eric Coonrod and Matt Lashoff. According to Coonrod, the language regarding team payouts is intended to convey to prospective investors that LIV franchises are more than just hype and wishful thinking; they have potential revenue streams as well, not just costs associated with transporting players and their entourages across the globe.
“The big questions at this stage are what kind of return can the investment provide in three, five or seven years,” Coonrod says, “and are you ready to jump in because you’re more afraid of missing out than you are of doing a proper valuation?”
According to Coonrod, conducting due diligence would entail determining whether or not a client wishes to support LIV as a business and not just as an ego or passion project. It would also entail determining how much latitude teams have within the league’s structure to increase revenue. Could Crushers GC benefit from DeChambeau’s notoriety for sponsorship and merchandise in addition to team prize money? How about constructing a team facility where supporters can go to games, observe practices, or even enroll in a golf academy that is “taught” by a professional player?
“If I’m advising a client who is considering buying in, I don’t think you want to look at this as a passive investment where you write a check, walk away and hope for the best,” Coonrod says. “This is an opportunity to actively participate in building something that could change the golf industry. There’s real work to be done building a brand, growing audience and attracting sponsors and broadcast exposure.”
More revenue is obviously nice, but the main spliff for a potential owner is the potential for that team to become more valuable for reasons unrelated to how many birdies DeChambeau makes or autographs Koepka signs. “Dan Snyder wasn’t the best NFL owner by many measures. The team was not successful on the field, went through a challenging rebrand and became less popular in its market,” Coonrod says. “But because the NFL brand is so strong and there are so few opportunities to be an NFL owner, just holding onto the franchise for 20 years turned an $800 million investment into $6 billion when he sold the team this year. That has to be considered a win.”
Part of the calculus for a potential LIV team buyer: What happens if the LIV-PGA Tour agreement goes through? Can LIV teams then tap into the PGA Tour’s established sponsor and television pipelines and become household names? Those things make setting a potential sale price tricky, especially for trailblazers. “I’d want to be able to buy Team No. 12, not Team No. 1,” Coonrod says. “You can not only learn from the playbook of the other deals but apply what franchises like the NHL’s Golden Knights and WNBA’s Aces have done to become so important in their markets so quickly. You also have more time to see what might be happening relative to the PGA Tour. Jumping in early probably means a lower price and more upside, and waiting means having better data. The trick is to find the sweet spot.”
One competitor has clearly found the right message to attract the billionaire class. Tiger Woods and Rory McIlroy’s TGL golf league has sold franchises to Fenway Sports Group’s John Henry, hedge-fund billionaire and New York Mets owner Steve Cohen, Atlanta Falcons owner Arthur Blank and billionaire couple Serena Williams and Alex Ohanian. The price those groups paid for one of six franchises in the league that kicks off in January is undisclosed, but marketing documents say they’re each projected to collect more than $2 million in revenue in year one and be cash flow positive before the second season.
LIV teams are playing for more prize money, but they likely have substantially more expenses than TGL teams, which are geographically based but all compete in the same league-owned arena in Florida. LIV teams also don’t have the built-in marquee value of the world’s most famous golfer as a brand leader. “I’d certainly categorize LIV as an early-stage investment,” Coonrod says. “You’re placing a bet on exceptional leadership, market disruption and growth potential. LIV is certainly showing early signs of all those things. You can compare it to, say, cryptocurrency. It seems cool now. People want to be a part of it, and it could provide a huge return, but there are significant risks. I suspect the people who end up taking that gamble aren’t going to be ones who’ll have trouble paying their bills if it doesn’t work out.”
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