We’ve wanted to write something about the PGA - LIV merger ever since the news broke but sensed this story did not benefit first movers, given the lack of info initially disclosed about the deal.
From a sports business perspective - the story holds so many interesting elements to consider as a case study – ultimately in the collision of sport as a social asset vs a commercial product.
Some might say that “money always wins”, but what golf and other sports tapping private equity do with the money is of utmost interest.
What we have noticed is missing from most of the narrative and discussions is what private equity, in the case of the PIF investment in golf, will do for more people playing golf – more people playing sport is our mission at Assemble. We believe that any private equity coming into a sport needs to quarantine a portion of any investment directly to go to the grassroots of the sport. However, this is scarcely mentioned. The imperative of these deals and the predominant discussion seems to be about ensuring elite players are fairly rewarded.
Even as of today – some weeks, months since the merger announcement - there is still much to be clarified regarding the overall PGA – PIF deal. And unfortunately, not often has good come from Neville Chamberlain-like appeasement deals, but it feels like this deal to date has the scent of one.
Pleasingly some of the first direct references to the importance of investment going towards grassroots came from the CEO of the R&A, Martin Slumbers, who runs the British Open. Whilst Slumbers has seen the writing on the wall and says PIF investment in golf is inevitable – he also said he needs to focus on what he can control for now, and a big part of that is “doing all we can to get more people playing golf”.
The top players’ value extraction (rising prize pools) was deemed unsustainable by the PGA, which was a big part of the genesis of this whole issue. Whilst it’s an easy and valid argument that the players are the stars and deserve to be rewarded for this – it needs to be considered in the overall context of where funds are allocated within a sport.
Slumbers spoke of the reality of balancing having a competitive prize fund with its wider role as a governing body of the sport. “We have a huge responsibility to the game around the world to grow it, govern it, and to ensure it’s thriving.”
“We are not willing to compromise on how we see developing the game because that’s actually what we think is the most important long-term balance for it”.
Refreshing, and hopefully, Slumbers gets a seat at the table as they work this through as a sport.
Our fear is that Private Equity money flows predominantly to the elite, and the growth of the sport is reliant on the theory that a growing commercial product will trickle down and have a halo effect on interest and participation in a sport.
Theoretically, this has some merit; however, many assumptions are built here that may not come to the fore without a commitment to funding allocation to this part of the game.
We will watch with interest.
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