PGA Tour is on the verge of a financial armageddon. In its battle with LIV Golf, the Tour has increased its event purses multifold, but Jay Monahan wants more in the David vs. Goliath battle. As per an earlier Sports Business Journal report, the PGA Tour is proposing a new financial model whereby the non-profit tournaments have to contribute to a larger share of the purses. But tournament organizers are not impressed with the money-flexing modus operandi.  

Depending on the market size, and the nature of the event, the Tour will decide the fee. The organizers are asked to pay 50% in the first year, starting in 2025. However, the percentage will increase in the next year, reaching 100% in 2027. But Tournament officials have expressed their disapproval in strong words.

A flawed financial model at work

Reportedly, organizers are fed up with the policy that seeks to draw financial ammunition from already dwindling tournament revenues. As per the tournament officials, this will impact the way they run the events. “I am not expecting any good news out of this,” said one official to Sports Illustrated on condition of anonymity.

The Tour is effectively asking the sponsors to cough up more. But they are not too eager to comply, as the purses have inflated courtesy of sponsors increasing their contribution. “Many of them are just saying they won’t do it, they’ve had enough,” one director said. For tournament organizers, this spells more trouble. They are left to fend for themselves after the sponsorship fee and entitlement fee that the PGA Tour gives to the local host.

The organizers can raise funds only from Pro-Ams, tickets, and merchandise sales. Concurrently, paying bills for infrastructure, staff, and food for players takes up a major chunk of their earnings. The tour knows all these, and one tournament director fears, “It’s like maybe they can use that against us.”

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Moreover, the organizers donate a sizable share of their profit to charities. While Monahan & co. haven’t explicitly asked the organizers to stop the flow of money in that pipe, this is effectively what will happen as some directors say. The new financial model is part of the PGA Tour’s plan to counter LIV Golf’s financial sway. 

How the PGA Tour is countering the LIV Golf’s influence 

The PGA Tour’s Signature events now have heftier purse sizes. For example, the Wells Fargo Championship saw an $11M increase from $9M a year earlier. The Arnold Palmer Invitational and the Memorial both have a $20M purse size from  $12M. There will be eight such signature events with $20M on offer for players.

Notably, the Fenway Group is reportedly interested in spending billions on the Tour, once it becomes a for-profit entity. However, none of that money will come in the tournament’s way. At the same time, Monahan remains adamant about the $3B merger framework that would see LIV Golf become a partner in the coming years. 

While the PGA Tour by no means operates on a shoestring budget, PIF, which bankrolls the Saudi-backed league, has coffers that seem to run deeper than Monahan’s hands can reach. Although the PGAT commissioner wants to arm himself with more monetary ammunition, the sustainability of the model is certainly dubious. The issue will be the focal point at the upcoming meetings between Tour officials and Tournament organizers.

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