An economist who spoke to LIV Golf CEO Greg Norman at length about the venture has cast doubt on its ability to survive for longer than a couple of years.
Steve Levitt spoke to Norman on his People I (Mostly) Admire (opens in new tab) podcast, but in his summary of the conversation, he admitted he thinks the franchise model being pursued by LIV Golf is flawed.
Levitt began with the positives, pointing to the way the added competition at the top of the game has forced the PGA Tour to change its own product, including the upcoming TGL, which is being launched in partnership with the Tour.
He said: “On the question of LIV Golf making the world a better place, my own personal opinion is that yes, competition is good. It spurs innovation. And, ultimately, I suspect it will be a benefit to golf fans. Because not only is LIV Golf trying out all sorts of new things, but the PGA Tour is innovating also, like with the new Monday night team matches, slated to start in 2024.”
One of the big innovations of LIV Golf is its franchise model, which allows captains of its 12 teams an equity stake in them and the opportunity to attract interest from sponsors. However, Levitt expressed doubts over whether it will succeed and predicted a relatively short shelf life for the circuit. He said: “On the question of LIV Golf’s economic viability, well, there I’m a little more skeptical. I just don’t see the franchise model working, at least in its current form. In that case, I don’t think LIV will survive more than a couple years.”
LIV is noticeably pushing the team aspect in the early stages of the 2023 season, and a report from Alan Shipnuck, who also claimed LIV would stop paying travel expenses for players and caddies, revealed that rather than the money won by teams going into the pockets of the players, it will instead be invested in the teams to help grow the franchises.
Norman also detailed the model during the discussion with Levitt, saying: “So we have 12 principal players. Those 12 principal players own 25 percent of that franchise. The league owns 75 percent of it. Now that principal player is responsible for his own P&L over his team. No different than any NFL team, right? They’re responsible for their own P&L – profit and loss. So he has to bring in individuals to help him manage his team.”
Considering there has only been one tournament of 14 so far this year, it’s too early to know whether the franchise model will capture the imagination of fans and…
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