The Economics Behind Tiger Woods & Rory McIlroy’s New Golf League
Huddle Up is a 3x weekly newsletter that breaks down the business and money behind sports. If you are not already a subscriber, sign up and join 100,000+ others who receive it directly in their inbox each week. Today At A Glance:TGL, the new tech-enabled indoor golf league by Tiger Woods and Rory McIlroy, announced its first franchise last week. So today’s newsletter breaks down the league’s business model, including future revenue streams, TV rights, real estate, and more. This newsletter is also available via podcast on Apple or Spotify. Enjoy! Today’s Newsletter Is Brought To You By SoFi!
SoFi is the all-in-one finance app helping you bank, borrow, invest, and save. SoFi’s mission is to help members achieve financial independence and realize their ambition, all in one app. SoFi is transforming the industry and disrupting how the world sees personal finance, and it’s the single app you need to get your money right. I’m a SoFi member, and I love it. SoFi is legit, and they comply with the strict regulatory standards of the FDIC so you can be sure your money is safe. Friends, With the agreement to merge the commercial businesses of the PGA TOUR and LIV Golf announced last week, another golf-related announcement fell under the radar. I’m talking about TGL, the tech-based golf league founded by Tiger Woods, Rory McIlroy, and Mike McCarley of TMRW Sports. And the announcement was that Reddit co-founder Alexis Ohanian and tennis legends Serena and Venus Williams had purchased the league’s first official team: The Los Angeles Golf Club. But the bigger story is where TGL fits into the greater golf landscape and how the PGA TOUR has a financially vested interest in seeing the league succeed.
TGL is different from any golf league we’ve ever seen. Launched by Tiger Woods and Rory McIlroy’s company TMRW Sports, TGL is a hybrid between live-action and virtual golf, with teams competing against each other in an indoor arena. The league will have six teams with three PGA TOUR players each. According to Forbes, these golfers will start by teeing up long-distance shots on a virtual course simulator “closer to the size of a massive IMAX screen” than the typical simulator bay. Then, after those shots, the players will rotate over to a tech-based short-game area for chipping, bunker shots, and putting. Each match will be 18 holes and played within 2 hours. The players will be mic’d up the entire time, and fans can affect course conditions while tracking live player data, like increasing heart rates.
TGL’s inaugural season isn’t scheduled to tee off until January 2024 — but the league has quietly made a lot of progress over the last six months. For example, TGL broke ground on its new 135,000-square-foot arena earlier this year, which will be built on 10 acres of unused land at Palm Beach State College and seat between 1,500 to 2,000 fans. TGL has also received commitments from 12 of the world’s best golfers, including Tiger Woods, Rory McIlroy, Jon Rahm, Justin Thomas, Collin Morikawa, Max Homa, Matt Fitzpatrick, and Xander Schauffele. And the TGL’s investor list reads like a guest list at the ESPYs, with athletes like Stephen Curry, Lewis Hamilton, Shohei Ohtani, Shaquille O’Neal, Kevin Durant, and Sidney Crosby all investing in the league. TGL Confirmed Players (6 yet to be announced)
TGL Notable Investors
But the most impressive move by TGL so far is not their multi-million dollar arena, player commitments, or investor list — it’s how they are intelligently aligning incentives to build golf’s first-ever social-first sports league. Let me explain.
Per reporting from Sportico, TGL’s cap table consists of four different groups: TMRW Sports (the company owned by Tiger Woods and Rory McIlroy) owns 54% of the business, the PGA Tour owns 18%, franchise owners (the teams) own 18%, and the players collectively own 10%. TGL Ownership Breakdown
TGL teams will each be given a geographical affiliation, even though TGL matches will all take place in Palm Beach, Florida. And these teams will make money the same way traditional sports franchises do today — national media rights, sponsorships, merchandise, ticket sales, etc. — with TGL’s executive team projecting teams to break even in year one after collecting national revenue distributions of $2.4 million each. These national revenue distributions are then projected to grow to $7.6 million by 2033, and TGL expects teams to make $13.3 million in additional revenue by then too. How TGL Franchise Owners Will Make Money
TGL’s League-Wide Revenue Share Projections Per Team
TGL’s Team-Specific Revenue Projections (via sponsorship & licensing)
But aligning incentives through shared equity distributions is not the only thing TGL is doing well — the league’s overall setup and format are also pretty genius. Take the timing, for example. TGL will hold 15 events on Monday nights from January through April. This is a perfect time because 1) they are only competing with NBA and NHL regular season games, 2) US sports fans are already trained to watch sports on Monday nights because of Monday Night Football, and 3) it will be the only golf event in the world played in primetime (not midday). And that’s good news for the TV rights. Tiger Woods is marketable enough to secure a TV deal all on his own — think of TV rights as just an advertising fee — and when you add in the fact that there are essentially no premium live sports rights up for grabs over the next few years (outside of the NBA), it’s easy to see why a current PGA TOUR broadcast partner like NBC would pay a lot of money for this. The Match series with Capital One has already proven that mic’d up celebrity-driven golf content is in demand. And TGL will instantly be the world’s only golf league that allows fans to watch every shot — rather than following your favorite player around the course or staying in one area to watch many different players come through. So the only big question remaining is whether traditional golf fans will enjoy indoor golf content enough to tune in every week. But with TGL’s impressive list of owners (Woods & McIlroy), players (Woods, McIlroy, Rahm, Thomas, Morikawa, etc.), and investors (50+ celebrities with huge audiences), I certainly wouldn’t bet against them. Ps. The second half of today’s podcast is an exclusive interview with Reddit co-founder Alexis Ohanian. Alexis, Serena, and Venus Williams purchased the first TGL franchise, so we discuss why he thinks the league will succeed, how he values the business today versus ten years from now, and much more. Enjoy!
I hope everyone has a great day. We’ll talk on Wednesday. Listen to the Joe Pomp Show on Apple or Spotify. Interested in advertising with Huddle Up? Email me. Your feedback helps me improve Huddle Up. How did you like today’s post? Loved | Gin the rin the eat | Good | Meh | Bad Want More Detailed Sports Business Breakdowns? Subscribe To JPS.The Joe Pomp Show is a 3x weekly podcast where I break down the business and money behind sports. Think of it as the same high-quality work you read here, just deeper. There are also exclusive interviews with people like Dana White, Lance Armstrong, and Troy Aikman, and you’re guaranteed to learn something. Huddle Up is a 3x weekly newsletter that breaks down the business and money behind sports. If you are not already a subscriber, sign up and join 100,000+ others who receive it directly in their inbox each week.
|
