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Confidential Records Show a Saudi Golf Tour Built on Far-Fetched Assumptions

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The season will unfold as LIV’s business evolves toward its planned franchise model. Although skilled golf has some signature team events just like the Ryder Cup, the PGA Tour generally relies on players competing for themselves. LIV, whose music-blasting gatherings feel little like traditional tournaments, is betting that fans will prefer to observe a dozen four-player teams competing against one another.

“LIV has repeatedly made clear that our stakeholders take a long-term approach to our business model,” Jonathan Grella, a spokesman for LIV, said in an announcement. “Despite the numerous obstacles put in our path by the PGA Tour, we’re delighted with the success of our beta test 12 months. And we’re confident that over the following few seasons, the remaining pieces of our business model will come to fruition as planned. Our marketing strategy is built upon a path to profitability. We’ve a pleasant, long runway and we’re taking off.”

Prince Mohammed, the dominion’s 37-year-old de facto ruler, often gravitates toward splashy ventures and has repeatedly said that he sets sky-high targets in hopes of motivating officials to realize a fraction of them. In its evaluation, McKinsey called the golf league “a high-risk high-reward endeavor.”

The consultants detailed three possible outcomes for a franchise-driven league: languishing as a start-up; realizing a “coexistence” with the PGA Tour; or, most ambitiously, seizing the mantle of dominance.

In probably the most successful scenario, McKinsey predicted revenues of a minimum of $1.4 billion a 12 months in 2028, with earnings before interest and taxes of $320 million or more. (Federal records show that the PGA Tour, a tax-exempt nonprofit, logged about $1.5 billion in revenue and posted a net income of virtually $73 million for 2019.)

In contrast, a league mired in start-up status — defined as attracting lower than half of the world’s top 12 players, navigating a “lack of pleasure from fans,” reeling from limited sponsorships and confronting “severe response from golf society” — stood to lose $355 million, before interest and taxes, in 2028.

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