Tuesday News Day: Responding to Tectonic Shifts in the World of Sports

Tuesday News Day: Responding to Tectonic Shifts in the World of Sports

To say that the agreement reached this week between the PGA Tour, DP World Tour and Saudi Arabia’s Public Investment Fund was stunning and not universally well received would be an understatement on both counts.

In addition, the announcement that roiled the golf world overshadowed initial reports the same day surrounding the move of soccer great Lionel Messi to MLS club Inter Miami, which reportedly involves unprecedented involvement from the league’s biggest sponsor and its media partner. More on that below.

But first, let’s consider the landmark golf deal from the perspective of the sport’s sponsors. While there are myriad details yet to be revealed regarding the “framework agreement”—in PGA Tour Commissioner Jay Monahan’s words—let’s assume that the deal ultimately comes to fruition as proposed, recognizing that it faces multiple obstacles, not the least of which is winning approval from the tour’s policy board where players have five of the eleven votes.

According to the joint press release issued Tuesday, the tripartite agreement “combines PIF’s golf-related commercial businesses and rights (including LIV Golf) with the commercial businesses and rights of the PGA Tour and DP World Tour into a new, collectively owned, for-profit entity.”

The establishment of this new organization would seem to require that current contracts with the 58 brands listed as the PGA Tour’s official marketing partners (along with those of the DP World Tour’s sponsors) terminate and/or be transferred whenever the to-be-named new business officially launches.

If the PGA Tour and DP World Tour have any interest in protecting their corporate partners from the potential public backlash of associating with a Saudi-funded entity, they would be wise to explore the option of keeping the sponsorship agreements between the brand partners and the tours. Although those sponsorships will require assets belonging to the new entity, contracting with the tours would provide some cover to companies that desire it.

As for the not-as-messy Messi situation, The Athletic first reported that the recruitment of the Argentine legend to Miami includes financial incentives from the league’s biggest sponsor (and Messi endorsee) Adidas, as well as broadcast partner Apple.

According to The Athletic, “Messi is being offered a profit-sharing agreement with the sportswear giant…which would involve the player receiving a cut of any increase in Adidas’ profits resulting from his involvement in MLS.”

Furthermore, “MLS and Apple have discussed offering Messi a share of the revenue generated by new subscribers to MLS Season Pass, the league’s streaming package on Apple TV+.”

The involvement of Adidas and Apple indicates just how monumental the acquisition of the seven-time winner of the Ballon d’Or award as the world’s best soccer player is for MLS.

As historic as they are, however, such moves don’t foreshadow a trend of brand and media partners becoming involved with player signings in other sports.

For one, soccer is unique in being a global game with multiple pro leagues vying for the best athletes, which sometimes necessitates extraordinary measures or amounts of money to win the battle. Also, Messi has reached a level of achievement and fame earned by only a handful of athletes from any sport at any time, immeasurably adding to his value.

So don’t expect to see sponsors and broadcasters throwing money after other superstars any time soon. (Although the example of Adidas and Apple has to make you wonder if maybe the golf kerfuffle could have been avoided by, say, CBS and Callaway cutting in Mickelson, Koepka and others!)

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