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Confidential records show Saudi golf tour based on outlandish assumptions

The season will unfold as LIV’s business evolves into its intended franchise model. Although professional golf has iconic team events like the Ryder Cup, the PGA Tour generally relies on players competing for themselves. LIV, whose musical gatherings bear little resemblance to traditional tournaments, is betting fans will prefer to watch a dozen four-man teams go head-to-head.

“LIV has repeatedly made it clear that our stakeholders take a long-term approach to our business model,” LIV spokesperson Jonathan Grella said in a statement. “Despite the many obstacles put in our way by the PGA Tour, we are delighted with the success of our year of beta testing. And we are confident that over the next few seasons the remaining elements of our business model will materialize as planned. Our business plan is built on the path to profitability. We have a nice long runway and we’re taking off.

Prince Mohammed, the 37-year-old de facto ruler of the kingdom, often gravitates towards splashy business and has repeatedly said he sets exorbitant targets in the hope of motivating officials to hit a fraction of them. In its analysis, McKinsey called the golf league “a high-risk, high-reward business.”

The consultants detailed three possible outcomes for a franchise-focused league: languishing as a start-up; achieving “coexistence” with the PGA Tour; or, more ambitiously, seize the cloak of domination.

In the most successful scenario, McKinsey projected revenue of at least $1.4 billion a year in 2028, with earnings before interest and taxes of $320 million or more. (Federal records show the PGA Tour, a tax-exempt nonprofit, had revenues of about $1.5 billion and posted net income of nearly $73 million for 2019.)

By contrast, a league mired in start-up status – defined as attracting less than half of the world’s top 12 players, navigating a “lack of fan enthusiasm”, plagued by limited sponsorships and facing a “harsh response from golf society” – stood to lose $355 million, before interest and taxes, in 2028.

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