The Augusta National leaderboard battle between PGA Tour players and those who have joined LIV Golf certainly dominated barroom and family room conversations during this weekend’s broadcast of The Masters, even as such discussion was studiously avoided by ESPN and CBS commentators working under the tournament’s legendary constraints.
But while the hole-to-hole fortunes of Jon Rahm, Brooks Koepka, Phil Mickelson and other stars kept the bitter rivalry between the two tours front and center for viewers, the “tradition unlike any other” also was a reminder of what The Masters and LIV have in common: Neither relies on corporate sponsorship as a revenue stream.
Adhering to its definition of tradition, Augusta National eschews commercial partnerships save for its longstanding relationship with IBM and the four minutes per hour it allows its broadcast partners to allot to their limited number of advertisers.
LIV Golf is actively pursuing sponsors, signing its first—shipping and logistics tech company EasyPost—just prior to the start of its season, but it is not dependent on them, having been able to spend a reported $784 million dollars to launch the circuit thanks to its deep-pocketed Saudi backers.
And while Augusta National and LIV practically define the term “outliers,” the fact remains across the rest of sports business that sponsorship is, in the vast majority of cases, not the biggest piece of the revenue pie. It is also often not the second or third largest slice.
Still, it’s an important piece. Generally speaking, many sports properties count on corporate partnerships for about 20 percent of their income. Basic business economics tells us that unless an organization is generating margins in excess of that, it can’t afford to lose those dollars.
But sports organizations are not always run like businesses that have to operate rationally with a close eye on the P&L. Billionaire owners can operate at a loss for as long as they want, especially as their valuations continue to grow year after year. Similarly, leagues and governing bodies are able to play by different rules.
The equation is different for smaller rights holders, however. For many of them, the most important number related to sponsorship is not its percentage of total revenue. It’s the cost-benefit ratio. How much do they have to spend on sales efforts and deliverables to bring that income in?
While we may envy an organization like Augusta National’s ability to turn its back on commercial revenue, or marvel at the growing size of partnership sales and activation staffs in pro sports, it’s important to remember that having to look at sponsorship with profitability in mind is one of the most significant differences between the big and small fish in the property pond.