Dusek: LIV Golf is wreaking havoc on equipment endorsement deals. Industry insiders explain

More than a century before Instagram Reels, Twitter takeovers and highly-polished YouTube videos started being made, Harry Vardon signed a deal with Spaulding. The company paid him to tour the United States and play scores of exhibition matches using the brand new Vardon Flyer golf ball. That made Vardon, the winner of six British Opens, one of the first golf influencers.

In the years after he inked that deal in 1900, pros from Gene Sarazen to Jack Nicklaus to Joaquín Niemann have been signing lucrative sponsorship agreements with golf equipment companies.

The model for endorsement deals has not changed much since Vardon’s day. Companies pay players and supply them with equipment and technical assistance in exchange for the right to use their name, image and likeness in advertisements and commercials.

Players also agree to be involved in photo shoots, be available for a negotiated number of corporate functions and wear the brand’s logo on their bag, hat or shirt. Incentive clauses for things like winning a PGA Tour event, a major championship, finishing first on tour in driving distance and making a Ryder Cup team are also common.

Fulfilling the contracts is usually easy for pros because they just need to play golf, smile, shake a few hands and stay out of trouble, but with the emergence of the LIV Series, brands are being forced to reevaluate their marketing plans and reassess the value of players.

Breach of contract?

The Oaks golf course at The International in Bolton, Massachusetts, is the host venue for the 2022 LIV Golf Invitational Boston. (Photo: Jonathan Ferrey/LIV Golf/via Getty Images)

According to several brand insiders that Golfweek has spoken with, all of whom insisted on anonymity, golfers are typically obligated to compete in at least 15 to 18 PGA Tour events in a season to fulfill their endorsement contracts. If the player gets hurt, brands make accommodations and adjustments.

For elite players, reaching that threshold is easy. Last season, competing in the four major championships, the Players Championship, the WGC-Dell Technologies Match Play Championship, then at Rivera, Bay Hill, the Memorial and the three FedEx Cup playoff events would get you to 12 tournaments. Sprinkle in a few events in preparation for the majors and you’re set.

However, the PGA Tour indefinitely suspended golfers who decided to play in LIV Series events. Many high-profile (and high-priced) players who participated in the first LIV Series failed to play in 15 PGA Tour events last season.

Kevin Na played 14 PGA Tour events last season, Sergio Garcia played 13 and Dustin Johnson and Louis Oosthuizen each played 12. Lee Westwood played in 10, Bryson DeChambeau (who was injured for part of the year) played in nine, while Phil Mickelson played six.

Now, imagine you are the CEO or the head of marketing for an equipment maker. What would you do if a player who was contractually obligated to compete in 15 PGA Tour events, and who did not sustain an injury, signed with LIV Golf, knowing he’d be suspended, and only played 11 or 12? Are you holding the player in breach of contract and not paying him, maybe pro-rating his payment based on how much he did play? Or just paying out the whole thing?

“If you pro-rate, you risk pissing off the player or the agent and creating some bad blood,” said one insider. “And if there is a deal struck between LIV and the PGA Tour and golfers get to do both at some point in the future, you may have burned a bridge with a star.”

Clubs, balls and equipment have been flying off the shelves over the last few years, so as lucrative as some endorsement deals are for star players, brands may pay golfers their full contract payment even if they failed to play enough.

What are LIV stars worth today?

Cameron Smith celebrates after winning the 150th Open Championship at St. Andrews Old Course. (Photo: Michael Madrid-USA TODAY Sports)

Cameron Smith dramatically held off Rory McIlroy to win the 2022 British Open in July after winning the Players Championship in March. The Australian had a monster year, then jumped to LIV Golf after the Tour Championship in August.

Smith plays Titleist clubs, uses a Titleist ball and bag, and even has the company’s logo on the front of this hat, the most visible, high-value piece of real estate in the golf endorsement world.

He is the highest-ranked Titleist staffer on the Official World Golf Ranking (No. 3 as of September 25), but if you click ‘Tour’ on Titleist’s website and view ‘Featured Titleist Players,’ you won’t see his picture. Jordan Spieth, Nelly Korda, Will Zalatoris, Patrick Cantlay, Garrick Higgo, Danielle Kang, Justin Thomas and Webb Simpson are there, but the “Champion Golfer of the Year,” who played in 18 PGA Tour events last season and won three, is not. He’s below that prime area, with a small square photo that blends in with seven others.

Under normal circumstances, a pro who wins marquee events like the Players Championship and British Open would have his picture splashed over marketing materials and advertisements for a year. However, at this point, it appears Titleist is not planning to promote Smith’s victories that he won using the company’s gear.

So, it could be argued that Cameron Smith’s choice to play in the LIV Series decreased the value of his win at TPC Sawgrass and St. Andrews for Titleist. As the champion of those events and a highly-ranked player, Smith would have been in marquee groups at PGA Tour events throughout 2023, and that means lots of exposure for Titleist, but now he will likely not be allowed to defend his title at Sawgrass (one of the highest-profile events in golf). He has a five-year exemption into the majors and can play the British Open until he’s 60, but otherwise, you can only see Smith play live on YouTube and LIV’s website.

Similarly, it would be tough to argue that Adidas and TaylorMade are getting the full value of their deals with Dustin Johnson. He played a full schedule through the PGA Championship in May, but after joining LIV Golf, the two-time major winner has only appeared in two televised events, the U.S. Open (T-24) and the British Open (T-6). Johnson won LIV’s event in Boston, but TaylorMade decided not to celebrate that victory on social media like when Rory McIlroy won the Tour Championship. The next time DJ plays on network television and flashes Adidas and TaylorMade logos will likely be next April at the 2023 Masters.

“Two years ago, there was stability and we knew where guys were going to be and roughly what their schedules were going to be,” said one brand’s marketing guru. “Now it’s, ‘Are they going to be on TV on a Sunday,’ but there are sub-levels to that, like ‘Which network are they on?’ Even if LIV gets on TV, who is watching it?”

In other words, how do you compare a golfer’s value and his exposure for a company when he’s on CBS or NBC on a Sunday afternoon in February or March to the same player in a LIV Series event that might be broadcast at the same time on Fox Sports 1 or another network that is less known for golf coverage?

Some golf fans, although not all, see many LIV players as less likable right now, and just about all of those who made the jump are seeing their positions on the Official World Golf Ranking slide down every week.

Gauging a player’s actual value to a brand in the marketplace with so many unknown variables is almost impossible.

Planning for 2023

Dustin Johnson lines up a putt on the 9th green during the final round of a LIV Golf tournament at Trump National Golf Club Bedminster. (Photo: John Jones-USA TODAY Sports)

You probably haven’t bought Halloween candy, come up with your menu for Thanksgiving dinner or hung holiday lights, but golf equipment companies have been busy for weeks with sales and marketing meetings focusing on what they are doing in 2023. Next year’s clubs, balls, shoes and bags are being manufactured today, and advertising campaigns, tag lines and commercial ideas are being finalized soon.

Golf equipment makers and their advertising agencies usually shoot commercials three or four months before they start appearing on broadcasts. With major releases historically hitting store shelves in January, February and March, they target October and November as good times to gather Tour staffers in secluded places and get the cameras rolling.

But once again, players defecting to LIV Golf and the public’s reaction to those moves complicates things for brands like TaylorMade, Callaway, Titleist, Cleveland/Srixon and Ping.

“It’s very challenging right now because it’s a moving landscape,” said an insider. “If you plan for an athlete to appear in a TV commercial nine months from now, you don’t know if he’s going to jump.”

Another brand veteran said, “We’ve never had a pro shop owner tell turn away promotional materials that have a PGA Tour player in it, but we’ve had a few people call us and say not to send posters that have LIV guys in them.”

As they strategize the content they plan to make in the weeks and months ahead, marketing experts and advertising agencies are going to have to consider things they never dealt with in the past, like how some PGA Tour and LIV Series athletes might get along on set and on camera, how will the LIV Series players be received by golf fans who have been anti-LIV and what are the best platforms for LIV player content?

“Let’s say that Player X jumps ship to LIV. Some people won’t care because they love Player X and want to see him play golf, but other people will call him a money-grabber,” notes one executive. The situation creates a bind for brands and adds a new wrinkle to plans.

Like everything else related to LIV Golf, understanding how it will ultimately change the relationships between players and brands, and how it may alter the endorsement landscape, will take time. The challenges will be different for every brand, but an industry veteran put into focus with a sobering thought.

“A brand that has multiple athletes might just ask itself, ‘Can we lose this guy? Do we really need this guy?’ If people can’t see him because he’s not on TV or because no one is watching, and he can’t appear in content with [other staff players], and he’s posting social out of a new contract [with LIV] … He’s essentially walked away from his existing contract for a major money deal and may not care.”

As a senior writer, David Dusek covers golf equipment, PGA Tour analytics and technology for Golfweek Magazine and Golfweek.com.

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Story originally appeared on GolfWeek