CEO Council Forum: Championship Experience

Key Concepts

• PJ Tour Leadership and Evolution: Discussion on the new CEO's ambition and the need for golf to modernize while respecting tradition.
• TPG and Symphony Ventures Partnership: The formation of a new investment strategy in sports, focusing on operating businesses with significant impact potential.
• Investment Strategy: Emphasis on acquiring controlling stakes or significant influence in businesses, particularly in the "picks and shovels" sector of sports, rather than passive team ownership.
• Rory McIlroy's Business Acumen: His transition from a golfer to a business person, his involvement in building businesses, and his desire to make a tangible impact.
• Athlete Transition to Business: Examining successful transitions of athletes into business and identifying role models.
• Sports Investment Landscape: Addressing the crowded and expensive nature of sports investments and identifying niche opportunities.
• Global Sports Investment Opportunities: The potential for global deployment of capital, with an initial focus on North America.
• Rory McIlroy's Masters Victory: A detailed reflection on the emotional and cinematic experience of winning the Masters.
• Ryder Cup Experience: The unique challenges and rewards of winning an away Ryder Cup.
• PGA Tour vs. LIV Golf: Discussion on the potential for unification and the current financial dynamics.
• Partnership Dynamics: The established and complementary relationship between Rory McIlroy and TPG.

PGA Tour Leadership and Modernization

The conversation begins with an assessment of the new PGA Tour CEO, who is described as ambitious and likely to "ruffle a few feathers." This is seen as a positive development, as golf, while rich in tradition, needs to "move with the times" and embrace the 21st century, exemplified by initiatives like TGL. The CEO's experience in the NFL is highlighted as a valuable asset for the tour.

TPG and Symphony Ventures: A New Sports Investment Strategy

Rory McIlroy discusses the genesis of his business relationship with TPG, which began with his investment vehicle, Symphony Ventures, founded with his business partner Sean O'Flaherty about six or seven years prior. The relationship with TPG developed organically through shared investments, including in healthcare and True Golf. TPG was considering a sports strategy, and this aligned with Rory and Sean's desire to partner with a firm rather than solely commit their own capital or raise a fund.

Todd, representing TPG, elaborates on their investment philosophy. They will focus on "operating businesses" where they can exert "control or a lot of impact" and actively drive growth during their ownership. This contrasts with passive investments in teams, which TPG feels less suited for. Their target areas include software businesses and "picks and shovels" companies that serve the amateur sports sector, emphasizing their ability to make a "significant impact on the broader sports." They see sports as having "nice steady secular growth" with opportunities for "step function growth and change" driven by technology and management talent, mirroring their successful strategies in other sectors over the past 20-30 years.

Rory McIlroy's Investment Philosophy and Future Career

Rory emphasizes that he and Sean O'Flaherty bring experience in "building some businesses within sports," such as TGL and Golf Pass, and have been "intimately involved" in other sports businesses, contributing strategically. He desires to "get their hands dirty" and make a tangible difference in the businesses they invest in, rather than simply making minority investments in teams.

Looking ahead, Rory asserts that he will remain a "golfer first and foremost" as long as he plays competitively, as golf provides his platform. However, he acknowledges his evolving career and the need to prepare for his "second part of my career" after golf. He aims for a "smooth transition" by investing in ventures like those with TPG, setting him up for life after his playing days.

Navigating the Crowded Sports Investment Market

Todd addresses the concern about the crowded and expensive sports investment market. He clarifies that TPG's focus is not on the high-valuation investments in top-tier teams and leagues. Instead, they are targeting businesses that resemble their successful ventures in software and services, operating within the "sports wrapper." They are building a dedicated team and a long-term business, not just raising a fund, and are confident in their ability to create value through their capital and expertise.

Global Reach and Athlete Role Models

The discussion touches upon Rory's global icon status and its impact on TPG's investment reach. While TPG has always invested globally, Rory's brand and connectivity are described as "game-changing" for sourcing opportunities and attracting talent. They anticipate starting with a majority of their investments in North America but see significant opportunities in Europe and Asia.

Rory identifies Roger Federer as a role model for athletes transitioning to business, citing his success in protecting his brand and making strategic investments. He also mentions Maverick Carter and LeBron James as early influences when he set up his own company in 2013. Philippe Laffont, a prominent tech investor, is also noted as an influential figure, with whom Rory shares a love for golf and wine, and from whom he gains insights despite Laffont's own admission of leaving significant potential gains on the table.

The Unique Appeal of Golf in Business

Todd speculates on why golf icons like Jack Nicklaus, Arnold Palmer, and Tiger Woods have achieved such significant business success. He suggests it's a combination of global reach and the individual nature of the sport, fostering identification with its stars. He reiterates the long-standing and complementary partnership between himself and Rory, emphasizing their shared vision and consistent approach to value creation. He notes that golf, like a few other sectors, exhibits a "sophisticated business-minded long-term approach" that aligns with TPG's aspirations.

Reflecting on the Masters Victory

Rory provides an emotional account of his Masters victory, describing the "cinematic" experience. He highlights the significance of seeing his childhood friend Harry on his bag, his wife Erica, and daughter Poppy, along with the "sea of people." He admits that even months later, watching the final scene on the 18th green can still bring him to tears, underscoring the profound emotional impact of achieving a lifelong dream. He notes that while he dreamt of the moment, he didn't dream about what came next.

He shares the practical perk of carrying the green jacket, acknowledging the initial complaint about wearing it in Abu Dhabi and his wife's reminder of how long he waited for that privilege. He finds joy in sharing this symbol of achievement, particularly when it's a first for a region, like India.

The Ryder Cup Experience

Rory reflects on the Ryder Cup victory on US soil as a major highlight of his year. He describes winning an away Ryder Cup as one of the most difficult feats in golf due to the partisan crowds, a challenge not typically faced by golfers. He contrasts this with the weekly experience of athletes in team sports like football and baseball. He praises the European team's performance, noting how they consistently outperformed the Americans, even when the Americans played exceptionally well. He emphasizes the importance of not letting negative crowd interactions detract from the team's remarkable performance.

PGA Tour vs. LIV Golf: The Unification Question

Rory expresses concern about the potential for golf to become fractured, drawing parallels to boxing and motor racing. He believes unification would be beneficial for the sport but acknowledges the difficulty given recent events. He states his support for the PGA Tour and the traditional structure of men's professional golf, noting the irrational capital allocation by LIV Golf. He points out that LIV has spent billions without a clear return and will likely need to continue spending to maintain its current position, especially with player contracts up for renewal. He feels more comfortable on the PGA Tour side but remains uncertain about future outcomes. He expresses confidence in the current PGA Tour leadership under Brian.

Competitive Spirit in Business

Todd concludes by affirming that Rory's competitive spirit extends to deal-making. He states that Rory and his team "leave nothing on the field," which is crucial for consistent follow-through and value creation beyond the initial deal. This dedication is what excites Todd most about their partnership.