(Deep sigh.)
OK, let’s do it.
If you’re the “golf person” in your group of friends, the “What’s up with this Tour stuff?” question is something that is going to be inescapable for a while. We’re still working through what we know and how to feel about everything, just like you probably are.
Hopefully, with the document below, you can feel somewhat prepared to discuss this topic (or at least have a link to forward to people). These answers are based on information we’ve gathered by reading everything we possibly can, and talking to people both on the record and on background over the past week (and year).
We’re going to start as basic and as simplified as we can and things are just going to keep going and going. So feel free to eject at any time. No one will blame you.
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Editor's Note: Shortly after this piece was published, the PGA Tour announced that Commissioner Jay Monahan was "recuperating from a medical situation."
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I’d like to skip the rest of this article: In the simplest possible terms, what happened?
After two years of telling players not to take Saudi money, Jay Monahan and the PGA Tour took a yacht-load of Saudi money.
That’s incredible.
For sure. You should keep reading though.
So the Saudis bought the PGA Tour?
Not exactly. The deal, as first outlined in a fever dream of a CNBC appearance by Jay Monahan and Yasir al-Rumayyan, would go as such:
The PGA Tour (historically a 501c6 tax-exempt non-profit) will move its commercial endeavors (TV rights, golf course properties, etc.) into a brand new for-profit company (referred to as “newco” throughout this piece). The DP World Tour will do the same with its commercial endeavors. And the PIF (Saudi Arabia’s Public Investment Fund, reported to be worth nearly $700 billion) will do the same with its commercial golf endeavors (Golf Saudi, LIV Golf, Aramco Team Series, etc.).
And then what happens?
As explained by the people who architected the deal, the assets of this newco will undergo a valuation. As we understand it, the valuation will be done by an independent party. (How much is the PGA Tour brand worth versus the DP World Tour versus LIV Golf, etc.?) Once that is determined, equity in the new company will be doled out accordingly. Monahan will serve as the CEO of this company, while al-Rumayyan will be chairman of the board.
The PIF will then have the first opportunity to invest in this newco, trading cash for an increased minority stake in the company.
So in the simplest possible terms: if the total valuation of all of these assets is $10 billion and the PIF would like to buy 20 percent more of the company, they would contribute $2 billion for that equity stake.
What’s to stop them from buying the whole thing?
According to those familiar with the negotiation, the deal would be structured to ensure that the PGA Tour maintains majority control over the newco, with the initial board being stacked 3 to 1 in favor of the PGA Tour (Monahan, Jimmy Dunne, and Ed Herlihy on the PGA Tour side and al-Rumayyan on the PIF side). All other details on voting shares and ownership shares, etc., are unclear as of now. But Dunne, who negotiated the framework agreement with Al-Rumayan, is adamant that the PGA Tour will retain control in all scenarios.
“As much as I like the people I dealt with, the game of golf is too important. The legacy of the PGA Tour is too important,” Dunne said in an interview with the Golf Channel. “The people that we have in place have too much experience that we have no desire, no need –– There is no way on God's green Earth that we're going to give up control. I don't know how else to say that."
Aren’t Monahan and the Tour complete hypocrites at this point? Why should we believe anything they say?
Hypocrites, yes. The PGA Tour has even acknowledged as much. “I recognize that people are going to call me a hypocrite,” Monahan said the day the was announced, responding to a question about why the Tour invoked the 9/11 Families and lobbied Congress about the Saudis' human rights record.
Whether you want to continue to believe them as they spell out this new deal is up to you.
It’s important to emphasize, and we’re going to do so repeatedly, that almost zero concrete details have been announced about this deal. We don’t know the size of the investment. We don’t know if or how players who remained loyal to the PGA Tour will be rewarded financially. There has been some talk, from Dunne and others, of players being given equity shares in the new company. We don’t know if or how LIV Golf players will be re-integrated into the PGA Tour ecosystem. We don’t know if LIV Golf is even going to exist after this season. We don’t know why the deal was rushed so quickly without any details. We don’t know – if this remains a private for-profit company – if we’ll ever get answers to a lot of these questions and there are about 100 other things to add to this list.
If those details exist at all, the only people that know them are the people who were part of this very secretive negotiation. Based on the past two years, golf fans are well within their right to be dubious of anything they have to say about it.
OK, I get the gist. Is anything going to change for me as a fan?
Who knows, man? As it stands right now, if you believe the people who have made the announcements, things will be business as usual on the PGA Tour in 2024. The new schedule will remain as planned (and should be announced in the coming weeks). Designated events, even though they strained the Tour’s finances and relationships with sponsors, are by all indications here to stay. The mini-runs of regular mule-heavy events will still ladder up to the designated events. And all of that will be planned around the majors, which now, comically, just seem more interesting and important than ever.
You’ll almost certainly see Aramco, the Saudi national oil company, become a major sponsor in men’s pro golf, as it is in F1, soccer, etc. How will that sponsorship affect the Tour’s relationships and market with other Tour partners? Who knows? Is buying traditional sponsor inventory another way to put pressure on the Tour’s decision-making outside of the equity control in the newco? Don’t know. Again, lots of questions.
But outside of that, it doesn’t seem like much will change from a week-to-week perspective on the PGA Tour, at least in the short term.
This is all subject to change based on what happens in the coming months and whether the deal even goes through, as it’s going to face scrutiny from the U.S. Senate, antitrust officials in the U.S., the U.K. and Europe and a host of other things. Keep reading!
I’m a massive fan of The Iron Heads and I'm planning to travel the whole LIV Golf circuit in 2024. Should I book my plane tickets or wait?
Up front, we’ll say: We have no idea.
The initial reports were painted as a merger between LIV and the PGA Tour and, predictably, were celebrated as a victory for LIV. (As a reminder, LIV has nearly zero revenue, minuscule TV ratings, no new big-name signings, and has lost a crucial court ruling in the UK which successfully upheld the DP World Tour’s ban of LIV players. This deal is about the PGA Tour joining forces with the group that funds LIV, not the fledgling organization described herein.)
The company line thus far has been that the newco will conduct an empirical evaluation of LIV at the end of the 2023 season and make a decision on whether to continue the league. The easiest conclusion to draw from that would be that Jay Monahan is now the CEO of LIV and you can guess that he – and the players that remained loyal to the PGA Tour – would enjoy killing it before this sentence is over. At a bare minimum, it seems certain that the idea of competing events on a given week would go away.
But the actual answer is that we don’t know. It’s possible LIV goes away completely. It’s possible that team golf takes a new form as some sort of fall-based Aramco Team Series. It’s even possible that they decide that in order to maximize financial upside, pro golf should be entirely team-based and they continue to re-shape the sport.
Monahan did say he doesn’t see a scenario where LIV events and PGA Tour events are staged opposite of each other. LIV captains, including Martin Kaymer and Dustin Johnson, have said they’ve received assurances from al-Rumayyan that the LIV Tour will continue through 2024.
Feel free to guess whatever outcome you want, but we don’t know at this point.
Does this mean that LIV players can come back to the PGA Tour?
Short answer: Yes, eventually. (With potentially some exceptions!) All the language around this deal has been about re-unifying the game of golf and it’s clear that both sides want all the best players in the world playing together in one place.
Of course, the answer is more complicated than just waving them back in. There could be heavy fines involved, but what’s more likely is there will be a limited future financial upside for LIV players (likely in the form of things like PIP earnings, equity in the newco, etc.).
Based on what’s been said publicly and reporting we’ve done, the idea would be to take each player on a case-by-case basis. For instance, a player who quietly went about their business at LIV would likely have a much simpler path back than someone who, I don’t know, funded the official incorporation documents for a breakaway league and used PGA Tour events as recruiting sites to poach players. What is clear from talking to players who remained loyal to the PGA Tour is they are not happy (and that’s putting it mildly) about the idea of having missed out on a generational payday. It’s not going to be as smooth or as simple as letting bygones be bygones.
(Editor’s note: Bet on the reintegration being a massive shitshow.)
Who are those guys you mentioned a minute ago that are going to make up this new board?
Ed Herlihy is the chairman of the PGA Tour policy board. In real life, he is a partner at New York City’s Wachtell, Lipton, Rosen & Katz, and a powerhouse mergers and acquisitions lawyer. Just for fun, he’s also an Augusta National member.
Jimmy Dunne is an independent director on the PGA Tour’s policy board. He is the Vice Chairman and Senior Managing Principal of Piper Sandler, a massive investment banking firm in New York. He is also an Augusta member, as well as the president of Seminole Golf Club and a member… pretty much everywhere else, too. Massive Notre Dame guy.
Dunne is relevant to this conversation for a lot of reasons. The first thing that many people know about Dunne is that his life was dramatically changed by the 9/11 attacks, which you can catch up on here.
The other thing to know is that Dunne just joined the PGA Tour policy board in November of last year. Reading between the lines, it’s clear that he was brought in to learn the lay of the land and help get the PGA Tour out of the mess in which it found itself over the past 2 years as LIV Golf poached some of its biggest names and brought colossally expensive legal action against the Tour. He was the one that first reached out to al-Rumayyan. He was the one that set up the first meeting in London. And he (and Herlihy) were the ones that urged Monahan to get in a room with al-Rumayyan to continue conversations.
So did all of this happen without any players knowing about the deal? Seems like they would be really pissed?
It seems that way, yes. There are other names slowly trickling out (Michael Klein and Amanda Staveley are two names that seemed to be involved from an M&A perspective), but seemingly no players were involved. Rory McIlroy and Cam Smith found out the morning of. Tiger Woods seemingly didn’t know. Greg Norman was told 5 minutes before the CNBC interview. The majority of PGA Tour players likely found out on Twitter or in texts from confused friends.
As far as we can tell, the immediate reaction from players touched a few different nerves:
- Players who stood with the PGA Tour on moral grounds for the past 2 years understandably felt used and foolish.
- Players of all skill levels who didn’t take the LIV money felt like they missed the boat.
- Players who remained loyal to the PGA Tour questioned whether they would somehow be made whole through this new partnership.
As the dust has settled a bit and players learned more about the proposed deal through player meetings, PAC meetings and meetings with the “Delaware” contingent of top players, it seems like the anger is cooling a bit. (We’re still hearing stories of players who are truly livid, however, particularly with Monahan. The fact that a “player-run organization” had no say from the players as it was dramatically reshaped isn’t lost on them.)
The picture that has been painted to the players is a combination of a dire financial situation for the PGA Tour, which forced the hand of decision-makers, but optimism about the fact that the Tour retains control over this new influx of cash coming into men’s pro golf.
Rory McIlroy summed it up most succinctly: “Whether you like it or not, the PIF were going to keep spending the money in golf. At least the PGA Tour now controls how that money is spent.”
I should have asked this earlier: Is any of this official yet?
No. It’s not. It all is subject to a vote of the PGA Tour policy board. To answer your next question, the Policy Board consists of independent directors Herlihy, Dunne, Mark Flaherty, Mary Meeker and Randall Stephenson, as well as player directors McIlroy, Charley Hoffman, Patrick Cantlay, Peter Malnati and Webb Simpson. John Lindert is the PGA of America Director, but is a non-voting member of the board.
(Note: A previous version of this story said that a vote was scheduled to take place on June 27th in Detroit. The Policy Board is next scheduled to meet on June 27, but a vote will not take place until definitive details have been ironed out.)
So why did the PGA Tour decide to go this route, which is clearly a PR nightmare?
The Tour’s motivation seems to be based, at least partly, on finances. The Wall Street Journal reported Monahan told people inside the Tour that the mounting legal bills and increased purse sizes were unsustainable, and while he struggled with the decision considering his previous stance — which included lobbying Congress and the current administration over human rights concerns — this was the best path forward.
"We cannot compete with a foreign government with unlimited money," Monahan reportedly told employees. "This was the time. … We waited to be in the strongest possible position to get this deal in place."
A massive part of this agreement was the fact that the legal action between LIV and the PGA Tour was immediately dropped as a result. A source confirmed to us this week that Tour’s legal bills have reportedly already exceeded $52 million dollars and it’s unclear how long the suit could have dragged on.
Additionally, both sides seem to be motivated by their desire to avoid discovery in their ongoing legal battle. In February, a U.S. Circuit court judge ruled that al-Rumayyan would be subject to being deposed by the PGA Tour’s lawyers. LIV Golf’s lawyers appealed and were granted a stay by the Ninth Circuit Court of Appeals, meaning they could potentially delay a deposition by “one or two years” while the PGA Tour had to continue discovery.
The settlement between the two sides means that the PGA Tour won’t have to disclose whether it engaged in collusion with the majors (an allegation made by Phil Mickelson) by trying to convince them to block LIV Golfers from appearing or from garnering Official World Golf Ranking Points for their events. Additionally, al-Rumayyan is no longer subject to being deposed, which is something the Saudis certainly wanted to avoid at all costs.
OK, so these two tours were fighting in court about whether the PGA Tour was an anti-competitive enterprise. But them suddenly being under one roof seems like it would raise all kinds of antitrust alarm bells?
Totally. Especially when you have the commissioner of the PGA Tour saying that they did this move at least partially in order to “take a competitor off the board.”
Couple that with the fact that the DOJ was already investigating the PGA Tour for antitrust purposes. And the fact that the Senate Permanent Subcommittee on Investigations just requested comprehensive records and communications relating to the proposed agreement and has subpoena power if they don’t receive them.
None of us will pretend to be experts in this realm, obviously. But one expert, Matt Stoller, titled this week’s newsletter, “The Saudi-PGA Tour Golf Deal Isn’t Going to Happen.” So take that for what you want.
Of course, as described above, the people involved in this deal are extremely savvy from an M&A perspective and you’d have to assume there was immense thought given to this angle of things. Perhaps this is an excuse for the PIF to divest their interest in LIV Golf (which has almost no other funding) and kill two birds with one stone? All communications around LIV have continued to describe it as a “standalone entity” and have insisted that business will continue as usual.
A more conspiratorial reading would be that maybe there are larger factors at play here with the indictment of Donald Trump and his ties to LIV Golf or that this is some piece of a larger geopolitical game with regard to the relationship between the US and Saudi Arabia. It’s worth noting that the U.S. Justice Department, as part of its investigation into former President Trump’s handling of classified documents, has subpoenaed the Trump Organization, seeking records pertaining to his dealings with LIV Golf. President Trump has not said how much money he has received from LIV, but referred to the number as “peanuts.”
Or perhaps it really is as “We’ll Cross That Bridge When We Get There” as it seems.
To quote McIlroy again from this week: “The way Jimmy described it, Rory, sometimes you got 280 over water, you just got to go for it. And that's what they did.”
Again, with a startling lack of details, it’s hard to know how literally to take that quote. Maybe it will be like this shot? Or maybe it will be like this one?
Update (6/14/23): Senators Elizabeth Warren and Ron Wyden have written letters urging Attorney General Merrick Garland to scrutinize the proposed deal for potential violations of federal antitrust laws. (ESPN story)
So what happens if everything falls apart?
That part is anyone’s guess. It’s hard to game theory all of that out when we have so few details at this point.
If things completely fall apart and we go back to the place we were in a few weeks ago, it’s hard to think we wouldn’t see a mass exodus of PGA Tour players to LIV. Their commissioner has placed all the Tour’s cards on the table and painted the Saudi money as inevitable for men’s pro golf. Couple that with a less-than-rosy financial picture, an aging viewer demographic and sponsor fatigue, and we’re not sure what straight-faced argument you could make to the membership to stay, especially if outrageously lucrative LIV offers start hitting inboxes again.
The Tour is also in the vulnerable position of having legitimized the Saudis by entering into a framework agreement. What sponsor would reject the PIF on moral grounds when the PGA Tour has already said they were willing to work with them?
Maybe the Tour tries to push through the same idea with different money from other private investors? We’ve heard from multiple sources there are American private equity firms that would have been interested, had they been approached. But it’s interesting to think that if the war ramps back up, who would want to pour money into competing against a foreign government with such deep pockets?
If this Saudi money was so inevitable, why didn’t we just skip to this part years ago and avoid this whole mess?
There are probably two reads on this question. Choose your fighter:
One is that, with hindsight, that was absolutely the right answer and it’s a colossal failure of leadership that it didn’t happen. There were reports from years ago (pre-LIV) that al-Rumayyan had a large sum of money that he was interested in investing in the PGA Tour, seemingly in the way that this deal allows. There was also the original proposal for the Premier Golf League (which also included Saudi funding), the model of which was stolen and spun up into LIV Golf.
None of those meetings were ever taken by Tour leadership. As a result, some of the top players in the game have spent years being spokesmen and crash test dummies for the ideas of “legacy over leverage” and loyalty to the PGA Tour only to have the rug pulled out from under them by their commissioner.
The other, more generous read is that things were going extremely well at the PGA Tour at the time this preemptive maneuver likely would have needed to take place. A new TV deal was signed in March 2020, purses were about to skyrocket, the pandemic hadn’t yet taken a massive bite out of the PGA Tour’s rainy day fund and the murder of Jamal Khashoggi was even more fresh in the minds of Americans. The idea of whipping a U-turn and jumping willingly into bed with the Saudis and yelling that “everyone should trust that this was the right move” before any players were poached or the LIV concept was rolled out probably wouldn’t have gone great either.
So the PGA Tour is saying they have the upper hand in this deal, but the PIF is providing the financing. Who is really in charge and what do they want?
Well, this is the $10 billion question.
Even if you take the PGA Tour (and al-Rumayyan!) at their word about the new structure, it’s pretty impossible to read everything above and not walk away thinking “the money always wins.” Even if everything looks peachy today, boards flip, leadership changes and who knows what could happen over the next 10, 20 or 30 years. Maybe the PGA Tour no longer had the luxury of considering that timeframe and needed to act now to stay alive. But the result is that there’s a fox in the hen house. Maybe they’ll work toward dramatically changing things. Maybe they like things the way they are.
It’s true that an equity investment into a for-profit company is massively different than a blank check designed to disrupt a legacy sports empire. LIV Golf and its players got wildly irrational money for their services because they were being used to chip away at the foundation of the existing power structure of an extremely lucrative and influential business.
But at some point, the PIF is ultimately looking for a return on this firehose of money. And now (provided this all goes the way it’s been proposed), they are woven into the very fabric of that business. And it’s not just the golf. It’s validity with the blue-chip sponsors that run golf. (“Grant Thornton, have you met my friend Yasir?”) As we’ve continually said from the infancy of the “sportswashing” conversation, this was probably the goal. As one person familiar with al-Rumayyan told ESPN this week: what he’s always truly wanted was “to be standing under the tree at Augusta National on Thursday at the Masters."
From the PGA Tour perspective, it’s possible that a massive cash infusion allows them to:
A. Exist.
B. Invest in myriad things and grow its product around the world at a time in which golf has incredible momentum. Perhaps the result becomes the long-talked-about “World Tour” that brings the world’s best players to the world’s best venues around the globe. In the past, these ideas have struggled to gain the type of corporate support abroad to coax U.S.-centric players from their homes in Jupiter and Scottsdale. Maybe this investment helps get those events off the ground and provides a proof of concept?
Maybe the group buys the LPGA and improves that product to maximize the potential revenue of the women’s game? Maybe they invest in the PGA Tour TV product in order to combat falling ratings.
If you don’t have qualms with the source of the funding, it’s possible the PGA Tour could see this as an opportunity to think long-term for the first time in decades about the future of the sport. Soccer was once a regional sport until it became a global one. The next Tiger Woods might have been born this week in India, China or Africa, but without exposure to the game, funding and opportunity, will they be able to thrive?
One reality that the Tour will continue to bump up against is that it is responsible for providing so much of a Tour player’s earnings without owning any of the biggest events in golf.
So maybe they buy the USGA? (Editor’s Note: Can you buy the USGA? We have no idea.) Can you buy the PGA Championship and the Ryder Cup that comes with it?
Sorry to do this to you one last time, but at this point, we’re talking about so much money and so few details that you kind of just have to say “I guess we’ll see.”
What we can say with full confidence: Golf is in the midst of a seismic shift. Now that it has become a piece in the global game of chess between nations and corporations, it is unlikely to ever look the same.
So what should a golf fan take away from all of this?
Again, that’s up to you. If you’d like to be depressed about an entire sport pretending to care about human rights violations only to take the bag when things got bleak, you’re well within your rights.
If you think that a country’s sovereign wealth fund probably shouldn’t have an outsized influence on your favorite sport, that seems pretty valid.
If you think this deal structure is a lot like Uber and Boeing and other minority investments that the PIF holds with all sorts of other companies, you’re probably more right than wrong.
If you’re mad as hell about the PGA Tour capitulating and going back on their word, by all means. Hopefully, this provides a little more context.
If you think there’s a way this makes golf better over the next 30 years, there’s probably a valid case worth listening to there as well.
If you think it’s absurd that this entire conversation revolves around somehow squeezing more and more out of niche, non-majors with pretty bad TV ratings, please join the party.
The long and short of it, at least from where we’re sitting, is that it’s really tiring and has made a fun thing pretty un-fun.
As bleak as it feels at times, you don’t have to let this dampen what you love about the game, something we tried to touch on last week in this column.
There’s Golf and there’s Pro Golf and the two things have never been more different. It’s probably about time to figure out why you like each one.
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Additional Reading
• Saudi Arabia, football’s big disruptors.: The Athletic; Jacob Whitehead, Stuart James and more
• Jay Monahan’s Letter to Congress: Originally posted by Politico
• LIV Golf’s al-Rumayyan and the PGA Tour’s Monahan make strange bedfellows: New York Times; John Branch