PIF Governor Yasir Al-Rumayyan & PGA Tour CEO Jay Monahan announced the new joint venture on CNBC
Last week the golf world was shocked to read that the PGA Tour, the European Tour (now known as the DP World Tour), and the Public Investment Fund (PIF) of Saudi Arabia, the major force behind the rival LIV Golf Tour, have agreed to form a unified commercial venture. Their vision is to create a collectively owned for-profit entity that ensures all stakeholders benefit from a model that delivers maximum excitement and competition among the game’s best players.
Additionally, PIF will make a capital investment into the new entity to facilitate its growth and success. The name of the new entity is yet to be determined. The plan is to grow the combined commercial businesses, drive greater fan engagement, and accelerate the ongoing growth initiatives. The PGA TOUR, DP World Tour, and PIF will collaborate to feature and enhance team golf in the future, especially with LIV Golf currently in its second groundbreaking season.
These points were shared through a press release, and PGA Tour Commissioner Monahan personally addressed the media at the RBC Canadian Open. He stated, “After two years of disruption and distraction, this is a historic day for the game we all know and love. This transformational partnership recognizes the immeasurable strength of the PGA TOUR’s history, legacy, and pro-competitive model. It combines with the DP World Tour and LIV Golf, including the team golf concept, to create an organization that will benefit golf’s players, commercial and charitable partners, and fans. Going forward, fans can be confident that we will collectively deliver on the promise we’ve always made – to promote competition among the best in professional golf and to secure and drive the game’s future.”
“We are pleased to move forward, in step with LIV and PIF’s world-class investing experience, and I applaud PIF Governor Yasir Al-Rumayyan for his vision and collaborative and forward-thinking approach that is not just a solution to the rift in our game, but also a commitment to taking it to new heights. This will engender a new era in global golf, for the better.”
According to the agreement, the Board of Directors of the new entity will oversee and direct all golf-related commercial operations, businesses, and investments. The aim is to ensure a cohesive schedule of events that excite fans, sponsors, and all stakeholders. Initially, PIF will be the exclusive investor in the new entity, along with the PGA TOUR, LIV Golf, and the DP World Tour. PIF will also have the exclusive right to further invest in the new entity, including a right of first refusal on any capital that may be invested in the PGA TOUR, LIV Golf, and DP World Tour. The PGA TOUR will appoint a majority of the Board and hold a majority voting interest in the combined entity.
Separately, PGA TOUR Inc. will continue as a 501(c)(6) tax-exempt organization and retain administrative oversight of events for the assets contributed by the PGA TOUR. This includes sanctioning events, administering the competition and rules, as well as other responsibilities “inside the ropes.” Jay Monahan will remain as Commissioner, and Ed Herlihy will continue as PGA TOUR Policy Board Chairman. PIF Governor Yasir Al-Rumayyan will join the PGA TOUR Policy Board. The DP World Tour and LIV Golf will retain similar administrative oversight of events on their respective tours.
The Board of Directors of the new commercial entity will include Al-Rumayyan as Chairman and Monahan as Chief Executive Officer; the new entity’s Board will also include an Executive Committee comprising Al-Rumayyan, Monahan, Herlihy and PGA TOUR Policy Board member Jimmy Dunne. The full Board will be announced at a later date, and it is anticipated that all three founding members will have representation.
Since then additional details have surfaced regarding the aforementioned deal. One of the most compelling revelations shared by Monahan was that the PGA Tour experienced significant financial strain due to the announcement of increased prize money and events, as well as the additional expenses incurred from long term litigation against LIV Golf. This unexpected burden compelled the tour to tap into its reserves in order to cover the costs.
Meet the man who brokered the deal
Jimmy Dunne member of the PGA Tour’s policy board was the first one to reach out to Yasir )PIF Governor) suggesting a merger
Jimmy Dunne, the PGA Tour policy board member who played a crucial role in facilitating this week’s remarkable deal, stated that current tour members would be granted equity in the new company, based on a formula that is yet to be determined. It has been reported that several of the tour’s top stars, including Hideki Matsuyama, Patrick Cantlay, Jon Rahm, and Cameron Young, turned down lucrative guaranteed contracts offered by LIV Golf League officials, which were estimated to be worth up to $100 million.
Dunne explained, “The new company would expand, and the current PGA Tour players would have a stake in the equity that would appreciate and grow in value over time. There would need to be a well-defined process to determine a fair mechanism that truly benefits our players.”
Furthermore, the Public Investment Fund (PIF), represented by Yasir Al-Rumayyan, the Governor of PIF, has been granted the right of first refusal. PIF will not be financing any events on the PGA Tour; rather, they will have the authority to decide which entities are permitted to engage in business with the PGA Tour.
Dunne elaborated on the entire process in an exclusive interview with Golf Central. You can watch the interview here –
What happens to LIV Golf ?
There is much speculation surrounding the future of LIV Golf, with many suggesting that it may become obsolete and PGA Tour Commissioner Monahan has the authority to dismantle it by December 2023. It appears that the Saudis primarily sought a position of influence within the PGA Tour, and LIV Golf was merely a means to accomplish that objective.
This viewpoint seems reasonable, especially considering that Greg Norman, the CEO of LIV Golf, was not mentioned in the press release, which gives the impression that he has been marginalised by the Saudi leadership.
However, recent developments indicate otherwise. Greg Norman held a meeting with LIV players and assured them that the tour is here to stay, with plans in place for 2024 and beyond. It appears that LIV Golf intends to continue operating despite the speculation.
On the other hand, Monahan stated that he would assess the place of the team-focused LIV Golf League in the new global golf landscape after the conclusion of its season in November.
“I don’t want to make any statements or make any predictions,” Monahan said. “But what is in place is a commitment to make a good-faith effort to look at team golf and the role it can play going forward.”
In conclusion, the current situation is too uncertain to make any definitive statements. Every few days, a new report surfaces suggesting the demise of LIV Golf, while another report indicates that Monahan is now reporting to Yasir Al-Rumayyan. The constant flow of conflicting information makes it difficult to provide a clear assessment of the situation.
What happens to golfers who joined LIV ?
In the event that LIV Golf were to cease operations, Dunne has prepared a plan to address the situation. He explained that a committee comprising both current PGA Tour members and administrators would be responsible for evaluating potential penalties for players who had departed for LIV Golf but now seek reinstatement into the PGA Tour.
“I think we would form a panel, including tour players, that would evaluate what the terms would be,” Dunne said. “Remember, they’re coming back to compete on the tour, so they have to be confident that they would be good enough to continue to play, and they have to be willing to incur the penalty for having gone.”
Is it a done deal ?
The alliance between the PGA Tour, PIF, and the DP World Tour is still pending approval from the PGA Tour’s policy board. Additionally, experts anticipate that the potential deal will undergo scrutiny from antitrust regulators at the U.S. Department of Justice.
Senate investigation is off to a hot start. Identifies PGA Foundation and PGA Reach, both charity components of the PGA of America, not the PGA TOUR. pic.twitter.com/2gZd4koooq
— NUCLR GOLF (@NUCLRGOLF) June 12, 2023
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Photo – CNBC