(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).
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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 lea
Source: https://nolayingup.com/blog/trying-to-understand-how-golf-changed-forever