PGA Tour, Saudi PIF provide negotiation update at deadline

Golf’s greatest story will run at least a number of weeks longer.

The PGA Tour and Saudi Public Investment Fund failed to achieve a “definitive agreement” on a possible merger by Sunday’s deadline, the 2 events introduced Sunday night, electing to push again the goal deadline to a later date that also has not been decided.

“While we had initially set a deadline of December 31, 2023, to reach an agreement, we are working to extend our negotiations into next year based on the progress we have made to date,” Monahan wrote in a letter to PGA Tour membership late Sunday night. “Our goal for 2024 is to reach agreements with SSG, PIF and the DP World Tour, bringing them on board as minority co-investors.”

Negotiations between the Tour and PIF have centered across the form of a brand new, for-profit entity named PGA Tour Enterprises. It is predicted that the Tour will pool its moneymaking ventures inside the new entity, permitting buyers (and a few gamers) to take fairness in professional golf’s high-ticket companies in alternate for vital money investments. That firm, an offshoot of the Tour’s current enterprise mannequin, may enable the Tour to function equally to {many professional} sports activities “franchises” immediately, wherein homeowners “buy into” a league in alternate for an annual minimize of revenues from TV agreements and sponsorships.

The information arrives after days of hypothesis round negotiations between the Tour and the PIF, which had been purported to be finalized by the beginning of the brand new yr. Tour representatives have repeatedly mentioned that talks had been “progressing” in latest weeks, however the two sides’ incapacity to achieve an settlement by the proposed deadline creates skepticism on the state of affairs. While the brand new deadline portends that the 2 sides nonetheless want to attain an settlement, the advanced nature of the negotiations and a latest spate of leverage performs leaves open the regarding risk that the 2 sides may nonetheless select to stroll away.

The conversations between the 2 sides have grown more and more advanced in latest weeks. On one aspect, the PGA Tour agreed to “advance” fairness talks with a consortium of rich buyers named the “Strategic Sports Group,” or SSG, which incorporates the present and former homeowners of at least a dozen skilled sports activities franchises. Part of Monahan’s letter to Tour membership on Sunday night centered across the SSG funding, which the commissioner mentioned had been undergone “meaningful progress” in latest days and was headed towards “finalization.” The SSG funding may infuse billions into the Tour, however the uncommon nature of the negotiations risked working afoul of the Saudis, who may see the SSG funding as a Tour effort at creating leverage in opposition to them. Leverage, in fact, was the first motivation for LIV’s poaching of reigning Masters champion and present World No. 3 Jon Rahm from the PGA Tour in a deal reportedly price a number of hundred million {dollars}. In addition to robbing the Tour of one in every of its most necessary gamers, the Rahm transfer had the impact of publicly reaffirming Saudi dedication to LIV and professional golf writ massive. The transfer was a coup for LIV, sure, nevertheless it was additionally a thinly veiled menace to a Tour institution that has brazenly admitted it can not financially compete with the Saudis.

Team golf is believed to be one of many vital sticking factors of the present negotiations — specifically, the form of LIV’s staff idea in a world the place the PGA Tour and LIV are operated underneath the identical umbrella. At current, it might appear incompatible for an eight-tournament “Signature Event” season on the PGA Tour and a 14-event LIV season to exist on the identical golf schedule (particularly when accounting for the 4 majors and the Ryder Cup). But LIV’s enterprise mannequin is based across the success and eventual worth of staff golf, the place franchise valuations and fairness stakes are considered as important.

In principle, a “merger” with the PIF would enable the PGA Tour to regulate LIV Golf whereas welcoming a multi-billion-dollar funding from the Saudi backers. But any settlement would require sign-off from each side, and that continues to be an unknown. For one factor, the motives of LIV’s Saudi buyers stay a thriller, as does their flexibility to give up management. For one other, the six participant administrators on the Tour’s all-important coverage board — Tiger Woods, Patrick Cantlay, Jordan Spieth, Charley Hoffman, Webb Simpson, and Peter Malnati — would want to approve any deal earlier than it’s formally agreed upon.

At the middle of the negotiations are two of probably the most influential males in skilled golf: PIF (and LIV Golf) chairman Yasir-Al Rumayyan and PGA Tour commissioner Jay Monahan. A detailed confidante of Saudi Crown Prince Mohammed bin Salman, Al-Rumayyan oversees the PIF, a $700 billion sovereign wealth fund with monetary entanglements everywhere in the world economic system. In latest years, Al-Rumayyan has managed the PIF’s strategic shift into the sports activities world as a part of an effort to cleanse the Kingdom’s public picture, with LIV taking heart stage in that mission. Monahan, however, has stewarded a radical transformation of the PGA Tour in his seven years at the helm. In 2020, he signed a flurry of TV rights offers price near $10 billion, a unprecedented accomplishment even in a booming sports activities TV rights market, contemplating the settlement factored within the anticipated finish of Tiger Woods’ taking part in profession. More just lately, Monahan has come underneath scrutiny for his dealing with of the Saudi intrusion into professional golf, particularly for the backroom dealings with Al-Rumayyan that resulted within the shock merger settlement on June 6.

Now, the merger seems nearer than ever to actuality — a call that would convey untold billions into the PGA Tour and reunify the professional recreation, ending a battle that has deeply broken the Tour’s popularity and upended its enterprise. Such a call may not relaxation effectively with a lot of the golf fanbase, given the hornet’s nest of human rights points tied to Saudi cash and the polarizing nature of the rival tour.

At the New York Times’ Dealbook Summit final month, Monahan appeared agitated by the criticism lobbed at the framework settlement. The scariest final result for professional golf, he mentioned, wasn’t what would occur if the merger went by way of. It’s what would occur if it didn’t.

“You’re looking at a fundamental change in our industry,” he mentioned. “The PGA Tour was facing an existential threat from a $700 billion sovereign wealth fund, and that sovereign wealth fund was determined to control the future of our sport.”

James Colgan

Golf.com Editor

James Colgan is a information and options editor at GOLF, writing tales for the web site and journal. He manages the Hot Mic, GOLF’s media vertical, and makes use of his on-camera expertise throughout the model’s platforms. Prior to becoming a member of GOLF, James graduated from Syracuse University, throughout which era he was a caddie scholarship recipient (and astute looper) on Long Island, the place he’s from. He may be reached at james.colgan@golf.com.