CNBC
Good, that It was shocking.
On Tuesday morning, the PGA Tour and Saudi Arabia’s Public Investment Fund merged, effectively bringing an end to the strife that has dominated the sport for the better part of the past 18 months. News that the Tour and PIF would form a “new golf unification business entity” — effectively bringing together the PGA Tour, LIV Golf and DP World Tour under one umbrella — shook the sport to its core, upending the most heated conflict in the sport’s history.
The ramifications of the agreement are wide-ranging, and still largely unknown. The PGA Tour’s press release announcing the decision – and a subsequent letter from PGA Tour Commissioner Jay Monahan to the players – was full of ambiguities, leaving a number of interpretations open.
we Do Know that the brass nails still need to be ironed. The head of the Public Investment Fund, Al-Manhan, Yasser Al-Rumayyan, said in a joint interview on CNBC that the agreement had not yet been finalized, but he expected it to be completed, in Al-Rumayyan’s words, “within weeks.”
So, what exactly are we dealing with here? And what do you, ordinary golf fan, do? Need to know? We sort it out below.
What the hell happened?
The PGA Tour, which represents the DP World Tour, and the Public Investment Fund, which represents LIV Golf, have agreed to merge their businesses.
The agreement will see the PGA Tour, DP World Tour and LIV Golf federate together under the umbrella of an organization funded primarily by the Saudi government. The new entity, which does not yet have a name, will be a for-profit foundation headed by Al-Rumayyan. Monahan will be the CEO of the organization.
Under the agreement, the tour, DP World Tour and LIV Golf will be strategic partners, but all tours will continue to exist as their own individual entities.
Well, now explain it like I’m a five-year-old.
The PGA Tour and LIV Golf have made peace. They will continue to exist, but under one commercial leadership — heavily funded by the Saudis and largely run by the PGA Tour — that seeks to match the success of both tours.
More Coverage of Integration on the PGA Tour: Player Reaction | 10 shocking discoveries | How did the merger come to be | Brandl Chambly Sounds | Rory, tiger left in the dark | PGA Tour-LIV golf schedule | Could this happen? Legal expert weighs in | Jay Monahan defends the decision
What happens to the players on both sides?
There is a way back for LIV players to join the PGA Tour. In his letter, Monahan said the tour would “work collaboratively to establish a fair and objective process for any player who wishes to re-apply for membership on the PGA Tour or DP World Tour after completion of the 2023 season, consistent with each tour’s policies.”
He went on to warn that the decision to allow LIV players to return is “a complex endeavor and will be guided by the rules and regulations of the PGA Tour”.
But the fact that the process will ever be created seems to indicate that it is inevitable that LIV players will return to the PGA Tour.
What does the PGA Tour get out of the convention?
Presumably, an absolute truckload of money from the Saudis. (Monahan’s letter refers to this as a “significant financial investment” that would make the PIF a “senior partner to the firm”.)
The Tour also gets less legal attention surrounding its competitive practices (more on that below).
But perhaps the tour’s greatest incentive is peace in professional golf. The PGA Tour product was damaged by LIV’s break, and the opportunity to merge its business interests with PIF means he could bring back the business he lost to LIV…and then some.
What does LIV get out of the convention?
Isn’t justification and sweet sweet victory not enough?
In all seriousness, LIV has gained legitimacy and longevity that, four hours ago, seemed almost entirely out of the question.
In the midst of a faltering second season, the upstart league gets nearly unlimited, long-term job security, and the chance to add the best players on the PGA Tour to their weekly product.
You literally couldn’t write a better script for LIV.
Who pays for all this?
The Saudi Public Investment Fund will pay the bill for almost the entire new league.
In recent months, the fund has redoubled its efforts to infuse money into the world of professional sports. They will be the “exclusive investor” in the new entity, and will reserve a “right of first refusal” for any future investors in the entity.
When did all this happen?
the financial times It reported on Tuesday that Monahan and Al-Rumayyan had hammered out details of a meeting agreement “over two months” in the United States, Europe and the Middle East, before announcing it on Tuesday.
Who knew it was coming?
Almost nobody. It appears as though the agreement was brokered almost entirely in secret, with the primary stakeholders being Monahan and Al Rumayan.
Did the players know it was coming?
no.
Discover most gamers via Twitter. Some discovered by observing Monahan.
Does anyone else in golf know it’s coming?
I sure didn’t. Golf stakeholders across the game were equally surprised by the developments over the course of the morning.
Ben Strauss of Washington Post reported that an executive at partner PGA Tour TV was shocked by the decision – a development that shows even the tour’s most important business partners were left in the dark about the decision until it was announced.
How did the players react?
no excellent Good! Although some, such as Padraig Harrington, have taken the opportunity to express their support for a new “global” golf entity, which could help raise the level of the game in general.
What happens to all lawsuits?
They’re done. According to the PGA Tour version – and Monahan’s subsequent letter to the players – an important part of the agreement with PIF was the requirement that all LIV claims against the tour be dropped.
What about the DOJ investigation on the PGA Tour?
This is still in the works, though it has changed measurably now that the tour has merged with PIF. As of now, it’s hard to say what all that means.
Why do we build a new entity?
It’s not entirely clear, but logic tells us it may have had something to do with the PGA Tour case against the Department of Justice. It is a little difficult for a DOJ investigation to allege anti-competitive conduct without the information from the potentially harmful “discovery” period. The Tour would certainly also argue in the continued presence of LIV defending the Tour’s case that there is no “monopoly” on professional golf tours. (Although there is room for accountability for how the agreement is strengthened a race between the parties—a key outcome in the Department of Justice’s final decision to block the merger between American Airlines and JetBlue).
Also, the decision to create a larger entity overseeing the round/DPWT/LIV prevents the three rounds from handling a bunch of redundancies.
Whose jobs change?
Al-Rumayyan will be the head of the new entity. Monahan will be CEO. The PGA Tour will assume majority control of the board of directors for the new entity, which will include Jimmy Dunn.
What happens to Greg Norman?
Al-Rumayyan had the opportunity to offer his support for Norman as CEO and commissioner of LIV on CNBC Tuesday morning and declined.
“He’s conscious [of the partnership]Al-Rumayyan said. “I had a call just before this. Of course he is a partner with us. All of our stakeholders had a call right before this interview.”
How do contracts work now? Will LIV keep pushing her guys?
This is also unknown. All we’ve been told indicates that LIV will continue to exist in its current form, which means contracts will continue to be honored and players will continue to be paid. But what does the news mean for LIV’s ability to attract new talent, for example? Or for players’ freedom to exit the LIV ecosystem? Everything could have changed radically, it’s too early to tell.
What about TV deals?
It is important that the round statement mentions the incorporation of ‘trading companies And rightswith the Public Investment Fund, but it is certainly too early to say how the agreement will affect any pre-existing media rights deals signed by either party.
The round, in particular, would be wise to keep TV partners happy, considering that the roughly $800 million a year that comes from their agreements represents a significant portion of its total revenue.
If you’re on the PGA Tour, why would you do this?
You do this because it ends the war without killing you.
The tour’s leadership, led by Monahan, could claim to have ended the LIV threat while at the same time agreeing to significant financial gain. The decision to partner with PIF eases all financial restrictions placed on the PGA Tour over the past 12 months and gives the tour a path forward into existence.
If you are the Public Investment Fund, why would you do that?
Because you can fully implement Saudi Arabia’s vision of golf around the world. As Rich Lerner of the Golf Channel thought Tuesday afternoon, the agreement could make Yasir al-Rumayyan — and by extension the Saudi government — “the most powerful man in golf right now.”
If you’re on the PGA Tour, why *don’t* do this?
Plus the optics of stacking the moral high ground just 11 months to partner with a so-called “enemy”? Well, because the agreement marks a change in everything the PGA Tour has done over the past 18 months.
Of course, the moral of the situation always seemed like a proper fact, but Monahan’s decision removes all doubt.