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Tom Watson has questions. There are a lot of good questions too, and he’s not alone. Davis Love III also has questions. Both players have made tens of millions in their Hall of Fame careers on the structures of the PGA Tour and are very interested in them. So much so that everyone felt compelled to write an open letter to the tour this week. Was love in response to Watson? Only he knows, but he sure felt it. Either way, the truth for them is the same as for current tour members: There are more questions than answers.
On the heels of the US Open – a legitimate deep breath for the golf world – we are now in a wait-and-see period for the Tour’s plans to partner with the Public Investment Fund of Saudi Arabia. Another player meeting on Tuesday came and went without much concrete information being shared with the players. Two weeks passed and little context was added to the fact that the “framework agreement” and announcement were privately created and shared in a hurry, mostly to eliminate litigation between warring golf tours. The health of tour leader Guy Monahan, who the tour said last week was recovering from an “undisclosed medical condition,” also remains a mystery.
While Yasser Al-Rumayyan made it clear in CNBC’s initial interview that the deal would be finalized in “a matter of weeks,” a source close to the negotiation process made it clear that it was likely to take several months. Adam Scott, a member of the Tour’s advisory board, seems to agree:
“So though [the framework agreement] It sounds rather simple, I think the deal sounds very complicated and that could take a long time,” Adam Scott said Wednesday at the Travelers Championships in Cromwell, Connecticut. players and these questions are answered.” The future of LIV Golf is one thing that will be determined as part of the proposed partnership, but multiple steps will be taken to consolidate the assets under one roof before decisions are made on each.
In terms of distributing power in the proposed new world of golf, various safeguards have been put in place to protect and maintain control of the tour, regardless of additional investment from the PIF, according to a source in possession of the agreement. Under the agreement, a partnership is defined as a “business relationship,” in which the Public Investment Fund makes a significant cash investment to grow the new company and bring its own assets to the negotiating table. This is what LIV Golf and its subsidiaries consider here: assets owned by the Public Investment Fund.
One of the first questions Watson included in his open letter concerned investment and what power would be entrusted to the PIF. In fact, this is one of the main stipulations that was repeated throughout the agreement. The agreement states that the round will retain the controlling voting right at all times and the PIF will hold the non-controlling voting rights.
The voting interest is determined by the representation of the board, which means that the round is expected to maintain majority representation on the board. At the moment, only four personalities are appointed to it: Al-Rumayyan, Monahan, and independent directors from the Tour Policy Board, Ed Herlihy and Jamie Dunn.
These four figures were heavily involved in the initial agreement and would constitute the initial executive committee of the new company’s board of directors, with other additions to the board requiring approval from both the PIF and the round. It is unclear how many board members there will be, but the DP World tour is expected to be represented. According to the source, it was stipulated in the agreement that increasing investment from the Public Investment Fund – in addition to its first right to refuse outside investment – would not give it a controlling voting stake. In other words, the investment fund (PIF) cannot buy more control of the round. The NewCo’s future operations will be dictated by the Board of Directors, with Monahan recommending it.
In recent weeks, the tour has communicated to its players that the collapse of what remains under a 501(c)(6) nonprofit called the PGA Tour, Inc. It would be on an “inside the ropes” versus “out the ropes” basis. In other words, assets such as media rights, sponsorships and even the TPC golf course network would be managed through the NewCo. Revenue streams like this that have been under a non-profit entity for decades would be taxed under The proposed new corporate.nonprofit organization is expected to retain assets such as tournament management.
While those plans appear to be well-intentioned, and Monahan responded to Al-Rumayyan’s “few weeks” line on CNBC with “we’ll get it done,” the deal remains controversial. It has already caught the attention of the Department of Justice as well as US senators who have launched an investigation into the proposed deal. Monahan, Alrumian and LIV Golf CEO Greg Norman were invited to testify at a hearing July 11 in Washington, D.C., focused on the planned partnership. The tour released a statement Wednesday announcing its intention to attend:
“We look forward to appearing before the Senate Subcommittee to answer their questions about the framework agreement that we believe sustains the PGA Tour as a leader for the future of professional golf and benefits our players, our fans, and our sport. Indeed, the first phase of this framework has led to the end of costly litigation with LIV Golf.
“As we enter the next phase, we look forward to continuing the productive conversations we had last night with our players, listening to their feedback, and working towards negotiating a final agreement that is in their best interest and ensures that the tour leads any new ventures.
“Any agreement that emerges from these negotiations must be approved by the full PGA Tour Council, including our player managers.”