Weekly | PGA Tour Throws Down The Gauntlet: $3 Billion Investment, Equity for Players, But LIV Talks Still Open
New Investor, Bigger Pockets: Will This Deal Block Out Saudi Rivalry or Fuel More Tension?
Good morning, folks!!!
This week has been all about the deal between The PGA Tour and Strategic Sports Group (SSG) to create a new for-profit entity called PGA TOUR Enterprises.
This is the first real deal, with substance and game-changing potential, since the golf war started three years ago. Everything that has been said so far, including the agreement from last June between the PGA Tour and LIV, which only announced the start of vague negotiations, has been pure talk.
So, even though Wyndham Clark made a historic 60 at Pebble Beach, the PGA seemed to take a break by shortening the AT&T Pebble Beach Pro-Am to 54 holes due to a stormy weather that hit the Monterey Bay and made it impossible to play golf on the Carmel Peninsula.
And therefore, today’s newsletter is almost mono-graphic and breaks down the PGA Tour’s new $3 billion investment, including who is involved and why this might signal the start of a long war against LIV Golf.
Enjoy!
Disclosure: Our committed team of writers has meticulously curated content from over 65 industry publications, more than 60 general news websites, a dozen newsletters, and a handpicked collection of top-tier podcasts. Now, everything you need is conveniently available here, allowing you to catch up on the significant events of the past week in just 10 minutes.
🔵 THE CONTEXT
LIV Golf has shaken up the professional golf scene in the past three years.
Phil Mickelson. Brooks Koepka. Jon Rahm. Dustin Johnson. Cameron Smith. The league, backed by Saudi money, has splurged billions to make millions, enticing major champions to leave the PGA Tour with huge contracts in hopes of launching a new worldwide professional golf tour.
The lawsuits have piled up so much it’s hard to keep count, with the PGA Tour shelling out more on legal costs in 2022 ($21 million) than in the previous decade combined ($16 million).
The verbal assaults have been relentless, too, both behind closed doors and in public.
Sponsors are dropping out of events. Leader-boards are losing their appeal, and the PGA Tour’s attempts to fight back have been ineffective against the menace.
But this week, the PGA Tour and Commissioner Jay Monaghan finally struck back.
🟢 THE BIG PICTURE (AND WHAT WE THINK IT MEANS)
In a significant move, the PGA Tour and Strategic Sports Group (SSG) have come together to establish a new for-profit entity known as PGA TOUR Enterprises. This business venture boasts a substantial valuation of $12 billion, marked by a noteworthy investment of up to $3 billion from SSG. Notably, the PGA Tour retains a majority stake in the enterprise, ensuring control of the board.
The investor group is called the Strategic Sports Group and includes owners from the NFL, NBA, MLB, NHL and EPL. SSG, led by Fenway Sports Group, is a group of prominent sports franchise owners, such as Marc Attanasio (Milwaukee Brewers), Arthur Blank (Atlanta Falcons), Steven Cohen (New York Mets), and others.
The group has more than a dozen members, such as hedge fund manager and New York Mets owner Steven Cohen, who has a net worth of $20 billion according to Forbes, and Home Depot co-founder and Atlanta Falcons owner Arthur Blank, who is worth $8.2 billion. Other members are John Henry (Boston Red Sox and Liverpool FC $5.1 billion); FSG chairman Tom Werner ($1.7 billion); Milwaukee Brewers owner Mark Attanasio; Boston Celtics owner Wyc Grousbeck; Boston Globe Media co-owner Linda Henry; and Marc Lasry’s Avenue Sports Fund (Milwaukee Bucks).
Four of the six franchise owners of TGL, the team golf league backed by Tiger Woods and Rory McIlroy, are also part of SSG. They are Cohen, Henry, Lasry and Blank.
However, the deal is still in flux. Tom Ricketts, the owner of the Chicago Cubs, withdrew his support at the eleventh hour, according to the sports business guru, Joe Pompliano. Finer details such as valuation and investor commitments are still under negotiation.
The crux of this arrangement lies in providing a substantial cash injection to the PGA Tour. This infusion will serve dual purposes:
Securing Future Events: The PGA Tour aims to guarantee prize money for all its events over the next five years, mitigating the need for future capital calls.
Introducing an Equity-Compensation Plan, allocating $1.5 billion in new company equity to 180 qualifying PGA Tour players.
The top 36 players stand to receive a larger share of the equity ($700 million), determined by their achievements and performance, while the remaining 144 players will share the remainder ($800 million). The precise distribution mechanism is yet to be unveiled, whether based on a ranking system akin to tournament winnings or a more egalitarian approach. Regardless, the PGA Tour's premier golfers stand to gain substantial equity if they remain loyal.
This strategy diverges significantly from LIV Golf. The PGA Tour's extended vesting period for equity compensation contrasts with LIV Golf's upfront financial incentives, particularly appealing to most top 50 PGA Tour players. Criticisms abound, with assertions that the deal does little to foster professional golf growth, that $3 billion is inconsequential for Saudi Arabia, and Commissioner Jay Monaghan faces backlash for spearheading the new company amid the PGA Tour's struggles. Furthermore, this move complicates the merger prospects with LIV Golf.
Skeptics argue that the PGA Tour's actions raise questions about their true intent regarding the nine-month-long merger talks with LIV Golf. Having missed a deadline, they swiftly inked a distinct agreement with a new investment group.
Is this a genuine pursuit of merger, or is the PGA Tour gearing up for a different kind of competition?
The $3 billion injection provides a unique advantage, enabling the PGA Tour to retain its stars through multi-year equity vesting deals, reminiscent of start-up practices. Additionally, the cash facilitates the return of LIV players to the PGA Tour — LIV golfers can keep their Saudi cash but don’t get any PGA Tour equity. Most importantly, it alleviates the pressure from Saudi Arabia's contentious demands for control, financial sway, and board positions.
Allen & Co. and the Raine Group provided financial counsel to the PGA Tour. Wachtell, Lipton, Rosen & Katz acted as the legal advisors for the tour. Meanwhile, Hogan Lovells and Shearman & Sterling assumed the role of legal advisors for the SSG.
Another important thing today: Sources verified that PGA Tour Commissioner Jay Monaghan will be the CEO of the new company.
🟠HOW WILL THIS IMPACT THE ONGOING TALKS WITH PIF, AND WHEN MIGHT WE WITNESS THE REUNIFICATION OF GOLF?
The partnership with SSG does not rule out investment from PIF, as long as it gets the necessary approvals. The PGA Tour is still talking with the Public Investment Fund of Saudi Arabia, with possible investments and deals on the table.
If the wider PGA-LIV-DP World Tour deal goes through, the PGA Tour would keep the control of the for-profit entity, and the Strategic Sports Group would be a minority owner.
The tour also told the players in a memo that the SSG deal opens the door for a future co-investment from Saudi Arabia’s PIF, but it would still need regulatory approval.
Sources told SBJ that they think a PIF investment will still happen, but that it would take a long time to pass the U.S. Department of Justice. Same sources think once a deal was made with the PIF, if it happens, it could take a year or more to get the DOJ’s approval. With that timeline in mind, sources think 2026 is the reasonable time for when the sides are united. Sources think that is also why LIV Golf has kept adding players, such as PGA Tour members Tyrrell Hatton and Adrian Meronk, as the league would keep running in its current state for 2024 and 2025.
🟤 HOW THE GOLF WORLD HAS REACTED TO THE NEWS
The PGA Tour’s deal with Strategic Sports Group has sparked different reactions in the golf world, with some saying the money boost for the Tour will be beneficial in many ways and others being more cautious.
This is a complete compilation of all the reactions that caught our attention:
The PGA Tour board, including prominent players like Tiger Woods, Patrick Cantlay, and Jordan Spieth, unanimously approved the deal. The players expressed their excitement about being more financially and strategically invested in the organization, emphasizing their commitment to delivering excellence in golf.
PGA Tour Policy Board member Jordan Spieth highlighted the positive aspect of unification with LIV players but suggested that discussing a PIF deal at this moment might not be worthwhile. He emphasized the importance of strategic partners, particularly the expertise and backing offered by the current group. Later, Spieth consulted with former board member Rory McIlroy, who highlighted changes in the nature of talks with PIF since June 6. McIlroy stressed the importance of favorable terms for both sides, stating that PIF must be part of the new PGA Tour Enterprises for the game's unity. Then, after a 1 hour phone conversation, Spieth clarified his stance, expressing that he doesn't oppose the Tour accepting PIF money or collaborating with them.
Tiger Woods announced the PGA Tour’s deal as “sports history”. According to Golf.com’s Sean Zak, Woods was pumped up at the chance of making sports history with the players owning a piece of their sport for the first time.
Leaving CEO Keith Pelley wrote to DP World Tour members to reassure them that the tour will get some benefit from golf’s latest big-money deal. The Canadian, who is giving up his job to his deputy Guy Kinnings in April to take up a dream job in his native Toronto, wrote:
“First thing to say is that the game of golf as we know it is changing and I believe this gives the chance for unity.
"Secondly, negotiations involving ourselves, the PGA Tour and PIF are still going on and I believe this announcement gives more momentum to those talks and also being an important step to possible overall alignment between all four entities, SSG included.
“Thirdly, the SSG, led by their main investor, the Fenway Sports Group, are very influential in the US but, more importantly, they have a clear global focus - it is the reason FSG became owners of Liverpool Football Club in 2010 for example.
“Finally, to avoid any doubt, our current Strategic Alliance with the PGA Tour which guarantees our prize funds and the ten cards initiative, stays in place.”
The LIV Golf Chair Yasir Al-Rumayyan “took a diplomatic approach in a message to LIV players”. He told players before the start of the LIV Golf League’s 2024 season that SSG’s investment “is consistent with PIF’s longstanding passion to grow the game.”
PGA Tour player and policy board member Adam Scott views the SSG investors' business acumen and the $3 billion investment as potential saviors for the Tour. Scott perceives this as a pivotal moment, allowing for a comprehensive reassessment of the PGA Tour's business structure. Scott said, “This is like a line in the sand if it wants to be for the PGA Tour, and you can put everything on the table right now as far as I’m concerned. Yeah, let’s have a look at the whole lot.” From Sports Illustrated.
Bob Harig from Sports Illustrated reported that LIV Golf CEO & Commissioner Greg Norman reassured his staff in response to the PGA Tour's deal with SSG, stating that LIV Golf is "stronger than it’s ever been." Norman emphasized that external announcements do not alter LIV Golf's positive trajectory or future plans. He highlighted the league's goal of creating something new, reaching a global audience, fostering innovation, and expanding golf's fanbase. Norman affirmed that LIV Golf is moving confidently into 2024 and beyond, expressing unwavering confidence in the league, its stakeholders, and supporters worldwide.
Ron Green Jr. of Global Golf Post notes that the PGA Tour-SSG deal focuses on ensuring the tour's financial stability. Simultaneously, the deal with Saudi Arabian PIF aims to manage the chaos caused by LIV's arrival, providing incentives for players and the tour to engage more with fans as financial success increases.
According to Eamon Lynch from Golf Week, the announcement provided clarity on the benefits for other involved parties. The deal has reinstated a degree of leverage for the PGA Tour that appeared lost, particularly after LIV's recent recruitment of Jon Rahm. While the Tour now possesses the resources to operate independently without reliance on the Saudis, this has always been a possibility. However, it highlights that the Tour remains dependent on the loyalty of its members.
In London, James Corrigan, from The Telegraph, observed a celebratory atmosphere at PGA Tour headquarters. However, he cautioned that it was premature to declare peace in professional golf. Corrigan emphasized that the recent deal is not the conclusion of the ongoing conflict that has enveloped the pro fairways for the past two years. PGA Tour member Bob MacIntyre expressed the belief that the involvement of PIF is essential for advancing the game.
Golf reporter Alan Shipnuck noted that golf has traditionally been a niche sport, with Tiger Woods' peak temporarily deceiving some into believing it had gone mainstream. Shipnuck argued that LIV's substantial investments in players do not change the inherent status of golf as a niche sport.
Mark Cannizzaro from the New York Post criticized the PGA Tour's $3 billion windfall, asserting that it does nothing for golf fans. He highlighted PGA Tour players as the primary beneficiaries, with golf fans who care being the losers in this context.
⚫ HOW ABOUT TWITTER?
CBS Sports golf writer Kyle Porter raised the question in Twitter/X of what triggers the remaining $1.5 billion in the deal, while various voices from the golf community, such as No Laying Up and Fried Egg Golf, expressed a mix of anticipation, curiosity, and speculation about the new era ushered in by PGA Tour Enterprises.
DP World Tour player Pablo Larrazabal: “We can confirm that a deal between the @PGATOUR and the Strategic Sports group is done. But where is the DP World tour is in the deal? Is it beneficial to us? What is going to do to us? Well, we will see, I hope.”
Golf commentator Shane Bacon: “As long as this new deal means we can stop talking about all this business/tours/money/feuding nonsense, I’m all in. I don’t care what it looks like, what millionaire becomes more millionaire-y … just let us talk about golf again. Fingers crossed!”
Sports Illustrated golf writer Bob Harig: “Besides the investment and Tour players getting equity, PGA Tour Enterprises remains largely unknown. What will it be? A tour of world events? Teams included in any way? Co-sanctioned events?”
Action Network golf writer Jason Sobel: “One thing I’ve heard from multiple players lately: Why are some of us – professional golfers – so involved in how the business is being run? Maybe it’s a small sample size, but there’s a huge difference between asking for transparency and needing to be involved in the deals.”
Golf writer Robert Lusetich: “Haven’t read fine print but initial take on #PGATour investment deal: maybe antitrust-driven, but Yasir loses face after boasting deal on TV last summer. Golf Wars will continue, no unity soon. #LIVGolf. Notable Tiger drove SSG deal. Imagine Steiny’s commission.”
🔴 FINALLY, OUR UNSOLICITED OPINION
In our assessment, this agreement might not garner universal approval, but that doesn't automatically brand it as unfavorable.
In reality, we see it as a commendable arrangement. The $12 billion valuation surpasses most expectations, presenting a robust financial foundation.
The premier players of the PGA Tour now have compelling reasons to commit for the long term, and the newly-formed investment group represents an optimal alliance.
With influential entities like Fenway Sports Group, Steve Cohen, Marc Lasry, Wyc Grousbeck, and others in the fold, the PGA Tour gains not only financial strength but also enhanced strategic acumen – a favorable position, particularly when confronting a rival with seemingly limitless resources.
The time has come to bring together the world's top players under a unified banner.
That’s all for today, folks.
The weekly newsletter will be back with you next Monday. Throughout the week, you can expect the usual content, including the Golf Gear Review.
And in case any breaking news arises, we’re ready to send relevant updates in this bustling golf landscape.
Have a good one!!!