The PGA Tour will maintain a controlling voting interest in the new entity formed by its surprise union with Saudi-backed LIV Golf, according to the provisional agreement between the two circuits filed to US lawmakers.
PGA Tour Chairman Jay Monahan will be chief executive, while the Saudi Arabia Public Investment Fund’s governor, Yasir Al-Rumayyan, will head the board of the combined entity, according to the filing.
PIF will pitch in golf assets, including those of LIV Golf, along with a cash investment in exchange for equity ownership in the entity dubbed NewCo in the framework agreement. The fund will pump in additional money with a right of first refusal on capital raised by NewCo.
The five-page document was provided to the US Congress before a July 11th hearing by a Senate panel investigating the merger. It discloses new details about the understanding between the golf circuits, which are currently valuing their assets to work out financial details.
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The merger of the two professional golf circuits, which blindsided golfers and fans when it was announced June 6th, is far from a done deal. The PGA Tour and LIV must still agree on an array of financial and operational details and the combination will need to pass antitrust scrutiny.
The PGA Tour and Europe’s DP World Tour, which is also part of the global deal with LIV Golf, will contribute their commercial rights, including contracts with players in the pro golf business, but not certain non-operational assets such as corporate reserves and golfer retirement plans, according to the agreement.
“The framework outlines a future for professional golf under the PGA Tour’s leadership that benefits players, fans, and the sport,” a PGA Tour spokesperson said. “Any resulting agreement will have to be approved by the full board of the PGA Tour, including our player directors.”
Representatives of PIF and DP World Tour didn’t immediately respond to requests for comment outside regular business hours.
The pact will terminate as soon the circuits agree on definitive financial terms, or on Decemeber 31st if they fail to do so, according to the framework.
LIV Golf’s emergence in pro golf last year prompted high-ranking and veteran players like Phil Mickelson and Bryson DeChambeau to switch to the Saudi-funded league that offered them lucrative deals. The PGA Tour responded by suspending the LIV players. The battle between the circuits splintered the world of pro golf and led to a heated antitrust court fight that was dropped when the deal was announced.
In terms of player rights, the agreement says the new entity will set in motion “a fair and objective process” for any players who seek to return to the PGA Tour and DP World Tour after the 2023 tournament season ends. The accord calls for the combined circuit to do its best to secure Official World Golf Rankings – a rating system for golfers – for LIV golfers and events that are excluded from it.
The agreement says the new entity’s executive committee will include Monahan, Al-Rumayyan, PGA board Chairman Ed Herlihy and PGA board member Jimmy Dunne.
PIF will also invest to become a premier corporate sponsor of the PGA Tour and DP World Tour and will have a representative, the first being Al-Rumayyan, mutually picked by PIF and the Tour, on the US circuit’s policy board, according to the agreement. The PGA Tour’s policy board members include former AT&T Chairman Randall Stephenson and golfers Rory Mcllroy and Patrick Cantlay.
Senate panel chairman Richard Blumenthal, a Connecticut Democrat, last week asked Monahan and executives of PIF and LIV Golf to testify. Such invitations often make way for subpoenas and it’s unclear whether the executives have agreed to show up for questioning. – Bloomberg
