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Rafael Henrique | Light Rocket | Getty Images
Details are emerging of how the Saudi-backed PGA Tour and LIV Golf plan to merge their business operations and return the sport’s best players to one new entity.
In a five-page agreement obtained by CNBC, the parties — the PGA Tour, Saudi Arabia’s Public Investment Fund, and Europe’s DP World Tour — agreed to set up a for-profit subsidiary of the PGA Tour. The new entity will manage the commercial assets of all the tours, while the PGA Tour will manage the competitions.
According to the document, the round will have a permanent controlling stake in the board of directors of the new entity and will retain a majority stake regardless of PIF investments. The Public Investment Fund, which agreed it would be a minority investor over which it has no control, said it would invest billions in the entity.
Details regarding the valuation of the assets were still being negotiated at the time of the agreement, dated May 30, and were not included in the documents.
News of the deal’s structure comes ahead of a July 11 Senate hearing in which senior officers from all parties were asked to testify.
Since its launch in 2022, LIV has been mired in controversy and criticism. In fact, the PIF is not publicly owned, as its name might suggest. It is a sovereign wealth fund controlled by Saudi Crown Prince Mohammed bin Salman that has been accused of “sports laundering”, effectively using LIV Golf and other sports investments to improve the oil-rich nation’s image and distract from the kingdom’s human history. Rights violations.
The initial merger agreement was signed by PGA Tour Commissioner Jay Monahan, Keith Bailey, CEO of DP World, and Yasser Al-Rumayyan of the Public Investment Fund.
The agreement provides a few more details about the proposed merger, which was announced earlier this month and would put an end to all litigation between the PGA Tour and LIV Golf.
The two organizations have filed a series of antitrust lawsuits against each other. LIV alleged anti-competitive practices on the tour banning its players. The PGA Tour opposed, claiming that LIV was stifling competition.
The lawsuits came after several high-profile players including Phil Mickelson left the PGA Tour for LIV.
The interim agreement also ends player recruitment during the negotiation process and sets out a set of requirements to guide them toward the final deal, including a no-sharing clause between all entities.
The PGA Tour board of directors, including player managers, will have to sign a final final agreement, which negotiations are still ongoing, according to a person familiar with the matter.
“There is a lot of work that needs to be done to move us from a framework agreement to a final agreement,” Monahan said in a note to players when the deal was announced.
The entities previously said they would establish a “fair and objective process for any player wishing to re-apply for membership on the PGA Tour or DP World Tour” after the end of the 2023 season.
Meanwhile, key lawmakers are holding a Senate subcommittee hearing to put the proposed deal under the microscope.
Sen. Richard Blumenthal and Sen. Ron Johnson, chairman and ranking member of the Senate Homeland Security Committee’s Permanent Subcommittee on Investigations, said in a letter that the subcommittee will study the proposed deal and “the risks associated with a foreign government’s investment in American cultural institutions, and the implications of this planned agreement.” about professional golf in the United States in the future.”
The PGA Tour said its officials will testify at the session, though it’s unclear if Monahan will attend. Manahan, who was previously named a future commissioner of the new entity, has recently gone on vacation as he is recovering from a medical condition.
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