One year later, why haven’t the PGA Tour and Saudis completed a deal?

Wed, 5 June 2024, 1:19 pm·10-min read

With virtually no warning of the pending earthquake, the golf world tuned in for the shocking sight of two combatants seated amicably side-by-side in a New York cable news studio.

“I think today is a historical day for the PGA Tour and the game of golf,” PGA Tour Commissioner Jay Monahan declared at the outset of a CNBC interview on June 6, 2023. “ … What we’re talking about today is coming together to unify the game of golf.”

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Vague details unspooled about the pending partnership between the tour and the Saudi Public Investment Fund, which had launched the rival LIV Golf operation, before the CNBC host asked PIF governor Yasir Al-Rumayyan, “How much more time to get to the definitive agreement?

“I think it’s a matter of weeks,” he said.

One year later, the professional golf world is still bitterly divided. Television ratings many weeks are down. There has been no merger and no partnership. The two tours continue to operate independently. The best players on the planet get together just four times a year. And there’s been no infusion of Saudi oil money to help reshape or bolster the PGA Tour.

That announcement was supposed to be a monumental day for the sport. Instead of providing closure to a tumultuous chapter, it bred more chaos and questions.

The deal is not dead, according to people close to the situation, who spoke on the condition of anonymity to be candid about the negotiations, and Monahan and Al-Rumayyan have been in regular contact in recent weeks. But while the two sides continue to talk, no one seems certain if they’ll be able to iron out the wrinkles - or if a deal would ultimately return professional golf to solid footing.

“Obviously, a year later you would have thought we had a bit more clarity on that,” Mackenzie Hughes, the Canadian golfer, said last week. “There’s not really much there. I think eventually when we get through this situation, I think golf will be in a great spot still. But there’s a lot of hurdles to get over right now.”

While neither tour nor PIF officials would publicly comment on where things stand one year later, several people familiar with the talks say meaningful progress is still being made. But it is clear the controversial pact was more complicated than anyone anticipated, with many of the same questions and hurdles that Monahan and Al-Rumayyan sidestepped last year still looming.

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What is taking so long?

Following the initial announcement, talks were instantly delayed by a congressional inquiry and the specter of a Justice Department investigation. Plus, the PGA Tour had to do clean up with its members, who were incensed at being kept in the dark, and Monahan took medical leave for five weeks to deal with anxiety related to the situation.

Talks were slow to heat up, and when LIV poached star Jon Rahm last December, relations between the two sides appeared frayed. Even with a Dec. 31 deadline, there was little meaningful progress. They agreed to keep negotiating past that deadline, as PGA Tour players took on more control, installing Tiger Woods on the tour’s influential policy board.

But Woods and the other player directors didn’t meet face to face with Al-Rumayyan until March, when the sides convened in the Bahamas and Woods and Al-Rumayyan played a round of golf together. Woods later called it “a very positive meeting.”

In May, following a minority investment of at least $1.5 billion from a consortium of pro sports owners, the tour formally created a new entity to oversee its commercial interests - PGA Tour Enterprises - and that company’s board formed a subcommittee to negotiate with the PIF.

The new entity effectively sidelined some of the initial negotiators, including policy board member Jimmy Dunne, who first reached out to Al-Rumayyan in 2023 and helped broker the initial framework agreement. After he was left off the new company’s board and the negotiating subcommittee, Dunne stepped down from the tour’s policy board last month, saying in his resignation letter that “no meaningful progress has been made toward a transaction with the PIF.”

But others say work is being done behind the scenes, even if the steps are slow and deliberate. In the past couple of months, the two sides have shared pitch decks and exchanged term sheets of what a final deal might look like, according to two people familiar with the talks.

“Things are actually moving positively from both sides,” Jordan Spieth, a member of the PGA Tour Enterprises board, said recently. “ … From what I do know, it's cordial, there's open dialogue, and it's moving along at the pace that it's moving along. And anything else that's said about it is just, I just know to be false. So I'm very optimistic.”

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What are the hurdles?

The sides are largely discussing the same issues they promised to solve a year ago. The tour’s membership has not always been unified on the best course of action or even what an acceptable resolution would be.

“I think there’s a lot of things people don’t realize that need to occur for things to go back together, for everyone to sort of shake hands and move along,” PGA Tour golfer Xander Schauffele said this week.

The PGA Tour wants to settle on a financially viable path while expanding its reach. But it doesn’t yet know how it would welcome LIV golfers back into PGA Tour events. The PIF, meanwhile, always sought a seat at the table, but it’s not keen to simply write a blank check; Saudi officials expect a return on any investment.

The tour doesn’t plan to use new money on tournament purses or to bolster existing operations; it is trying to identify untapped sources of revenue and expansion, which could include purchasing new properties, leveraging media rights or delving into untapped markets.

The Saudis haven’t always shown the same sense of urgency at the negotiating table. They aren’t eager to give up on LIV altogether, and the tour doesn’t want to compete head-to-head with a deep-pocketed rival league. But both sides are interested in growing the game globally and finding ways the PGA Tour can coexist with a complementary circuit, likely one that is team-based, internationally focused and has a competition calendar that doesn’t conflict with tour events.

Even if they can sort through that, the DOJ could still have final say on whether any deal passes muster and doesn’t violate federal antitrust laws.

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Who is at the negotiating table?

The June 6 announcement resulted in no shortage of mistrust and division among the PGA Tour ranks. Monahan survived the tumult, but the balance of power shifted.

Rory McIlroy, the face of the tour’s battle before June 6, resigned from the tour’s policy board in November. An effort to return him to the board was scuttled last month, with McIlroy saying “there was a subset of people on the board that were maybe uncomfortable with me coming back.”

He was ultimately included on the negotiating subcommittee but clearly has some different ideas than Woods and Patrick Cantlay, another influential member of the PGA Tour Enterprises board.

“It’s good to see it differently,” Woods said during the PGA Championship last month, “but collectively as a whole we want to see whatever’s best for all the players, the fans, and the state of golf. How we get there, that’s to be determined.”

The other members of the subcommittee are: Monahan; golfer Adam Scott; Joe Gorder, chair of the new board; Joe Ogilvie, a retired golfer; and John W. Henry, principal owner of Fenway Sports Group.

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What is the status of LIV Golf?

LIV Golf never altered its plans and continued entering into multiyear contracts with players, courses, sponsors and vendors that should ensure its existence through at least 2025. The organization now has more than 200 employees and is soon moving into new office spaces in both New York and London.

The product has been slow to catch on domestically, but LIV officials are buoyed by recent corporate partners and some of the response they’ve received overseas.

If there’s not progress on the PIF-PGA Tour negotiations in the next four months, the stage could be set for an offseason in which LIV moves even more aggressively to sign some of the tour’s biggest names.

In short, LIV is not operating like a business preparing to close up shop any time soon.

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What about the concerns over human rights violations?

For all the rhetoric from tour officials over Saudi Arabia’s human rights record when LIV launched in June 2022, those concerns have largely faded into the background - at least for many of the game’s stakeholders. Ogilvie, the former pro golfer who serves as “liaison director” on the PGA Tour Enterprises board and is also on the negotiating subcommittee, recently told Eamon Lynch, the Golf Channel host and Golfweek columnist:

“Look, it’s a very messy world. You hope things evolve. That society has by any measure gotten better. It’s better now than it was 10 years ago. It was better 10 years ago than it was 20 years ago. And I’m assuming it will be better 10 years from now. You can’t paralyze yourself. You can’t expect perfection. You just want things to evolve in a better way. And I think that’s obviously what the kingdom wants to do.”

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Why does the PGA Tour still want the Saudi investment?

While the PGA Tour has taken on the $1.5 billion investment from the Strategic Sports Group, there are still some questions about the viability of its business model, especially as it shifts its core operations from a nonprofit organization to a commercial entity and launches a player equity program. The tour has asked its local tournament directors to start kicking in more money and has fielded questions from key sponsors about the future of the game.

Tour officials have said that even if LIV Golf lags far behind in spectator interest, it will continue to pose an existential threat because it can pick off tour players and leave the PGA Tour with a watered-down product.

Notably, a PIF investment would be worth significantly more than whatever the Saudis put in. The SSG investors are expected to raise their commitment as high as $3 billion if the PIF ultimately signs on.

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What happens if the deal falls through?

The professional golf war would enter a new phase and no one around the game - particularly those at the PGA Tour headquarters - is eager to see how that would play out. The Saudi PIF could keep putting money behind LIV, and even if fan interest in LIV remains tepid, it could be devastating to both the tour product and its bottom line.

One bright side of the initial framework agreement: It called for an immediate end to the litigation that had consumed both sides. Tour officials have said their legal costs had reached the neighborhood of $50 million, and they were happy to see the cases dismissed last June.

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What is the possible timeline to a final deal?

The PGA Tour can’t wait forever and is eager to start making strategic steps with the money it has on-hand. That said, the potential PIF investment could be transformational, adding billions of dollars to the tour coffers, so officials remain hopeful. They surely don’t want to enter into an offseason bidding war with LIV, so this summer looks to be a pivotal period for negotiations.

If the two sides do agree to terms, it would likely trigger a federal review, which could take several weeks or months. If the DOJ feels competition is stifled or the consumer is somehow harmed, the whole deal could be rejected and the golf world would revert to its pre-June 6 state.