The PGA Tour’s board convened in-person for the first time since a portion of its members negotiated a deal with Saudi Arabia’s sovereign wealth fund to reshape the golf industry. Despite the outcry from players and lawmakers, the board indicated its intention to proceed with the agreement. However, they acknowledged that closing the deal was not guaranteed.
During the meeting, the board refrained from voting on the deal, which includes tentative terms to establish a new company encompassing various golf businesses. This new entity would have abundant Saudi funding but would be predominantly controlled by PGA Tour leaders. By convening, the board aimed to bring stability to the tour amidst internal division and global scrutiny, although they anticipate lengthy negotiations.
In a carefully worded statement, the board stated that they have entered a new phase of negotiations to determine if a definitive agreement can be reached in the best interest of players, fans, sponsors, partners, and the game as a whole. They also expressed their commitment to the safeguards outlined in the framework agreement, ensuring that the PGA Tour would retain control over the potential new commercial entity. The board was keen on avoiding further alienation of players who were blindsided by the initial news of the deal.
This meeting occurred three weeks after the surprising announcement of the deal and one day after the tour shared a copy of the five-page framework agreement with a Senate subcommittee. Notably, the framework agreement lacked binding commitments and left numerous important details to be resolved.
Although both the PGA Tour and the Saudi wealth fund are expected to contribute their golf ventures, such as LIV Golf, to the new company, the rapid signing of the agreement omitted any valuations or completed assessments in advance. The agreement does not specify the scale of the wealth fund’s investment, but it does outline the leadership structure and safeguard the fund’s investment rights.
The few binding clauses in the agreement include a nondisparagement pledge between the tour and the wealth fund (excluding players) and a truce preventing rival circuits from recruiting golfers from each other. If a final agreement is not reached by the end of the year, the tour and the wealth fund can revert to their original businesses without financial penalties, unless mutually extended.
However, board approval does not guarantee the long-term survival of the deal. The Justice Department’s antitrust regulators are scrutinizing the agreement, and it is expected to face further examination in a Senate subcommittee hearing next month.
Although only a small fraction of the board was involved in the negotiations, this pivotal meeting shaped the future of the tour. The meeting, held in the Detroit area, focused on technical aspects of the sport as well as the framework agreement. The board received a briefing from the tour’s bankers regarding assigning values to the various assets within the tour. PGA Tour Commissioner Jay Monahan was absent from the meeting due to a medical situation.
Board members refrained from commenting after the meeting, letting their statement speak for itself. Rory McIlroy, the only player on the board, has expressed some support for the deal, while others have expressed the need for more information.
Board members have been informed that the tour cannot sustain the competition from LIV, a league backed by the Saudi wealth fund that enticed top golfers with lucrative contracts and prizes. Furthermore, the wealth fund has faced setbacks in its court battle against the tour, and LIV has struggled to attract attention in the United States beyond its financial backing.
If the deal falls through, both parties have already gained a mutual victory by dismissing litigation in California. The PGA Tour, the wealth fund, and LIV agreed to drop their respective cases, ensuring that they cannot be refiled even if the overall agreement collapses.
Despite the cautious tone of the PGA Tour’s statement, the dismissal of litigation was highlighted in the opening sentence, indicating its significance.
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