The Alliance of LIV Golf and the PGA Tour: Here’s What to Know
The details of the partnership are far from complete, according to a document outlining the framework of the deal.
LIV Golf began in late 2021 with the former PGA Tour player Greg Norman as its commissioner and billions of dollars in backing from the Saudi sovereign wealth fund, which is known as the Public Investment Fund. LIV lured several PGA Tour players, including the major champions Phil Mickelson and Brooks Koepka, with massive purses and guaranteed payouts that far surpassed what they could earn on the established circuit.
LIV promised a sharp break from golf’s fusty traditionalism, starting with its name, which, when pronounced, rhymes with “give” but is actually the Roman numeral for 54, the number of holes played in each tournament. LIV had music blaring at its events, looser dress codes and team competitions — and tournaments that lasted three days instead of four. Further, and of particular appeal to potential players, while the PGA Tour tournaments cut golfers with the worst scores after two rounds, LIV did not cut anyone.
What was the relationship between the leagues before the deal?
Acrimonious, to put it lightly. Players who joined LIV were forced to resign from the PGA Tour — and its European equivalent, the DP World Tour — under the threat of suspension and fines. LIV sued the PGA Tour, and the PGA Tour countersued, litigation that is technically continuing (though the deal is supposed to resolve it).
PGA Tour supporters and other critics of LIV said the venture was simply an attempt by the Saudi government to distract attention from its human rights record, while LIV supporters said the PGA Tour was a monopoly that used inappropriate strong-arm tactics to protect its position in big-time sports.
And yet now they are combining?
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Yasir al-Rumayyan, left, who is the governor of the Public Investment Fund and who oversees LIV, would chair the board of the new entity. Former President Donald J. Trump, middle, has hosted LIV tournaments on his courses.
Credit…
Doug Mills
It seems so. The PGA Tour and LIV announced on June 6 the creation of a new entity that would combine their assets, as well as those of the DP World Tour, and radically change golf’s governance.
The PGA Tour would remain a nonprofit organization and would retain full control over how its tournaments are played. But all of the PGA Tour’s commercial business and rights — such as the extremely lucrative rights to televise its tournaments — would be owned by a new, yet unnamed, for-profit entity that is currently called “NewCo.” NewCo will also own LIV as well as the commercial and business rights of the DP World Tour.
The board of directors for the new for-profit entity would be led by Yasir al-Rumayyan, who is the governor of the Public Investment Fund and also oversees LIV. Three other members of the board’s executive committee would be current members of the PGA Tour’s board, and the tour would appoint the majority of the board and hold a majority voting interest, effectively controlling it.
PGA Tour and LIV Golf Agree to Alliance, Ending Golf’s Bitter Fight
What have they agreed on?
Not much, it turns out. The PGA Tour’s tentative deal with Saudi Arabia’s sovereign wealth fund includes only a handful of binding commitments, such as a nondisparagement agreement and a pledge to dismiss acrimonious litigation. (The sides have already moved to end their legal fights.) What it does not include is a clear path of what lies ahead for the tours: Many of the most consequential details about the future of men’s professional golf have not been resolved, and were left to be negotiated by the end of the year.
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Most crucially, the tour and the wealth fund must still come to terms on the values of the assets that each will contribute to their planned partnership. Bankers and lawyers have spent recent weeks beginning the valuation process, but a five-page framework agreement obtained by The New York Times includes no substantive details of projected figures or even the size of an anticipated cash investment from the wealth fund.
The Merger of LIV Golf and the PGA Tour
- A Surprising Deal: The merger of the rival circuits is expected to transform professional golf. Our reporter explains what was behind the pact and what it means for the business of sports.
- Senate Hearing: Appearing before senators, a PGA Tour executive said that Saudi Arabia’s sovereign wealth fund could invest more than $1 billion in the ambitious alliance — if the deal withstands scrutiny in Washington.
- Strange Bedfellows: The merger has raised many questions. A big one is how the governor of the Saudi sovereign wealth fund behind LIV Golf and the PGA Tour commissioner will manage to work together after a yearlong civil war.
- Betrayal and Confusion: Top players thought they were finally being heard by PGA Tour executives. Then came the stunning announcement that could reshape golf for years to come.
And one issue the two parties had agreed on has been removed. The framework agreement included a nonsolicitation clause, which said the PGA Tour and LIV Golf would not “enter into any contract, agreement or understanding with” any “players who are members of the other’s tour or organization.” But the two sides, facing pressure from the Justice Department, decided to abandon that clause.
PGA Tour’s Pact With Saudi Wealth Fund Shows Many Details Left to Settle
The five-page agreement provoked a furor but included only a handful of binding provisions.
When does this take effect?
Not yet.
First, the idea also has to be approved by the PGA Tour’s policy board, what it calls its board of directors, which includes some people who were left out of the secret negotiations for this deal in the spring.
The policy board is made up of five independent directors, including Ed Herlihy and Jimmy Dunne, who helped negotiate the deal. The board also includes five players: Patrick Cantlay, Charley Hoffman, Peter Malnati, Rory McIlroy and Webb Simpson.
Jay Monahan, the commissioner of the PGA Tour, said on June 6 that there was only a “framework agreement” and not a “definitive agreement,” with many details still to be decided. The definitive agreement needs a vote before it can go forward.
And for the rest of 2023, all the tours will remain separate, and all their tournaments will continue as scheduled.
And after that?
Who knows? This is how Monahan answered questions about what golf might look like in the future on the day the alliance was revealed.
- Will LIV continue to exist as a separate golf league? “I don’t want to make any statements or make any predictions.”
- Will LIV golfers go back to the PGA Tour and DP World Tour? “We will work cooperatively to establish a fair and objective process for any players who desire to reapply for membership with the PGA Tour or the DP World Tour,” Monahan wrote in a letter to players.
- Will PGA Tour players, many of whom spurned LIV and its huge paydays, receive compensation? Will LIV players somehow be forced to give up the money they were guaranteed? “I think those are all the serious conversations that we’re going to have,” Monahan told reporters.
How do players feel about all of this?
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LIV players like Brooks Koepka seemed to take a victory lap.
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Desiree Rios
Broadly, LIV players seem to think they have gained a major victory, and they are probably right. They got their cake (huge paydays) and can eat it (a pathway to returning to the PGA Tour), too.
Mickelson, the first major player to leave for LIV, tweeted that it was an “awesome day today.” Koepka took a jab at Brandel Chamblee, a former professional golfer and current television commentator, who has been vocally anti-LIV.
Many PGA Tour players were less jubilant. They were blindsided by the news, learning of the agreement when the public did, and they did not seem to understand why the tour waged a legal war against LIV and a war of morality against Saudi money, only to invite the wolf into the henhouse.
On the day the news broke, Monahan met with a group of players in Toronto at the Canadian Open, which was set to start in two days, and afterward told reporters it was “intense, certainly heated.”
Johnson Wagner, a PGA Tour player, said on the Golf Channel that some players at the meeting called for Monahan’s resignation.
“There were many moments where certain players were calling for new leadership of the PGA Tour, and even got a couple standing ovations,” he said. “I think the most powerful moment was when a player quoted Commissioner Monahan from the 3M Open in Minnesota last year when he said, ‘As long as I’m commissioner of the PGA Tour, no player that took LIV money will ever play the PGA Tour again.’”
Wagner estimated that 90 percent of the players in the meeting were against the merger.
McIlroy, perhaps the most influential PGA Tour player not named Tiger Woods, said he was reluctantly in favor of the agreement. McIlroy said he had “come to terms” with Saudi money in golf. “Honestly, I’ve just resigned myself to the fact that this is, you know, this is what’s going to happen,” he said.
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Rory McIlroy is a member of the PGA Tour’s policy board, which must vote to approve the definitive agreement. McIlroy has been one of the most outspoken players against LIV.
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Desiree Rios
I see a photo of former President Trump up there. Is he involved in this?
Yes, though not directly. The Trump Organization owns golf courses around the world, and Donald J. Trump has for years sought to host major tournaments on its properties. Those efforts suffered a setback after the Jan. 6, 2021, attack on the Capitol by a pro-Trump mob, as the golf establishment distanced itself from the former president. Most significantly, the P.G.A. of America pulled the 2022 P.G.A. Championship from the Trump National Golf Club in Bedminster, N.J.
But Trump had cultivated unusually close ties to Saudi Arabia while president, and Saudi-backed LIV had no problem embracing him. Last year, two LIV events were held at Trump courses, and this year it will be three.
Trump’s son Eric said that the agreement between LIV and the PGA Tour was a “wonderful thing for the game of golf” and that he expected tournaments to continue to be held at Trump-owned courses. He declined to comment on whether the Trump family played any role in bringing the two parties together.
Trump Praises the PGA and LIV Golf Merger
If the PGA Tour was so against LIV and Saudi money, what changed?
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Jay Monahan, the PGA Tour commissioner, at the Players Championship in March. He said the ability to “take the competitor off of the board” while retaining control was a significant factor in the merger.
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Erik S Lesser
“Listen, circumstances change, and they’ve been changing a lot over the last couple years,” Monahan said.
Get it? No?
“What changed? I looked at where we were at that point in time, and it was the right point in time to have a conversation,” Monahan said.
Between the lines, Monahan made it sound like the agreement came down to money and competition, as it often does. To compete with LIV, the PGA Tour has enhanced purses, supported the DP World Tour financially and pursued extremely expensive litigation. “We’ve had to invest back in our business through our reserves,” Monahan said.
He also said the ability to “take the competitor off of the board” while retaining control was significant.
LIV Golf Joins a Club That Will Have It as a Member
Can anybody else stop the deal from going through?
The Justice Department, Federal Trade Commission or the European Commission could certainly try.
For about a year, the Justice Department has been investigating the tight-knit relationship between the PGA Tour and other powerful entities in golf. Among its questions is whether the organizations have exerted improper influence over the Official World Golf Rankings, which determine players’ eligibility for certain events and can be an important factor in their success and income.
As part of their deal, LIV and the PGA Tour agreed to drop their dueling lawsuits, but doing so would not necessarily change the Justice Department’s inquiry. If there were any illegal conduct by the PGA Tour, a merger would not prevent the PGA Tour from being punished for it.
“The announcement of a merger doesn’t forgive past sins,” said Bill Baer, who led the Justice Department’s antitrust division during the Obama administration.
The federal government, through the Justice Department and the F.T.C., also reviews more than 1,000 mergers for approval each year, and the European Commission reviews them for the European Union. Without a definitive agreement, it is not clear whether this might be the type of combination regulators could block or whether they would try to do so.
Saudi Arabia seems to have grand sports ambitions. Will it always remain a junior partner to the PGA Tour in golf?
As always, Saudi Arabia has the perfect vehicle to gain more control: money.
The Public Investment Fund will invest “billions,” according to its governor, al-Rumayyan, into the new for-profit entity. It will also hold “the exclusive right to further invest in the new entity, including a right of first refusal on any capital that may be invested in the new entity, including into the PGA Tour, LIV Golf and DP World Tour,” according to the release announcing the agreement.
If the Public Investment Fund invests more money, it will surely demand more board seats and greater voting rights, further tilting control of men’s professional golf toward the kingdom
