For all the of fine weather that Ponte Vedra Beach enjoys, yesterday’s news from the PGA Tour’s headquarters that a ‘common goal’ agreement had been struck with LIV Golf came straight out of the clear blue Florida sky.
The shock merger will see the PGA Tour, DP World Tour and the Public Investment Fund (PIF) come together to jointly run the game of golf on a global basis. The agreement will combine PIF’s golf-related commercial businesses and rights (including LIV Golf) with the commercial businesses and rights of the PGA Tour and DP World Tour into a new, collectively owned circuit. PIF will make a capital investment as the exclusive investor into the new entity (whose name is still yet to be decided) and as a result all pending litigation between the participating parties will end immediately.
Going forward, PIF will have 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. The PGA Tour will appoint a majority of the Board and hold a majority voting interest in the combined entity. The key takeaway here, however, is that the new organisation will be a for-profit entity, whilst in its current guise the PGA Tour is a nonprofit organisation.
This seemingly improbable damascene conversion may yet prove to be a case study in how to stage manage the opening phases of a communications campaign. The announcement which came via a bombshell CNBC exclusive, saw PGA Tour Commissioner Jay Monahan cosy up in the studio alongside PIF Governor Yasir Al Rumayyan. Before their appearance alongside one another, not a single element of the story had leaked beforehand, which is quite incredible considering the duo’s announcement that the framework deal had been struck over a two-month period with several games of golf together and lunches behind closed doors in the US, Europe and the Middle East. Monahan told the FT on Tuesday that he began to trust Al-Rumayyan “10 minutes after sitting down with him in Venice”.
This approach may yet prove dividends, as both Al Rumayyan and Monahan are now in control of the narrative and can jointly build credibility with their respective stakeholders. For Al Rumayyan this is the Saudi state, who will be relieved that he will no longer have to testify in a US court and potentially implicate the PIF as a malign sovereign instrument of Saudi Arabia. For Monahan, the two-year nightmare of ‘disruption and distraction’ is over. The future prospect of the PGA Tour’s revenues being further eroded and his star players being poached by a rival tour will now fade away to nothing more than a bad dream.
However, he still might have to face a backlash from those players on the PGA Tour who weren’t tempted by the Saudi riches and stuck by Monahan in his hour of need. Household names such as Rory McIlroy and Jon Rahm may now feel sold down the river. Nonetheless, it’s now clear from Monahan’s actions that he believes this was a price worth paying in order to unify the game. And against all the odds, the Board of Directors of the new commercial entity will now include Al Rumayyan as Chairman and Monahan as Chief Executive Officer.
Another key figure in the saga arguably has been Keith Pelley, Chief Executive of the DP World Tour. Despite previously working with PIF to stage European Tour events in Saudi Arabia, Pelley nailed his colours to the PGA Tour mast when rumours of LIV first surfaced in 2019. Yet political machinations quickly came to the fore when at the beginning of the 2022 season, Pelley signed DP World as the new title sponsor of the European Tour. The logistics company is based in Dubai, United Arab Emirates, whose leadership enjoys particularly close relations with its Saudi neighbour. So, it can be speculated that overtures to reach yesterday’s conciliation were made behind the scenes stemming from that initial commercial deal over eighteen months ago. How instrumental that was though is something we may never find out.
Looking ahead isn’t much clearer either with this tie-up posing more questions than answers. Both parties look to have come out as winners by agreeing to come together in the coming few months to finalise the terms of their initial agreement, with details to be announced in due course. It seems that only the lawyers will be ruing the lost opportunity of a protracted civil war!