PGA Tour and LIV Golf Agree to Merge

From a Wall Street Journal story by Andrew Beaton and Louise Radnofsky headlined “PGA Tour, LIV Golf Agree to Merge”:

The PGA Tour and LIV Golf, the Saudi-backed upstart that sent the industry into chaos when it teed off last year, have agreed to a stunning merger that ends the divide that has dominated the sport for the last year.

The deal weds the Saudi money and the PGA Tour name and connections after months of bruising litigation and sharply traded accusations. It also consolidates the biggest assets in professional golf—at a time when golf bodies including the Tour are being investigated by the Justice Department for antitrust violations.

Now, the same Saudi gushers that have funded LIV will be pooled with the PGA Tour’s existing revenue streams, giving the combined entity vast new resources for unnamed future investments. It effectively makes the Saudis investors in U.S. golf’s legacy powerhouse—a move that carries risk for the PGA Tour, which has spent the past year lashing out at its rival as LIV paid hundreds of millions of dollars to stars like Phil Mickelson and Brooks Koepka to persuade them to defect.

The parties said that the agreement combines the golf-related business from Saudi Arabia’s sovereign wealth fund with the commercial and business rights of the PGA Tour and a third circuit, the DP World Tour, into a new, collectively owned for-profit entity. The PGA Tour, a non-profit, will continue to exist but essentially as a governance body while it contributes its money-making arms to the new, unnamed venture.

Critically, for both sides, the parties also said that the merger will end the litigation between the parties, which have been at odds in court and in the court of public opinion since LIV’s launch.

The move marks a jarring evacuation plan for two parties that had looked set to continue suing and countersuing each other into the ground, if necessary. The Kingdom had craved entry into the golf world, and believed the Tour was illegally using monopoly power to block it. LIV was accused of trying to use the sport’s popularity to whitewash the country’s record on human rights, and PGA Tour commissioner Jay Monahan, just a year ago, dubbed LIV “a foreign monarchy that is spending billions of dollars in an attempt to buy the game of golf.”

The new, unnamed commercial entity will be chaired by Yasir Al-Rumayyan, governor of Saudi’s Public Investment Fund. Monahan will serve as chief executive. The Tour will appoint a majority of the board and hold a majority voting interest in the combined business.

The talks between the two sides were so tightly held that LIV chief executive Greg Norman was informed of the development in a conference call shortly before Monahan and Al-Rumayyan recorded an interview talking about it. Players and sponsors also weren’t consulted on the deal for confidentiality reasons, a person familiar with the matter said.

“I love finding out morning news on Twitter,” tweeted two-time major champion Collin Morikawa, one of the prominent players who stayed with the Tour.

And the sudden willingness of the PGA Tour to take money they had derided drew bipartisan skepticism from Washington lawmakers.

“I wonder if the PGA Tour—having wrapped itself in the flag—invited 9/11 families to the big announcement? I guess not, because money was worth more than principle, apparently,” said Texas Republican congressman Chip Roy, who had championed the Tour’s fight against LIV.

Roy’s sentiment was echoed by a group representing 9/11 victims’ families, who blame the Kingdom for its role in the terrorist attacks. Most of the terrorists were Saudi nationals, but the country has denied any involvement.

“PGA Commissioner Jay Monahan co-opted the 9/11 community last year in the PGA’s unequivocal agreement that the Saudi LIV project was nothing more than sportswashing of Saudi Arabia’s reputation,” said 9/11 Families United Chair Terry Strada.

Connecticut Democratic Sen. Chris Murphy also questioned the Tour’s motivation.

“So weird. PGA officials were in my office just months ago talking about how the Saudis’ human rights record should disqualify them from having a stake in a major American sport,” he wrote on Twitter. “I guess maybe their concerns weren’t really about human rights?”

The deal also comes after LIV had shown scant public evidence of financial success—though it continued to represent a formidable opponent in court. While the Saudis had pledged billions in its effort to disrupt golf, its sponsorships were scant and when it finally landed a TV deal in the U.S., its events on the CW Network drew poor viewership.

It remains to be seen how influential players, many of whom rebuffed lucrative offers potentially worth tens or hundreds of millions from LIV in order to stick with the PGA Tour, feel about the agreement. Four-time major champion Rory McIlroy, who had been one of LIV’s staunchest critics, has a previously scheduled press conference set for Wednesday ahead of this week’s PGA Tour event.

The 2023 LIV Golf schedule will continue as planned, according to a memo sent by Monahan to employees reviewed by The Wall Street Journal. The memo says the sides will “work cooperatively to establish a fair and objective process for any players who desire to re-apply for membership with the PGA Tour” after this season.

“Today is a momentous day for your organization and the game of golf as a whole,” Monahan wrote in the memo. The memo added that there “are many details to work through as we develop a definitive agreement, which will ultimately require PGA Tour Policy Board approval.”

Monahan’s memo also said that the deal prohibits any further recruitment of PGA Tour or LIV Golf members, and that the Tour will conduct a “comprehensive evaluation of LIV Golf and determine how best to integrate team golf into the professional game.”

Many aspects of the new venture still have to be hashed out. Monahan, in his memo, said “there is much work to be done to get us from a framework agreement to a definitive agreement.”

Appearing side-by-side on CNBC, Monahan and Al-Rumayyan said they were confident they could work out what they characterized as details. “I think it’s a matter of weeks,” Al-Rumayyan said.

“The tension’s gone, and these are things we’re going to solve together,” Monahan said, adding that he was confident he would not face backlash from PGA Tour players.

The PGA Tour and several other golf entities—including Augusta National Golf Club, which puts on the Masters, and the United States Golf Association, which runs the U.S. Open—have been facing an antitrust investigation by the U.S. Justice Department over their response to the LIV challenge.

Now, they are seeking a fresh start and an end to their legal woes by consolidating with their rival. On CNBC Monahan brushed off concerns that the merger could trigger fresh antitrust scrutiny.

“Every single player in men’s professional golf is going to have more opportunity and growth. As we look to contribute to the women’s game I would expect the same, and as an industry, we’re going to grow our industry. I think this is all a positive on that front,” Monahan said.

The pair who had once traded harsh criticisms and legal threats on Tuesday offered warm words for each other in their joint interview—with Al-Rumayyan saying that the fund was committing billions to the new venture on the basis that it saw it as an investment, not a subsidy, and Monahan saying that the Saudis were bringing golf “an opportunity we’ve never had before.”

“To have this capital, at this point in time, with the strength of this game, there’s just, there’s so much opportunity,” the PGA Tour commissioner said.

The men said that the deal had been worked out over lunch meetings in London —and a round of golf. Not included in the discussions, Al-Rumayyan indicated on CNBC, was the LIV Golf chief executive Greg Norman. Instead, Al-Rumayyan said, Norman had been notified along with other stakeholders on a group call shortly before he and Monahan gave the interview.

Even before LIV Golf’s first tournament a year ago, the circuit was embroiled in controversy. In inflammatory comments, superstar Phil Mickelson referenced Saudi Arabia’s killing of journalist Jamal Khashoggi and the country’s “horrible record on human rights” in comments published by the golf outlet Fire Pit Collective last February. But Mickelson said he would consider joining LIV nonetheless because it was a “once-in-a lifetime opportunity to reshape how the PGA Tour operates.”

The backlash from those comments led top golfers to publicly declare their allegiances to the PGA Tour. Superstar Rory McIlroy called LIV “dead in the water” at that time.

But LIV reemerged on life support. When it played its first event last year, Dustin Johnson headlined the first wave of players to sign on—along with Mickelson, who became one of the first golf stars to sign with the new tour, receiving an eye-popping compensation package estimated to run to hundreds of millions of dollars.

While LIV presented reputational concerns for the players who signed on, a group that grew to include major champions such as Brooks Koepka and Cameron Smith, it also offered fabulous wealth. Its tournaments, which include a team element, paid out record prize funds, in addition to the lucrative appearance fees just for joining.

The PGA Tour, meanwhile, banned players who joined, saying they had violated their contracts. So when anyone defected to the rebel tour, they had committed themselves to being on one side or other in the fight—there was no straddling the line.

Players later sued over their bans, in what eventually transformed into a direct legal confrontation between LIV and the PGA Tours. While LIV accused the Tour of violating antitrust law by behaving like a monopolist, the Tour later countersued saying the upstart had interfered with its business dealings.

The sprawling litigation threatened ugly revelations for both sides. In recent months, PIF had been vigorously trying to avoid being subject to discovery and having Al-Rumayyan subject to deposition by claiming sovereign immunity—while LIV accused the Tour of hiring consultants to secretly coordinate criticism of the Saudi circuit from families of people who died in the Sept. 11 attacks.

The Tour has also spent aggressively in its efforts to stave off its new rival. In addition to the battalions of consultants and lawyers both sides armed themselves with, the Tour had upped the purses at its events and adopted format changes for certain events—some of which reflected LIV’s format.