Why Did The PGA Tour Merge With The Public Investment Fund?

Seven weeks ago a deal between the PGA Tour and the Public Investment Fund seemed not even close to being on the table. Then PGA Tour Policy Board members Ed Herlihy and Jimmy Dunne met with the PIF and there would be four in-person meetings and a number of video calls and phone conversations. The Tour's commissioner Jay Monahan explained that the first conversation was the most important one and, encouraged to join a follow-up meeting, that's when it began to materialise. 

In the space of those seven weeks the PGA Tour have now reached a framework agreement with the PIF and DP World Tour. 

Unlikely as it seemed this was always on the cards but, in most people's eyes, it would come about years down the line. So why have the PGA Tour 'merged' now with the PIF?

The Court Case

An anti-trust lawsuit first surfaced in August 2022 when 11 players – Bryson DeChambeau, Matt Jones, Peter Uihlein, Phil Mickelson, Talor Gooch, Hudson Swafford, Carlos Ortiz, Abraham Ancer, Pat Perez, Jason Kokrak and Ian Poulter – all filed. Soon after LIV Golf joined the lawsuit and not long after the PGA Tour followed up with a countersuit. LIV sued the PGA Tour for bad faith and 'egregious interference with LIV Golf’s contractual and prospective business relationships'.

In the original ground-breaking joint statement it read: 'Today’s announcement will be followed by a mutually agreed end to all pending litigation between the participating parties'.

'Better together'

One of the very simple facts about the past 18 months is the huge amount of disruption between tours at odds with one another. It's been the main talking point in Major weeks and, according to the PGA Tour commissioner Jay Monahan, the element of moving forward was a key one. And a very fruitful one financially.

"We just realised that we were better off together than we were fighting or apart, and by thinking about the game at large and eliminating a lot of the friction that's been out there and doing this in a way where we can move forward, we can move forward and grow the PGA Tour, and I'm excited about the changes that we're going to make coming into 2024," Monahan explained in his Tuesday press conference.

"It put us in a position where, again, we're in control, we have an investor, and ultimately for the game, we're moving forward constructively. If you look at the values of the game, I think that's what the situation warranted."

How the PGA Tour will move the game forward remains to be seen but, with all the quarrels of the past 18 months, this has been almost impossible with press conferences and coverage dominated by what's going on elsewhere. This will certainly quieten down the noise. 

The end of LIV Golf?

This is what Monahan said on Tuesday: "We're in a framework agreement. We haven't concluded the definitive agreement. I have not had the opportunity that I'm going to have to conduct a comprehensive empirical evaluation. I don't want to make any statements or make any predictions. But what is in place is a commitment to make a good-faith effort to look at team golf and the role it can play going forward."

Monahan was later asked about the possibility of players going back and forth between the PGA Tour and LIV Golf?

"I can't see that scenario but I haven't gotten into the full evaluation, full empirical evaluation of LIV that I'm going to do to be able to comment on that. But I don't see that scenario, no. To me, any scenarios that you're thinking about that bridge between the PGA Tour and LIV would be longer term in nature."

On the flip side LIV commissioner Greg Norman is already talking about what their schedule looks like in 2025.

There is talk of there being an element of team golf in the near future, whether that is in the form of LIV we don't know. 

'A position of control'

This, the PGA Tour are keen to stress, is not a merger. Monahan will sit at the top of the tree and the PIF would have a place on the board with Yasir Al-Rumayyan acting as chairman.

"This ultimately is a decision that I think is in the best interest of all of the members of the PGA Tour, puts us in a position of control, allows us to partner with the PIF in a constructive and productive way, to have them invest with us, again, running the PGA Tour, having these three entities under one for-profit LLC (limited liability company)," added Monahan.

As for the talk of any merger Rory McIlroy played that down in no uncertain terms.

"If you look at the structure of how it's structured now, this new company sits above everything. Jay's the CEO of that. So technically anyone that is involved with LIV now would answer to Jay. So the PGA Tour have control of everything. Whether you like it or not, the PIF were going to keep spending the money in golf. At least the PGA Tour now controls how that money is spent. So, you know, if you're thinking about one of the biggest sovereign wealth funds in the world, would you rather have them as a partner or an enemy? At the end of the day, money talks and you would rather have them as a partner."

If all this is true and Monahan is still calling the big shots then you can be assured that the PIF will be playing a big part too. Again, the details are few and far between.

One of the first steps will be how to return the LIV exiles back onto the PGA Tour and to compensate the stars of the PGA Tour for turning down the big money.  

The removal of a key competitor

LIV Golf has been officially up and running for less than a year and the disruption, through a limited schedule, has been off the charts. There has been endless talk of world ranking points and they've lured a host of superstars and Major champions to their League (and a lot of very ordinary players) and, despite reports of lacklustre TV viewing figures and then the decision to stop reporting them while also moving back to YouTube streaming, they weren't going away. 

"Ultimately to take the competitor off of the board, to have them exist as a partner, not an owner, and for us to be able to control the direction going forward put us in a position as the PGA Tour to do and serve our members, and at the same time, again, get to a productive position for the game at large."

The bottom line

Make no mistake this is beyond a huge investment. With the new designated events and huge prize pots it's put a big strain on the PGA Tour and this wipes out any financial worries going forward. That all will come at a cost but it's one worth taking.

"We've had to invest back in our business through our reserves. Between our reserves, the legal fees, our underpin and our commitment to the DP World Tour and their legal fees, it's been significant. You have to look at all the monies that we make, we make in the commercial realm, and we're in long-term media deals. This puts us in a position where we've got capital that we can deploy to the benefit of our members and through our tournaments, and it gives us capital to deploy in growth businesses that ultimately will generate a return that we'll reinvest in our players."

Monahan was also quick to point out how the structure of the PGA Tour works and how that will now change, allowing them to reinvest. The PGA Tour will keep tax-exempt status as a 501-c-6 organization that is charity driven along with the LLC. 

"There's a much bigger play here now, and that is ultimately if you look at our model, we've been a (c)6. We're going to continue to do all the things that we do for impacting lives and impacting communities through our tournaments, but by being able to create a for-profit LLC, we've been handicapped. We're a pass-through organisation. We've not been able to reinvest our dollars in growth businesses, and now this gives us the opportunity to do that."

What the leading players wanted?

We're all well aware that money makes the world go round and gets golfers to get on planes to the other side of the world but, somewhere, there is still the desire to compete against the best week in, week out. The Majors have been fairly toxic at times in the past year and now we have a winner in Brooks Koepka who most of us will only see at the Majors unless we tune in to LIV's free-to-air coverage.

The Ryder Cup has been tainted by the emergence of LIV Golf. We've seen the European captain, Henrik Stenson, leave his post and others no longer in a position to play. The players, most of them anyway, seem happy enough to let anyone play but we've spent more time looking at the Ts & Cs rather than who's in form. From a romantic point of view none of this was sustainable and, if all these people do want to trot out the old adage of 'growing the game' then at least there has to be some sort of harmony at the top of the game otherwise absolutely everything else just jars.