June 25, 2023

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Good morning! This is senior reporter A.J. Perez [[link removed]], here to take you through what we’ve learned since the unexpected merger between the PGA Tour, LIV Golf, and the DP World Tour earlier this month.

This new golf entity will receive billions from Saudi Arabia’s Public Investment Fund, and the PGA Tour will have the board-seat advantage once the setup gets the necessary governmental approvals. Still, there are a lot of moving parts left — which has led to some frustration regarding what the organization will eventually look like.

But with litigation formally ending just a few days ago, a lot more will be known over the next month as negotiations ramp up. Until then, sources give us some intriguing options as golf’s split is healed.

Golf’s Uneasy Alliance Leaves Unfinished Business

Adam Hagy-USA TODAY Sports, A.J. Perez-FOS

Two bitter golf rivals took a big swing when they announced their controversial partnership [[link removed]] earlier this month.

Now, it’s time to see where the ball lands.

It will take weeks — if not months — before a final agreement is reached by the PGA Tour, LIV Golf, and LIV’s major financial backer, Saudi Arabia’s Public Investment Fund. Then comes the expected regulatory, legislative, and legal scrutiny, both in the U.S. and in Europe.

This new for-profit golf entity, intended to bridge the chasm created in pro golf over the past two years, isn’t a lock. But there’s confidence on both sides that the partnership will come to fruition, and there’s already been one positive outcome: the end of litigation [[link removed]].

“That was massive,” one source close to the negotiations said.

LIV Golf dropped its antitrust case originally filed [[link removed]] in August, the PGA Tour dropped its counterclaims against LIV and the PIF, and the PIF dropped its appeal as part of the tentative agreement.

That was a win-win decision — though maybe not for the many lawyers looking at a case that would’ve blown past the May 2024 trial date as PIF’s appeal was decided.

“There were tens of millions of dollars already being spent,” said attorney Ian Gunn, a sports law professor at Tulane. “There would probably be tens of millions more spent. The PGA Tour had significant exposure in terms of the actions that it took, which were certainly anticompetitive. At the end of the day, there might not have been as much liability [for the PGA Tour], but it was going to be a long battle.”

Backed by a $650 billion sovereign wealth fund, LIV possessed the money to fund a prolonged legal fight — although the PIF might not have been so keen on that approach.

The agreement did shine a light on the hypocrisy of PGA Tour commissioner Jay Monahan. He’ll become CEO of the new organization, which will control the business interests — including all the media rights deals — and will be backed by at least $2 billion of PIF money.

On the other hand, there were likely a lot of closed-door PGA Tour machinations to thwart LIV Golf that won’t come to light (unless The New York Times’ motion [[link removed]] to intervene to gain public access prevails).

The PIF’s appeal to the 9th Circuit earlier this year could have set an unwelcome precedent, considering its many other U.S. investments. If it lost, PIF not only would’ve been subject to discovery in this case — which included a deposition of PIF Governor Yasir Al-Rumayyan — but it would’ve made sovereign immunity arguments much more difficult in other cases moving forward.

But the motion to dismiss was granted on Tuesday — and none of the parties can refile the case since it was dismissed with prejudice. The PIF appeal was dismissed [[link removed]] on Thursday.

“It would’ve been interesting,” Gunn said of a potential trial. “It would’ve been salacious, but I don’t know that we would’ve learned anything different about the character of the organizations and the people involved.”

Now What?

The shock of the announcement in pro golf circles has worn off. Not much is known about the deal — which was negotiated in private over the course of less than two months — other than what was in the original press release.

One insider scoffed when asked about letters sent by Sens. Richard Blumenthal (D-Conn.) and Ron Johnson (R-Wisc.) to Monahan, LIV Golf CEO Greg Norman, and Al-Rumayyan that invited the trio to a July 11 hearing in front of the Senate Permanent Subcommittee on Investigations. Al-Rumayyan will become chairman of the new entity.

“There are no deal points,” the source said. “There’s nothing final yet on the specifics of what the transaction will look like.”

Sources told FOS that the tenor of the most recent player meeting — held in Connecticut at the Travelers Championship on Tuesday night with Tour officials, minus Monahan who has taken a leave of absence to deal with an undisclosed medical issue — was calmer and more productive.

“The first meeting, they were shocked,” one source said. “I think they took a step back, and said, ‘Wait, the litigation is gone, and LIV potentially is no longer a threat.’ I think they can get over the secretive nature of it if the Tour takes steps to better communicate with players as this process plays out in the coming weeks and months.”

While the drama in the meetings has abated, there’s still not a lot to share at this point.

“The sad part is, I probably don’t even have a question they can answer. There just isn’t a whole lot of information out just yet. Some part of the agreement still needs to be written up,” seven-time PGA Tour winner Xander Schauffele told Sports Illustrated [[link removed]] after the latest meeting.

There’s one major reason for that: The LIV Golf-PGA Tour lawsuit wasn’t officially dismissed until right around the time of that Tuesday meeting, when U.S. District Court Judge Beth Labson Freeman signed the order [[link removed]].

“That was a hurdle toward having meaningful business conversations,” one source said. “All that’s stopped. Now, everyone can be in the same room to sort out the transaction. There’s been a lot of progress.”

PGA Tour commissioner Jay Monahan and Rory McIlroy. / Adam Hagy-USA TODAY Sports In From the Cold

Even after final details are set, the PGA Tour’s five-player advisory board — which includes Rory McIlroy, one of LIV’s most outspoken critics — has to give its approval.

One potential issue is how players like Phil Mickelson (who reportedly received $200 million to join LIV), Dustin Johnson ($150M), Bryson DeChambeau ($100M), Brooks Koepka ($100M), and LIV Golf will be, for lack of a better term, repatriated.

All the LIV Golf players who previously held PGA Tour cards remain suspended.

Top players like McIlroy and Tiger Woods are expected to earn some kind of reward for their loyalty, which could include an equity stake in the new company. Meanwhile, various scenarios have been discussed for lifting LIV players’ suspensions.

PGA Tour leadership will be discussing both ideas to potentially reward players who stood with the Tour as well as scenarios for the eventual return of LIV players after significant penalties which are expected to include — but not limited to — additional suspensions and fines.

But that’s all down the road. LIV Golf, which is more than midway through its second season, will be back for a third in 2024, and a 2025 season isn’t out of the question. LIV’s deal with The CW likewise runs through at least next season.

LIV would also need to wind down its contracts with golf courses, although those deals tend to command fees in the low seven figures to exit.

But the PIF isn’t going to let its $2 billion investment in LIV Golf languish while golf’s cold war thaws and the necessary negotiations on a final deal are readied for review by government officials, fans, and players.

“We want a deal to work out,” said one insider. “We’re excited about the future. We’re ecstatic that the litigation is over with.”

Related Reading PGA Tour-PIF Union Could Be Put On Hold For Years [[link removed]]by David Rumsey [[link removed]] and A.J. Perez [[link removed]]

The DOJ is investigating the PGA Tour and Saudi PIF.

NBC’s U.S. Open Golf Coverage Is Most-Watched Since 2019 [[link removed]]by Andrew Cohen [[link removed]]

NBC's U.S. Open average viewership jumped 27% over last year.

Could The NBA Be Open For Saudi Arabia’s Business? Maybe [[link removed]]by David Rumsey [[link removed]]

Adam Silver doesn't shut down the idea of Saudi investment in the NBA.

Bombshell PGA Tour-LIV Merger Leaves Unanswered Competitive Questions [[link removed]]by Eric Fisher [[link removed]]

The stunning merger pairs competing personalities and business models

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