The merger of LIV Golf and the PGA Tour: Here’s what you need to know

The PGA Tour, the world’s preeminent professional golf league, and LIV Golf, a Saudi-funded upstart whose rise in the past year and a half has split the sport in half, have agreed to join forces.

The pact is complicated and incomplete, and many golfers dislike it. They direct their anger at the architects of the deal. Let’s start at the beginning.

What are the PGA Tour and LIV Golf?

The PGA Tour holds tournaments almost every weekend, mainly in the United States but also in other countries in North America, Europe and Asia, with prize pools worth millions of dollars. The tour has been home to pretty much every male golfer you can name: Jack Nicklaus, Tiger Woods, Arnold Palmer and so on.

It has affiliations with, but is separate from, the organizations that host the four majors of men’s golf: the Masters Tournament, the PGA Championship, the US Open, and the British Open.

LIV Golf began in late 2021 with former PGA Tour player Greg Norman as commissioner and billions of dollars in support from the Saudi sovereign wealth fund known as the Public Investment Fund. LIV lured several PGA Tour players, including major champions Phil Mickelson and Brooks Koepka, with huge purses and guaranteed payouts far beyond what they could earn on the established circuit.

LIV promised a sharp break from golf’s seedy traditionalism, with music blaring at events, looser dress codes and team competitions – and tournaments lasting three days instead of four. Further, of particular interest to potential players, as the PGA Tour tournaments eliminated golfers with the worst scores after two rounds, LIV would not exclude anyone.

What was the relationship between the leagues before the deal was aligned?

Bitter, to put it mildly. Players who joined LIV were forced to resign from the PGA Tour – and its European equivalent, the DP World Tour – under threat of suspension and fines. LIV sued the PGA Tour, and the PGA Tour filed a countersuit, a lawsuit that is technically still pending (although the deal should resolve it).

PGA Tour supporters and other critics of LIV said the venture was simply an attempt by the Saudi government to divert attention from its human rights record, while LIV supporters said the PGA Tour was a monopoly that used undue forceful tactics to protect its position in top sport.

It seems like. The PGA Tour and LIV on Tuesday announced the formation of a new entity that would combine their assets, as well as those of the DP World Tour, and revolutionize the governance of golf.

The PGA Tour would remain a non-profit organization and would retain full control over how the tournaments are played. But all of the PGA Tour’s commercial property and rights — such as the extremely lucrative rights to televise its tournaments — would be owned by a new, yet-to-be-named for-profit entity currently called “NewCo.” NewCo will also own LIV, as well as the commercial and corporate rights of the DP World Tour.

The board of directors of 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 the current members of the PGA Tour’s board, and the tour would nominate the majority of the board and hold a controlling interest, effectively controlling it.

Does this change how I track golf?

Not yet. For the remainder of 2023, all tours will remain separate and all of their tournaments will proceed as scheduled.

And after that?

Who knows? For example, Jay Monahan, the commissioner of the PGA Tour, answered questions on Tuesday about what golf might look like in the future.

• Will LIV continue to exist as a separate golf league? “I don’t want to make any statements or make predictions.”

• Will LIV golfers return to the PGA Tour and DP World Tour? “We will work together to establish a fair and objective process for all players who wish to re-apply for membership on the PGA Tour or the DP World Tour,” Monahan wrote in a letter to players.

• Will PGA Tour players, many of whom rejected LIV and its huge payouts, receive compensation? Will LIV players somehow be forced to give up the guaranteed money? “I think these are all serious conversations we’re going to have,” Monahan told reporters.

What do players think about all this?

In general, LIV players seem to think they’ve got a big win, and they’re probably right. They have their cake (massive payday) and can eat it too (a way of getting back to the PGA Tour).

Mickelson, the first major player to leave for LIV, tweeted that it was a “great day today”. Koepka took a jab at Brandel Chamblee, a former professional golfer and current TV commentator, who has been vocally anti-LIV.

Many PGA Tour players were less jubilant. They were blindsided by the news, learned of the deal when the public did, and they didn’t seem to understand why the tour was waging a legal war on LIV and a moral war on Saudi money, only to invite the wolf into the chicken coop .

Monahan met a group of players in Toronto on Tuesday at the Canadian Open, which was set to start in two days, later telling reporters it was “intense, definitely 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 a lot of times when certain players called for a new PGA Tour lead, even getting a few 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 am commissioner of the PGA Tour, no player who has taken LIV money will ever play the PGA. On tour again.’”

Wagner estimated that 90 percent of the players in the meeting opposed the merger.

Can the players prevent this?

Possible! The agreement was negotiated in secret for seven weeks this spring. Most of the board, players, broadcast partners and others were in limbo until the public announcement.

Monahan stressed that there was only a “framework agreement” and not a “final agreement,” with many details still to be decided. The final agreement must be voted on by the PGA Tour’s Board of Directors, known as the Board of Directors.

The Board of Directors consists 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.

If Wagner’s estimate that 90 percent of players are against the merger is correct, the vote could become difficult.

If the PGA Tour was so against LIV and Saudi money, what has changed?

“Listen, circumstances are changing, and they’ve changed a lot in the last few years,” Monahan said.

Do you understand? No?

“What changed? I looked at where we were at the time and it was the right time to have a conversation,” said Monahan.

Reading between the lines, Monahan made it sound like the deal came down to money and competition, as it so often does. To compete with LIV, the PGA Tour has bolstered purses, financially supported the DP World Tour, and fought extremely expensive lawsuits. “We have had to invest back into our business through our reserves,” Monahan said.

He also said the ability to “take the competitor off the board” was significant while maintaining control.

Can someone else prevent the deal from going through?

The Department of Justice, the Federal Trade Commission or the European Commission could certainly try.

For about a year now, the Justice Department has been investigating the close relationship between the PGA Tour and other powerful entities in golf. One of the questions is whether the organizations have exercised undue influence over the Official World Golf Rankings, which determine players’ eligibility for certain events and could 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 this wouldn’t necessarily change the Justice Department’s investigation. If there were any illegal conduct on the part of the PGA Tour, a merger would not prevent the PGA Tour from being penalized for it.

“Announcing a merger does not forgive past sins,” said Bill Baer, ​​who led the Justice Department’s antitrust division during the Obama administration.

The federal government, through the Department of Justice and the FTC, also reviews more than 1,000 mergers each year for approval, and the European Commission reviews them for the European Union. Without a final agreement, it’s not clear if this is the type of combination that regulators could block or if they would try.

Saudi Arabia seems to have big sporting ambitions. Will it always be a junior partner of the PGA Tour in golf?

As always, Saudi Arabia has the perfect tool to gain more control: money.

The Public Investment Fund will invest “billions” in the new for-profit entity, according to the governor, al-Rumayyan. It will also have “exclusive right to further invest in the new entity, including a right of first refusal to any capital that may be invested in the new entity, including in the PGA Tour, LIV Golf and DP World Tour,” it said. the release announcing the agreement.

If the Public Investment Fund invests more money, it will certainly demand more board seats and more voting rights, shifting control of professional men’s golf further to the kingdom.