PGA Tour Board meets as Saudi deal scrutiny swells

The PGA Tour board, with its members for the first time since a fraction of them struck a deal with Saudi Arabia’s sovereign wealth fund to reshape golf, sat in the same room Tuesday. stretching from the clubhouse locker rooms to Capitol Hill.

But it also made it clear that closing the deal was not a certainty.

The board, as expected, did not vote on a deal riddled with preliminary terms calling for a web of golf companies — including the tour, the Saudi Arabia-backed LIV Golf circuit and the European Tour, now known as the DP World Tour — to be transferred to a new company. The entity is expected to be flush with Saudi cash, but for now under the day-to-day scrutiny of PGA Tour leaders. But executives hoped the regular meeting of the board of directors, which is not expected to formally review the pact until final terms are negotiated, would help stabilize the tour’s course amid a turbulent series of internal divisions and global scrutiny.

That period, board members know, can take months.

Tour executives, the board said in a carefully worded statement Tuesday evening, have “entered a new phase of negotiations to determine whether the tour can reach a final agreement that is in the best interests of our players, fans, sponsors, partners and the game.” in general.”

The board, wary of further alienating the players included in the tour’s membership, some of whom were furious after being blindsided by news of the pact, said it was “committed to the safeguards in the framework agreement ensuring that the PGA Tour would lead and maintain control over this potential new commercial entity.”

The board meeting took place three weeks after the surprise announcement of the deal, and a day after the tour, a Senate subcommittee released a copy of the five-page framework agreement. The preliminary agreement, signed in the early morning hours of May 30 at a Four Seasons hotel in San Francisco, ended seven weeks of secret negotiations, but it was notable for the small number of binding commitments it contained — and how many resulting details were left. are sorted.

While the tour and endowment fund are expected to bring their golf ventures, such as LIV, into the new company, the deal’s architects signed the framework agreement so quickly that no valuations were included or, apparently, even completed ahead of time. The agreement does not quantify the size of the endowment fund’s expected investment in the new company, though it outlines the leadership structure and protects the Saudi fund’s investment rights.

The few binding clauses include a non-disparaging pledge that covers the tour and fortune fund (but not the players) and a truce that keeps the rival circuits from recruiting golfers from each other. If there is no final agreement by the end of the year, barring a mutual renewal, the tour and wealth fund can “return” to their businesses without any financial penalty, such as a severance payment.

Board approval, if any, is no guarantee that the deal will hold. The Justice Department’s antitrust regulators are among government officials investigating the accord, and they may eventually try to block it. The pact will also be examined next month on Capitol Hill, where a Senate subcommittee has scheduled a hearing for July 11.

But Tuesday’s meeting was seen as crucial to moving forward for the tour and an 11-member council that includes five players and celebrities in business, law and finance. Only two board members, Edward D. Herlihy and James J. Dunne III, were involved in the negotiations that led to the deal, and it appears many board members were unaware they were on their way.

The board meeting, held at a hotel in the Detroit area, began in the early afternoon and continued into the evening. A person familiar with the meeting, who spoke on condition of anonymity to describe a private meeting, said it was not fully focused on the deal; instead, the person said, the board also devoted a lot of time to more technical matters of the sport, such as competition cuts and eligibility.

Most of the meeting, however, focused on the framework agreement, with board members being briefed by the tour’s bankers on how they will attempt to assign values ​​to the circuit’s various assets. Jay Monahan, the commissioner of the PGA Tour, was absent from the meeting in Dearborn; on June 13, the tour announced he was going on a leave of absence while he recovered from an unspecified “medical situation.”

Board members did not comment as they left the meeting, leaving the statement on its own. Only one player sitting on the board, Rory McIlroy, has publicly suggested any support for the deal. In recent weeks, other players have said they wanted to know more about the agreement and what it would mean for the tour.

But board members have been told in recent months that the tour couldn’t afford to continue the duel with LIV, the league founded with billions of dollars from the Saudi wealth fund that tempted some of the game’s biggest stars with guaranteed guarantees. contracts and huge prize money. The endowment fund also came under some strain as it faced setbacks in a lawsuit against the tour, and as LIV struggled to gain public and attention in the United States for reasons beyond the lender’s control.

However, if the deal falls through, both parties have already won a mutual victory: California’s post-tour lawsuit dismissal, the wealth fund and LIV agreed to drop their clashing cases. The resignations are made with prejudice, meaning they cannot be resubmitted even if the rest of the pact falls apart.

For as careful as the tour’s statement was on Tuesday night, the trial’s denial was stated in the very first sentence.