Even the U.S. Senate wants more information on secretive deal between Saudi PIF and PGA Tour.
The PGA Tour, the Saudi Arabian-owned Public Investment Fund and LIV Golf may be working to finalize the terms of their planned merger, but it won’t take place without a closer look from Capitol Hill.
Sen. Richard Blumenthal (D-Conn.), chairman of the Senate Permanent Subcommittee on Investigations, said Monday the deal raises concerns “about the Saudi government’s role in influencing this effort and the risks posed by a foreign government entity assuming control over a cherished American institution.”
After an initial media release last week by the Tour that called it a merger, both parties have tried to avoid characterizing the deal as a merger, saying the PGA Tour would retain its non-profit status and the joint commercial entity would exist as a secondary asset. The press release by the PIF announcing the news June 6, and still available on the organization’s website, starts with the statement that the “PGA Tour, DP World Tour, LIV Golf merge commercial operations under common ownership.”
By combining forces, the PGA Tour and LIV Golf could become an even bigger target for antitrust regulators, who could potentially try to block or delay the deal.
Citing Saudi Arabia’s “deeply disturbing human rights record at home and abroad,” Blumenthal said in his letter to PGA Tour commissioner Jay Monahan the Tour’s “sudden and drastic reversal of position concerning LIV Golf raise serious questions regarding the reasons for and terms behind the announced agreement.”
Brent Schrotenboer and Nancy Armour from USA TODAY contributed to this article.
During Tuesday’s PGA Tour players’ meeting in Toronto, Tour pros called PGA Tour commissioner Jay Monahan a hypocrite and said it was time for new leadership. The latter remark drew a standing ovation.
This moment in time happened shortly after Monahan blindsided the players he works for by announcing an agreement brokered in secret to merge commercial interests in a newly formed business entity with the DP World Tour and Saudi Arabia’s Public Investment Fund, the sole financier of the rival LIV Golf.
The optics following that meeting, which Monahan himself described as “heated” and “intense,” are that he’s in a tumultuous and weakened position. The knee-jerk reaction is to think Monahan has lost trust with the players and is a dead man walking.
But that is a short-sighted view, according to one former Tour pro.
“Survive?” he wrote in a text. “They are going to give him a raise and throw him a parade.”
The parade may have to wait several years for the anger to die down and for players to have been rewarded handsomely for being good soldiers during golf’s civil war. But the larger point is that Monahan’s in the strongest position he’s ever been in, which is hard to fathom after the beating he’s taken in the court of public opinion the last few days until you factor in that he’s CEO in the proposed for-profit enterprise and his only competitor is now his partner. He’s leading a new global golf entity and has two of his board members – chairman Ed Herlihy and Jimmy Dunne – covering his flank.
“Can he survive it? He’s already come out on top. This is game, set, match,” said a former longtime PGA Tour executive, who knows the ins and outs of how the Tour operates. “Now we’re just dissecting the game: How was the Tour down two sets to one and all of a sudden they went 6-0, 6-0, we win. And, oh, by the way, the guy we just beat is going to be our new doubles partner.”
PGA Tour Commissioner Jay Monahan speaks during a news conference ahead of the 2022 Tour Championship at East Lake Golf Club in Atlanta, Georgia. (Photo: Cliff Hawkins/Getty Images)
In this brave new world, Monahan and board members Herlihy and Dunne are at the top of the mountain. According to the press release announcing the deal, the Tour will hold the majority of the board seats. This was a power play, a turf grab and Monahan protected his job all under the flag of ‘this is the best for the game.’
It took the two board members, Monahan’s consiglieres, to convince him to take a meeting with His Excellency Yasir Al-Rumayyan, the governor of Saudi Arabia’s sovereign wealth fund, who, sticking with the mafia theme, made Monahan an offer he couldn’t refuse. He finally realized that there’s no bottom to the Saudi pockets and that LIV wasn’t going away and would continue to poach players. So he sold his soul and took the money.
Then it became a matter of determining how he was going to justify his about-face and explain his utter lack of transparency to his membership. He could argue that the litigation was a drain on resources and that dropping it would avoid having its dirty laundry aired in discovery, which could be problematic. Monahan won’t publicly address some of the challenges the Tour was facing but sources say that there was pushback from sponsors asked to pony up more money for the designated events, which the Tour was funding this year through its reserves, and the TV networks were asking for modifications to their long-term agreements due to the loss of big names.
The Tour’s rainy day fund may not have been equipped to outlast the storm. Remove the source of the money and the deal makes a lot of the Tour’s problems go away, not to mention the financial woes of the DP World Tour. Taking the moral high road in the fight against LIV, all the anti-Saudi rhetoric turned out to be just another strategy to securing a better price. Monahan knew he’d be painted as a hypocrite and he made the deal anyway.
“Jay took the arrows, took the hit, he got lambasted and was burned in effigy, but is he going to lose his job? No,” said the former Tour executive.
But at least one agent to a multiple major winner was making phone calls on his players’ behalf to determine how Monahan could be ousted from office so that the unhappy pros could hit the pause button on the memo of understanding with the Saudis.
“It was an autocratic decision. This is supposed to be a member’s organization, right?” the agent said.
PGA Tour Commissioner Jay Monahan converses with Dustin Johnson on the seventh tee during a pro-am prior to the RBC Heritage at Harbor Town Golf Links on April 13, 2022, in Hilton Head Island, South Carolina. (Photo by Kevin C. Cox/Getty Images)
But here’s the reality: the players have little to no recourse. They could have a majority vote to remove Monahan and it would only confirm how support for his leadership has dwindled. Monahan can only be ousted from above and that’s the board and two of the independent directors on the board are also on the board of the new entity.
There’s nothing in the Player Handbook labeled “how to replace the Commissioner.” But to organize a special meeting a player has to have a written request from two or more of the player directors of the Tour’s policy board or file a petition signed by no less than 25 percent of the voting members of the PGA Tour with the Commissioner. Within 30 days of receipt of the request of that petition, the Commissioner shall schedule and give notice to such a meeting. In short, to have a policy meeting requires a lot of leg work.
Monahan may have lost the faith of many of the players but there is no unified voice – they are divided over PIP, over designated events, etc. As one former Tour pro put it, “the majority of players just care if their direct deposit works on Tuesday.”
Unless the Tour’s policy board were to block the deal, which seems highly unlikely, Monahan’s job isn’t just secure, he’s more entrenched than ever before. No one has any leverage to unwind the agreement he’s made. The players don’t have a voice. They’d have to unionize against their own association. There is, however, one way Monahan’s power play could unravel: if the U.S. Department of Justice determines the proposed merger violates anti-trust rules. A DOJ probe is ongoing, but Herlihy, the Tour’s chairman and a lawyer by trade, co-heads one of the top law firms and his specialty is mergers and acquisitions. He’ll know how to lead the Tour through any murky waters.
“The corner office is set,” the former Tour executive said. Monahan’s legacy may look in tatters today, but in time his preemptive strike to end the hostility in golf and pump billions of dollars into the sport may have the same pros calling for his head to throw him a parade down PGA Tour Boulevard.
All it took was selling the PGA Tour’s soul less than one year after Monahan said it wasn’t for sale.
So many questions were raised but first off, how did Monahan get from refusing to meet with the Saudis for the past several years to getting into bed with them?
“We just realized 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,” he said. “Ultimately it was looking at the broader picture and saying that I don’t think it’s right or sustainable to have this tension in our sport, and to be able to organize and orient this in a way where we’re in a control position, we have an investor, a great and world-class investor, and I recognize everything that I’ve said in the past and in my prior positions.
“I recognize that people are going to call me a hypocrite. Anytime I said anything, I said it with the information that I had at that moment, and I said it based on someone that’s trying to compete for the PGA Tour and our players. I accept those criticisms. But circumstances do change. I think that in looking at the big picture and looking at it this way, that’s what got us to this point.”
Monahan shared more on the timeline, noting that secret conversations had been conducted over the last seven weeks. There were four in-person meetings and a number of video calls and phone conversations.
https://www.instagram.com/p/CtKpEiItaLu/
“When you get into these conversations, and given the complexity of what we were dealing with, it’s not uncommon that the circle of information is very tight,” Monahan explained. “In our case, we kept that information very tight. There were two prominent Policy Board members that sat side by side with me, our chairman Ed Herlihy as well as Jimmy Dunne, and ultimately we got to the point where we finalized everything last night and had a communications plan that we started first thing tomorrow.”
Monahan pointed out that Saudi Arabia’s financial resources will allow the Tour to capitalize on a number of opportunities that will allow it to create “meaningful growth” for its players.
“Between our reserves, the legal fees, our underpin and our commitment to the DP World Tour and their legal fees, it’s been significant,” he said of the costs of fighting a civil war with LIV. “I’m grateful that when we looked to ’24, the response that we’ve gotten from our sponsors and our partners has been very positive, and those losses that we’ve experienced in ’23 will be significantly mitigated.
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“We’ve been handicapped. We’re a pass-through organization. We’ve not been able to reinvest our dollars in growth businesses, and now this gives us the opportunity to do that. Being able to do that and recognizing the uncertainty generally in the commercial realm going forward puts us in a position where I can say today to our members that we’re going to experience meaningful growth as we go forward.
“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 said it was too soon to determine the pathway back for LIV players but he said those members who remained loyal made the right decision.
“They’ve helped rearchitect the future of the PGA Tour. They’ve moved us to a more pro-competitive model,” he said. “I think any player that has stayed is going to realize that the money that they’re going to make, the strength of this platform, all the things that we talk about are going to put them in a really strong position. They’re going to win. They’re going to continue to grow, and we’re in a control position on their behalf as we move forward in this structure.”
Chamblee’s take on Tuesday’s major announcement was greatly anticipated. He didn’t disappoint.
As the most outspoken voice in the game on LIV Tour and the growing involvement of the Saudi PIF in golf, Golf Channel’s Brandel Chamblee’s take on Tuesday’s blockbuster announcement of the merger agreement between the PGA Tour, DP World Tour and PIF was greatly anticipated.
He didn’t disappoint.
“I think this is one of the saddest days in the history of professional golf,” Chamblee said.
“I do believe the governing bodies, the professional entities have sacrificed their principles for profit,” he said. “Then, of course, I tried to imagine what circumstances would have led to such a capitulation.
“I think there are three things likely that would have led to something like this: Intractable legal issues going on indefinitely into the future … with legal vulnerability on both sides and the only ones who stood to profit from that were the lawyers involved.
“The entanglement of the various business entities and sponsors that the PGA Tour has that have Saudi money, PIF money in them. It became increasingly difficult for the PGA Tour to disentangle themselves from that scrutiny and that criticism. They were leaving billions of dollars potentially on the table for the growth of the game.”
Chamblee said he expected PGA Tour players, many of whom learned of the deal via social media or after the announcement was made, to be “hugely disappointed and let down by the leadership,” he said. “One of my first thoughts was I wonder what Tiger and Rory and other players that turned down 10s and 100s of millions of dollars and stood on principle and fought for the PGA Tour and the betterment of the PGA Tour and this came out of nowhere. I would imagine this will be a very hard and long day for Jay Monahan.”
Chamblee and LIV’s Phil Mickelson have been involved in an ongoing Twitter spat, and Chamblee was asked if he thought Mickelson, who was the first prominent name to jump to LIV, viewed the merger announcement as vindication?
“I’m sure he does. I’ve had numerous people ask me about this today about Phil and I. This isn’t about Phil; this isn’t about me, it’s not. It’s about the growth of the game and the future of golf,” Chamblee said. “Will the game of golf still have its integrity? Will it still have this leadership that so many people point at as one of the most inspiring aspects of golf? This isn’t about Phil, it’s not about me, this is about the game of golf, it’s about the future of golf, it’s about so much bigger than either of us.”
When asked to name one question he’d like to broach to PIF Governor Yasir Al-Rumayyan, Chamblee couldn’t pick just one.
“Is it going to bring dishonor to the sport? Is it going to jeopardize the integrity of the sport going forward? How can you square your involvement with an entity that is so involved with philanthropy and charity while you have a country and source of the funds that is the most misogynistic, is the most anti-semitic, that doesn’t have freedom of speech, that doesn’t freedom of expression, that doesn’t have freedom of religion, that tries to silence, kill or dismember members of the media that speak out in opposition to their government,” Chamblee said. “Are any of these going to be removed, ameliorated, going forward? It’s not just the money. I’ve always said that they’re trying to buy the success of the West and then pretend they are surrogate to the success. The enormous success of the West at least in my view comes about because of the particular freedoms that are the foundation of the West.
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“To what extent are they going to alleviate all of the issues that we’ve talked about that the West has such a problem with. And by the way, does PIF want to own all of the professional golf?”
At the end of the interview, Chamblee’s GC colleague Rich Lerner asked him: what would have to happen for you to continue to do in good conscience what you love to do, which is talk about golf?
“This deal needs to meet three specific criteria,” Chamblee said. “The philanthropic aspect of the Tour needs to remain intact; the integrity of tournaments must remain intact; and the legacy of past players must be protected.
“I continue to love the game of golf. I love what I do. I love where I get to work. My job is to analyze the game. I have said for the longest time that I look forward to getting back to talking about golf, golf swings, competition, just the game and not the politics around the game. I don’t work for the PGA Tour and I look forward to getting back to talking about golf and not these politically fragmented issues in the game of golf.”
The ramifications of the development are still unraveling. What do we know now?
In a surprise announcement Tuesday morning that came after a year of bitter fracturing in men’s professional golf, the PGA Tour and the Saudi-backed LIV Golf tour announced an agreement to merge their business operations.
The ramifications of the development are still unraveling, as a 4 p.m. ET meeting has been scheduled for PGA Tour players, many of whom reported being entirely unaware of the agreement.
Both the PGA Tour and LIV Golf, along with the DP World Tour, announced the move in a joint statement published Tuesday. The merger aims to create “a new, collectively owned, for-profit entity to ensure that all stakeholders benefit from a model that delivers maximum excitement and competition among the game’s best players.”
The terms of the agreement are not fully finalized and are scheduled to be completed in the coming months.
“After two years of disruption and distraction, this is a historic day for the game we all know and love,” PGA Tour commissioner Jay Monahan said Tuesday in a statement.
“Going forward, fans can be confident that we will, collectively, deliver on the promise we’ve always made — to promote competition of the best in professional golf and that we are committed to securing and driving the game’s future.”
The R&A said “we look forward to working with the new entity for the benefit of the sport globally” as to professional golf’s new format.
Martin Slumbers, CEO of the R&A, weighed in Tuesday on the announcement that LIV Golf, the PGA Tour and the DP World Tour plan to merge under the umbrella of one new for-profit company that is yet to be named.
The R&A governs the sport of golf in most of the world outside the United States and Mexico. The R&A (originally part of the Royal & Ancient Golf Club but now an independent governing body) is separate from the DP World Tour, formerly the European Tour. The R&A conducts the Open Championship, known by many in the U.S. as the British Open. In cooperation with the USGA, the R&A determines the Rules of Golf.
It was not made clear if the R&A had been aware of the merger ahead of Tuesday’s statement. Many professional golfers have expressed surprise upon hearing the news. The USGA had not made any statements about the planned merger as of early Tuesday afternoon.
The full statement from Slumbers, who has been head of the R&A since 2015:
“We are pleased that an agreement has been reached which will help men’s professional golf move forward in a collaborative, constructive and innovative fashion. We care deeply about golf’s future and are committed to ensuring that the sport continues to thrive for many years to come. This agreement represents a huge step toward achieving that goal for golf and we look forward to working with the new entity for the benefit of the sport globally.”
Norman, who lives in Palm Beach Gardens, was behind the creation of LIV Golf.
The PGA Tour and Saudi-backed LIV Golf, who have been embroiled in a year-long bitter rivalry, have agreed to merge, they each announced Tuesday morning.
The tours, including the DP World Tour, signed an agreement that would combine their commercial businesses and rights into a new company. The move is thought to be a big win for the sport, which had become divided.
“After two years of disruption and distraction, this is a historic day for the game we all know and love,” PGA Tour commissioner Jay Monahan said in a statement. “This transformational partnership recognizes the immeasurable strength of the PGA Tour’s history, legacy and pro-competitive model and combines with it the DP World Tour and LIV — including the team golf concept — to create an organization that will benefit golf’s players, commercial and charitable partners and fans.
“Going forward, fans can be confident that we will, collectively, deliver on the promise we’ve always made — to promote competition of the best in professional golf and that we are committed to securing and driving the game’s future.”
With @PGATOUR and @livgolf_league agreeing to combine, what will the new organization look like?
— Squawk on the Street (@SquawkStreet) June 6, 2023
The tours have been embroiled in a year-long bitter rivalry that has included insults being hurled back and forth by LIV commissioner and CEO Greg Norman and Monahan along with several lawsuits. As part of the new deal, those lawsuits will be dropped.
Norman, who lives in Palm Beach Gardens, was behind the creation of LIV Golf. The league, financed by Saudi Arabia’s Public Investment Fund, has come under fire for what detractors say is a form of “sportswashing,” with Saudi Arabia attempting to distract from its atrocious human rights violations.
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From the start, Norman was seeking collaboration from the PGA Tour and told The Palm Beach Post last summer he believed a LIV-PGA Tour merger was in the future.
“One hundred percent I do,” Norman said when asked if he believed the two tours could come together. “Jay Monahan, if he had the decency to take our meetings right from the get-go, none of this stuff would be in place today. The game of golf would be in a much better place. The Tour would be in a much better place. European golf would be in a much better place.
“In the world of business if you got a competitor coming to challenge you, understand what your competitor’s got by sitting down and signing an NDA, having a conversation and see (what) works for us.”
