Details are emerging about how the PGA Tour and Saudi-backed LIV Golf plan to merge their commercial operations and bring the sport’s top players back into a new entity.
In a five-page agreement obtained by CNBC, the parties — the PGA Tour, Saudi Arabia’s Public Investment Fund and Europe’s DP World Tour — agreed to create a for-profit subsidiary for the PGA Tour. The new entity will manage all of the tour’s commercial assets, while the PGA Tour will manage the tournament.
The Tour will have a permanent controlling stake in the new entity’s board of directors and will maintain a majority regardless of PIF’s investment, the document said. PIF agreed to be a non-controlling minority investor and said it would invest billions of dollars in the entity.
Specific details about the valuation of the assets were still being negotiated and were not included in the document as of May 30, when the agreement was signed.
The news about the structure of the deal comes ahead of a July 11 Senate hearing where top leaders from all political parties are called to testify.
Since its launch in 2022, LIV has been mired in controversy and criticism. In fact, as its name suggests, PIFs are not held publicly. It’s a sovereign wealth fund controlled by Saudi Crown Prince Mohammed bin Salman that has been accused of a “sports shuffle,” effectively using LIV golf and other sports investments to improve the oil-rich nation’s image and distract Concerns about the human history of the kingdom. violate rights.
The tentative merger agreement was signed by PGA Tour Commissioner Jay Monahan, DP World Tour CEO Keith Pelley and PIF’s Yasir al-Rumayyan.
The agreement provided no other details about the proposed merger announced earlier this month and would end all litigation between the PGA Tour and LIV Golf.
The two groups have filed a series of antitrust claims against each other. LIV accused the Tour of banning its players for anti-competitive conduct. The PGA Tour countersued, claiming LIV stifled competition.
The lawsuits come after several high-profile players left the PGA Tour for LIV, including Phil Mickelson.
The tentative agreement also concludes player recruitment during the negotiation process and lays out a set of requirements to guide the final agreement, including a non-disparagement clause between all entities.
The PGA Tour’s board of directors, which includes player directors, will have to sign off on a final definitive agreement, negotiations for which are still ongoing, according to a person familiar with the matter.
“There’s a lot of work to do to get us from a framework agreement to a definitive agreement,” Monaghan said in a memo to players when the trade was announced.
On Tuesday, the PGA Tour Policy Committee said it held its regular meeting in Detroit.
In a statement, the board noted that the proposed deal would end “costly litigation” between the entities, and Tuesday’s board meeting focused on whether a definitive agreement could be reached.
“Based on the advice of our Director of Players, management has now begun 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 tournament as a whole.” The board said in a statement, adding that it included input from members through its player directors.
The board said it is committed to “the safeguards in the framework agreement to ensure that the PGA Tour can lead and maintain control of this new potential commercial entity.”
When the proposed deal was announced, Monaghan acknowledged tensions between the two organizations but said “the game of golf is better than what we do today.”
The entities previously said they would “establish a fair and objective process for any player who wishes to reapply for a PGA Tour or DP World Tour membership” after the 2023 season.
Meanwhile, key lawmakers are holding Senate subcommittee hearings to scrutinize the proposed deal.
Sen. Richard Blumenthal and Ron Johnson, chairman and ranking member of the Senate Homeland Security Committee’s Permanent Subcommittee on Investigations, said in a letter that the subcommittee would review the proposed deal and “relationships with foreign government investments.” related risks”. The implications for U.S. cultural institutions, and the implications of this planned agreement for the future of professional golf in the United States. “
The PGA Tour said its executives would testify at the hearing, but it was unclear whether Monaghan would attend. Monaghan, who was earlier named future commissioner of the new entity, was recently on leave due to recovery.