The PGA Tour and LIV Golf are currently engaged in an arms race for the future of golf. The PGA Tour recently received a massive $3 billion injection of cash from the Strategic Sports Group (SSG), while LIV Golf is focusing on luring top players with lucrative contracts. The ultimate goal for the PGA Tour is to preserve the traditional nature of the sport.
The PGA Tour’s deal with SSG will not only fund tournament purses for the next five years but also provide players with $1.5 billion in equity shares. Additionally, the deal grants the PGA Tour seven seats on the 13-member board and a new name: PGA Tour Enterprises. This agreement is seen as a temporary lifeline for Tour commissioner Jay Monahan and a shrewd investment by notable sports franchise owners such as John Henry and Tom Werner (Fenway Sports Group), Mark Attanasio (Milwaukee Brewers), Steve Cohen (New York Mets), Wyc Grousbeck (Boston Celtics), Arthur Blank (Atlanta Falcons), and Tom Ricketts (Chicago Cubs).
The Fenway Sports Group, which owns the Boston Red Sox, Liverpool FC, and the Pittsburgh Penguins, led the deal and expanded its already impressive portfolio. For the other billionaires involved, this was a no-brainer investment. Instead of buying individual properties on a Monopoly board, they acquired an entire side at a great value.
The addition of investors is intended to help alleviate the regulatory scrutiny surrounding the PGA Tour-LIV merger. However, the exact impact of increased money and power on regulatory issues remains unclear. While this move might not expedite the pending deal, it could potentially prolong the negotiations, which were originally expected to conclude on December 31st. If the PGA Tour had been more proactive earlier in the process, the $3 billion injection might have been sufficient to maintain its autonomy. Unfortunately, it may now be too little too late, as top players like Jon Rahm, Dustin Johnson, Phil Mickelson, Cameron Smith, Brooks Koepka, and Bryson DeChambeau have already signed contracts with LIV Golf worth a staggering $950 million in total.
The Professional Investment Fund (PIF), the primary financial backer of LIV Golf, has spent nearly $1 billion on securing these six top golfers. While they are undoubtedly some of the biggest names in the sport, it is unlikely that the top six PGA Tour players will receive two-thirds of the $1.5 billion equity sharing. The PGA Tour has stated that the allocations will be weighted based on ranking, but with the ambiguity surrounding membership criteria, dividing up the equity could prove to be a challenge.
As for Tiger Woods, who finished 228th in the FedEx Cup rankings last season, he is expected to receive significantly less in equity shares compared to what he could have earned by joining LIV Golf. Despite Woods’ low ranking, his value as a player is not always reflected in his ranking. In the last season Mickelson qualified for the FedEx rankings, he finished 70th, yet he still received a substantial contract from LIV Golf, second only to Rahm.
One of PGA Tour commissioner Jay Monahan’s biggest mistakes may have been believing that adding billionaire backers to the bargaining process would give the PGA Tour an advantage. However, when negotiating with individuals who have virtually unlimited funds, this tactic seems futile. The PGA Tour’s only remaining high ground was its moral stance, which was compromised when it chose to merge with LIV Golf.
Simply enriching already wealthy individuals is unlikely to win the PGA Tour any favor. In fact, it may be more beneficial for the Tour to distance itself from controversial partners like the Saudis, as regaining respect from fans is crucial. The longer fans’ favorite players are absent from tournaments or competing in lesser-known events, the greater the risk of losing casual viewers and the revenue they generate.
While the drama surrounding defectors invading major tournaments may be entertaining, the tournaments in between are becoming increasingly irrelevant. Longtime sponsors such as Wells Fargo, Honda, and Farmers Insurance have already severed ties with the PGA Tour. It is time for Monahan and the PGA Tour to accept their fate, as last-ditch efforts reminiscent of the TV show “Succession” will only be effective if the Saudis withdraw from the scene, which is highly unlikely.
