The PGA Tour ultimately decided to partner with the PIF because it wants to own and control professional golf just as much as, if not more than, the Saudis, and is no less power hungry and morally nimble. The Public Investment Fund, meanwhile, previously prioritized making money on professional golf and long ago understood a deal with the PGA Tour presents that pathway. The PIF, valued at more than $700 billion, is in the business of making money to transform the kingdom’s oil-dependent economy and finance a government ruled absolutely by Crown Prince Mohammed bin Salman and the Saudi royal family.
So let’s talk about it.
This all, in hindsight, could’ve very well ended that late April day in London.
Al-Rumayyan sat opposite PGA Tour emissaries Jimmy Dunne and Ed Herlihy. The first meeting. Neither side came looking to spar. This was, instead, an attempt to breathe the same air, see what was in the middle. Both sides agreed professional golf’s schism was bad for everyone. Both agreed ongoing litigation between the U.S.-based PGA Tour and Saudi Arabian-backed LIV Golf was both costly and ineffective. Neither wanted to go through the discovery process of a further drawn-out court battle. So al-Rumayyan removed any possible contention with a move no one saw coming.
The Public Investment Fund of Saudi Arabia, he said, intended to drop all litigation against the PGA Tour, regardless of how the meeting proceeded.
Dunne, a member of the PGA Tour’s policy board, and Herlihy, the chairman of the board, stared back at al-Rumayyan.
“I think they were stunned by it,” said an individual with knowledge of the PIF’s side of the meeting. “I mean, they were shocked. (Al-Rumayyan) just put that on the table in exchange for nothing.”
That alone may have been worth the trip for Dunne and Herlihy. “A massive win,” the individual said. “They could’ve said that was enough.”
Yet, they didn’t.
That’s not why they were there.
The PGA Tour’s dalliance with the PIF was not a matter of peace or survival. The goal was to both somehow surrender the fight and commandeer the boat. The tour’s financial position over the last year went from tenuous to potentially unsustainable. The costs of massively increased purses (a byproduct of the arms race vs. LIV), subsidies earmarked for the DP World Tour, and legal fees exceeding $10 million monthly, were not being funded by a new windfall of sponsorship money or a magically increased media deal. The tour’s 2023 finances are strained and, according to Monahan, in order to make changes in ’24, “we’ve had to invest back in our business through our reserves.” On top of everything, a constant dread existed, fear of another big star leaving, weakening the product more and more. Some around the tour believe outside recruitment threats were greater than any fiscal concerns.
This was, at its core, an existential crisis. The tour’s books weren’t yet at the brink, but would inevitably get there, as long as the PIF continued unhindered spending on LIV. Which, why wouldn’t it?
“They could further marginalize us and lure away players and, in time, transform the tour into a minor league,” said one individual involved with the PGA Tour’s negotiation with the PIF.
Facing an uncertain financial future and uncertain legal outcomes, Dunne and Herlihy didn’t leave the table. Sure, al-Rumayyan dropping litigation might ease some tension on the tour, but wouldn’t solve the larger problem — competing with Saudi spending.
They were there to make a deal, not a truce.
It was six months earlier when Monahan added Dunne to the PGA Tour policy board, a 10-member group made up of five PGA Tour players and five independent board directors from the corporate world that collectively casts the deciding votes of consequence and, ostensibly, acts as Monahan’s boss.
Dunne, an investment banker with a long history in mergers and acquisitions, is a Wall Street legend and an omnipotent and omnipresent figure in golf. As a new independent director on the board (joining Bond Capital partner Mary Meeker, former AT&T CEO Randall Stephenson, former Wellington Management vice chairman Mark Flaherty, and Herlihy, one of the most highly regarded corporate lawyers in the country), he was seen as a wartime ambassador — a trusted intermediary to convince the best players in the game to remain with the PGA Tour.
But ultimately a chance arose for Dunne to fall into a more natural role.
“I don’t think it was a coincidence that he was brought in and settlement discussions for a commercial basis began,” said one person familiar with the makings of the deal. “Progressing from a legal path to a commercial is in Jimmy’s DNA.”
Between Monahan, Dunne and Herlihy, the decision was made that, instead of competing against the PIF’s billions, the PGA Tour would instead take it and use it. (Al-Rumayyan has long maintained the PIF approached the tour before LIV was ever imagined to make such an investment but never heard back.)
After London, there was Venice. Al-Rumayyan was in town for the wedding of the daughter of Lawrence Stroll, the Formula 1 racing billionaire, while Monahan was there for al-Rumayyan. According to multiple individuals briefed on the conversations that followed, al-Rumayyan told Monahan the PIF was “ready to invest in the tour and ready to invest in you.” Monahan tested al-Rumayyan over the next two days. “Testing if he was serious to commit behind the PGA Tour,” one person familiar with the meeting said. The two got along fairly instantly.
On the second day in Venice, Monahan laid out six key principles focused on the PGA Tour operating as a “not-for-profit, with for-profit streams.” He laid out possibilities around media and data capabilities and aligning the game globally. Al-Rumayyan nodded along.
“Jay laid out four or five ideas, each of which were billion-dollar investments that the PGA Tour obviously couldn’t make alone,” said a person familiar with the meeting. “The goals aimed to roughly triple the number of people playing golf, triple the number watching and triple the revenue.”
From the Venice meeting came the vision of this new for-profit company. The PGA Tour and DP World Tour would combine their commercial interests behind a large cash investment from the Public Investment Fund. The PIF, in turn, would also contribute its own golf-related investments and assets, including LIV Golf, to the company. The PIF would be granted a right of first refusal on future capital funding. The two men agreed on Monahan serving as CEO of all commercial operations and al-Rumayyan being chairman of the new company’s board (of which the tour will have a majority of seats), while also taking a seat on the PGA Tour policy board.
Before Monahan and al-Rumayyan left Venice and scheduled a subsequent meeting in San Francisco, it was made clear the PIF was comfortable ceding management authority to Monahan and the tour. Those concessions would be offset, of course, by the PIF and, by proxy, the Saudi monarchy, having some dominion in professional golf.
The two sides met next on Memorial Day weekend. The deal was finalized at the San Francisco Four Seasons and a five-page framework agreement was carved out.
So, how grand are the plans of this new PGA Tour-led, PIF-backed company? Some individuals interviewed here have mentioned the possibility of the tour buying the LPGA. Or buying the PGA of America, along with its most coveted holding — the Ryder Cup. Hell, maybe all of the above? Open access to multiple billions of dollars is now readily available. It was suggested the tour may also want to expand its property portfolio. How much would Pebble Beach go for, anyway?
For all the talk of THE SAUDIS ARE BUYING GOLF!, it’s being missed that, in fact, it can equally be said that it’s the PGA Tour that’s buying golf, albeit with Saudi money. Did such a deal require a shocking degree of abasement? And a total reveal of the performance art that was its moral stand? And a betrayal of its own players who existed totally in the dark as the deal was made? Yes, yes, and yes. But PGA Tour leadership would clearly rather eat sand than let go of its self-assessed birthright as the most powerful brand in the game.
by Brendan Quinn, The Athletic | Read more:
Image: Sam Richardson / The Athletic; Photos: Cliff Hawkins / Getty Images, Adam Hagy / USA Today, Jonathan Ferrey / LIV Golf via Getty Images
