Details of PGA Tour and Liv Golf merger reveal what remains to be decided

The PGA Tour’s tentative agreement with Saudi Arabia’s sovereign wealth fund contained only a handful of binding commitments — such as a non-disparagement agreement and a promise to reject tough lawsuits — leaving many of the most significant details about the future of men’s professional golf up for negotiation of the end of the year.

The five-page framework agreement was obtained Monday by The New York Times. The proposed deal, announced June 6 by the tour and the wealth fund, the financial powerhouse behind the defunct LIV Golf circuit, has sent shockwaves throughout the golf industry. But a review of the deal points to the rushed nature of the secretive seven-week talks that led to the deal and the complex road still ahead for the new venture, a potential triumph for Saudi Arabia’s quest for power and influence in sports and, its critics say, to distract from its reputation as a human rights abuser.

Most crucially, the tour and the wealth fund still need to agree on the value of the assets each will contribute to their planned partnership. Bankers and lawyers have spent recent weeks beginning the valuation process, but the framework agreement contains no significant details about expected numbers or even the size of an expected cash investment from the wealth fund.

Instead, much of the agreement focuses on the basic structure of the new company, which will house what the agreement describes as all the “commercial businesses/rights” of the PGA Tour and European Tour, now known as the DP World Tour.

The wealth fund is expected to contribute its “golf-related investments and assets”, including the LIV circuit that split the sport, and will have the first opportunity to invest in the new company. The tentative agreement says the PGA Tour will maintain “at all times a controlling voting interest” in the new company, but that Yasir al-Rumayyan, the wealth fund’s governor, will serve as chairman of the new joint entity. Jay Monahan, the PGA Tour commissioner who recently went on leave due to an unspecified “medical situation,” is in line to become its CEO.

The new company could pursue “targeted mergers and acquisitions to globalize the sport,” according to the deal, and could look to incorporate “LIV innovations,” such as the team golf concept the league has championed since it debuted last year.

However, these provisions are not binding until the tour and the wealth fund enter into a final agreement. Instead, the agreement’s only ironclad caveat involves seeking dismissal of lawsuits, a mandate fulfilled on June 16; a ban on recruiting players to rival circuits; a deadline of December 31 to sign final agreements, without a reciprocal extension; and confidentiality and nondisclosure clauses.

The effective gag agreement appears far-reaching, prohibiting the tour and the wealth fund from “any defamatory or disparaging remarks, comments or statements” about the other side and any “ultimate beneficial owners” — a phrase that could be interpreted to include the Saudi government, which the tour previously condemned for its human rights record.

“I recognize everything I have said in the past and in my previous positions,” Monahan, a leading architect of the deal, said this month. “I recognize that people will call me a hypocrite. Every time I said something, I said it with the information I had at the time and I said it based on someone trying to compete for the PGA Tour and our players . I accept that criticism, but circumstances change.”

Saudi officials have denied that their investments in sports, which include efforts in soccer, Formula One racing and boxing, are aimed at cleaning up the kingdom’s reputation. Instead, they have portrayed these investments as a glitzy component of a sweeping effort to diversify the country’s economy under Crown Prince Mohammed bin Salman, the kingdom’s de facto leader, who is also the wealth fund’s chairman.

Al-Rumayyan, the wealth fund’s governor, signed the deal on behalf of the Saudis, with no evidence of direct involvement by Greg Norman, LIV’s commissioner.

Monahan and Keith Pelley, DP World Tour CEO, effectively represented the golf establishment when they signed the deal behind closed doors in San Francisco on May 30. It was spawned by nearly the entire golf industry, including most of the PGA Tour’s board of directors, a week later.

The board, which has been considering the deal it was largely shut out of negotiating, is expected to discuss the pact’s initial terms during a meeting in Detroit on Tuesday. The 11-member board is not believed to be planning a vote yet because the final nuances of the deal may not be finalized for months.

The deal faces scrutiny far beyond the tour’s board of directors. In Washington, Justice Department officials and congressional investigators are preparing to examine the details of the deal, which antitrust regulators could eventually try to block. Turen shared a copy of the agreement with a Senate subcommittee Monday night, just more than two weeks before a hearing on Capitol Hill that many expect will be contentious.

But tour executives concluded in recent months that the new financial order that LIV’s rapid rise engendered — swelling legal bills, larger prize purses, a diluted product with the world’s most marketable players competing against each other only four times a year at golf’s majors tournaments – were unsustainable. They sought a detente with the Saudis and found a receptive audience in and around the wealth fund, where some officials were frustrated by a series of legal setbacks associated with LIV and uneven success in gaining ground in the crucial American sports market.

The second section of the framework nodded to the unrest, while the tour and the wealth fund said they were interested in “ending divisions.” Some elements of the agreement constituted the olive branches. In one section, for example, the two sides agreed to “cooperate in good faith and do their best” to bring secure official World Golf Ranking accreditation to LIV events.

The fate of LIV, which ruined the PGA Tour for some of its star players after offering exorbitant contracts and prize purses, is not included in a binding part of the deal. Instead, the new company, if it happens, is expected to “undertake a full and objective empirical data-driven evaluation of LIV and its prospects and potential.”

The framework doesn’t outline any financial penalties if the deal ultimately doesn’t go ahead, but it says the tour and the wealth fund “could return to running their respective businesses” if the deal collapses.

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