Phil’s Fate, Shark’s Bite and Team Golf’s Future

A week after the PGA Tour and Saudi Arabia’s Public Investment Fund agreed to merge, information is leaking out about how the deal came together and what it means for the future of golf. But the intelligence is often conflicting and raises even more unknowns, from ongoing legal battles to stock disputes. However, here is an attempt to provide at least a few answers.

Was Phil wrong?

Immediately after the deal, one of the most repeated reactions was a variation of “Phil was right.” A week later, the opposite appears to be the case.

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Yes, Phil Mickelson set out to put more money in Phil Mickelson’s pocket because he believed that the estimated $1 billion plus he has earned for hitting a ball with a stick was not commensurate with the value he has created in world. He succeeded.

His larger point, however, was that the PGA Tour was holding out, needlessly sitting on giant reserves of cash that should have gone to tour members. As he saw it, the players needed “leverage” to overcome the organization’s “disgusting greed.” Don’t forget that these reserves saw the ride — and the players — through the 2008 financial crisis and COVID-19 lockdowns with much less financial pain than other professional sports.

As the first release about the deal noted, PGA Tour Commissioner Jay Monahan said, who announced late Tuesday night, when he steps away from riding the Tour’s day-to-day with an undisclosed medical problem, utilized those reserve funds in the fight against LIV. Reports emerged this week that the tour spent $50 million on legal fees last year and $100 million on the bonuses and increased purses needed to prevent more players from defecting.

The long-term plan required increased commitments from existing sponsors and the addition of new ones to fund the expense. Companies that had ponyed up about $14 million to sponsor a regular tour event found that the price tag would jump to about $25 million if that tournament became one of the tour’s new high-paying “designated” events.

Some sponsors balked at the higher price, and a number of them pulled out completely. That reality contributed to the trip’s capitulation.

In other words, as it turned out, the tour had its faults — bloat, complacency, lack of imagination — but it couldn’t actually afford the huge increases in purses and player bonuses that Mickelson demanded. (He also resented the tour to collect the IP rights needed for NFTs, another complaint that hasn’t aged very well.)

In that sense, Phil was wrong. And while he secured a nice payday, with LIV’s future in doubt (see below) and his re-entry to the tour now dependent on Monahan and the players who remained loyal, Mickelson may once again find himself without leverage.

Will the shark LIVE?

Multiple reports suggest that LIV CEO Greg Norman, who only learned of the deal an hour before the news broke, held a staff call the next day to say he wasn’t going anywhere and that LIV would be around at least through 2025. But Jimmy Dunne , told the PGA Tour board member who helped negotiate the deal Sports Illustrated that Monahan had full control of the golf operation and would use the rest of 2023 to evaluate LIV, after which he was free to kill it. Likewise, Monahan controlled Norman’s future. Given the animosity between the two, things don’t seem to bode well for Shark.

Who is in control?

The questions of what’s in store for Norman and LIV revolve, to some extent, over who is ultimately in control. Firepit Collective‘s Alan Shipnuck, whose book LIVE and LET DIE coming out in September, spoke to a LIV source who said that while the PGA Tour will have more board seats and a voting majority, the governor of the Saudi Public Investment Fund, Yasir Al-Rumayyan, remained firmly in charge and would protect LIV, which he watching her baby.

However, Dunne stressed that the PIF has not invested in the PGA Tour – it is spending a few billion on a minority stake in the new, unnamed company, called NewCo. in documents that will have the commercial rights. The tour itself, as well as the DP World Tour and LIV, will be a separate entity. Dunne argued that Al-Rumayyan wanted to weave the PIF into the fabric of the golf firmament and LIV was merely a tool to do so. Now that he has succeeded, he doesn’t care what becomes of LIV.

Al-Rumayyan is still the chairman and Monahan’s boss, so it’s hard to believe the golf structure will evolve into something he doesn’t want it to be.

What about the teams?

Whether LIV dies or gets absorbed into the PGA Tour, both sides want to keep some part of the team structure. As noted in the deal release, the PGA Tour will be combined “with the DP World Tour and LIV – including the team golf concept…”

This is because the 12 LIV teams are expected to increase in value and PIF owns a 75% stake in them; each team’s captain has the other 25%. Before the merger news broke, unconfirmed reports circulated that Nike had offered $2 billion to buy Brooks Koepka’s team, Smash GC. LIV had already considered adding a few more teams, and giving equity in new teams to the players who have passed on LIV money to stay on tour—Tiger Woods, Jon Rahm, Hideki Matsuyama, etc.—is a possible way to help them. players get back some of the money they gave up.

It’s unclear how the team concept would work, but one potential scenario includes something like the current touring schedule supplemented by perhaps a dozen team events a year played in LIV-like conditions, though it’s hard to imagine the shorts and blaring music survives.

The payouts will remain at least as high as they are now – there’s no going back there – which makes the last question the most interesting: Will NewCo. generate enough money to pay for it all, or will golf become a PIF money pit?

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