NASSAU, BAHAMAS – A soft deadline that many believed was just a bookmark in the ongoing negotiations between the PGA Tour, Saudi Arabia’s Public Investment Fund and various private equity offers has at least been confirmed by the commissioner. Monaghan has evolved into a “steady target,” according to Jay.
Insiders continue to insist that the December 31st deadline remains flexible and that if all parties believe progress is being made, talks will be postponed to 2024. But it is clear that the intensity of the talks is increasing.
The outcome of the negotiations remains very fluid, but there are essentially four options (some would say not ideal):
PGA TOUR-PIF
The deal between the Tour and PIF is still being negotiated, but it’s unclear what exactly it will look like and whether the two sides will form PGA Tour Enterprises, a for-profit entity that includes the Tour, LIV Golf, and DP. How we will work together to achieve this goal will be determined by this agreement. World tour – that’s anyone’s guess.
This deal has two benefits. As Monaghan explained after announcing the framework agreement on June 6, partnering with PIF would take the circuit’s biggest and most threatening competition off the board. The move would also provide long-term funding for the tool from partners who are clearly not looking for quick returns.
The disadvantages of partnering with a PIF are equally real. As evidenced by the backlash the Tour received on June 6th, a deal with Saudi Arabia would generate significant public relations backlash. The PR effect could be short-lived, but there could also be pushback from some sponsors who are reluctant to do business with Saudi Arabia.
But the biggest hurdle may be federal regulators.
The Justice Department’s antitrust division notified Tour in June of its plans to review the group’s proposed dealings with PIF, adding to its existing investigation. In July, the department pressured TOUR and PIF to remove the non-solicitation clause from the framework agreement, and the US Senate Permanent Subcommittee on Investigations has already held two hearings on the agreement. .
The exclusive agreement between the tour and PIF will only increase scrutiny from lawmakers and federal antitrust investigators.
There is also the idea that if there are rumors of more players moving to LIV Golf, it will be impossible to sign with PIF, but that ignores the obvious fact. With the new high-profile signature, PIF and its President Yasir Al Rumayan Actual leverage in ongoing negotiations.
Monaghan is scheduled to meet with Al Rumayyan this week, but if another player heads to LIV, the message will be deafeningly clear – ignore us and your ‘presence’ The threat is only increasing.
PGA Tour – Private Equity
According to various sources, there are three remaining companies willing to partner with the tour besides PIF. Liberty Media Corporation, the owner of F1. A consortium led by Fenway Sports Group. and investment firm Acorn Growth Cos.
The benefits of using private equity instead of a PIF are primarily the path of least resistance. While the Justice Department’s detailed review of Tour and PIF’s transactions will take up to 18 months, other private equity transactions are likely to receive less scrutiny.
By replacing PIF with private equity, the Tour would also avoid having to answer questions about sportswash and the messy heel turn caused by the Framework Agreement.
A potential drawback to deals involving private equity is the very nature of the investment, which typically expects some return within five years.
Policy board officials said last week that these potential investors are “not traditional private equity groups, as has been reported, but rather strategic partners with a multi-decade outlook.” A memo was sent to members explaining this.
As one official put it, the tour is after “patient money.”
Private equity options also include Rory McIlroy of Fenway-owned TGL team Boston Commons Golf and Monaghan, who served as executive vice president of Fenway Sports Group before joining the Tour. creating the possibility of a palace conspiracy between them.
And Tiger Woods is the policy board’s player director and co-founder with McIlroy of TMRW Sports, which backs the made-for-TV TGL. Liberty Media CEO Greg Maffei is an investor in TMRW Sports.
There is also a very real danger that if the Tour does not reach some kind of agreement with PIF, Al Rumayyan will double and LIV Golf becomes an even bigger threat.
PGA Tour – PIF/Private Equity
This is likely to be the most attractive option for the tour and its members.
The virtues of combination moves go deep into the weeds of trading. Adding “other” investors could placate the Justice Department and potentially avoid, or at least mitigate, a potential investigation into the new entity.
This appears to be the preferred option among players, according to Monaghan’s comments at the New York Times’ Dealbook Summit last week, with the deal including PIF and “another person with extensive experience in business and sports.” is likely to include co-investors of [that] It will help the PGA Tour take market share from other sports and become even more competitive. ”
The downside of the PIF-private equity deal lies entirely with Mr. Al Rumayan. PIF, along with other private equity firms, has made minority investments in many companies, but it’s unclear whether that model applies to his golf plans.
current situation
At least with the current alignment of the golf world, this is not an option. Human nature abhors change, especially the unprecedented changes our tools are facing. There will always be people in the world of golf who are nostalgic for simpler times and the old ways.
But the downside of doing nothing can be devastating. The move to signature events, with smaller fields and bigger purses, was designed to stem the tide of top players leaving to join LIV Golf, which has enjoyed similar success to the Tour. This is an economic model that is not sustainable even for established businesses.
Whatever deal is ultimately struck, it will include partners, and options are beginning to take shape, if not the final outcome.