The PGA Tour is less than three weeks away from a deadline to finalize a deal with Saudi Arabia’s sovereign wealth fund that has promised to transform professional golf into a global powerhouse and an era of quiet poignancy.
But clearly the poignancy remains.
The plan’s outline called for combining the revenue-generating operations of America’s storied circuit, the PGA Tour. And then there’s LIV Golf, a new league that has attracted billions of dollars in Saudi investment. But the deal announcement on June 6 lacked fundamentals, including an overall valuation and minimal support from many players. Six months later, anxiety and distrust are still rampant within the PGA Tour. Players, board members and senior executives are struggling to repair relationships after secret talks that led to the Saudi deal, which also surprised many on the board.
“Trust has been broken at the highest level since June 6,” Adam Scott, who turned pro in 2000 and is now chairman of the tour’s player advisory committee, said in an interview this week. “Nothing has changed to restore that trust.”
Mr. Scott, winner of the 2013 Masters Tournament, will take a seat on the PGA Tour’s board of directors next month. If so, he would join a group that has felt divided recently as board members repeatedly clashed with some outside directors. Hostility may not stop the deal, as many players are open to significant outside investment. But frustration with tour leaders over the secretive nature of how the deal was done and the feeling that players do not have a strong enough say in how the sport is run could shape decisions about the details and future makeup of the tour. Boards will influence golf for decades to come. “Ultimately, the onus will be on the players to vote,” PGA Tour Commissioner Jay Monahan said at the DealBook Summit last month.
The deal will give the wealth fund a significant stake in American golf as Saudi Arabia pours money into the sport to boost its reputation globally. There is also backlash outside the golf world, with the Justice Department poised to scrutinize any move for antitrust violations, senators investigating the Tour’s ties to Saudi Arabia and Tour officials having been in talks with potential U.S. investors for months. are facing.
The Tour and the Saudi Arabian asset fund have set a deadline of December 31 to finalize the deal, but the two sides could extend negotiations.
A tour spokesman declined to comment.
The tentative deal with the asset fund, which came after the tour, has long been claimed by LIV Golf as nothing more than an attempt by the Saudi government to divert people’s attention from its human rights record, and has sparked an uprising among players, many of whom have criticized LIV. refused to make lucrative payments. The clandestine nature of the negotiations also sparked outrage. The tour tried to curb the rebellion last August when it agreed to add Tiger Woods to its board of directors, equalizing the number of golfers and independent directors to six each. And he pledged that merchant banker Colin Neville, who has already been brought in to advise the players, will be “fully aware of the negotiating situation”.
Woods’ arrival was a boon to the players, who felt his outspoken attitude and savvy would make their team more important to the board. That did it. But Mr. Woods’ ascension did not change certain realities, for example the voting threshold needed to make significant changes. As expected, the two directors who negotiated secretly with the Saudis were not removed. Edward D. Herlihy, chairman of the board and partner at the law firm Wachtell, Lipton, Rosen & Katz; James J. Dunne III, vice chairman of investment bank Piper Sandler.
“I learned that any good board requires differences of opinion to get the best solution,” said 2012 US Championship winner Webb Simpson. “We’ve had a lot of disagreements this year, even among the players.” Member of the Open Tour Board. “But we’re all trying to get to a better place.”
Although tour membership is limited to some of the best golfers in the world, the players have too much influence in appointing outside directors to their boards. This has long frustrated many players who felt they were being placed in a subordinate position to independent board members. Making the mood even worse, former AT&T CEO Randall Stevenson, whom many players viewed as a well-meaning ally, resigned after the Saudi deal was announced. (The committee recommending Mr. Stevenson’s successor, Joseph W. Gowder, had two players.)
Long-time player Charley Hoffman said the independent club had “the best interests of the players in mind.” But the tour’s structure ultimately limited the players’ influence on the tour, he and others said. This is especially painful after the Saudi deal.
“The word I hear throughout the membership is ‘accountability,’” Mr. Hoffman said.
Amid this scrutiny, the Tour is considering bringing in additional U.S. investors, along with a Saudi asset fund that would guarantee investments in the Tour ahead of a lengthy regulatory review of Saudi deals. The tour said on Sunday it had begun negotiations with Strategic Sports Group, an investment group led by Fenway Sports Group, the parent company of the Boston Red Sox and Liverpool Football Club and Mr Monaghan’s employer several years ago.
Fenway will put $3.5 billion into the newly formed for-profit company, which could be valued at up to about $12 billion, according to two people familiar with the situation who spoke on condition of anonymity to discuss personal finances. As with most terms associated with a transaction, these terms remain subject to change.
Last week’s announcement that Saudi Arabia had signed world number three player Jon Rahm left tour loyalists disappointed and anxious at LIV. It also sparked a surge in infighting, most notably in a Sports Illustrated article that described golfer Patrick Cantlay as having enormous control over the tour’s fate. According to the article, Mr. Cantlay “seemed more interested in catering to elite golfers like himself,” and he implied that he was the leader of the group who was “leading the negotiations.”
Mr Cantlay is the highest-ranking player in the Official World Golf Rankings (fifth), but other directors downplayed the idea that he was in charge.
“He likes to think deeply and see what can improve the organization for everyone,” Mr. Hoffman said.
Jordan Spieth, who joined the board after winning the British Open, Masters and US Open, admitted he was puzzled by Mr Cantlay’s claim to be the seat of power. He thought Mr. Cantlay’s curious and persistent style and vision had unnerved some within the Tour hierarchy.
“He challenged people who had been in positions that shouldn’t have been challenged for a long time, and I think that upset them.” Mr. Spieth said. “Because he comes from a place where he’s trying to force some change when change is inevitable, but he does it in a way where players play a big role in how they look, and that challenges the status quo and makes him a target.”
Mr Cantlay said his approach to the role had not changed since June 6 and “generally my mindset is just to keep my head down and try to get the job done”.
Mr. Stevenson is not the only director to leave. Superstar Rory McIlroy resigned last month. His successor, Mr Spieth, is a popular tour stalwart with a background in board service, but turnover has added to the anxiety.
“Obviously the dynamic has been shaken up,” Mr. Scott said. “It doesn’t really matter why. At such a critical time, it’s not ideal.”
Some board members believe that once a deal is completed, tensions can almost automatically ease, especially if there are changes to board composition.
“If we all hit golf shots and do things we actually know how to do, everything would slow down,” Mr. Hoffman said with a wry smile.
