There is no doubt that the tentative agreement announced on June 6 between PGA Tour and the rich upstart LIV Golf circuit shocked the golf world. On the one hand, you have a tradition-bound golf establishment. On the other, you have bottomless wealth underwritten by Saudi Arabia’s sovereign wealth fund creating a rival tour by paying large sums to some of the world’s best players. After months of trash talk, the announced tentative agreement was a huge surprise to most.
What we know so far
The agreement is short on details at this point, with only a handful of binding commitments laid down during the initial seven weeks of secret talks that led to the deal. The known terms include:
- A binding non-disparagement agreement.
- A pledge to dismiss litigation.
- A ban on recruiting from rival leagues.
- Controlling vote interest at all times by the PGA.
- A final deal signed by the December 31 deadline.
Still to be determined
The partnership will be built on money, and bankers and lawyers are currently going through the process of placing a value on the partners. Those involved say that LIV’s value and potential for growth will be “objectively” assessed. The agreement focuses on a new company to hold all the partnership’s commercial businesses and rights for the PGA, the European Tour (now known as the DP Tour) and LIV. There is yet to be talk of how much of LIV’s money (referred to as “golf-related investments and assets”) goes into the coffers of the others.
What the PGA gets
- LIV also would likely offer up its circuit of tournaments.
- They could use the team play format, a popular element of LIV.
- High-profile players who left the PGA for LIV could return to play tournaments.
- Money to make the PGA’s own ship more financially stable.
What LIV gets
A lot of criticism has been directed towards Saudi Arabia for the country’s stance on human rights and other Western norms. Some experts believe the country is trying to improve its global image by “sportwashing,” which refers to countries using sports to clean up a tarnished image by investing in sports and sporting events. Others claim the interest in sports reflects the country’s love of sports and attempts for the general population to exercise (obesity and diabetes are common). The Saudis already made forays into soccer and the English Premier League, Formula 1, and boxing, so there is precedent. Some say the Saudis don’t even care if they lose money if they get seats at the table.
Scrutiny in Washington
At the end of June, a Senate subcommittee, the Justice Department and congressional investigators received information about the new business plan, which could run afoul antitrust laws. There was a Capitol Hill hearing on July 11, that could be enlightening and combative.
Watch this space.