Wed. Feb 21st, 2024

The PGA Tour struck a massive investment deal this week with a group of U.S.-based sports team owners, which tour officials hope will help stabilize the organization’s finances, further reward tour golfers and provide a pathway to a more sustainable future for professional golf, even as the tour’s negotiations with potential Saudi investors continue.

The tour’s policy board approved the investment at a meeting late Tuesday night, and its commissioner, Jay Monahan, was expected to brief golfers on details of the deal on a conference call Wednesday morning. The deal is expected to help the tour create a new for-profit company that will oversee the its commercial interests, with the Strategic Sports Group (SSG) serving as a minority investor.

The tour originally planned to create the new entity alongside the Saudi Arabia Public Investment Fund, which owns LIV Golf, a rival team-based golf circuit, but the two sides have yet to agree to terms nearly eight months after announcing their intention to join forces. Though they faced a Dec. 31 deadline to reach a final deal, the two sides are still negotiating and remain hopeful the PIF will become an investor in the new commercial entity, according to two people familiar with the discussions who spoke on the condition of anonymity because of the sensitivity of the discussions.

Tour officials have spent the past several weeks deep in parallel negotiations with the PIF and the SSG, which is led by Fenway Sports Group, the Boston-based private holding company that owns MLB’s Boston Red Sox, Fenway Park, Liverpool Football Club of the Premier League and the NHL’s Pittsburgh Penguins. The initial SSG investment is expected to be around $3 billion, according to one person familiar with the deal.

The news comes as the PGA Tour continues its early-season schedule and just days before LIV Golf is set to stage its season-opening event in Mexico. For now, the tour and LIV Golf remain locked into a rivalry that has splintered the golf world, competing for talent, fans and sponsors.

The tour has spent much of the past two years trying to shore up the shaky economics underpinning the sport, particularly following the launch of LIV Golf, which lured many of the tour’s biggest names and set off a legal fight that cost the tour millions in fees. The PGA Tour couldn’t match some of the contract offers made to brand-name golfers, such as Jon Rahm, Brooks Koepka, Cameron Smith and Dustin Johnson, and had been seeking to mitigate the threat posed by LIV Golf while shoring up its own rocky finances.

A spokesman for SSG did not immediately respond to a request for comment.

The investment group includes Red Sox owners John Henry and Tom Werner; Arthur Blank, who owns the NFL’s Atlanta Falcons; Mark Attanasio, owner of MLB’s Milwaukee Brewers; Tom Ricketts, chairman of MLB’s Chicago Cubs; Steve Cohen, owner of the New York Mets; Wyc Grousbeck, owner of the NBA’s Boston Celtics; and Marc Lasry, the former co-owner of the Milwaukee Bucks.

The tour, which operates as a nonprofit organization, is expected to launch a new for-profit entity called PGA Tour Enterprises, which will oversee all of its commercial interests. The tour has promised to give players an equity stake in the new venture, which would be a first among top-tier U.S. sports leagues. About half the SSG investment is expected to help fund equity grants to tour members, according to a person familiar with the deal.

While the Saudi PIF could still be an important stakeholder in the venture, the tour and SSG are expected to begin immediately mapping out next steps for professional golf, which could impact everything from the competition schedule to tournament purses to the role team golf might play in the new landscape.

The Saudi PIF has been aware of the tour’s talks with SSG but has continued negotiating separately with the tour, according to two people familiar with the situation. The tour and the Saudis shocked the golf world when they announced their plans to partner June 6. They’d negotiated in secret the basic framework of a deal to combine their commercial interests under one umbrella, drop their litigation against each other and begin working cooperatively. While the dueling lawsuits were dropped in June, the two sides had until the end of last year to hammer out terms of a final agreement but struggled to overcome some hurdles, including a congressional probe and scrutiny from the Justice Department.

The June announcement surprised and upset many players and immediately drew the interest of both Congress and Justice Department regulators who oversee mergers and were already investigating the PGA Tour for possible antitrust violations. The turbulence was immediate; tour officials told lawmakers at a Senate subcommittee hearing last year that it was difficult to negotiate with so much public scrutiny. Those officials also warned that final terms were still a ways off.

As they hammered out details, tour officials have tried to avoid any appearance of collusion — they even amended the preliminary agreement with the PIF to remove a provision that barred poaching players — and repeatedly told players the tour was negotiating separately with the SSG after fielding investment inquiries from a handful of other groups.

LIV Golf, meanwhile, has continued normal operations and never abandoned plans for a 2024 schedule. LIV signed Rahm last month, one of its biggest coups, and officials there are still working with considerable financial backing from LIV’s Saudi owners. Rahm will make his LIV debut at the circuit’s season-opening event, which begins Friday at Mayakoba’s El Camaleón Golf Course in Playa del Carmen, Mexico. It will go head-to-head this weekend with the AT&T Pebble Beach Pro-Am, one of the PGA Tour’s eight signature events.

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