After a year of wrangling, the PGA Tour and DP World Tours announced a shock merger with the LIV Golf Series, run by the Saudi Arabian Public Investment Fund (PIF).
PGA Tour commissioner Jay Monahan said the deal was “ultimately to take the competitor off of the board, to have them exist as a partner, not an owner”. The main takeaway, however, from the press release was how glowing it was of the Public Investment Fund, a hard turn from Monahan’s previous stance.
Monahan talked last summer about knowing people who lost loved ones on 9/11, then wondered aloud on national television whether LIV golfers ever had to apologise for being a member of the PGA Tour. Now he refers to the PIF as “world-class investing” and has applauded the governor Yasir Al-Rumayyan for his “vision”. Keith Pelley, the DP World Tour CEO, also said he was delighted to reignite his relationship with PIF, although this was less of a change of tack when the European Tour already had the Saudi International on its tour schedule from 2019-21.
But money talks the loudest and the Saudis have the most. The PIF, a wealth fund controlled by Crown Prince Mohammed bin Salman, is among the largest sovereign wealth funds in the world with total estimated assets of €580 billion. Saudi Aramco made €500 billion revenue in 2022. Even Rory McIlroy was resigned to its seeming inevitability once PIF got involved in golf.
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“I’ve come to terms with it. I’ve resigned myself to ... this is what’s going to happen. It’s very hard to keep up with people who have more money than anyone else,” McIlroy said.
What they are buying is legitimacy or as some call it “sportswashing”, and under the merger they have it. The PGA Tour could never compete with that sort of money, never mind the DP World Tour, and in raising the prize funds of tournaments to compete with LIV, they were heading for an unsustainable model in trying to compete with the rival tour.
“We have had to invest back in our business through our reserves. But you hit it; between our reserves, the legal fees, our underpin and our commitment to the DP World Tour and their legal fees, it’s been significant,” Monahan said.
“I’m grateful that when we looked to ‘24, the response that we’ve gotten from our sponsors and our partners has been very positive, and those losses that we’ve experienced in ‘23 will be significantly mitigated.”
The Saudi Public Investment Fund will make capital investment into a new “for-profit entity” with the PGA and DP World Tours. It will be the exclusive investor, reserves the exclusive right to further invest in the new entity, and a right of first refusal on any capital that may be invested. Al-Rumayyan will join the PGA Tour Policy Board and also be chairman of the board of directors of the new commercial entity, with PGA Tour’s Jay Monahan as CEO.
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This exclusive investor will no doubt bring more money into the game. Any golfer who refused to take the Saudi money on moral grounds before will not be able to avoid the Saudi’s hands on all prize money on the main tours. Winners on the LIV Tour get $4 million minimum per event, with the possibility of another $750,000 for being a part of the winning team this year. Only the Players Championship and Tour Championship, with its bonus FedEx Cup pot, compete with that sort of money, despite a large increase in funding in 2023.
The DP World Tour meanwhile can offer no more that $1.6 million to the winner of its flagship of event, the BMW PGA Championship, with Tom McKibbin’s $340,000 winning prize for taking home the European Open last weekend a more typical winning prize. All events now on the Tours can expect a prize bump, or at the very least a consolidation of the rising prize funds. The Players Championship’s winning prize has already more than doubled in the space of five years, with the Saudis involved it could increase further.
The PGA Tour players are said to be livid about not being consulted about the decision. Tiger Woods was reportedly offered $800 million to join LIV Golf and refused, only to see the money enter the game anyway. Hideki Matsuyama was reportedly offered more than $100 million but stayed loyal to the PGA Tour. The “traitor” players like Phil Mickelson, who received a $200 million contract, and Dustin Johnson, who received $150 million, could be back on the PGA Tour in 2024 like nothing happened but a lot of extra cash in the bank.
“This ultimately is a decision that I think is in the best interest of all of the members of the PGA Tour,” Monahan said.
Whether it is in their best interest or not, Monahan is hoping to survive by banking on the belief that a richer golfer is a happier golfer, no matter what the source.
