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The PGA Tour has launched a formal process to review outside investment, independent of negotiations for a deal with Saudi Arabia’s Public Investment Fund, as the U.S.-based professional golf organization evaluates options for unifying and commercializing the men’s game globally.
Allen & Co, the PGA Tour’s investment banker, officially launched the bidding process on Friday. Potential investors interested include Endeavor, Fenway Sports Group and a consortium of private investors including billionaire Henry Kravis.
The tour shocked the sporting world in June when it announced a “framework agreement” with the PIF and the Europe-based DP World Tour to halt civil litigation between the US Tour and the breakaway LIV Golf Union. The LIV Golf League launches in 2022 and involves billions of dollars in U.S. dollars from Saudi Arabia’s sovereign wealth fund.
The PGA Tour is expected to evaluate the bid and consider alternatives to the discussed PIF investment and structure of the bidder’s cooperation with Saudi Arabia.
“We remain committed to reaching a final agreement with the PIF and DP World Tour, but not surprisingly, these negotiations have resulted in a number of other interested parties,” PGA Tour Commissioner Jay Monahan wrote in a memo. Unsolicited contacts and proposals from investors.” Financial Times.
“All these activities reinforce the Tour’s strong position and our potential for growth,” he added.
The framework agreement envisages the establishment of an umbrella organization under which the PGA Tour will operate alongside LIV Golf. The PGA Tour will hold a majority controlling interest in the new car, while PIF will make an estimated billion-dollar cash investment for a minority stake.
In June, Monaghan and PIF chief Yasir Al-Rumayyan said a final agreement could be reached within weeks after both parties agreed to value the golf assets of the “new company” .
According to people familiar with the matter, the terms of the framework agreement between the PGA Tour, DP World Tour and PIF stipulate that the two parties must reach an agreement before December 31. The PGA Tour has set a soft deadline for outside investor bids in December and hopes to make a decision that month, one of the people said.
PGA Tour players had not been informed of the status of negotiations with the PIF before the news was announced and had been organizing individually to understand the terms of a potential deal.
The players are working with Colin Neville, the executive of Raine Group, a merchant bank active in the sports and golf sectors. The PGA Tour’s policy committee, whose current majority is made up of players including the recent addition of Tiger Woods, must be approved for any deal.
Among the complex issues that need to be resolved are the futures of PGA Tour players who defected from LIV Golf and what their path back to the PGA Tour might be. Several PGA Tour players say loyal fans should be rewarded for boycotting hundreds of millions in signing bonuses offered to defectors by a Saudi Arabian wealth fund.
The PIF and LIV Golf have insisted that the LIV Golf Tour will continue, and some LIV golfers have said they are not interested in returning to the PGA Tour. But LIV was dealt a blow earlier this week when the body that sets the official player rankings refused to award points to the LIV Championship.
The LIV Tour will hold its penultimate event of the season this week in Jeddah, Saudi Arabia, before the championship finals scheduled for late October at Donald Trump’s Miami resort.
The PGA Tour, in its public campaign and lawsuit to revoke LIV, accused Saudi Arabia of trying to take over professional golf to “whitewash” its checkered human rights record, but that position was quickly abandoned.
In July, former AT&T CEO Randall Stephenson, a longtime member of the PGA Tour’s policy committee, resigned, citing concerns about doing business with the country. The country has been found responsible for the 2018 death of Saudi journalist Jamal Khashoggi.
The PGA Tour insists it will retain full operational and governance control of its events, with the PIF and any other financial backers providing cash only.
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