LIV Golf (Saudi PIF), "Mergers," and More

[Jeremie Boop]

I stopped watching a majority of sports well before any of this. Though I'm disappointed to see this. Just reinforces my decision to enjoy playing sports,, but not watching.

[imsys0042]

6 minutes ago, iacas said:

It's going to stick around.

Woof.

Is Jay Monahan the PGA Tour commissioner (or whatever this new super league is called) on June 6, 2024?

 

shameful and what a shame.   Pro golf seems to not stand for very much outside of the majors now.

[saevel25]

Looks like this was done with out much input outside of a few people.

 

[iacas]

Peter with the first intelligent thing he's said in three years.

 

[boogielicious]

This sickens me. I am surprised that Jimmy Dunne is involved too. What will be curious is since they will now be a For-Profit entity, anti-trust laws may apply even more. They have no competition now.

I will not be watching the PGA Tour events now. I have enough other fun stuff to do in my life. I hardly watch sports anymore anyway.

[Pretzel]

21 minutes ago, mcanadiens said:

That's probably the most significant thing there. 

Bingo - even if the new entity starts out with a 33% financial stake for each organization (which is incredibly unlikely given they discuss that the PIF is fronting all of the initial investment money) the fact of the matter is that the PIF has enough money to dilute the financial stake of the PGA/Euro tour immediately without it amounting to much more than a rounding error on their cumulative balance sheet. There is also no way for the PGA/Euro Tour to prevent their financial stake from being diluted in such a fashion, but the PIF does have the right to do exactly that themselves. 
 

In other words it may not happen today or tomorrow, but eventually the financial stake in the combined entity will effectively be entirely owned by the PIF. The PIF has purchased both the PGA and Euro tours on an extended payment plan, and as an added bonus they even got the PGA Tour to provide the board members that actually have to successfully operate their new professional golf business. They don’t even have to do much of the work to run it all or figure out how to be successful (since they clearly didn’t have the right answer with the LIV), they just have to sign a check occasionally and collect the profits at the end of the quarter, it’s literally that easy for them!

[TourSpoon]

Get the popcorn out. I can't wait to see how he responds. 

[DeadMan]

13 minutes ago, boogielicious said:

What will be curious is since they will now be a For-Profit entity, anti-trust laws may apply even more.

Antitrust laws already apply to non-profits. Their applicability does not change if a business is for profit or not.

That said, the DOJ may get more involved, because this looks like more of a monopoly now than it was a year ago.

11 minutes ago, Pretzel said:

Bingo - even if the new entity starts out with a 33% financial stake for each organization (which is incredibly unlikely given they discuss that the PIF is fronting all of the initial investment money) the fact of the matter is that the PIF has enough money to dilute the financial stake of the PGA/Euro tour immediately without it amounting to much more than a rounding error on their cumulative balance sheet. There is also no way for the PGA/Euro Tour to prevent their financial stake from being diluted in such a fashion, but the PIF does have the right to do exactly that themselves. 
 

In other words it may not happen today or tomorrow, but eventually the financial stake in the combined entity will effectively be entirely owned by the PIF. The PIF has purchased both the PGA and Euro tours on an extended payment plan, and as an added bonus they even got the PGA Tour to provide the board members that actually have to successfully operate their new professional golf business. They don’t even have to do much of the work to run it all or figure out how to be successful (since they clearly didn’t have the right answer with the LIV), they just have to sign a check occasionally and collect the profits at the end of the quarter, it’s literally that easy for them!

The thing that cuts against this is the PGA Tour has a majority of the board of the new entity and a majority of the voting stake. At least according to the press release. So the PIF can invest money, but it may not have the control that it wants. A lot of this will depend on how the actual agreements are drafted, so it's to early to say. It could be that the PIF ends up a sponsor of all these golf entities but the PGA Tour is still controlling everything. It could also end up with the PIF running everything. And even if the PGA Tour maintains control, that might change with further PIF investments. 

There's still a lot in the air on exactly how this will work.

[TourSpoon]

6 minutes ago, DeadMan said:

There's still a lot in the air on exactly how this will work.

And there will be a lot on the air...speculating for the next few golf news cycles on this issue. I wonder how the PGAT player's meeting today will go. 

[mcanadiens]

6 minutes ago, TourSpoon said:

I wonder how the PGAT player's meeting today will go. 

Going to take some big brass ones for Monahan to face the music this afternoon.

Hope lunch agrees with him today. Be a shame to go home sick now. 

Those guys are probably about to shred him.

[Pretzel]

23 minutes ago, DeadMan said:

The thing that cuts against this is the PGA Tour has a majority of the board of the new entity and a majority of the voting stake. At least according to the press release. So the PIF can invest money, but it may not have the control that it wants. A lot of this will depend on how the actual agreements are drafted, so it's to early to say. It could be that the PIF ends up a sponsor of all these golf entities but the PGA Tour is still controlling everything. It could also end up with the PIF running everything. And even if the PGA Tour maintains control, that might change with further PIF investments. 

Correct, the PGA Tour is still effectively running and operating the PGA Tour (as well as now the Euro Tour and whatever may remain of the LIV) in terms of commercial and business decisions. They don't, however, get the profit that results from these decisions except what is allocated based on financial stake in the newly merged company (depending on how exactly the agreements are written up, of course). Their operating expenses will obviously be covered by the Board as they're an operating expense for the merged entity itself, but anything beyond that is a complete unknown right now.

The point of the investments and dilutions is that the PIF gets to have the PGA Tour run their company for them, while the PIF collects the profits as the largest financial stakeholder. It's not a disadvantage, at least financially speaking, to have the most successful of the 3 merged entities also be the ones responsible for the business and commercial decisions of the new conglomerate. The board also has a fiduciary duty to place the interests of the shareholders above their own interests, by which I mean they are legally obligated to take actions that they reasonably believe and can defend will have the best financial impact for the conglomerate. The PIF itself also has an obligation to grow their holdings, and having a majority financial stake in essentially every relevant professional golf tour on the planet is a massive win for them regardless of if they dictate the exact day-to-day business operations of the tours. It simply makes far more sense for them to outsource the golf-specific commercial and business decisions to the people who have already made a very, very successful product rather than trying to reinvent the wheel.

The PIF doesn't care about micromanaging the day to day operation of the tours, they never have. They don't need or even want the Tour to come out and say anything about Saudi Arabia directly, they just want eyeballs on their product with their brands on display at the highest level of sports. In this case they got to acquire two profitable professional golf tours on incredibly flexible terms, increasing their financial stake whenever they want with no risk of their own stake ever being diluted, and they don't even have to find a qualified team to manage it because the most successful of the tours they acquired will be doing the commercial management for them.

Edited June 6 by Pretzel

[TourSpoon]

6 minutes ago, mcanadiens said:

Those guys are probably about to shred him.

They must be LIVid. A lot of them held out and could have taken the cash only to watch the Tour cash in. Too bad its not live on air. It should prove to be entertaining. 

[Elmer]

3 minutes ago, TourSpoon said:

They must be LIVid. A lot of them held out and could have taken the cash only to watch the Tour cash in. Too bad its not live on air. It should prove to be entertaining. 

If Rory is not rolling into that meeting with a pillowcase full of golf balls, then he is indeed worthy of sainthood!
 

[JetFan1983]

Dan Rapaport's article on this. 

Full Breakdown Of The PGA Tour-LIV Golf Merger: What We Know, What's Next, How Players Are Reacting

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Michael Reaves. Getty Images.The players found out the same way you and I did: on Twitter. Joel Dahmen was going through his morning routine when he got a text from a buddy. He couldn't believe it wa...

 

[Zeph]

Hugely disappointing, but not surprising. Money talks and SA got a lot of dirty (bloody) laundry to wash.

[StuM]

I read, I re-read, I checked alternate sources, this was so unexpected I simply felt it had to be some kind of "April Fools" joke even though it is June.   There will be a lot of issues rebuilding trust and comradery....it may be impossible.  Just this week Jack said LIV Players are not part of the game.  Now he may need to shake their hand behind #18 next year.  

Jack Nicklaus on LIV Golfers: I don’t really consider those guys part of the game

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The other guys made a choice to go where they went. We don’t really talk about it.

 

 

[PatrickMurtha]

One thing is certain: All the big name golfers on all three affected tours got in touch with their attorneys this morning. They would be fools not to. 

[StuM]

Here's a question....Can Phil keep his mouth shut without saying "I win" or "Look what I did for you guys" or something like that?  From a PR Standpoint I think the best thing for Phil to do is sit back and listen and say nothing, but he has struggled with that in past.