iacas knows way more about this than I do.
But I just want to point out that 2 things:
1- the LIV business model was to over pay trash player. No wonder their TV matches were unwatchable and business model unsustainable
2-Imagine being trash and getting paid all that much $? That has to inflate their ego a bit. Even if these players return to the PGA, they are going to slide out of the top 50 an on to the local put-put tour.
Lets all come to the agreement that neither SA nor China will win any humanitarian awards. We still have not addressed the topic of how this will affect beer prices next year, or why Chamblee's twitter remains silent. Heck, this was a Fox News Breaking Alert a little while ago, even the Donald chimed it. Golf is in the news, that got to be good for someone. TopGolf and Acushnet stocks jumped up a bit after the news.
The PIF can increase their investment stake. Outside organizations and even the PGA/Euro Tours cannot do the same without approval from the PIF due to the first right of refusal. They’re a sponsor, yes, but one that explicitly reserves all rights to expand their financial stake and block other investors in the arrangement as it’s been laid out so far to the public.
The PGA and Euro Tours are getting their initial financial stake in the merger by contributing their tours essentially, as you mentioned, because the PIF is the only one putting forth cash upfront in the deal the way it’s been described thus far. The issue for those tours is that the announcement specifically states the PIF reserves rights to both increase their financial stake in the created company AND prevent dilution of their financial stake through the first right of refusal. They’re the only ones with those powers, not the PGA or Euro Tour who could at a minimum have their stake heavily diluted or at worst also be barred from increasing their initial investment later on by the PIF itself.
The parent company will get the revenue from all 3 tours, and the board will distribute it as deemed best for the company between the accounts payable, future year budgets, and profit for financial stakeholders. The only money that the PGA/Euro Tours would have available to expand their financial stake is their portions of the profits that get reinvested into the company and even then the PIF’s portion of reinvested profits offsets that. The PIF, on the other hand, has $600+ billion dollars of additional investments they can draw from to dilute the initial investment of the two Tours.
To clarify, I’m not talking about immediate effects of the merger. They could very well start out with equal financial stakes in the merged company, with the PIF essentially paying in cash what the PGA/Euro Tour have valued themselves at to enter as an equal partner (not likely since PGA and Euro Tours themselves are not equally valuable, but I digress). I’m talking about the effects down the road when the PIF exercises their exclusive rights to expand their initial investment or block additional investors from joining as the financial stake each partner has begins to change. I’d very much like to be wrong about this, but it’s very weird to specifically call out in the announcement that the PIF has exclusive rights to increase their investment AND a first right to refusal for other investors. That’s borderline hostile-takeover merger terms right there.
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