The loyalty shown by Tiger Woods, Rory McIlroy and other star golfers to the PGA Tour will be officially rewarded on Wednesday. Woods is set to receive $100 million in equity as part of the newly created for-profit PGA Tour Enterprises with McIlroy obtaining about half as much equity, according to the Telegraph,
The stakes being awarded to Woods, McIlroy and other PGA Tour stars are part of a make-good by the league to thank players for sticking by its side rather than leave for big-money contracts from LIV Golf (as backed by Saudi Arabia's Public Investment Fund).
Earlier this year, PGA Tour Enterprises received an investment of up to $3 billion from Strategic Sports Group, a high-profile assortment of billionaire sports owners. While it is unclear how that investment will be spent, this equity distribution will be backstopped by those funds.
Payouts are being handed to players based on a variety of factors, including career success and cultural popularity. Several hundred players will receive stakes, though the majority of that equity -- up to $750 million -- will go to the top 36 players as determined by an undisclosed formula that takes into consideration the aforementioned factors, among others.
While the figures are gaudy, this is not simply a cash payout, as explained by the Telegraph.
After four years, 50 percent of their equity will be vested, with another 25 percent two years later and the remaining amount two years after that. They will also have to fall in line with the rules, which as well as not decamping, involve meeting the minimum requirements for Tour membership and, if not, providing services such as sponsors meets and media appearances.
How this plays out going forward will be interesting. There will reportedly be $100 million in equity handed out annually, which will add up quickly. Even with the $3 billion backing, that's a lot of equity going to current and future players.
Regardless, the intent is clear: The PGA Tour is rewarding players for their loyalty. It is also attempting to align incentives within the organization. PGA Tour commissioner Jay Monahan said as much at The Players Championship earlier in this year.
"Historically, our structure has limited our ability to make transformative investments into the sport," he said. "With PGA Tour Enterprises, with our 13-member board of directors now in place and the partnership with Strategic Sports Group, we've changed that dynamic and unleashed our potential for future growth.
"With our player equity program, which is the first in professional sports, our interests and those of our players will be more deeply aligned. Our business thrives when together we're all laser focused on delivering for our fans. If we fail on that front, we fail on every front."
Players will reportedly begin receiving emails with the amount of equity they have been awarded this week. The equity numbers will be based on the $12 billion valuation from earlier this year when the SSG received 25% of PGA Tour Enterprises for its up to $3 billion investment.
