The framework agreement made between the PGA Tour and Saudi Arabia's Public Investment Fund, obtained and released Monday night by No Laying Up, confirms much of what the parties have explained publicly regarding the details of their deal. It even goes so far as to say the parties' goal is to unify the game of golf.
Three weeks ago, PGA Tour commissioner Jay Monahan and PIF governor Yasir Al-Rumayyan announced their deal to combine the business interests of the PGA Tour, the DP World Tour and LIV Golf, which the PIF has funded for the last year, into a new for-profit entity. The deal shook the foundation of the golf world at a time when the game had been as divided as ever.
Monahan will serve as CEO of the new venture with Al-Rumayyan as chairman of the board. The PGA Tour claimed it would maintain controlling interest based on its voting shares and board seats with the PIF serving as the sole new investor into the company.
In the days and weeks that followed, more details of the deal began to emerge, but what spoke loudest was the details left unshared. Golf Digest's Joel Beall correctly assessed that no one -- including the handful of folks who worked on this deal: Monahan Al-Rumayyan, Ed Herlihy, Jimmy Dunne and DP World Tour commissioner Keith Pelley -- actually knew those details.
The framework agreement, which is meant to serve as a deal outline that gets all parties on the same page as they begin to hammer out a final plan, proves that assertion correct. While some of the details were known already, the following can be gleamed from the document itself.
The PGA Tour will maintain controlling interest: The agreement plainly states the PGA Tour will "at all times maintain a controlling voting interest in NewCo and PIF will continue to hold a non-controlling voting interest, not withstanding any incremental investment by PIF or exercise of its right of first refusal [for other capital raised by NewCo]."
What Monahan and others have been saying is true: The Tour controls the votes, the PIF funds (some of) the money.
Golf will be more global than ever before: NewCo will "implement a plan to grow the combined commercial businesses and drive financial returns for the shareholders, including through targeted mergers and acquisitions to globalize the sport, redesigning the commercial business to drive greater fan engagement, accelerating certain PGA Tour growth initiatives already underway and utilizing innovations from LIV."
This should come as welcome news to proponents of a global regular season. Never in a million years would one have imagined this as be the path toward a global world tour, but its existence, ultimately, will be a fine and perhaps even good thing.
The PGA Tour division will attempt to remain non-profit: NewCo will run the business with the PGA Tour heading up the competitions. Simply put, the Tour will now function as a mechanism for hosting and operating tournaments, while NewCo will be the entity through which the business endeavors (and most of the money) flows.
LIV Golf's future is tenuous: "Subject to execution of the definitive agreements, (a) NewCo will undertake a full and objective empirical data-driven evaluation of LIV and its prospects and potential and will make a good faith assessment of the benefits of team golf in general, and PIF, the PGA Tour and the DP World Tour will work together in an effort to determine how best to integrate team golf into PGA Tour and DP World Tour events going forward ..."
We are about to find out whether LIV Golf was successful enough to continue running as a separate tour or whether team golf was attractive enough to at least be continued in separate events. NewCo will have access to all financial information regarding all tours, which for LIV may not look all that great considering the fact that it spent three-quarters of a billion dollars in less than a year and did not generate revenue even beginning to approach that number.
The reapplication process for players to rejoin the PGA Tour is ambiguous: The document simply says, "PIF, the PGA Tour and DP World Tour will work cooperatively and in good faith to establish a fair and objective process for any players who desire to re-apply for membership with the PGA Tour or the DP World Tour following the completion of the 2023 seasons ..."
Concepts have been thrown around regarding what that process might look like but all appear to be supposition at this time.
Saudi Arabia's PIF as a public PGA Tour sponsor appears inevitable: The PIF will have the opportunity to become a sponsor "at one of the highest levels of sponsorship offered by the PGA Tour, DP World Tour and other applicable international tours."
This is significant and seemingly what the PIF aimed to achieve all along. In addition to this being a potentially lucrative financial investment, the PIF has obtained and will almost assuredly utilize the soft global power associated with sponsoring world championship golf.
Agreement must be finalized before the year is out: The entities have until December 31, 2023 to enter into definitive agreements or "the parties can revert to operating their respective businesses in the state that existed pre-agreement in their discretion."
Given litigation between the leagues has been dropped and the public relations fiasco regarding the deal has already begun waning with time, the parties seemingly have no reason to not complete the deal in the determined timeframe. There is motivation across the board to get a deal done, which is why the framework agreement was signed in the first place. What might instead stand in the way of the new company being formed is the U.S. Department of Justice.
While not much new information was contained in the framework agreement, it's certainly interesting to see it all written down on paper. After reviewing the entire document, I am less convinced than ever that the PIF and Al-Rumayyan want to "own golf" as many have stated. Rather, it's clear they simply wish to be affiliated and associated with it at the game's highest level. At least for now. This appears to accomplish that, even if the future remains ambiguous.
