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Deadline passes, but PGA Tour and Saudis plan to continue negotiations

Deadline passes, but PGA Tour and Saudis plan to continue negotiations

طوبیٰ Tooba 55 years ago 0 1

The PGA Tour and the Saudi Arabia Public Investment Fund were set to miss a midnight deadline Monday to agree to a formal partnership, but both sides were expected to continue negotiations with the hopes of reaching final terms to align forces at some point in the new year.

The PGA Tour notified its members in a memo Sunday evening that it had not reached a final agreement with the PIF but said “we are working to extend our negotiations into next year based on the progress we have made to date.” No formal extension had been signed, according to two people familiar with the situation, though recent talks have been productive and both the tour and PIF officials were willing to continue negotiations to see if a final deal can be reached.

Jay Monahan, the PGA Tour commissioner, told players the organization has made “meaningful progress” with another set of potential investors — a group of high-powered pro sports team owners called Strategic Sports Group (SSG) — and said “we are focused on the finalization of terms and drafts of necessary documents.”

But negotiations with the PIF have been complicated from the day the initial framework agreement was announced June 6. Though neither side formally agreed to an extension, the two people familiar with the talks said there has been progress and both sides wanted to keep working toward a final deal, which is still likely at least a month or two away.

“While we had initially set a deadline of December 31, 2023, to reach an agreement, we are working to extend our negotiations into next year based on the progress we have made to date,” Monahan told players in the memo. “Our goal for 2024 is to reach agreements with SSG, PIF and the DP World Tour, bringing them on board as minority co-investors in PGA TOUR Enterprises. These partnerships will allow us to unify, innovate and invest in the game for the benefit of players, fans and sponsors.”

The Dec. 31 deadline was one of the few binding elements of the initial framework of an agreement between the tour and the Saudis. At the time, both sides were hopeful that negotiating the final terms of their alliance would take only a few weeks, but seven months later several wrinkles remain. The proposed partnership instantly faced congressional pushback and the likelihood of scrutiny from federal regulators, and for weeks both sides have said an extension of the deadline was increasingly likely.

The extended talks means the PGA Tour’s new calendar year begins this week with no clarity on what the future holds for professional golf. The Sentry tees off Thursday in Maui without its defending champion, after Jon Rahm signed with LIV Golf last month, and the cloud of uncertainty promises to linger for at least several more weeks.

The PGA Tour is a non-profit organization but is aiming to launch a separate for-profit entity that will oversee its commercial interests, called PGA Tour Enterprises. The Saudi PIF was expected to inject billions into the new entity with its governor, Yasir Al-Rumayyan, serving as board chair and LIV Golf falling under the tour’s umbrella. Without a final deal in place, the board construction and future of LIV have been up in the air, and the PGA Tour is deep in discussions with other investors as it moves forward with plans to launch the new entity.

The tour could receive a 10-figure investment from a group of high-powered sports owners that includes Arthur Blank, who owns the NFL’s Atlanta Falcons; Mark Attanasio, owner of MLB’s Milwaukee Brewers; John Henry and Tom Werner, whose holdings including MLB’s Boston Red Sox; and Wyc Grousbeck, owner of the NBA’s Boston Celtics. The group is called Strategic Sports Group and is led by Fenway Sports Group, the Boston-based private holding company that owns the Red Sox, Fenway Park, Liverpool Football Club and the NHL’s Pittsburgh Penguins.

Owners of Red Sox, Cubs and Celtics could inject money into PGA Tour

It is not clear how the group and the Saudis would co-exist as partners with the PGA Tour, though people close to the negotiations have said the two investment groups would serve as minority investors and tour officials would retain a controlling interest in the new commercial entity. The parties have spent the past several weeks trying to decide how to divide that pie, while also discussing how to give tour golfers an equity stake in the new venture and what role team golf — or LIV Golf — might play in the future.

The Saudi-owned LIV Golf has announced plans for a 14-event season that begins Feb. 2.

The tour and the Saudi PIF shocked the golf world when they announced an alliance in June. They had negotiated in secret the basic framework of a deal to combine their commercial interests under one umbrella, drop their litigation against each other and begin working cooperatively. While the dueling lawsuits were dropped in June, they had until the end of the year to hammer out terms of a final agreement.

After a non-poaching provision from the initial agreement was dropped in July, LIV Golf successfully recruited Rahm and has also reached out to other PGA Tour players, which has upset some tour officials.

In announcing the preliminary deal, the game’s stakeholders sold it to the public by saying it would draw the divided golf world back together, stabilize the game and ensure the long-term viability of the PGA Tour. The announcement, though, surprised and upset many players and immediately drew the interest of both Congress and Justice Department regulators who oversee mergers and were already investigating the PGA Tour for possible antitrust violations. The turbulence was immediate, and tour officials told lawmakers at a Senate subcommittee hearing that it was difficult to negotiate with so much public scrutiny. Those officials also warned that final terms were still a ways off.

There is no deal,” Jimmy Dunne, the PGA Tour policy board member who helped craft the basic framework agreement, told lawmakers. “There is simply an agreement to try to get to an agreement instead of lawsuits.”

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