The PGA Tour’s board of directors, with its members gathered in the same room for the first time since part of them negotiated a deal with Saudi Arabia’s sovereign wealth fund to reshape golf, indicated on Tuesday that it intended to move forward with the agreement and move past the protest. that stretched from the club’s locker rooms to Capitol Hill.
But she also made it clear that a deal is not certain.
The board did not, as expected, vote on a deal stock with tentative terms calling for a network of golf companies — including the tour, the Saudi-backed LIV golf circuit and the European Tour, now known as DP World Tour — to be housed in a new company. The entity is expected to be brimming with Saudi cash, but for now, it is under the day-to-day control of the PGA Tour leaders. But executives had hoped the regular meeting of the board, which is only expected to formally weigh the agreement once final terms are negotiated, would help stabilize the round’s trajectory during a turbulent period of internal division and global scrutiny.
Executives and board members know that this period can last for months.
The board said in a carefully worded statement Tuesday night that tour executives “have commenced a new phase of negotiations to determine whether the tour can reach a final agreement in the best interest of our players, fans, sponsors, partners, and the game at large.”
The board, which warns against turning away the players who make up the tour’s membership, some of whom were furious after being shocked by news of the agreement, said it was “committed to the safeguards in the framework agreement that ensure that you lead the PGA Tour and retain control of this potential new business entity.”
The board meeting came three weeks after the sudden announcement of the deal, and one day into the round it gave the Senate subcommittee a copy of the five-page framework agreement. The tentative agreement, signed in the early morning hours of May 30 at the Four Seasons Hotel in San Francisco, capped seven weeks of secret negotiations, but was notable mostly for the few binding commitments it contained — and the number of subsequent details left to sort through.
Although the Tour and Wealth Fund were expected to contribute their own golf ventures, such as the LIV, to the new company, the deal’s architects signed the framework agreement so quickly that no valuations were involved or, it seemed, were previously completed. The agreement does not specify the size of the expected investment of the wealth fund in the new company, although it provides a blueprint for its leadership structure and protects the investment rights of the Saudi fund.
Its few binding clauses include a no-participation pledge that covers the tour and the wealth fund (but not the players) and an armistice that prevents competing rings from recruiting golfers from each other. If no final agreement is reached by the end of the year, barring a mutual extension, the round and the wealth fund can “return” to their businesses without any financial penalty, such as a break-up fee.
Board approval, if it comes, does not guarantee the continuation of the deal. Antitrust regulators at the Justice Department are among the government officials scrutinizing the agreement, and could eventually try to block it. The agreement is also set to come under scrutiny next month on Capitol Hill, where a Senate subcommittee has scheduled a hearing for July 11.
But Tuesday’s meeting was seen as pivotal to the way forward for the tour and an 11-member board that includes five players and leading figures in business, law and finance. Only two of the board members, Edward D. Herlihy and James J. Dunn III, were involved in the negotiations leading up to the deal, and many of the board members were apparently unaware that it was in the works.
The board meeting, held at a Detroit-area hotel, began in the early afternoon and extended into the evening. It wasn’t entirely focused on the deal, said a person familiar with the meeting, who spoke on condition of anonymity to describe a private gathering; Instead, the person said, the board has also spent significant time on more technical matters of the sport, such as competition and eligibility cuts.
Most of the meeting focused on the framework agreement, though, as board members received a briefing from the round’s bankers on how they would attempt to assign values to the circle’s various assets. PGA Tour commissioner Guy Monahan was absent from the meeting in Dearborn; On June 13, the tour announced that he was on leave as he recuperated from an unspecified “medical condition”.
The board members did not comment when they left the meeting, allowing the statement to stand on its own. Only one player on the board, Rory McIlroy, has publicly suggested any amount of support for the deal. In recent weeks, other players have said they want to know more about the agreement and what it will mean for the Tour.
But board members have been told in recent months that the tour cannot afford a duel with LIV, the league founded with billions of dollars from the Saudi wealth fund that has lured some of the game’s biggest stars with guaranteed contracts and huge prize money. The wealth fund was also facing some pressure as it faced setbacks in a court battle against the tour, and while LIV struggled to attract audiences and interest in the US for reasons outside of its financial backer.
If the deal falls through, though, the two sides have already secured a mutual victory: California litigation declined after the round, the wealth fund and LIV agreed to drop their conflicting cases. The dismissals were done with prejudice, which means they can’t be reinstated, even if the rest of the agreement falls apart.
As cautious as the Tour’s statement on Tuesday night was, the dismissal of the lawsuit was mentioned in the first sentence.
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