The framework agreement for the controversial new trading company that unites the PGA Tour and Saudi Arabia’s Public Investment Fund, along with the DP World Tour, has been secured by the athleteoffering for the first time new clarity and vision for the deal.
The agreement — signed on May 30 by PGA Tour Commissioner Jay Monahan, PIF Governor Yasir Al-Rumayyan, and DP World Tour CEO Keith Bailey after six weeks of meeting and negotiations — ended a year of fighting between professional golf’s biggest stakeholders. In the courtroom and in court. Court of public opinion.
The frame convention matches the speed with which it came into being. It consists of only six pages.
According to a source familiar with the tour’s legal proceedings, the document was sent by the PGA Tour to the US Senate Permanent Subcommittee on Investigations (PSI) Monday night, along with other documents and information related to the agreement. The subcommittee, chaired by Richard Blumenthal (D-CT), opened an investigation into the agreement on June 12, and subsequently called Monahan, Alrumian and LIV Golf CEO Greg Norman to testify at the July 11 hearing in Washington. A source familiar with the plans confirmed the tour the athlete that the PGA Tour will participate in the hearing. The PIF’s plans are still unknown.
The core of the deal, which has often been misunderstood or misinterpreted since its June 6 announcement due to a lack of detail and specificity in the initial versions, has become somewhat clearer in the framework agreement obtained, although many questions remain.
- The future of LIV Golf remains uncertain, as it now falls under the control of the PGA Tour, an odd development for the two longtime foes.
- The framework sets out the composition of the new venture board (referred to as the NewCo throughout) but also provides for the creation of a ‘Communications Committee’ that could have significant influence.
- In addition to ensuring PIF’s right of first refusal for capital raised by NewCo, the framework also provides that the PIF will be the “principal corporate sponsor” of the PGA Tour, DP World Tour, and other international tours, and that these tours “work collaboratively together to define an event.” High-profile in which the Public Investment Fund or its representative(s) make a financial investment to act as the property sponsor.”
- While $2-3 billion was reported as an initial investment for the Public Investment Fund, this was not mentioned in the agreement. PIF source said the athlete The size of the premiere is still under negotiation. Before the number can be decided upon, evaluations of each entity in the new company must be completed. The PGA Tour valuation will include all business interests, media rights, and property. The round does not put money into the new company.
LIV future
The fate of the LIV, the rogue golf league created by PIF and fronted by Greg Norman, will be decided by the NewCo board of directors which will be controlled by a majority of the PGA Tour, according to the agreement. It states that a “data-driven pilot evaluation” will be conducted for the one-year-old LIV to determine its future, and the board, which Monahan oversees, will determine the plan and ongoing strategy.
There are currently major questions regarding the existence of LIV in the 2024 season and beyond. The framework does not answer for those, but it makes it clear that these decisions will be made primarily by NewCo’s board of directors which is weighted against its largest competitor. While it must be considered that the PIF has already invested more than $1 billion in LIV, product sustainability will be the final measure.
However, the golf team idea is mentioned separately in the framework agreement, where it states that the council will “make a good faith assessment of the benefits of the golf team”.
The future of LIV players
The framework states that the Tours will “work collaboratively and in good faith to establish a fair and objective process for any player wishing to re-apply for membership on the PGA TOUR or the DP World Tour after the completion of the 2023 season and to establish fair criteria and conditions for readmission consistent with each player’s disciplinary policies.” a tour “.
Translation: A path will be created for LIV players like Dustin Johnson and Phil Mickelson to return to the PGA Tour, but not until 2024 at the earliest and not without penalty. What that might look like is still unknown, but some sources on the PGA Tour have suggested everything from fines to a one-year suspension dating back to the player’s final LIV event played.
Understanding of the PIF and PGA Tour Consortium
As previously known, the agreement between the three parties creates a new business (NewCo) that brings together each entity’s golf business properties. While the PGA Tour will operate independently, on the competition side, its business holdings will now fall under NewCo. In the meantime, the PIF will “make a cash investment in NewCo for additional ownership in order to finance the growth of the new company that will include a right of first refusal on the capital raised,” according to the agreement. As part of the deal, both sides agreed to drop all outstanding lawsuits.
The unexpected union of the PIF and PGA Tour is as follows:
The PIF will contribute its golf-related investments and assets, including LIV, to NewCo along with a cash investment, in exchange for PIF issuing an equity ownership interest in NewCo at the fair value agreed upon between the parties. After the assets have been contributed to the NewCo, the new company assumes all the responsibilities and liabilities of the contributed assets, provided that the business to which each party contributes is valued in its entirety, taking into account all liabilities, liabilities, contributions and commitments made or incurred by it. respective former owners, including in relation to player contracts, working capital and other operating expenses. In addition, the PIF will make a cash investment in NewCo for additional ownership in order to fund the growth of NewCo which will include a right of first refusal on capital raised by NewCo, provided that, for the avoidance of doubt, the PGA Tour will at all times retain a controlling voting interest in the Company. The new PIF will continue to hold non-controlling voting rights, notwithstanding any additional investment by the PIF or the exercise of its right of first refusal.
The framework also states that the PIF will be the “principal corporate sponsor” of the PGA Tour, the DP World Tour and other international tours. While that might raise some eyes, imagine the possibility of the Public Investment Fund or one of its properties sponsoring a PGA Tour event after a year of tussle between the two, it is possible that the Public Investment Fund or Saudi Aramco, the kingdom’s emerging oil giant, could be a larger presence on the Tour. DP World, where such sponsorship has already become popular.
Who has the votes?
According to the framework, the composition of NewCo’s board of directors will reflect the percentage of voting ownership and the Public Investment Fund will continue to own a non-controlling voting interest. Al-Rumayyan will be president. Monahan will be CEO. The Executive Board will consist of Monahan, Alramayan and PGA Tour Board Members Jimmy Dunn and Ed Herlihy.
Although the composition of the Board of Directors is known, the framework also provides for the creation of a “Communications Committee” that would “help facilitate a smooth transition for business” and “coordinate and manage communications” between the PIF, LIV, and the PGA Tour. Herlihy and one unnamed person will co-chair the committee, while the remaining two members will be Dunn and another unnamed person. These lines are empty in the frame. According to a source familiar with the agreement, this committee will finalize plans to merge tours and guide decisions on LIV players trying to regain membership on the PGA Tour.
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