Three weeks after its intention to merge with LIV Golf in a new entity that would receive substantial financial backing from Saudi Arabia’s Public Investment Fund (PIF), the PGA Tour enlisted its policy board members, many of whom had no idea about the proposed pact, to meet and discuss the deal in a Michigan hotel room. Tour commissioner Jay Monahan was not in attendance yesterday as he is recovering from an undisclosed medical issue that cropped up almost directly after the highly scrutinized merger was announced, but his temporary replacements, Tyler Dennis and Ron Price, were there, as were PGA players Rory McIlroy, Patrick Cantlay, Webb Simpson, Charley Hoffman and Peter Malnati.
The timing of the meeting is notable, as it came a day after the five-page agreement outlining the framework for the PGA’s deal with the PIF was obtained by The New York Times on Monday, the day after a Senate committee that will be holding a July hearing about the deal received a copy. The terms in the agreement, which could still fall apart or be nixed by the Justice Department, are not nearly as firm as initially thought.
According to the agreement, the PGA will have the final say on whether the LIV Golf circuit will continue and the PIF will be the “premier corporate sponsor” of the proposed merged tours and they will “work together collaboratively to identify a high profile event for which PIF or its designee(s) will make a financial investment to serve as title sponsor.”
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The agreement also includes a nondisparagement clause that covers the Tour and the PIF and a stipulation that both parties can “revert” to their businesses without any financial penalty if a final agreement is not in place by the end of the year, according to The New York Times.
“In some ways, this looks a little more like a settlement to me than an actual M&A deal,” Suni Sreepada, a partner in the mergers and acquisitions group at Ropes & Gray, told The Times. “The fact that they were willing to publicly announce it does mean that the parties are pretty committed to doing something. But I guess that leaves us with a question of who holds the leverage at this point? And how does this end up getting fleshed out?”
Even if the deal ultimately falls apart, both sides can claim victory, as the PGA Tour and LIV/PIF agreed to drop their legal cases against one another in order to attempt to merge. “Notably, today’s announcement will be followed by a mutually agreed end to all pending litigation between the participating parties,” read the original press release regarding the deal. As that line points out, the agreement to drop the clashing cases is notable because they cannot be refiled even if the rest of the pact disintegrates, according to The Times.
In a statement released after Tuesday’s meeting, the PGA Tour Policy board, which did not vote on the deal, mentioned litigation in the first line. “Entering the Framework Agreement put an end to costly litigation,” per the statement. “Management, with input from our Player Directors, has now begun a new phase of negotiations to determine if the Tour can reach a definitive agreement that is in the best of interests of our players, fans, sponsors, partners and the game overall.”
One has to wonder if the PGA Tour determined that permanently eliminating the lawsuits, no matter the cost and damage to its reputation, was what was really best for golf and agreed to a shaky deal that may fall through.