Inside the Details of the PGA Tour–Saudi PIF Agreement

The finer points of the deal most notably include the PGA Tour’s control over LIV Golf’s uncertain future.

The framework agreement signed by parties involved in the PGA Tour, DP World Tour and Public Investment Fund of Saudi Arabia outlines several details of the shocking arrangement that was first announced three weeks ago, including that LIV Golf’s future will be determined by the PGA Tour.

The six-page written agreement was first obtained by NoLayingUp.com and The Athletic, which reported it was sent to the U.S. Senate Permanent Subcommittee on Investigations (PSI) on Monday night. The subcommittee, chaired by Richard Blumenthal (D-CT) opened an investigation into the agreement on June 12 and invited PGA Tour commissioner Jay Monahan, Yasir Al-Rumayyan, governor of the PIF, and LIV Golf CEO Greg Norman to testify at a July 11 hearing in Washington.

A source told The Athletic that the PGA Tour plans to attend; the PIF’s plans are unknown.

The document clarified some aspects of the deal that were disclosed by Monahan in a June 6 news conference in Canada, the day the deal was first announced. It was signed by Monahan, Al-Rumayyan and Keith Pelley, CEO of the DP World Tour.

OFFICIAL PGA TOUR X LIV GOLF AGREEMENT DOCUMENT RELEASED. 👀

(📸: @NoLayingUp) pic.twitter.com/WgRCM38gEy

— SI Golf (@SI_Golf) June 27, 2023

Among the details is the fact that LIV Golf’s uncertain future will be determined by the PGA Tour.

When asked specifically about whether LIV Golf could coexist in its current format in 2024 and beyond, Monahan said: “I can’t see that scenario, but I haven’t gotten the full evaluation, the full empirical evaluation of LIV that I’m going to do to be able to comment on that. But I don’t see that scenario, no. To me, any scenarios that you’re thinking about that bridge between the PGA Tour and LIV would be longer term in nature.’’

(The Tour and Monahan announced in a statement on June 13 that Monahan had a health issue that required a hospital visit and that his duties were for the time being taken over by Tour executives Ron Price and Tyler Dennis. No updates have been provided on his health.)

LIV Golf is playing its eighth event of the year this week in Spain followed by another tournament next week outside of London. Although it has said nothing official, internal discussion has been to go ahead with plans for 2024.

Other aspects that are part of the agreement:

• It describes the composition of the board of the new for-profit venture now being referred to as NewCo but states that there will be the creation of a “communications committee’’ that potentially could have influence.
• PIF has the right of first refusal on capital raised by NewCo and will be “a premier corporate sponsor” of the PGA Tour, DP World Tour and other international tours, and that those tours 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.”
• The agreement outlines no initial investment amount from the PIF. Part of the process of the agreement is getting valuations for the PGA Tour, DP World Tour and LIV Golf, including each entities assets. The PGA Tour is not putting cash into the new company.

Although LIV Golf insiders have pushed back on the idea, the agreement states that the league that launched in June of last year and will see its future determined by the NewCo board of directors that will see the PGA Tour hold a majority. Al-Rumayyan has been named chairman of that board, with Monahan as CEO. Jimmy Dunne and Ed Herlihy, members of the PGA Tour policy board, will also be members of this new board.

The agreement says that an “empirical data-driven evaluation” will be conducted of LIV Golf to determine its future, and the board, overseen by Monahan, “will determine the ongoing plan and strategy.”

Elsewhere, the agreement states that the board “will make a good faith assessment of the benefits of team golf.” LIV’s business model rests on its 12 four-man teams being sold as franchises, with those teams charged with selling sponsorships.

As reported previously by Monahan, there will be a system to evaluate how LIV players can return to the PGA Tour, likely with some sort of penalty.

The agreement states that the PGA Tour—known as PGA Tour Inc., a non-profit member organization classified as a 501c-6—will operate independently, suggesting it will exist as we know it now, with a season of events capped by the FedEx Cup playoffs.

Its commercial holdings will fall under NewCo. The PIF will “make a cash investment in NewCo for an incremental ownership in order to fund the growth of NewCo which will include a right of first refusal on capital raised,” per the agreement. As part of the deal, both sides agreed to drop all existing litigation.

And because it was dropped “with prejudice,’’ it means that litigation cannot be renewed, even if the deal falls apart.

Further, the agreement says:

“PIF will contribute their golf-related investments and assets, including LIV, to NewCo along with a cash investment, in exchange for the issuance to PIF of an equity ownership interest in NewCo at a fair value mutually agreed by the parties. Following the contribution of assets into NewCo, NewCo shall assume all of the liabilities and obligations of the contributed assets, provided that each Party’s contributed businesses will be valued in their totality, taking into account all liabilities, commitments, contributions and obligations made or incurred by the respective prior owners, including in respect of player contracts and other working capital and operating expenses. In addition, the PIF will make a cash investment in NewCo for an incremental 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 time maintain a controlling voting interest in NewCo and PIF will continue to hold a non-controlling voting interest, notwithstanding any incremental investment by PIF or exercise of its right of first refusal."

Adding to the confusion, the year-long battle over Official World Golf Ranking consideration is addressed with "the Parties will cooperate in good faith and use best efforts to secure OWGR recognition for LIV events and players under OWGR's criteria for considering LIV's pending application."