As Questions Still Linger, Execs Say PGA Tour Will Be Guiding Force After Partnership
Wednesday morning, at a table outside the clubhouse at the Detroit Golf Club, the interim co-leaders of the PGA Tour talked about a tentative, preliminary agreement for the future of the Tour. If that sentence makes the PGA Tour seem on shaky ground, their words did not.
In an interview with Sports Illustrated, Tour executive vice president Tyler Dennis and chief operating officer Ron Price answered a few of the many questions around the Tour’s plan to become business partners with Saudi Arabia’s Public Investment Fund. They kept hitting a common theme: The PGA Tour controls not just its future but the future of men’s golf.
Dennis, who held informal one-on-ones with players competing in this week’s Rocket Mortgage Classic before the interview, said, “The primary question is actually also the primary safeguard, that the PGA Tour feels is important—and by the way, the other parties do as well—that the PGA Tour is the clear leader of this moving forward and gives the clear direction on shaping the future of this.”
So other parties, including PIF governor Yasir Al-Rumayyan, want the Tour to be the “clear leader” of the new structure?
“Absolutely,” Dennis says. “And we wouldn’t move forward without that. They understand that. As our players start to understand that, they start feeling better about the transaction. And that’s very clear that the PGA Tour will be in charge.”
The preliminary agreement said the PGA and European Tours will “coexist” with the LIV tour—but it also gives PGA Tour commissioner Jay Monahan the power to determine the future of LIV after a “good faith” evaluation. There has been a lot of discussion about whether the Tour and LIV will continue as separate entities. SI asked a different version of the question: Is the plan, moving forward, to have all the best players in the world compete on a single tour?
There was a four-second pause. Then Dennis said:
“I think you have to go back to what was announced and the spirit of the framework. And that’s simply that working together and working in a way that’s unified is going to be better for the sport, better for the professional game, better for the PGA Tour.”
If the Tour is true to its stated goal, keeping LIV as a stand-alone operation would not seem to make sense. The agreement gives the Tour the right to administer penalties to LIV players who reapply for PGA Tour membership. The nature of those penalties was discussed at the PGA Tour Policy Board meeting Tuesday, a person familiar with the discussions said. But nothing specific has been determined.
Nonetheless, it is getting clearer by the day that an agreement would give the Tour the authority to control its competitive and business operations. Price says when the Tour, European Tour and LIV Golf put their commercial assets in a new company, titled NewCo in the agreement, “the PGA Tour is fully in control of this new company, which we tentatively are calling PGA Tour Enterprises.”
If the PGA, European and LIV tours can mutually agree on the value of each of their assets, those assets would then go into what is tentatively being called PGA Tour Enterprises. PIF would then purchase a share of that business. So essentially, the Saudis’ sovereign wealth fund would be buying a minority stake in the Tour—an arrangement that is conceptually similar to plans for the Qatar Investment Authority’s plan to buy a stake in Monumental Sports & Entertainment, which owns the Washington Wizards, Capitals and Mystics.
Price also says of the new company: “That’s a taxpaying entity. Whatever the net income of that organization is, it will pay taxes. It will not be exempt.”
That could address one of the legal hurdles ahead: The congressional threat of removing the Tour’s nonprofit—or 501(c)(6)—status. Price says the Tour itself would become “a regulatory body that oversees the sport. So it clearly qualifies under 501(c)(6), even more so than it does today, because all the commercial activity has been moved out of it. It’s simply overseeing our competitions going forward.”
Will individual players have equity in the new company?
“Nothing has been determined yet,” Price says. “There’s a lot of things that we have to consider.”
Tour players initially expressed outrage at being left out of conversations for the preliminary agreement. But the Tour has been meeting with players every week to both educate them and make sure they are invested in the rest of the process. Price says, “Anything that we do, it’s got to have the player support, and it’s got to have our own approval, or we don’t do anything going forward.
“Initially, people didn’t understand how the transaction worked. As we had more time to explain it to them, and as they looked at what’s in the framework agreement, I think our players are starting to understand there’s a lot of potential benefits in this agreement. But the only thing we’ve done at this point in time is end the litigation, and there’s a moratorium on recruiting players from the PGA Tour.”
In the past, Dennis has been a more public presence than Price. Now, with Monahan on medical leave and the Tour trying to complete a monumental, landscape-changing business deal in just a few months, they have split his duties.
Will Monahan come back?
“What we’ve been communicating to our constituents is that Jay is O.K.,” Dennis says. “We understand he’s recovering. The Monahan family has asked for privacy and continues to do so, and we’ve simply been respecting that. We do expect him to return.”
In the meantime, Dennis says, “From a day-to-day business, we’re just full steam ahead.”