LIV Golf posed an “existential threat” to the PGA Tour, officials told U.S. lawmakers Tuesday probing the iconic golf league’s proposed merger with its Saudi-backed rival.
PGA Tour Chief Operating Officer Ron Price and board member Jimmy Dunne testified before the U.S. Senate Permanent Subcommittee on Investigations regarding the negotiations, which could end up being a “win-win situation” for all parties.
Dunne stressed the urgency of the PGA Tour striking a deal with the upstart golf league — before it was no longer an option.
“My fear is if we don’t get to an agreement, they’re already putting billions into golf, they got a management team that wants to destroy the tour … they have an unlimited horizon and an unlimited amount of money,” Dunne said.
“It isn’t like the product is better, it’s just that there’s a lot more money that will make people move and I’m concerned exactly with what the senator’s worried about. I’m more concerned if we do nothing, they could end up owning us.”
The deal between the rival golf leagues shook the sporting world when it was announced June 6, given the leagues have been engaged in bitter battles for two years.
LIV Golf is run by former pro golfer Greg Norman and is bankrolled by Saudi Arabia’s Public Investment Fund (PIF), which critics have accused of being a vehicle for the country to try to improve its reputation abroad.
Much of the backlash centres around the alleged involvement of the Saudi Arabian government in human rights violations, including the murder of Washington Post journalist Jamal Khashoggi in 2018.
Last June, several former world No. 1’s or major champions announced that they were leaving the non-profit PGA Tour for LIV Golf.
Those departures put the PGA Tour’s primary revenue streams at risk, Price said.
“We’re performance-based … we try to balance the allocation of resources among our top players and the ones who are performing at a top level on a regular basis, while at the same time maintaining earnings opportunities for all of our players. Our top players, those are the ones fans are interested in and fans tune in to watch and they drive our primary revenue streams, media and sponsorships,” he said.
“To the extent that LIV Golf has been successful in taking away some of our top players through their irrational economical business model, that puts pressure on our ability to maintain our primary revenue sources and if they continue to do that, we would, as you said, faced an existential threat.”
A deal price was not announced, but a new company will be created with the PGA Tour as the majority owner.
The new company, however, will operate for profit and Saudi Arabia’s PIF will take a large minority stake in the combined entity.
The exact stake will depend on how much it will invest – an amount expected to be north of US$1 billion, Price said. PGA Tour and PIF will negotiate how much money the new company should start off with.
Saudi Arabia’s PIF governor, Yasir Al-Rumayyan, will be the chairman of the new entity, while PGA Tour Commissioner Jay Monahan will serve as CEO.
Price said the PGA Tour would have a controlling interest in the board.
“We faced a choice: one was to allow professional golf to be taken over and operated by the Public Investment Fund of the Kingdom of Saudi Arabia,” he said. “The second was to allow the PGA Tour to continue to lead in accordance with our mission and our values for the benefit of our players and charity.”
The Permanent Subcommittee on Investigations, chaired by Sen. Richard Blumenthal, D-Conn., released documents detailing the negotiations ahead of Tuesday’s hearing.
The documents revealed discussions between the two sides of ousting Norman and giving golf giants Tiger Woods and Rory McIlroy their own LIV teams.
Each of them would play in 10 LIV events per year, the documents show. There is no indication in the documents that either Woods or McIlroy, both of whom remained loyal to the PGA Tour in its dispute with LIV, were ever informed of the idea.
Woods has played only twice this year and is recovering from ankle surgery to address complications from a car crash in Los Angeles in early 2021 that he has said will severely limit his playing schedule going forward.
Among the other proposals included in the memo were a mixed-gender, LIV-style team event with qualifying in Saudi Arabia and concluding in Dubai; awarding world ranking points to LIV events, including retroactively; and PIF sponsorship of two elevated PGA Tour events, including one in Saudi Arabia.
None of those proposals were included in the framework agreement signed on June 6. The agreement called for the parties to drop all lawsuits and to combine the commercial interests of the PGA Tour, LIV and the European tour into a new, for-profit company while maintaining the PGA Tour’s nonprofit status.
The proposal to replace Norman as LIV’s CEO was included in a side agreement that was negotiated ahead of the announcement, but the committee could not determine whether the side agreement was executed. Emails obtained by the committee showed that Dunne and fellow PGA Tour board member Ed Herlihy discussed with Commissioner Monahan the prospect of Dunne and Herlihy replacing Norman.
Norman remains in the CEO role, although he has been largely sidelined as the public face of LIV since the deal was announced. He was invited to testify at Tuesday’s hearing along with Al-Rumayyan; both declined.
Monahan also was not testifying because he is recovering from an unspecified medical situation that kept him out of work for a month; he has said he plans to return next week.
— with files from The Associated Press and Reuters
© 2023 Global News, a division of Corus Entertainment Inc.
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