PGA Tour to offer players equity in new company

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ST. SIMONS ISLAND, Georgia — Once it reaches an agreement with Saudi Arabia’s Public Investment Fund or U.S.-based investment partners — or perhaps even both — the PGA Tour will offer its members direct ownership in the newly formed corporation, PGA Tour commissioner Jay Monahan said in a memo sent to players Tuesday.

The memo comes on the heels of Monday’s marathon meeting at PGA Tour headquarters in Ponte Vedra Beach, Florida, in which policy board members, including Tiger Woods, were apprised of potential investment partners.

Tour management has designed a program that would align the interests of our members with the commercial business of the Tour via direct equity ownership in PGA Tour Enterprises,” Monahan’s memo said.

At the point we secure outside investment, this would be a unique offering in professional sports, as no other league grants its players/members direct equity ownership in the league’s business. We recognize — as do all of the prospective minority investors who are in dialogue with us — that the PGA Tour will be stronger with our players more closely aligned with the commercial success of the business.”

The PGA Tour reached a surprising framework agreement with the Public Investment Fund (PIF) and the DP World Tour on June 6. The framework agreement is set to expire Dec. 31, although sources have told ESPN that the deadline can be extended.

For the past few months, the PGA Tour has been weighing bids from several U.S. based entities, including Fenway Sports Group, which owns the Boston Red Sox, Pittsburgh Penguins and Liverpool FC. Fenway Sports Group has emerged as one of the strongest potential partners, sources told ESPN. Last week, Fenway Sports Group chairman Tom Werner confirmed to CNBC that the company had conversations with the PGA Tour but declined to provide further details.

Golfweek, citing sources, reported Nov. 4 that the PGA Tour had trimmed its list of potential financial partners to five companies: Fenway Sports Group, Liberty Strategic Capital, Acorn Growth Company, Eldridge Industries and Friends of Golf, a consortium of influential Wall Street investors and other individuals who have a fondness for the game.

Liberty Strategic Capital is operated by Steve Mnuchin, who was the secretary of the treasury under former U.S. President Donald Trump. Eldridge Capital is led by Todd Boehly, owner of Chelsea FCA and a minority owner of the Los Angeles Dodgers, Lakers and Sparks.

“Many of those prospects moved forward to a diligence review — with Tour management and Allen & Company working together with the potential minority investors’ representatives — and we then received significant, formal proposals that demonstrate the power of the PGA Tour brand, its players and our commercial opportunity,” Monahan wrote in the memo.

Monahan wrote that investment bank Allen & Company, the Raine Group and PGA Tour management “thoroughly reviewed all bids and agreed, in concert, to recommend select parties advance to the next round based on various criteria, including financial value proposition, minority investment rights and strategic value-add.”

“This is an important part of the process, allowing us to focus on the most attractive bids and the long-term value creation for you and the Tour,” Monahan wrote in the memo. “In the Policy Board meeting, we reviewed these remaining bids with the Independent Directors and Player Directors — with input from Allen & Co. and The Raine Group — and agreed to continue the negotiation process in order to select the final minority investor(s) in a timely manner.”

Endeavor Group, parent company of WWE and UFC, had submitted a bid to the PGA Tour but was turned down, COO Mark Shapiro confirmed Oct. 23.

“It’s been quite quiet lately; I haven’t heard anything,” Open Championship winner Brian Harman said. “I trust our leadership. I think Tiger coming on board has been really positive for all the players, we’ve all got his back. I think our goal is just transparency from here on out and just to make the best decision for the entire membership.

“I haven’t read the memo, so I don’t know what happened yesterday, but I’m sure I’ll hear some more today. I feel good about the direction things are going. I’m not on the policy board, I’m not in any of the meetings, but I do trust guys that are there, and I think they’ll make the right decisions.”

Sources have told ESPN that talks with PIF governor Yasir Al-Rumayyan and other PIF officials have slowed down tremendously since the initial framework agreement was reached more than five months ago. Sources said the proposed deal is far from getting done for a variety of reasons, including PIF officials wanting more control of the new for-profit enterprise. Sources said the Saudis are also digging in their heels on incorporating team golf into the sport’s future global ecosystem.

There are also concerns that a Saudi-only deal might not be approved by the U.S. Department of Justice’s antitrust division, which has already opened an investigation of the PGA Tour’s business practices and expanded it once the framework agreement was reached with the Saudis. Adding U.S.-based investors to the deal — it could potentially be more than one, according to Monahan’s memo — might grease the wheels for government approval.

“I don’t think it will ever happen,” a source previously briefed regularly on the state of negotiations with the Saudis previously told ESPN. “I don’t think the Department of Justice would ever approve a merger with the PGA Tour. And I don’t think the Saudis are pleased with how little influence they’d get in a merged entity. For those reasons, I don’t think the merger is ever going to happen.”

The tour also announced that Joseph W. “Joe” Gorder, executive chairman of Valero Energy Corporation, has been unanimously approved to replace former independent director Randall Stephenson on the policy board.

Stephenson, a former AT&T chairman, resigned in protest over the PIF deal.

“I am honored to be joining the PGA Tour Policy Board,” Gorder said in a statement. “I’ve truly enjoyed my engagement with the PGA TOUR through the Valero Texas Open, and I am excited to step into this role for the PGA TOUR and its members, as we continue to cultivate growth and success for this proud organization, its passionate fanbase and its engaged communities.”

Information from ESPN’s Don Van Natta was included in this report.

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