The Million Dollar Stalemate: PGA Tour, PIF Remain Locked in Negotiation Limbo

But it was nothing like a real one. Actually, there was an agreement to just negotiate in good faith and put an end to the cases.

There have been deadline extensions in the last year. The possible union was investigated by the US government. Gamers now wield power. On June 6, 2023, important figures have either retired or witnessed a decline in their level of power. American sports owners spearheaded the emergence of a new investing group. Players demanded that PGA Tour Commissioner Jay Monahan leave, and he went from being the most powerful person to firmly back in charge. All the while, athletes like Jordan Spieth, Patrick Cantlay, and Tiger Woods have assumed prominent roles. Few people appear to know where any of this is going, though.

After the shock on June 6, where are we now? Let us attempt to break through the clutter and clarify the current situation.

The change in power

A “PGA Tour policy board” may mean nothing to you. It ought not to. However, be aware that the PGA Tour policy board makes nearly all of the decisions. And there is no better way to start describing the crazy previous year than with the board seat changes.

The main outsider on the board a year ago was Jimmy Dunne, the legendary investment banking figure who was well-liked by the players for his readiness to help them make connections with the business world. In the meantime, Rory McIlroy was juggling his roles as the most influential player-director on the board and one of golf’s top stars. He was the most persuasive speaker on the PGA Tour, always criticizing LIV.

The announcement on June 6th, however, caused quite a stir in the golf community. First of all, it was all done in total secret, meaning the players had no say on a tour where they are also, in a sense, the owners. Furthermore, players were incensed that despite spending the previous year rejecting enormous offers from the Saudis and supporting the tour, they were still not paid for their efforts. The tour had only served to legitimize LIV. In the view of many players, Monahan and Dunne—the former covertly designating the latter to start negotiations with PIF—went from being the good men to the bad people.

The athletes desired greater voice. They insisted that Woods be given an additional voting seat in order to increase his or her voting power. They also ran an effort to appoint Joe Ogilvie, a former tour player who is now an investment banker, as a “liaison director.” The players suddenly gained voting power in addition to being more involved.

The story developed that, in addition to other differences like a possible return for LIV players and a more international golf circuit, the McIlroy team wanted the money to be distributed throughout the tour, while the Cantlay group lobbied for more money for the greatest names. McIlroy eventually gave up his position on the board. McIlroy was replaced by Spieth, who is said to support Cantlay and Woods.

Since then, McIlroy has significantly tempered his views on LIV and advocated for the game to unite and attract the greatest players. He has even openly challenged remarks made by board members Cantlay and Spieth. Therefore, the powers that be rejected Webb Simpson’s (McIlroy-aligned) April resignation request and McIlroy’s appointment in his place. McIlroy was instead added to the PGA Tour Enterprises transaction subcommittee that negotiates with LIV, so the outcome was the same whether of whether it was a vendetta or a matter of process.

Dunne and investment banker Mark Flaherty, two other board members who supported a deal with PIF, departed within a month after McIlroy’s abortive comeback. Dunne mentioned “no real movement” toward a PIF agreement and players taking charge of board voting.

“I think things are, unfortunately, put in a really bad light right now,” Spieth said last month, “and I think things are actually in a really, really good place, based on what I know, which is quite a lot in this situation.”

LIV did not stop

There was debate about who had more authority—the PGA Tour or Monahan—when the announcement on June 6th was made. PIF governor Yasir Al-Rumayyan would chair the newly formed PGA Tour Enterprises and receive a seat on the policy board in exchange for PIF investing billions in the company; nevertheless, Monahan would lead the new enterprise as CEO and have ultimate control over LIV’s future. It was marketed as PIF simply wanted a seat at the table in professional golf and everyone got what they wanted, but it was viewed with skepticism as many felt the man with the money actually controls everything.

By October, the PGA Tour had made it apparent that it was looking for alternative investment opportunities, and there had been little real progress toward a contract. More on that in a moment. It was reasonable to suspect that anything would get done by the scheduled deadline of December 31. Thus, when reports surfaced in late November that LIV was in talks with the defending Masters champion, Jon Rahm, it made headlines. Many people questioned whether LIV’s pursuit of Rahm was intended to put pressure on the PGA Tour because he was regarded as the top or second-best player in the world. Months later, Rahm acknowledged that he had believed that signing for hundreds of millions of dollars would speed up discussions and reunite the sport.

Such an event has not yet occurred. Both parties decided to extend the deadline because no agreement was reached by December 31. In addition to acquiring office space in New York and London, LIV has been hiring executives in recent weeks, including new hires from Pepsi and the Philadelphia 76ers.

PGA Tour added new investors

The PGA Tour’s power, if Rahm was LIV’s main negotiating tool, was to increase outside funding. Supported by a $3 billion pledge from Strategic Sports Group, a group of significant professional sports investors that includes, among others, John Henry, Arthur Blank, and Steve Cohen, the tour formally created PGA Tour Enterprises on January 31. With the distribution of $750 million in stock to contributing players (past and present) based on value brought to the tour, the agreement made players genuine owners in the sport.

Determining whether this outlay indicated a move toward an agreement or the tour making sure it did not “need” the Saudis was the difficult part of the investment. Some claimed PIF was being pushed out by the tour. Others countered that investors in private equity seek a return and would prefer a deal that unites the sport. Although SSG’s investors have not made any public statements to promote openness, Ogilvie told Golfweek that he thinks SSG “committed with the hope that there would be another investor.”

Spieth was asked his thoughts on needing PIF the week before the announcement and said, “I don’t think it’s needed. The idea is that we have a strategic partner that allows the PGA Tour to go forward the way that it’s operating right now without anything else, with the option of other investors.”

It was alleged that PGA Tour representatives and SSG investors went to Saudi Arabia a week later to meet with Al-Rumayyan. The parties got together once more at Woods’ Bahamas residence in March, this time with members of the policy board. No significant progress was made toward a settlement, according to those involved, and it was more of a kind, well-intentioned greeting.

What about Jay Monahan?

Board members requested that Monahan step down as PGA Tour commissioner as recently as December. Following the June 6 announcement, he lost the players’ faith totally, and it seemed like he was losing more and more control of the situation when Rahm left.

Subsequently, it was understandable to speculate that Monahan would be leaving given the departure of allies like Flaherty and Dunne as well as the potential departure of another board member, Ed Herlihy, when his tenure ends this autumn. While some, like Xander Schauffele, acknowledged that Monahan still has “a long way to go,” McIlroy and Justin Thomas spoke up for Monahan. The tough thing about Monahan is that he is always been praised for his abilities both with investors and sponsors and in one-on-one situations. Only at the podiums and great stages does he look so unconvincing.

So where does this leave a deal?

Never has it seemed so hazy. The true explanation may be that, although hoping for a deal, both parties are bracing for the likelihood that none will materialize.

It looks like there has not been much movement and that many of the important players who were in favor of a transaction have been sidelined from the outside. Some contend that the extent of the ongoing events surpasses public awareness and that deciphering the nature of this future will require time.

There are issues, including as the potential for a “global tour” and LIV’s future. Many ideas have been put out, ranging from crossover events in the vein of the “AFC-NFC” to a global Champions League-style tour. One of LIV’s main goals has been to take the sport worldwide, and McIlroy supports that direction. Many PGA Tour players would rather focus on series that are focused on the United States rather than commit to that kind of schedule. There is also the debate over whether or not to allow LIV defectors to return to PGA Tour events, a topic that has some tour members vehemently opposed.

Government oversight would also be necessary for any sale. Any kind of union could be years away, as the Sports Business Journal noted earlier this year, given that Department of Justice permission could take longer than a year.

There is a lot more that we do not know than we do, and the majority of influential people are content to speak in generalities and ambiguously about hope that a compromise is reached. We have no idea exactly what the DOJ may do. Who wants a deal and who does not is not really clear to us. It is all a game of interpreting hints and trying to make sense of them.

(Top photo of Jon Rahm, left, and Jay Monahan: Mark Brake, Sam Hodde / Getty Images)