PEBBLE BEACH, Calif. — The PGA Tour is getting a $3 billion investment from Strategic Sports Group in a deal announced Wednesday that would give players access to more than $1.5 billion as equity owners in the new PGA Tour Enterprises.
The launch of PGA Tour Enterprises, with SSG as a minority partner, comes eight months after the PGA Tour signed a framework agreement with the Saudi backers of LIV Golf for a commercial venture, which ultimately led to private equity groups wanting to join.
The Public Investment Fund of Saudi Arabia is not part of the deal yet, though the tour said negotiations with the PIF are ongoing for it to also become a minority investor.
“The coolest thing about it is the players are now owners,” said Jordan Spieth, one of six players on the PGA Tour board. “So not only do they benefit with the tour, they now are equity owners so they want to push it themselves, they want to make the product better themselves. Not that they didn’t before, but you directly benefit from owning a piece.”
How much of a piece remained unclear. PGA Tour Commissioner Jay Monahan held a conference call with players from all its main tours (including the PGA Tour Champions and Korn Ferry Tour) on Wednesday morning that included Tiger Woods, whom the tour appointed to the board last summer at the players’ request.
“As the tour grows, we grow,” Woods told players, according to Golf.com, which obtained access to the call. “So the more we invest into the tour, the more we get the benefits of it, which has never been — it’s never happened in sports history. So we’re the first. Exciting for me to be able to be part of that.”
Also uncertain is where this leaves the PIF.
The tour said its deal with SSG allows for a co-investment from the PIF, subject to regulatory approval. A Senate subcommittee wrote a letter earlier this week to Yasir Al-Rumayyan, governor of the PIF, that it is proceeding with its inquiry into framework agreement with the PGA Tour that was announced June 6.
“At this point if the PIF were interested in coming in on terms that our members like and/or the economic terms are at or not beyond SSG’s and they feel it would be a good idea, I think that’s where the discussions will start,” Spieth said. “I understand it could take some time to even come to those kind of terms, and then beyond that the Department of Justice and a regulatory review would be intact.”
LIV Golf starts its third season this week in Mexico and is likely to be around through all of next year depending on the timing of any investment by the PIF in the PGA Tour. How the fractured landscape of golf gets repaired remains as cloudy as how specifically equity ownership is distributed.
The PGA Tour plans several player meetings over the next month to work through details.
“By making PGA Tour members owners of their league, we strengthen the collective investment of our players in the success of the PGA Tour,” Monahan, who will be CEO of PGA Tour Enterprises, said in the formal announcement.
He said a partnership with SSG — a group comprised of American owners and executives of pro sports franchises — will “enhance our organization’s ability to make the sport more rewarding for players, tournaments, fans and partners.”
The PGA Tour Enterprises board would be comprised of seven players, the PGA Tour commissioner, four members of SSG and an independent director who’s also on the tour board.
The unique equity program in golf would give some 200 players access $930,000 in initial grants. Starting next year, PGA Tour Enterprises would use $600,000 for recurring grants for future players.
While specific details of the equity ownership program were not announced, the initial grants would be based on career accomplishments, recent achievements and PGA Tour status. The grants would vest over time.
SSG is led by Fenway Sports Group and includes owners Marc Attanasio (Milwaukee Brewers), Arthur Blank (Atlanta Falcons), Steven Cohen (New York Mets), Wyc Grousbeck (Boston Celtics), Tom Werner and John Henry (Boston Red Sox), and Marc Lasry (Milwaukee Bucks). Others in the group include Alec Scheiner, former Cleveland Browns president and co-founder of Otro Capital.
“Our enthusiasm for this new venture stems from a very deep respect for this remarkable game and a firm belief in the expansive growth potential of the PGA Tour,” said Henry, the principal owner of Fenway Sports and manager of SSG.
SSG is investing an initial $1.5 billion into PGA Tour Enterprises and will concentrate on maximizing revenue for the benefit of the players and on finding opportunities to enhance golf across the world. Another $1.5 billion would go toward PGA Tour business.
The deal was unanimously approved by the PGA Tour board.
“It was incredibly important for us to create opportunities for the players of today and in the future to be more invested in their organization, both financially and strategically,” the player directors said in a joint statement. “This not only further strengthens the tour from a business perspective, but it also encourages the players to be fully invested in continuing to deliver — and further enhance — the best in golf to our fans.
“We are looking forward to this next chapter and an even brighter future.”
