PGA Tour boss Jay Monahan cites Saudi Arabia’s inability to compete with PIF as reason for merger, according to reports
PGA Tour Commissioner Jay Monahan told staffers on Thursday that the league would not be able to afford the ongoing legal battle against LIV Golf and its financial backer, the Public Investment Fund of Saudi Arabia, according to the Wall Street Journal. In response to the threat posed by LIV Golf, the PGA Tour not only ran into heaps of legal fees but also continued to raise the tournament’s purse strings in an attempt to combat its player recruitment.
This financial trend is not sustainable; The PGA Tour went up against the world’s fifth largest sovereign wealth fund with an estimated $620 billion in assets under management. According to reports, the Tour has collected $50 million in legal fees and dipped into its reserves an additional $100 million to aid in sponsorship of advanced tournaments.
“We can’t compete with a foreign government with unlimited money,” Monahan told employees. “This is the moment. … We wait to be in the strongest position possible to execute this deal.”
The meeting comes two days after a landmark agreement between the PGA Tour, DP World Tour and Saudi Arabia PIF to consolidate commercial activities under one for-profit organization was announced. The settlement ended all litigation between the PGA Tour and PIF of Saudi Arabia, and helped reduce not only legal fees but also what appeared to be a much-needed capital inflow into the tournament. fight.
Under the terms of the deal, Saudi Arabia PIF will act as the exclusive investor in the new for-profit institution. It will also have the right to make further investments and the right to refuse any capital that may be invested.
“Whether you like it or not, PIF will continue to spend money on golf,” said Rory McIlroy at this week’s Canadian Open. “At least the PGA Tour now controls how that money is spent. So, you know, if you’re thinking about one of the biggest sovereign wealth funds in the world, you want them to be a partner. At the end of the day, money talks and you want them as a partner.”
