PGA Tour-PIF Saudi Arabia deal overdue for finalization

The PGA Tour and the Saudi Public Investment Fund (PIF) failed to finalize specific cooperation terms as scheduled today, December 31.

"They certainly won't be able to announce the full deal this weekend. They may have to wait until the end of March 2024," the British newspaper Telegraph reported on December 30, citing a private source.

This situation is contrary to the determination of the organizations involved and the positive comments in the US golf community after the PGA Tour and PIF Saudi announced a preliminary agreement for a joint venture project with DP World Tour, in June this year. This is considered a blockbuster cooperation in modern golf.

Saudi PIF President Yasir Al-Rumayyan and PGA Tour Special Envoy Jay Monahan during a joint appearance on US television network CNBC earlier in 2023. Screenshot

Accordingly, the world's two largest professional men's golf arenas will combine commercial operations with the LIV Golf League, then hand over to a joint enterprise to exploit and manage. This unit is expected to be called PGA Tour Enterprises, in which the American organization will have the right to direct and control operations, while PIF Saudi will be the investor.

Although the relationship includes the DP World Tour, the PGA Tour and PIF Saudi have in fact played an initiating and leading role in the negotiations, with the goal of finalizing the deal by the end of the year.

However, the possibility of implementing the project is currently low due to barriers from the US government, due to concerns about national security issues and the loss of control of the domestic golf industry to the Saudi economic organization with an estimated net worth of 600 billion USD. This is the reason why the PGA Tour - PIF Saudi deal is being investigated by the US Department of Justice and the Specialized Committee in the US Congress.

Faced with the risk of "breaking down" in the situation of wanting more development capital, the PGA Tour continues to negotiate with the Saudi side, while also receiving other potential investors. That strategy was confirmed by the PGA Tour Board of Directors in an internal memo earlier this month.

The document also specifically names the most promising investment candidate as Strategic Sports Group (SSG), which has many billionaires and leading sports business groups in the US. Experts commented that PGA Tour Enterprises is likely to avoid antitrust suspicions - the main reason for the US Department of Justice's investigation - by including both SSG and PIF Saudi as shareholders.

ESPN said SSG plans to inject more than $3 billion into PGA Tour Enterprises. This enterprise, after adding the Saudi PIF stake, will have a combined capital of more than $7 billion. When it goes into operation, SSG and Saudi PIF will still be minority shareholders while the PGA Tour will be the majority shareholder, and member golfers will also have shares.

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