The interim agreement between the PGA Tour and Saudi Arabia’s sovereign wealth fund contains only a handful of binding promises, including a no-disrespect pact and a pledge to dismiss painful lawsuits, which are the most important for the future of men’s professional golf. Many of the details remain open to negotiation. End of the year.
Five-page framework agreement It was obtained by The New York Times on Monday. The proposed deal, announced on June 6 by Wealth Fund, the funder of the Tour and the rebellious LIV Golf Circuit, has caused an uproar throughout the golf industry. However, a review of the terms of the deal highlights the hasty nature of the seven weeks of confidential talks that led to the deal and the new undertaking that could prove a potential win for Saudi Arabia’s quest for power and influence in the sport. It points out the complicated path left for the future. And to deflect his reputation as a human rights abuser, critics say.
Most importantly, the tour and the wealth fund will need to reach agreement on the value of the assets that each will contribute to the planned partnership. Bankers and lawyers have begun the evaluation process over the past few weeks, but the framework agreement does not contain substantial details of the numbers expected, or even the size of cash investments expected from wealth funds. do not have.
Instead, the bulk of the deal is focused on the basic structure of the new company that will house all of the “commercial operations/entitlements” of the PGA Tour and the European Tour, now known as the DP World Tour, as described in the deal. .
The wealth fund, which will contribute “golf-related investments and assets” including the LIV circuit that split the sport, will have the first opportunity to invest in the new company. Under the interim agreement, the PGA Tour will retain “at all times a controlling voting right” in the new company, but wealth fund president Yasir Al Rumayyan will serve as chairman of the new consortium. PGA Tour Commissioner Jay Monahan, who recently went on leave for an unexplained “medical condition,” will take over as the Tour’s chief executive.
The new company could pursue “targeted mergers and acquisitions to globalize the sport,” according to the agreement, which could include “LIV innovations,” such as the team golf concept the league has championed since its inception last year. ” may be included.
However, these provisions are not binding until the Tour and Wealth Fund reach a final agreement. Instead, the agreement’s only stern caveat included seeking to dismiss the lawsuit, a duty fulfilled on June 16. Prohibition of soliciting players to rival circuits. The deadline for signing the final agreement is December 31, unless there is a mutual extension. and confidentiality and non-honor clauses.
The effective gag agreement appears to be far-reaching, prohibiting Tours and Wealth Funds from making “any defamatory or disparaging remarks, comments or remarks” against the other party or any “ultimate beneficiary”, but this The phrase may be interpreted to include Saudi Arabia. Tour had previously accused the government of its human rights record.
“I am aware of everything I have said in the past and in my previous job,” said Monahan, the lead architect of the deal, earlier this month. “I know people will call me a hypocrite. I accept those criticisms, but things change.”
Saudi officials have denied that sports investments, including football, Formula 1 racing and boxing efforts, are aimed at tarnishing the kingdom’s reputation. Instead, they portray these investments as shining elements of a broader effort to diversify the country’s economy under Saudi Arabia’s de facto leader and wealth fund chairman, Crown Prince Mohammed bin Salman. It’s here.
Wealth fund president Al Rumayyan signed the deal on behalf of Saudi Arabia, but there is no evidence that LIV commissioner Greg Norman was directly involved.
Monahan and DP World Tour CEO Keith Perry were effectively representing the golf world when they signed the deal privately in San Francisco on May 30. The deal has rippled through nearly the entire golf industry, including most of the PGA Tour’s board of directors. After a week.
The board is reviewing the deal, which has been largely shut out of negotiations, and is scheduled to discuss initial terms of the deal at its meeting in Detroit on Tuesday. The 11-member board is not believed to be planning a vote yet, as it could take months to finalize the nuances of the deal.
The deal faces scrutiny far beyond the tour board. In Washington, Justice Department officials and congressional investigators prepare to scrutinize the details of the deal, which antitrust regulators may eventually try to block. Just over two weeks before the Capitol hearings, which many expect to be controversial, Tour shared a copy of the agreement with a Senate subcommittee on Monday night.
But Tour executives have spent the last few months embracing the new economic order that the LIV’s rapid rise has sparked: ballooning legal costs, hefty prize money, and only four major golf tournaments a year, the most marketable in the world. Diluted commodities for which players compete – unsustainable. While they sought to ease tensions with the Saudis and found a receptive audience inside and outside the wealth fund, some officials warned of a string of legal setbacks related to the LIV and its impact on important American sports markets. dissatisfied with uneven success in gaining traction.
The second paragraph of the framework nods to the confusion, saying that the Tour and Wealth Fund are interested in “ending the divide”. Some elements of the agreement were equivalent to olive branches. For example, in one section, the two countries agreed to “cooperate in good faith and use their best efforts” to bring secure official World Golf Ranking accreditation to LIV events.
The fate of LIV, who offered exorbitant contracts and prize money to take some star players from the PGA Tour, was not included in the binding part of the deal. Instead, the new company is expected to “make a complete, objective, empirical and empirical assessment of LIV, its prospects and potential,” once it materializes.
The framework doesn’t specify any financial penalties if the deal doesn’t make any final progress, but if the deal fails, the tour and the wealth fund “can go back to running their respective businesses.” and