High-profile US investors are being considered to help finance the PGA Tour’s transaction with Saudi-backed LIV Golf in an effort to ease political opposition to the deal.
(Bloomberg) — High-profile US investors are being considered to help finance the PGA Tour’s transaction with Saudi-backed LIV Golf in an effort to ease political opposition to the deal.
The PGA said it had received unsolicited interest from investors and it has a responsibility to its members, sponsors and fans to evaluate opportunities.
The inclusion of outside investors could help appease politicians who have voiced concerns that the deal would amount to a takeover of a US institution by LIV Golf, a rival venture financed by Saudi Arabia’s sovereign wealth fund, said people familiar with the matter who asked not to be identified because the discussions were private.
US lawmakers have been vocal about their opposition to LIV Golf, despite assurances by PGA representatives in July that the kingdom’s Public Investment Fund would be only a minority investor in the combined entity. The deal is still a long way from completion — with the sides yet to agree to financial terms, and make further concessions to address regulatory concerns. Potential US investors haven’t been disclosed yet.
The PGA said negotiations with the PIF and the European DP World Tour are progressing with a goal of reaching a definitive agreement by Dec. 31.
“Throughout 2023, the PGA Tour has demonstrated its strength, reach and value as an enterprise,” it said in an emailed statement. “Our focus continues to be on finalizing an agreement with the Public Investment Fund and the DP World Tour, however, our negotiations have resulted in unsolicited interest from other investors.”
Any investment would be made through PGA Tour Enterprises, a subsidiary that the PGA Tour would permanently control through majority board representation, according to the statement.
Representatives for LIV Golf and PIF were unavailable for comment.
Any deal with LIV and any outside investor would need the backing of PGA players, who were left furious after they were failed to be consulted about the merger. Tiger Woods recently joined the influential PGA policy board, giving the players a one-seat advantage.
A nearly yearlong antitrust court feud between the PGA and LIV Golf was dropped following the surprise announcement in June that the two rivals — along with the European tour — would combine their golf-related business and rights in a new entity.
As part of the agreement, Saudi Arabia’s Public Investment Fund is prepared to invest billions of new capital in the combined venture. The governor of the PIF, Yasir Al Rumayyan, himself a keen golfer, is slated to be the new entity’s chairman.
‘North of $1 Billion’
PGA Chief Operating Officer Ron Price told lawmakers at a Senate hearing in July that the PIF will invest “a significant amount — north of $1 billion” after the deal is finalized. PGA commissioner Jay Monahan said in August that the PGA Tour wasn’t considering any outside investors at that time.
It’s unclear which investors might potentially back the new venture, but in the wake of the coronavirus pandemic, sports have emerged as one of the few forms of live entertainment guaranteed to attract viewers.
Investors have since been piling into teams and leagues, boosting valuations. Sovereign investors, most recently led by Saudi Arabia, have also targeted sport to help boost their influence and burnish their image.
Saudi Crown Prince Mohammed bin Salman has made sports a key plank of diversifying the economy from oil, and the kingdom has spent billions of dollars to support that effort. Before agreeing to the merger, the PGA was among the critics of the country’s human-rights record.
–With assistance from David Hellier.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.