(Bloomberg) -- The PGA Tour and Saudi-backed LIV Golf agreed to a shock merger, ending a seismic dispute and underscoring how the Middle East kingdom’s money is increasingly influencing sports around the world.
The battle has captivated fans and split players, after LIV Golf threw down millions to lure some of the biggest players away from the traditional PGA Tour to its louder, brasher rival. With its livelihood threatened, the PGA soon found itself in an acrimonious legal battle, with billions of dollars at stake for the golf leagues, TV networks, advertisers and athletes.
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“After two years of disruption and distraction, this is a historic day for the game we all know and love,” PGA Tour Commissioner Jay Monahan said in a statement.
The deal marks a significant victory for Saudi Arabia, which backed LIV Golf through its sovereign wealth fund. The Kingdom is now assured of having a prominent voice in a major sport as it deploys its oil riches to try to increase its global influence. The Saudis have also poured billions into soccer, offering nine-figure contracts to some of the game’s best-known stars, and are looking to expand their reach in Formula 1 auto racing, tennis and other sports.
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The new tie-up is likely to draw scrutiny from regulators. The Justice Department has already been investigating whether the PGA Tour committed antitrust violations in its battle to keep players from defecting to the LIV tour. A DOJ spokesperson declined to comment on whether they would review the merger.
Under the terms of the deal, the PGA Tour, LIV Golf and the DP World Tour, the European golf circuit, agreed to combine their golf-related business and rights into a new commercial entity. Financial terms of the arrangement weren’t disclosed. The accord will also bring to an end all legal action between LIV Golf and the PGA Tour.
As part of the agreement, Saudi Arabia’s Public Investment Fund is prepared to invest billions of new capital into the new venture. The governor of the Saudi wealth fund, Yasir Al Rumayyan, himself a keen golfer, will be the new entity’s chairman.
The PGA Tour has billions of dollars in broadcast deals and numerous corporate sponsors, including FedEx, Citigroup, Charles Schwab and Rolex. LIV had argued that the PGA Tour’s power has frustrated its efforts to strike deals for broadcast rights and sponsorships.
In January, LIV Golf signed a multiyear agreement with Nexstar Media Group Inc. making the CW Network the television and streaming home of the upstart golf league. The tie-up with the PGA Tour won’t have any short-term impact on that broadcast deal, according to a person familiar with the matter.
LIV Golf lured several prominent golfers from the PGA Tour, including Phil Mickelson and Cameron Smith, with hefty cash payments. Still, LIV struggled to find broadcast partners for its tournaments to gain revenue and more eyeballs. A LIV tournament at Donald Trump’s Bedminster golf club last year drew protests from survivors and families of 9/11 victims who condemned the event.
The relationship between LIV and the PGA Tour soon descended into insults and lawsuits. LIV sued the PGA Tour last year for allegedly engaging in monopolistic behavior by using restrictive rules intended to deprive golfers from playing in rival leagues. The PGA Tour countersued and sought subpoenas to gather additional material to support its claims that LIV illegally pushed players to break contracts with the legacy US-based tour by offering them exorbitant sums of money. The case was expected to go to trial in May 2024.
Once the new agreement becomes definitive, the PIF will consider how much investment is needed, Al-Rumayyan said in an interview on CNBC. He declined to get into specifics, other than the amount would be in the “billions” and would be what is needed to boost the sport. The entities have to negotiate details with the goal of reaching a final agreement “within weeks,” Al-Rumayyan added. Those discussions will include how much money the PIF will invest in the entity and when players will be able to participate in events of both tours.
The PIF, the Saudi Arabian fund, was advised by the banker Michael Klein and PCP’s Amanda Staveley, according to sources familiar with the situation.
The potential merger still has plenty of hurdles. Because of the DOJ’s open investigation, the agency could conduct an antitrust review of the proposed deal between the PGA Tour and LIV.
If it does clear any regulatory issues, the new competition would be the latest high-point of Saudi Arabia’s push into investing into sport as a form of soft power. 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. Still, critics — including until recently the PGA Tour — and human-rights advocates have said these efforts are aimed at improving the country’s reputation, tarnished by the murder of Jamal Khashoggi in 2018.
In 2021, the PIF led a consortium that acquired English Premier League football club Newcastle United FC for more than £300 million ($372 million) and Saudi Arabia is considering a joint bid to host the 2030 FIFA World Cup. Its soccer league now features Cristiano Ronaldo, who joined on a contract worth $200 million a year, and Argentina’s Lionel Messi has been reported to join for as much as $400 million a year.
--With assistance from Paul Wallace, Gerry Smith, Zachary Fleming, Adveith Nair, Leah Nylen, David Hellier, Dinesh Nair and Matthew Martin.
(Updates with CW Network in ninth paragraph.)
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