This post was originally published on this site
- It’s a coin flip whether there will be an extension on the partnership agreement deadline, sources told Front Office Sports.
- The departure of World No. 3 Jon Rahm could increase the sense of urgency for the PGA Tour.
Jon Rahm’s departure to LIV was the latest indicator that the struggle for the future of pro golf likely won’t end by Dec. 31, the deadline for the PGA Tour and Saudi Arabia’s Public Investment Fund to come to a definitive partnership agreement.
Rahm’s deal worth a reported $566 million — most of that guaranteed — angered those on the PGA Tour side of the negotiations in the hours before he signed with LIV on Thursday. PIF’s offer to the World No. 3 player wasn’t news. After all, the sovereign fund has already committed well north of $2 billion to LIV.
The only question now is this: Will PIF spend billions more as part of a new commercial entity (PGA Tour Enterprises) that would include the assets of the PGA Tour, LIV, and DP World Tour, or will it continue to splinter pro golf by poaching more PGA Tour stars?
The answer could come over the next 18 days, even if a completed deal appears unlikely.
“It just seems to me that’s not going to happen,” said Andrew Brandt, a former sports executive and executive director of the Jeffrey S. Moorad Center for the Study of Sports Law at Villanova Law School. “Does that mean the deal is dead, or will they continue to negotiate an extension?
“The agreement to agree part has happened [with June’s framework announcement], which was basically calling off the lawyers, calling off the lawsuits, and calling off the poaching. But as the time went by, with no action, it seems to me that the LIV side said, ‘Why are we sitting on our hands here?’”
The deadline can be extended by mutual agreement. Sources told Front Office Sports that it’s a coin-flip chance at this point, but Rahm’s deal could increase the sense of urgency for the PGA Tour — especially Tiger Woods and the other players on the PGA Tour’s Policy Board — to make enough meaningful progress in the coming days.
“From a lawyer’s perspective, there was no way a deal this complicated was going to get done [by Dec. 31],” said attorney Ian Gunn, a sports law professor at Tulane. “With this many parties and only having six months based on a five-page framework agreement, I don’t think that it was ever a realistic expectation for it to get done by then.
“Maybe the idea is now that they’re going to extend this through Dec. 31, 2024, with hopes to have a deal by then. That’s a realistic timeframe, although 2025 seems more likely.”
First, there must be optimism on all sides that an extension could mean a deal will eventually be reached.
There appeared to be movement on that front over the weekend.
In a memo to PGA Tour players, the Policy Board stated it was “very confident in an eventual, positive outcome for all players and the PGA Tour as a whole.”
“Reading between the lines, it sounds like the big holdup on the PGA’s part is that the players were not happy with how the PGA Tour is structured and governed,” Gunn said. “In some ways, this is what led to the creation of LIV to begin with. Phil Mickelson wasn’t happy with not having input on financial decisions and things like that. It’s a situation that the players are stuck in now.”
Multiple players on the Policy Board — which also includes Patrick Cantlay, Charley Hoffman, Peter Malnati, Webb Simpson, and Jordan Spieth — have posed the most significant roadblocks in negotiations so far, sources told FOS.
Rory McIlroy’s departure from the Policy Board on Nov. 14 came a day after a board meeting. McIlroy, who cited “personal and professional commitments” in the statement on his resignation, had been apprehensive over PIF’s involvement in the deal, one source told FOS.
While the money thrown at Rahm was the main driver for his defection, the discord at the highest levels of the PGA Tour that includes execs and players — from the stars to the rank-and-file — factored in as well, sources said.
The PGA Tour has spent heavily in response to LIV over the last two-plus years:
- The Player Impact Program forked over a record $100 million to 20 players in 2023.
- There will be eight designated events (now called “Signature Events”) in the 2024 schedule, with sub-80-player fields and $20 million-plus purses.
-
The 2024 FedEx
FDX,
+0.30%
Cup champion will earn $25 million, up from the $18 million Viktor Hovland earned for the PGA Tour’s postseason.
But, there are signs that the PGA Tour could have difficulty funding the higher costs through sponsors.
Wells Fargo
WFC,
confirmed late last week that the Wells Fargo Championship — one of the 2024 Signature Events — would be the bank’s last as a title sponsor. The Quail Hollow Club event had been sponsored by Wells Fargo or Wachovia — a bank that Wells Fargo acquired — since 2003.
Two sources told Front Office Sports that beyond existing long-term deals, the PGA Tour has sought more funding from sponsors of Signature Events — and at least one other Signature Event could lose its title sponsor after next season.
“Where’s the funding coming from without PIF?” Brandt said. “If you’re a sponsor, if you’re an equipment company, if you’re a network, you’re starting to see this with [Brooks] Koepka, [Dustin] Johnson, Mickelson, Bubba Watson, and, now, Rahm, are you saying, ‘Why is my money going to the lesser tour? What are we investing in?’”
There are also indications that companies with long-term relationships with the PGA Tour could be warming up to LIV. Callaway Golf is sticking with Rahm, and a source confirmed that the brand has had talks about sponsoring his LIV team.
The PGA Tour received “extremely strong” proposals from several outside investors but will be moving forward with Strategic Sports Group (SSG), the PGA Tour announced on Sunday.
“We also anticipate advancing our negotiations with PIF in the weeks to come,” the memo sent to PGA Tour players stated.
SSG includes Fenway Sports Group (the parent of the Boston Red Sox, Pittsburgh Penguins, and Liverpool FC), New York Mets owner Steve Cohen, and Atlanta Falcons owner Arthur Blank — industry veterans who can help move partnership negotiations along.
More: Jon Rahm’s $300 million LIV Golf offer ‘is stunning,’ says Sen. Ron Johnson
If the framework talks do fall apart, PIF — a fund with about $800 billion in assets — could continue to strip players away from the PGA Tour and, as a result, strip talent fans have been accustomed to seeing every weekend.
And unlike when Mickelson and the first stars left the PGA Tour, the blowback of heading to LIV — which has been accused of being a sportswashing venture for the Saudis — won’t be the same.
“Other than the history of the PGA Tour, their primary defense for players defecting to LIV was the moral superiority argument,” sports law attorney John Nucci said. “This was called bad money, and people questioned why these guys were getting in bed with LIV. Now there’s no moral argument to be made. [PGA Tour Commissioner] Jay Monahan can’t go out when Rahm leaves to talk about where the money is coming from any longer. That ship has sailed.”
Added Brandt: “Up until the June 6 agreement, there had been this moral high ground that Jay and so many others — talking about 9/11 and the overall moral compass of players taking the money. Once they took it themselves, it’s hard to stand on any moral high ground.”
That’s what makes the last few days of 2023 crucial to the future of the sport. The PGA Tour is unlikely to be the one to walk away and not seek an extension. LIV and PIF, however, need assurances that an extension would bring about a deal in 2024.
“The PGA Tour is under fire from their own players and from PIF,” Gunn said. “It’s not a great situation. That’s partially why I don’t necessarily see them walking away. It’s more in the PGA’s interest to try to get a deal worked out, and stop the fire.”
Read the original article on FrontOfficeSports.com.
For more on how sports impacts business and culture, subscribe to the Front Office Sports Today podcast.
