PGA Tour commissioner Jay Monahan told employees Thursday the league was not going to be able to afford the ongoing legal battle against LIV Golf and its financial backer, the Saudi Arabia Public Investment Fund, according to the Wall Street Journal. In response to the threat of LIV Golf, the PGA Tour not only found itself entangled among a heap of legal fees but also continued to increase tournament purses in an effort to fend off further recruitment of its players.
This financial trend was not sustainable; the PGA Tour was up against the fifth-largest sovereign wealth fund in the world whose assets under management check in around an estimated $620 billion. According to the report, the Tour had already racked up $50 million in legal fees and dipped into its reserves for an additional $100 million to aid the funding of the elevated tournament purses.
“We cannot compete with a foreign government with unlimited money,” Monahan reportedly told employees. “This was the time. … We waited to be in the strongest possible position to get this deal in place.”
The meeting came two days after the landmark deal between the PGA Tour, DP World Tour and Saudi Arabia PIF to merge commercial operations under a new for-profit entity was announced. The agreement ended all litigation between the PGA Tour and Saudi Arabia’s PIF, and provides not only relief from legal fees but also what appears to be a much-needed influx of capital into the league.
Per the agreement terms, the Saudi Arabia PIF will serve as the exclusive investor in the new for-profit entity. It will also have the right to further invest and holds a right of refusal on any capital that may be invested.
“Whether you like it or not, the PIF were going to keep spending the money in golf,” Rory McIlroy said at this week’s Canadian Open. “At least the PGA Tour now controls how that money is spent. So, you know, if you’re thinking about one of the biggest sovereign wealth funds in the world, would you rather have them as a partner or an enemy? At the end of the day, money talks and you would rather have them as a partner.”