The PGA Tour said in a memo to players Wednesday night that it remains focused on reaching a definitive agreement with Saudi Arabia’s Public Investment Fund and the DP World Tour but is also receiving interest from other potential investors.
The memo sent to players by PGA Tour executive vice president Jason Gore said “the process we’ve put in place is working well” in regard to the tour’s ongoing negotiations with the PIF and the DP World Tour.
“We remain focused on reaching a Definitive Agreement with PIF and the DP World Tour, but not surprisingly, these negotiations have resulted in unsolicited outreach and proposals from a number of other interested investors,” Gore wrote in the memo, a copy of which was obtained by ESPN. “All of this activity reinforces the Tour’s strong position and our potential for growth.”
Sources told ESPN that while the negotiations with PIF chairman Yasir Al-Rumayyan and other officials with the country’s sovereign wealth fund are ongoing, the proposed deal is far from getting done for a variety of reasons, including PIF officials wanting more control of the new for-profit enterprise. Sources said the Saudis are also digging in their heels on incorporating team golf into the sport’s future global ecosystem.
The parties announced June 6 that they had signed a framework agreement to form a new for-profit enterprise, now called PGA Tour Enterprises, that “combines PIF’s golf-related commercial business and rights (including LIV Golf) with the commercial business and rights of the PGA Tour and DP World Tour.”
The framework agreement expires Dec. 31, although it could be extended, sources told ESPN.
The U.S. Department of Justice’s Antitrust Division was investigating certain aspects of the deal, which some feel will have difficulty gaining approval.
“I don’t think it will ever happen,” said a source briefed regularly on the state of the negotiations. “I don’t think the Department of Justice would ever approve a merger with the PGA Tour. And I don’t think the Saudis are pleased with how little influence they’d get in a merged entity. For those reasons, I don’t think the merger is ever going to happen.”
Bloomberg reported last month that Endeavor Group Holdings Inc. and Fenway Sports Group, which owns the Boston Red Sox, Pittsburgh Penguins and the Premier League team Liverpool F.C., were exploring investing in the PGA Tour as a “possible alternative transaction” to the pending deal with PIF. Bloomberg reported that Henry Kravis, co-founder of the investment firm KKR & Co., was among other U.S. investors contemplating a potential deal with the PGA Tour.
The source privy to the state of the negotiations told ESPN that “at least 10” private equity groups and other investors have had discussions about investing in the PGA Tour. If the negotiations with PIF fail, the PGA Tour’s goal would be to build a $2 billion “war chest” equal to what the Saudis had committed to investing in the tour.
“There is no shortage of interest in high roller entities to put up money in exchange for a piece of the PGA Tour,” the source said. “LIV Golf is not going to go away. So the tour will need deep pockets to continue to go toe to toe with the Saudis. … I don’t think there will be a problem for them [the PGA Tour] to find wealthy enough partners.”
Endeavor CEO Ari Emanuel confirmed Wednesday that his company submitted a bid to the PGA Tour on Oct. 6. Emanuel, speaking during Bloomberg’s Screentime conference in Los Angeles, said Endeavor was competing with “like seven other bidders.”
Endeavor, which has a market value of about $9.5 billion, according to Bloomberg, recently acquired World Wrestling Entertainment and combined it with UFC to form a new company, TKO Group Holdings.
“We are in the sports business,” Emanuel said. “I’m an avid golfer. It’s one of the great sports. I love it. I think we could add to it what we’ve added to all of our sports based on the flywheel [effect].”
Emanuel didn’t give specifics on Endeavor’s bid, saying only “that you can’t buy the majority” of the PGA Tour.
Colin Neville, a partner at Raine Capital and an independent adviser to the PGA Tour’s player directors, and investment bank Allen & Co. are also involved in the negotiations on behalf of the tour.
Gore said in the memo that a Nov. 13 policy board meeting scheduled three days before the start of the RSM Classic at St. Simons Island, Georgia, will be dedicated to discussing the ongoing negotiations.