Deal broker: Equity for golfers loyal to PGA Tour

Mark SchlabachESPN Senior WriterJun 9, 2023, 11:50 PM5 Minute Read

Golfers who remained loyal to the PGA Tour — but not those who left for the LIV Golf League — would receive equity shares in the new for-profit enterprise being formed by the PGA Tour, DP World Tour and Saudi Arabia’s Public Investment Fund, Jimmy Dunne told ESPN on Friday.

Dunne, the PGA Tour policy board member who helped broker this week’s stunning deal, said current tour members would receive equity in the new company based on a yet-to-be-determined formula. Several of the tour’s top stars, including Hideki Matsuyama, Patrick Cantlay, Jon Rahm and Cameron Young, reportedly turned down guaranteed contracts worth as much as $100 million from LIV Golf League officials.

“The new [company] would grow, and the [current PGA Tour] players would get a piece of equity that would enhance and increase in value as time went on,” Dunne said. “There would have to be some kind of formulaic decision on how to do that. It would be a process to determine what would be a fair mechanism that would be really beneficial to our players.”

The players who left for the LIV Golf League, according to Dunne, would not be able to participate in the new company’s equity plan.

Dunne, the vice chair and senior managing principal of the investment bank Piper Sandler, helped lay the groundwork for the PGA Tour’s alliance with the Public Investment Fund (PIF), which is financing the rival LIV Golf League. A member of Augusta National Golf Club and president of Seminole Golf Club in Juno Beach, Florida, Dunne will serve on the new company’s board.

The PGA Tour’s surprising decision to do business with PIF has left many of its current members questioning why they were encouraged not to accept money from Saudi Arabia’s sovereign wealth fund to join LIV and instead remain loyal to the PGA Tour.

“Obviously, for the guys that did turn down significant amounts of money, then that’s probably a tough one to swallow, and I feel for them,” reigning U.S. Open champion Matt Fitzpatrick said Thursday.

Bryson DeChambeau, who reportedly was paid more than $125 million to defect to LIV Golf, told CNN on Tuesday that he felt sorry for PGA Tour members who didn’t take the money.

“The players that did go over, we did take a risk, and there was a reason for taking that risk relative to the capital that had to be paid out for that to occur,” DeChambeau said. “I do feel bad for the PGA Tour players because they were told one thing and something else happened. On our side, we were told one thing and it’s come to fruition.”

Dunne said PGA Tour commissioner Jay Monahan would also have oversight of the LIV Golf League under the new agreement, giving him the authority to determine whether the breakaway circuit will continue beyond this season. Monahan will serve as CEO of the new, yet-to-be-named entity; PIF governor Yasir Al-Rumayyan will be chairman.

PIF invested more than $2 billion into the league being fronted by two-time Open Championship winner Greg Norman in its inaugural season in 2022. LIV’s lawyers revealed in federal court records obtained by ESPN in February that it generated virtually no revenue last year.

While Norman has told LIV Golf’s staff members that the league was making plans for 2024 and beyond, others at the highest levels of the sport don’t seem convinced that the LIV Golf League will survive beyond this year. Multiple sources have told ESPN that if there’s a team concept in future seasons, it won’t be in LIV Golf’s present form and won’t include Norman as its CEO and commissioner.

Monahan said he would wait until LIV Golf League’s season ends in November to evaluate whether the team-focused circuit had a place in golf’s new global ecosystem.

“I don’t want to make any statements or make any predictions,” Monahan said. “But what is in place is a commitment to make a good-faith effort to look at team golf and the role it can play going forward.”

If the LIV Golf League folds, Dunne said a committee that includes current PGA Tour members and administrators would determine potential punishment for players who left for it but want to apply for reinstatement to the PGA Tour.

“I think we would form a panel, including tour players, that would evaluate what the terms would be,” Dunne said. “Remember, they’re coming back to compete on the tour, so they have to be confident that they would be good enough to continue to play, and they have to be willing to incur the penalty for having gone.”

Monahan suspended more than 30 PGA Tour members for competing in LIV tournaments without conflicting-event releases, including past major champions DeChambeau, Dustin Johnson, Brooks Koepka, Phil Mickelson, Cameron Smith and others.

Sources have told ESPN that the punishment would probably be considered on a case-by-case basis. The 11 LIV Golf League players who sued the PGA Tour in federal court might get stiffer penalties than those who didn’t, while players who actively recruited PGA Tour members to the breakaway circuit could also be hit hard.

Litigation between the PGA Tour and LIV went away with this week’s agreement.

“Players on the LIV [tour] that wanted to reinstate into the PGA Tour would go through a process [and] suspension,” Dunne said. “Whatever the penalty was, they’d have to decide whether they wanted to do that or not and then they could play.”

The PGA Tour’s policy board must still approve the alliance with PIF and the DP World Tour. The potential deal is also expected to be scrutinized by U.S. Department of Justice antitrust regulators, according to experts.

“I thought it sounded brazen and sounded illegal because merger to monopoly is illegal under antitrust laws,” said Tim Wu, a professor at Columbia Law School and former special assistant to President Joe Biden for technology and competition policy. “The two entities were in competition, and [they] somehow become one entity. If they’re going to take two entities, become one, that’s basically a straightforward violation of the antitrust laws.”