Sources: PGA Tour, U.S. group nearing $3B deal

A multibillion-dollar deal between a group of well-known U.S. sports team owners and the PGA Tour is imminent, and the tour is still hoping to reach a similar agreement with Saudi Arabia’s Public Investment Fund, sources told ESPN on Friday.

The agreement with Strategic Sports Group, a consortium of billionaire team owners that includes Tom Werner and John Henry (Boston Red Sox), Arthur Blank (Atlanta Falcons) and Wyc Grousbeck (Boston Celtics), would infuse more than $3 billion into a new for-profit entity, PGA Tour Enterprises, the sources said.

The PGA Tour is also continuing talks with officials from the Public Investment Fund (PIF), which is financing the rival LIV Golf League. If a deal is reached with both Strategic Sports Group and the PIF, more than $7 billion might be infused into PGA Tour Enterprises, which would combine commercial assets of the PGA Tour, PIF and DP World Tour.

A deal with Strategic Sports Group might be announced before the end of the year. The PGA Tour, DP World Tour and the PIF signed a framework agreement to form a partnership on June 6. The agreement is set to expire Dec. 31, although sources have told ESPN it would likely be extended if progress is being made.

Under the terms of the agreements, the PGA Tour would retain control of the new for-profit entity; Strategic Sports Group and the PIF would be minority owners.

PGA Tour commissioner Jay Monahan and PIF governor Yasir Al-Rumayyan are scheduled to meet next week, after previously scheduled meetings were postponed.

There is an increased urgency to get the deals done, after the LIV Golf League signed another PGA Tour star, Spain’s Jon Rahm, on Dec. 7. Sources told ESPN that Rahm, the reigning Masters champion, agreed to a multiyear contract worth more than $300 million to jump to the LIV Golf League.

“It was nothing more than a shot across the bow,” said a source familiar with the negotiations. “It was a f— you by PIF to the tour that they can grab anyone, even the guy who was adamant about not joining. Three-hundred-million dollars is a rounding error to the Saudis. Their message was: ‘You want to keep fighting with us, really? You want to keep talking to everyone and box us out? Good luck with that.’ That’s their message.”

The original framework agreement between PIF and the tour included a provision that prohibited the sides from recruiting each other’s players. It was removed because of concerns raised by regulators from the U.S. Department of Justice’s antitrust division, which was already investigating the PGA Tour’s alleged monopolistic business practices.

Sources told ESPN last week that the LIV Golf League is recruiting other PGA Tour players to fill out the spots on a team that Rahm will captain.

“Yasir stood down for a while but as he kept reading about all these other suitors, I think he just decided, let’s go after the Masters champion, the guy who said he wouldn’t be bought for any price, and name him a price he couldn’t refuse,” the source said. “The lesson here is if you have enough money, you can do whatever the f— you want to in America. The Saudis have figured that out. Yasir understands that.”

The potential deals would stabilize a fractured sport that has been stung by player defections, a federal antitrust lawsuit and skyrocketing operational costs as the rival circuits have battled for the best golfers in the world over the past two years.

On Sunday, the PGA Tour policy board, which includes six player directors and five independent directors, sent an email to players, notifying them that the board had voted unanimously to continue negotiations with Strategic Sports Group.

The policy board had also considered bids from other U.S.-based equity groups, including Endeavor, the parent company of WWE, the UFC and the sports agency IMG. A multibillion-dollar bid from Acorn Growth Company, an Oklahoma City-based private equity investment firm involved in aerospace, defense, intelligence and space, was also considered.

“The major benefit of doing a deal with PIF is so they are not Jon Rahm-ing you to death,” the source said. “It isn’t like the tour can’t get billions elsewhere. There are very deep pockets that want in. The tour really doesn’t want to be in bed with the Saudis, but they have so much money, so much muscle — they can still destroy you. That’s what the Rahm signing signaled.”

The Saudis were initially hesitant to be part of a deal with the PGA Tour that includes other U.S.-based investors. But becoming partners with high-profile franchise owners like Henry, Blank and others was appealing. The Strategic Sports Group also includes Mark Attanasio (Milwaukee Brewers); Cohen Private Ventures (New York Mets); Tom Ricketts (Chicago Cubs); and Marc Lasry (Milwaukee Bucks, former co-owner).

“They get to rub shoulders with all these billionaire American sports magnates,” a source said. “It’s a long game for them. They’re not stopping with golf. They want a piece of everything.”

Even if deals are reached with Strategic Sports Group and the PIF before the end of the year, it might be several months before the best golfers are playing in the same tournaments again. The deals are expected to be heavily scrutinized by the U.S. Department of Justice’s antitrust division, which expanded its investigation to include the proposed alliance between the PGA Tour, DP World Tour and the PIF once the framework agreement was announced.

The PGA Tour also is still grappling with how to punish its members who signed with LIV Golf and might want to return. Monahan suspended more than 30 players who competed in LIV Golf tournaments without conflicting-event releases. A committee is trying to devise a sliding-scale system of potential discipline.

The future of the LIV Golf League and team golf in the ecosystem of men’s professional golf remains a sticking point for PIF officials, sources said. LIV Golf CEO and commissioner Greg Norman told ESPN this week that his circuit will “always remain a standalone entity,” whether the PIF reaches a deal with the PGA Tour or not.

While the LIV Golf League has lured away several past major champions, including Phil Mickelson, Dustin Johnson, Brooks Koepka and Bryson DeChambeau, with guaranteed contracts worth more than $100 million and the richest purses in the sport’s history, it has struggled to gain a foothold with golf fans in the United States, with middling TV ratings and few sponsors.

Still, the LIV Golf League, with its unique format of 54 holes, shotgun starts and team and individual competitions taking place concurrently, has forced massive changes on both tours and injected billions of dollars into the sport.

“Golf has been stuck in a box for 53 years and been viewed the same way all along,” Norman said. “We recognized there are other opportunities. Our investor recognized that there was an opportunity to invest in the game of golf, which is the team model, the franchise model. And now we’re seeing equity dollars looking into investing into the PGA Tour with the opportunity of growing that too.

“So I applaud LIV and LIV’s platform for opening up and then exposing that and putting more money back into the game of golf, which is extremely important for the players and for the stakeholders and all other institutions in golf.”

Norman said he hoped the PGA Tour and the PIF would reach an agreement. Norman said PIF tried to invest in the PGA Tour and DP World Tour two years ago but was rebuffed. “It has come full circle to where we were two years ago to where it is today,” Norman said.

“I’m just going to say this: the narrative coming out of LIV has been consistent and we have not changed,” Norman said. “The narrative from the other side of the world of golf has fluctuated tremendously from players to institutions. And that narrative now is switching back.

“So, you can see the pure fact that competition’s a wonderful thing for the game of golf. It’s a wonderful thing in life and business and sport. So we have been consistent, we are going to remain consistent. And my responsibility, as I’ve said to you before, is to keep growing and to keep making sure LIV gets more and more value built into it each and every tournament and each and every year.”

PGA Tour players will be getting a share of the multibillion investments. In a memo to players on Nov. 14, Monahan said the PGA Tour will offer its members direct ownership in PGA Tour Enterprises.

“At the point we secure outside investment, this would be a unique offering in professional sports, as no other league grants its players/members direct equity ownership in the league’s business,” Monahan wrote. “We recognize — as do all of the prospective minority investors who are in dialogue with us — that the PGA Tour will be stronger with our players more closely aligned with the commercial success of the business.”