PGA Tour’s new billions will enrich players, but fans?

The 239 days that have elapsed since June 6 proved the Framework Agreement between the PGA Tour and the Saudi Arabian Public Investment Fund was more armistice than peace accord, so it’s tempting to interpret the announcement that a group of sports industry titans have invested $3 billion in the newly-formed PGA Tour Enterprises as rearmament for more conflict ahead. It’s more accurate to read it as evidence that parties to the game’s civil war are closer than ever to their desired outcomes.

Except you, dear golf fan. You can pound sand, at least for now.

The unveiling of the Strategic Sports Group investment wasn’t intended to answer fundamental questions about the future of golf but rather to assure the only constituency that really matters that their interests are being tended. That constituency is star players, and their only interest is personal enrichment, which they’ll see in equity grants and purse guarantees, even if it’s unclear how the market works for them to realize the value of their equity by selling it. For most, it’s not LIV Golf money, but it’s enough to hold off the wolves that are apparently gathering at every door in Jupiter, Florida.

But Wednesday also offered a measure of clarity on what other parties are getting.

The deal restores to the PGA Tour a little of the leverage that had seemed lost, especially when LIV poached Jon Rahm last month. It now has the resources to go it alone without the Saudis, but then that’s always been true. The Tour is just no less dependent on the loyalty of its members, many of whom have shown themselves to be Benedict Arnolds in soft spikes.

SSG’s investors get a minority stake in the only major league in the U.S. that didn’t have conventional owners, one that is ripe for private equity’s most cherished combination: expansion and cost-cutting. They also gain proximity to Yasir Al-Rumayyan, the governor of PIF and the idealized Ken doll of investment partners.

Ostensibly, PIF is not part of this deal — its negotiations with the PGA Tour are far from the finish line — but there’s a clear victory here too for Al-Rumayyan. SSG’s backers include owners from every American league (NFL, MLB, NHL, NBA) and PIF, like many wealth funds in Gulf States, is eager for access to those opportunities. Golf is merely the Saudi’s pathway to greater prizes.

All of the aforementioned parties are incentivized to see the Saudi component finalized. As for regular fans, the only thing they’ve gotten so far is turned off and pissed off. The SSG announcement provided broad strokes on the financial and governance structures of PGA Tour Enterprises, but nothing on the actual product that will be served to its audience. That will come with the finer brushwork, which remains a ways off.

Today was all about the carrot, but the stick surely cometh as pressure for a return on investment creates a drive for efficiency that runs counter to the culture in Ponte Vedra.

“I’m a tough manager. I question almost every assumption in what are hopefully pragmatic ways. The more you question, the more you learn and the more the person you are questioning learns,” John W. Henry once said. He’s the principal owner of Fenway Sports Group and the manager of the SSG partners.

This approach portends a radical (and long overdue) reassessment of the Tour’s product and operations. That will go well beyond culling the swollen ranks of VPs, SVPs and EVPs, precious few of whom are MVPs. It means ceasing the dilution of its own product, a result of executives being bonused on creating playing opportunities, mostly for players who aren’t essential to the business. That trains the crosshairs on opposite-field events, the fall schedule in which the lower orders jockey for status, and even the number of players exempt on Tour — anything thought to detract from the core, star-driven product. It’s increasingly obvious that Q4 is the area of opportunity on the professional golf calendar, and where involvement by PIF might be seen most, whether in team tournaments, the elevation of DP World Tour stops, or the leveraging of the Presidents Cup as an international road show.

The addition of domestic investors will help defuse political concerns about a foreign wealth fund taking over a U.S. institution, but perils remain. A Congressional investigation into PIF investments in America (outside of golf) is growing more fractious as Saudi targets of subpoenas refuse to bow to U.S. law, while the current conflagration in the Middle East could shred the best-laid plans. Antitrust regulators will also be watchful for a competitor being “taken off the board,” to quote the commish. That leaves the fate of LIV uncertain. Why would PGA Tour Enterprises want it? Other than PIF, who can afford to sustain an execrable product with no traction that loses hundreds of millions of dollars annually, and with laughably overpaid talent who need to be re-signed in the coming years? LIV is an ongoing liability for PIF, not a potential asset for PGA Tour Enterprises, but it will likely trundle on for least another season or two until Al-Rumayyan settles its fate.

The SSG investment won’t prevent the Saudis from owning a stake in golf’s more respectable precincts — that dreary outcome seems inevitable since commerce has trumped conscience throughout this episode. What it does ensure is that an authoritarian regime won’t outright own the elite level of the sport, which seemed possible for a time. That’s not nothing, and it’s about all we can point to, at least until the players back away from the trough and offer something to the fans.