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How the PGA Tour-LIV Golf Merger Got here Together


Jay Monahan, the PGA Tour commissioner, had gone unnoticed in Venice last month.

With luck, he thought over breakfast near the Palazzo Ducale, his confidential talks in Italy with Yasir al-Rumayyan, the governor of Saudi Arabia’s greater than $700 billion sovereign wealth fund, might stay secret. A leak would endanger what only a handful of insiders knew: that the PGA Tour was considering going into business with al-Rumayyan’s LIV Golf league, whose monthslong clash with Monahan’s tour had turn out to be a fight as much over golf’s soul as its future.

Then Stefano Domenicali, Formula 1’s chief executive, strolled into view. He was on the town for a similar wedding that had brought al-Rumayyan to Venice. If the motor sports executive spotted the PGA Tour’s leader, he would assuredly connect the presences of Monahan and al-Rumayyan, and golf’s biggest secret might get out. All Monahan could do, he told people later, was attempt to dodge Domenicali’s gaze.

But Domenicali never looked as if it would notice him. What would ultimately amount to seven weeks of clandestine meetings and furtive calls stayed hidden until a surprising announcement last Tuesday: The PGA Tour, the dominant force in men’s elite golf for many years, planned to affix forces with LIV, the upstart that had provoked debate over the morality of Saudi money in the sport.

The agreement was a singular moment within the history of the skilled game. The civil war that had disrupted and defined the once genteel sport — for instance, Monahan once publicly asked whether PGA Tour players had ever felt compelled to apologize for competing on the circuit — was abruptly suspended. The tour’s status was stained and lots of of its loyalists were furious, but its coffers were poised to overflow.

The deal, though not yet closed, was also a breakthrough for Saudi Arabia’s ambitions in golf. The culmination of a years-old plan called “Project Wedge,” the agreement gives al-Rumayyan, one in all the dominion’s most influential officials, a seat in the game’s most rarefied rooms. And for a rustic that has craved a greater global profile, an economy based on greater than oil and a distraction from its gruesome human rights abuses, the agreement was one other step in its rapprochement with the West.

This account relies on interviews with nine individuals with knowledge of the negotiations. Most of them spoke on the condition of anonymity to explain the lead-up to a rare transaction — one so closely held that the majority of golf’s eminent bankers, lawyers and broadcast partners had no warning that it was even being discussed.

It was not until this spring that even golf’s most connected power brokers grew confident a deal could occur this yr, if ever. But there seemed enough conspicuous pressure points, some rather more severe than others, that prodded either side into secret talks.

LIV had enticed a few of golf’s most talented and bankable stars, including Brooks Koepka and Phil Mickelson, with contracts that sometimes promised them $100 million or more. The league’s television deal, though, had been meager, and its lawyers had acknowledged that its revenues were “virtually zero.” Federal judges in California added to LIV’s turmoil after they showed limited interest in shielding the Public Investment Fund from the sort of scrutiny it had generally avoided in other court battles in the USA.

However the PGA Tour, a tax-exempt nonprofit with an aging audience and a stiff status, was in greater peril. As a part of a federal antitrust inquiry, Justice Department investigators were asking questions on heavy-handed tactics the tour used to discourage player defections and examining whether tour leaders were too cozy with other powerful golf organizations, like Augusta National Golf Club, the organizer of the Masters Tournament.

More precariously, the tour’s efforts to retain the loyalty of players, which included raising prize purses by tens of tens of millions of dollars, were severely straining its funds. The tour’s television contracts had been constructed before it was facing one in all the richest conceivable rivals. And the tour’s legal fees had swelled to greater than $40 million a yr — up greater than twentyfold from the beginning of the last decade — because it waged fights some thought could last until at the very least 2026.

Monahan had foretold something like this.

“If that is an arms race and if the one weapons listed below are dollar bills, the PGA Tour can’t compete,” he said last June in Connecticut.

Late within the yr, the PGA Tour said a veteran deal maker, James J. Dunne III, would join its board, and a few involved within the wealth fund wondered whether he would someday emerge as an emissary.

He did on April 18, when a WhatsApp message flashed on al-Rumayyan’s phone. The tone toward one in all the world’s most influential financiers, a figure often addressed as “Your Excellency” and shut to Crown Prince Mohammed bin Salman, was strikingly casual.

“Yasir,” Dunne began as he introduced himself and asked to rearrange a call and, “hopefully,” a visit. He signed the message with equal informality: “Jimmy.”

The approach, as optimistic and unguarded as men’s skilled golf had been tumultuous and tense, led to a conversation inside hours. Dunne and al-Rumayyan fast found some extent of harmony that might shape the negotiations: Neither man insisted on a nondisclosure agreement.

London was neutral ground, only hours from golf’s birthplace in Scotland. The boys decided they’d meet there lower than every week later, joined by Edward D. Herlihy, the chairman of the PGA Tour’s board. Herlihy was not any abnormal board member; greater than a half-century after he earned his law degree, he was a partner at Wachtell, Lipton, Rosen & Katz and one in all Wall Street’s most sought-after counselors for mergers and acquisitions.

Even without nondisclosure agreements, the boys concluded that any prospective deal would must be weighed in private. Most members of the tour’s board, including Rory McIlroy, one in all the world’s most famed golfers and a ferocious critic of LIV, and the previous AT&T chairman Randall Stephenson, can be largely shut out. Greg Norman, the two-time British Open winner who had envisioned something like LIV long before he became its commissioner, wouldn’t be on the bargaining table, nor would a lot of the seasoned bankers and lawyers the 2 parties had worked with over time.

However the negotiators also knew that an accord wouldn’t be reached on the initial gathering in London, partially because Monahan wouldn’t be in attendance as a few of his allies took stock of the Saudis.

In a gathering, and later at dinner and over cigars, Dunne, Herlihy and al-Rumayyan discussed their approaches to golf and their very own lives, testing whether their budding rapport would endure across hours of face-to-face conversations.

Dunne’s personal history made him an unlikely figure to attach with al-Rumayyan. A couple of-third of his investment bank’s employees died within the 2001 attacks on the World Trade Center. Dunne had been out of the office playing golf that Tuesday. Greater than 20 years later, after years of supporting the families of the victims, he was meeting with a senior official from a rustic many individuals still accused of getting a job within the attacks. But al-Rumayyan and his allies, he felt, mustn’t be blamed.

“If someone can find someone that unequivocally was involved with it, I’ll kill him myself,” Dunne told the Golf Channel this past week. “We don’t must wait around.”

The morning after their dinner, al-Rumayyan and Herlihy beat Dunne and Brian Gillespie, a wealth fund lawyer, in a round at Beaverbrook Golf Club.

Sooner or later before the boys parted ways after lunch, Herlihy said he believed it was essential that skilled golf be unified. It was one other clear signal that the tour was open to an armistice with the wealth fund that had thrown it, and golf at large, into chaos and acrimony.

al-Rumayyan paused.

“Let’s see how that might work,” he replied.

The PGA Tour men told Monahan that he should meet his Saudi rival.

al-Rumayyan was due in Venice in mid-May, scheduled to attend the marriage of the daughter of Lawrence Stroll, the billionaire Formula 1 racing titan. The lagoon’s islands weren’t exactly rife with golf courses, but the perimeters agreed that Venice can be where al-Rumayyan and Monahan would meet for the primary time.

Monahan, who had risen through Fenway Sports Group after which the PGA Tour before he became commissioner in 2017, had spent months studying and talking about al-Rumayyan.

The tour had capitalized on LIV’s Saudi ties, harnessing American emotion and skepticism to sow moral doubts concerning the league. But now Monahan would undertake a covert mission to fulfill the person his team had vilified.

The group from the USA arrived behind schedule, after its plane required a diversion to Farnborough, England. A series of boat rides later, Monahan eventually greeted al-Rumayyan and the Saudi executive’s wife and daughters before the boys settled into a personal session for about two hours.

Within the evening, al-Rumayyan went to the marriage, a glitzy gathering dotted with movie stars and world-class athletes. The Americans, preparing for serious negotiations the subsequent day with al-Rumayyan, met for dinner. The trip would also include a meal with al-Rumayyan’s family and a few of his closest lieutenants.

To the tour’s negotiators, the meetings in Italy were essentially the most pivotal of the conversations that might proceed in video conferences, phone calls and gatherings in San Francisco and Recent York over lower than a month.

During Memorial Day weekend, the PGA Tour’s Cessna Citation X jet hopscotched from Recent York to San Francisco. Takeout burgers were brought aboard during a temporary stop in Omaha, instigated by Michael Klein, the well-connected banker who was working with al-Rumayyan and invited on the trip.

Many of the flight, which also included Monahan, Dunne and Herlihy, was dedicated to ironing out a few of the remaining details. The boys were hoping to finalize things in San Francisco, where al-Rumayyan would attend meetings related to the wealth fund’s other business dealings.

An agreement was close, its terms detailed across mounting pages of legalese, with the brand new company known simply as “NewCo.” A few of the negotiators were still nervous. A leak before a deal was signed, they were certain, would cause an uproar: How could the PGA Tour consider taking the Saudi money it had denounced?

“What modified?” Monahan would say after the deal became public. “I checked out where we were at that time limit, and it was the proper time limit to have a conversation.”

“I recognize that individuals are going to call me a hypocrite,” he said. “Anytime I said anything, I said it with the data that I had at that moment, and I said it based on someone that’s attempting to compete for the PGA Tour and our players. I accept those criticisms. But circumstances do change.”

Within the early hours of May 30, after a bargaining marathon, a dozen or so people gathered at a 4 Seasons hotel to sign and toast the deal behind closed doors.

The PGA Tour contingent didn’t linger long. Monahan was due at an Ohio tournament that Jack Nicklaus, who had helped found the trendy tour within the Nineteen Sixties and rejected a proposal price greater than $100 million to work with LIV, was hosting.

A signed pact, intended to bring the moneymaking components of the PGA Tour and LIV, like television and sponsorship contracts, right into a recent company expected to be flush with Saudi money, didn’t mean the deal was complete. Nobody had agreed on learn how to value assets because the litigation had left the rivals unable to delve into one another’s books. The deal didn’t demand a particular investment from the Saudis, but promised them the exclusive rights to inject money into the brand new company. The PGA Tour would get Monahan as the corporate’s chief executive and a majority of board seats, including ones filled by Herlihy and Dunne. But al-Rumayyan can be the chairman.

Many antitrust experts expect the agreement will intensify the Justice Department’s scrutiny of skilled golf, partially since Monahan said the deal would “take the competitor off of the board.” On Capitol Hill, lawmakers have raced to sentence it.

The tour, though, is expecting an investment well into the billions of dollars. The jockeying with a wealth fund aiming to be price $1 trillion in the subsequent few years can be over.

On Tuesday morning, after a session in Recent York to finalize the deal’s rollout, Monahan and al-Rumayyan sat beside one another for a television interview. Around the identical time, the cellphones of players world wide lit up with the news.

Monahan soon flew to Toronto to face a gathering of golfers that he called “intense” and “heated.”

Dunne and al-Rumayyan retreated to Long Island’s Deepdale Golf Club for an additional round.

al-Rumayyan won again.

Mark Mazzetti and Tariq Panja contributed reporting.

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