(Bloomberg) -- Talks between the PGA Tour and the Saudi-backed LIV Golf have dragged on for over a year since their shock deal announcement, with one detail still problematic: getting players to agree on who gets to keep their millions.
Saudi Arabia’s Public Investment Fund started LIV as a rival to the PGA, luring a number of big-name players and sparking a mammoth feud before the sides agreed to a deal in June 2023. Since then, they’ve been working on the terms of investment by Saudi Arabia into PGA Tour Enterprises — a new commercial entity valued at about $12 billion.
PIF representatives met with PGA Tour officials in New York last week, and an agreement over the financial details inched closer, according to people familiar with the situation. In the months leading up to the latest discussions, talks had failed about how to reintegrate players who ditched the PGA Tour to play for LIV and ensure some financial parity, according to people familiar with the situation.
A deal isn’t a certainty, and talks may still fail, the people said. A particular sticking point is Jon Rahm’s reported $300 million LIV contract, struck late last year, the people said, asking not to be named discussing private information.
Some PGA Tour players want Rahm — and others — to hand back money they’ve made from LIV, the people said. Other options include paying fines to participate in events, giving to charity, or agreeing to forfeit any future career winnings on the PGA Tour, the people said.
However, Rahm and other LIV Golf players have refused to agree any terms that would penalize them for taking a risk and leaving the PGA Tour, the people said.
Rahm is currently declining to pay fines to the DP World — formerly European — Tour for breaching its rules about playing in other tournaments. He also picked up $22 million in prize money for winning the LIV Golf season title last weekend.
PGA player directors including Tiger Woods, Adam Scott, Peter Malnati and Webb Simpson are members of the PGA board and have a major say over any deal. Rory McIlroy also has a role as a member of the negotiating team.
Other issues include getting PGA Tour players to agree to tour the world to participate in LIV Golf events, the people said. PGA Tour players have traditionally been reticent to travel outside North America, with the majority of PGA Tour events taking place in the US.
The two sides could agree some terms and attempt to reach an agreement on players terms at a later date, one of the people said.
Despite players dominating the PGA board, none were present at last week’s meetings due to prior commitments, the people said.
Representatives for the PGA Tour, LIV Golf, PIF and Rahm declined to comment.
The golf tensions erupted in 2022 when PIF started LIV and lured star golfers including Phil Mickelson, Brooks Koepka, and Dustin Johnson. The PGA responded with offers of more prize money, but it also suspended some players, leading to lawsuits and a US Justice Department investigation.
A deal was announced in June 2023, but progress since has been slow. PGA Tour and LIV have been trying to agree on a new schedule that would allow players to compete in tournaments in both leagues, along with the PIF getting a minority equity stake in PGA Tour Enterprises. At present, LIV players are banned from the PGA Tour.
Meanwhile, LIV has continued to lure players with promises of massive pay checks. In December, Rahm agreed to the largest such offer to jump ship.
And earlier this year, PGA Tour Enterprises agreed an investment of $1.5 billion, plus the possibility of doubling that sum, from Strategic Sports Group, a consortium that includes Fenway Sports Group and hedge fund manager Steve Cohen.
SSG has also played a significant role in the talks, and is keen to avoid them dragging on, the people said.
One worry is that the Saudis walk away, refocus on growing LIV and luring more PGA players. PIF is pulling back from major deals unless the transactions are structured with a significant domestic element, the people added. It is currently unclear how much influence PIF would have over PGA Tour Enterprises with a minority stake in the commercial vehicle.
The fracturing of golf, which used to see the top names tee off against other, has helped cause a drop in viewership for flagship events on the PGA Tour, while LIV has failed to attract large scale audiences.
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--With assistance from Randall Williams.
©2024 Bloomberg L.P.
