Yahoo Finance PGA Tour to merge with Saudi-backed LIV Golf
The PGA Tour has agreed to merge with Saudi-backed LIV Golf roughly a year after the upstart league challenged the longstanding professional tour.
The agreement will put the PGA Tour, DP World Tour, and LIV Golf under one new collectively owned entity that has yet to be named.
Backed by the Saudi Public Investment Fund (PIF), LIV Golf took over the golf world in 2022. The upstart league offered lucrative contracts to players, with multiple contracts reportedly worth more than $100 million.
The PGA Tour reacted by suspending eligibility for players that joined the LIV tour. LIV players filed a class action lawsuit against PGA in response.
Tuesday's partnership will end all pending litigation, according to the release.
“We are pleased to move forward, in step with LIV and PIF’s world-class investing experience, and I applaud PIF Governor Yasir Al-Rumayyan for his vision and collaborative and forward-thinking approach that is not just a solution to the rift in our game, but also a commitment to taking it to new heights," PGA Tour Commissioner Jay Monahan said in a release.
The deal to form the new unnamed entity includes an infusion of capital from the PIF, which will initially be the "exclusive investor in the new entity," per the release.
Jefferies analyst Randal Konik sees the partnership as an overall positive for growing the game of golf.
"The infusion of capital from PIF signifies a strong commitment to the growth and promotion of golf on a global scale," Konik wrote in a note to clients on Tuesday. "This injection of funds will enable the newly formed company to embark on ambitious initiatives aimed at expanding the reach of golf and cultivating a broader fan base."
Popular golf stocks popped on the news. Shares of TopGolf Callway Brands (MODG) and Acushnet Holdings Corp (GOLF) — which owns popular golf brands Titleist and FootJoy — both rose more than 5% in midday trading.
LIV built its reputation by pouring millions of dollars into the business and uprooting traditional golf with loud music at the tee boxes and a team play format. But pundits questioned how LIV Golf would make money. A year into the new league's existence, that still remained unclear.
Last summer, then-COO and president of LIV Golf Atul Kholsa told Yahoo Finance that the league "absolutely needed a broadcast deal." While broadcast deals are usually a key source of revenue for sports leagues, LIV Golf never found a traditional sports streaming partner.
Instead, the upstart league signed with the CW (NXST) and streams on YouTube (GOOGL). Given the brutal murder of Washington Post journalist Jamal Khashoggi by Saudi government-directed operatives in 2018, among other human rights accusations, members of the sports world had questioned American involvement in a league financially supported by Saudi Arabia Public Investment Fund.
However, the new partnership will link LIV to golf's preeminent tour, the PGA Tour. The PGA Tour has deals with a breadth of streamers including ESPN (DIS), Amazon (AMZN), and NBC (CMCSA).
Partnerships had also been a big point of discussion throughout the rise of LIV Golf. As the tournament started touring last year, many companies pulled their sponsorships with their respective golfers.
The Royal Bank of Canada pulled its sponsorship with Graeme McDowell and Dustin Johnson while UPS pulled its sponsorship with Lee Westwood. Callaway, Workday, KPMG, and Heineken all ended or paused relationships with Phil Mickelson.
Josh is a reporter for Yahoo Finance.
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