PGA Tour, LIV Golf agree to merge: What may have driven the deal

Many in the sports world were surprised when the PGA Tour and Saudi-backed LIV Golf agreed to merge. The Yahoo Finance Live team breaks down some of the reasons why the deal may have happened.

Video Transcript

[AUDIO LOGO]

- Let's take a look at some of the top trending stories of the day. We've got Josh Schafer and [? Prasti ?] [? Ramini ?] here to help us break it all down. We've got to start with one of the big headlines out today. And that's a huge announcement that shocked the golf world.

The PGA TOUR and LIV Golf teaming up. Josh, you have been digging into this story. You've been closely following this story since day one. This is a stunning announcement. You got to think, a lot of those athletes, a lot of the golf players, extremely upset over this.

JOSH SCHAFER: Yeah, it really is. So LIV Golf was the new startup league that we've been covering since last year. It's backed by the Saudi public investment fund. And what was announced today is a partnership between LIV golf, and the PGA TOUR, and the DP World Tour, which is the European world tour, World Golf tour.

And essentially, what this deal does is it creates a new entity that is going to be funded by the Saudi public investment fund exclusively right now, funded by the Saudi public investment fund. And really, what the take I think here is broadly is we have both sides doing what they said they weren't going to do last year.

LIV Golf said that the PGA wasn't good enough for it, and they could find their own media rights and they could succeed on their own. LIV Golf couldn't succeed on their own. They never even got a good streaming deal. And then you had the PGA saying we don't need Saudi money. That's dirty money. We'd never go over there. We don't want our players going over. There well, now they're taking that money.

And I think that's the broad takeaway I have today, Akiko, is that you basically have both sides doing what a year ago they said they wouldn't do. And I'm personally just pretty shocked by the merger as a whole.

AKIKO FUJITA: I think you're putting it gently. It is hypocrisy.

JOSH SCHAFER: Yes.

AKIKO FUJITA: I mean, that's, kind of, the bottom line of it, right. And you look at both sides on the LIV side, to your point, it was all about, well, we're offering competition here. There's only been one entity. And then, on the PGA side, it was about the Saudis. It was about the 9/11 families. It was about we would never go near that at. The end of the day, it's business.

- Yeah, I mean, I look at it from the player's point of view. I got to see-- I mean, some of them must be like-- Rory McIlroy must be dumbfounded by this move. Kind of shocked. He took a big stand against LIV. But then it makes me think that was the PGA scared that all their players are going to leave. Is that why they did this deal?

Because we talked about this before in player-run leagues like tennis and golf, you can actually kind of core in the market very easily. And then-- was it the fear the PGA was the players sort of all of them leaving? I don't know, but it's just the thought I had.

- I don't know because they were able to retain at least, for now, a lot of their top talent. You mentioned Rory McIlroy. He was one of the most vocal in defending the PGA TOUR criticizing those players who did decide to leave. He got in a couple of back-and-forths with Phil Mickelson over the last several weeks.

But when you take into account what's happening at the end of the day, I think a lot of people are asking what this will do to the game of golf. And there is an argument out there-- Jefferies is one of the companies that came out with an analyst note today saying that the golf-- the sport, in general, is going to benefit. Some of the names, like Topgolf Callaway obviously one of those best positioned to benefit from this.

But I still have question marks just in terms of how much bigger we're really going to see the sport of golf grow, even if it does have all of that funding from Saudi Arabia.

JOSH SCHAFER: Yeah, the take is essentially now they'll just be more money in the game, right. And I think, at a high level, I guess you could say that would make the players more motivated, right. So then you can maybe have a longer season, and you can grow beyond the majors. That's where the PGA has really struggle when you think about why LIV Golf came about.

Outside of those four majors that we talk about, that includes the Masters Tournament and the British Open, we don't really talk about the tour that much from a broad sports perspective. It's not as popular as some of the other major sports. So I guess the theory would be get more money in, you get the players to be more interested in the off-season, and then it grows.

I don't know the market. I will say those golf stocks were up today. Up about 5% at one point. So it was interesting to see that people do sort of believe in maybe it is a rising tide there.

AKIKO FUJITA: Saudi's coming out the biggest winners in all of this.

- Yeah, they certainly are.