Several high-powered U.S. investors have come together to form Strategic Sports Group (SSG), and they have made an investment of $1.5 billion in the PGA Tour. To utilize the investment, a new for-profit entity will be created, called PGA Tour Enterprises. It will be overseen by PGA Tour Inc., which is the nonprofit organization that everybody knows as the group that runs the tournaments for the PGA Tour, PGA Tour Champions, Korn Ferry Tour and the Canadian and Latin American tours, now called PGA Tour Americas.
The way the investment will work for the players is that PGA Tour players will own “stock” in the PGA Tour. The stock will be “earned” by a player based on his recent as well as career accomplishments, membership status and other values. It will vest over time, like a corporate retirement account. Details of that program have not yet been made available.
“By making PGA Tour members owners of their league, we strengthen the collective investment of our players in the success of the PGA Tour,” PGA Tour Commissioner Jay Monahan said about the deal.
“We greatly appreciate the opportunity to join PGA Tour players in this important next phase of the PGA Tour’s evolution,” said John Henry, principal owner of Fenway Sports Group and manager of the Strategic Sports Group.
SSG is made up of several owners of various sports teams, media companies and other high-level business people who believe in the value of the PGA Tour as a sports property. An additional $1.5 billion will be available later for future investments.
Policy Board Player Directors Patrick Cantlay, Peter Malnati, Adam Scott, Webb Simpson, Jordan Spieth and Tiger Woods issued a joint statement on the new entity:
“We were proud to vote in unanimous support of this historic partnership between PGA Tour Enterprises and SSG. It was incredibly important for us to create opportunities for the players of today and in the future to be more invested in their organization, both financially and strategically. This not only further strengthens the Tour from a business perspective, but it also encourages the players to be fully invested in continuing to deliver — and further enhance — the best in golf to our fans. We are looking forward to this next chapter and an even brighter future.”
According to the PGA Tour’s announcement, “nearly 200 PGA TOUR members will have the opportunity to become equity holders in this new company.”
It is believed this change will create a true sense of ownership by each player. Each will understand how he contributes to the overall and what he needs to do to make the organization better and his own bottom line improve. This is different than the compensation players receive for playing in PGA Tour events.
According to a report on Golf Channel, Tiger Woods said, more or less, that with this new arrangement, as the Tour grows, the players’ revenue will grow. The more they invest of themselves into the Tour, the more benefits they will receive. Again, no details, but one might assume playing extra PGA Tour tournaments, participating in sponsor events, etc.; would benefit both the Tour and the increase the player’s value or shares of stock.
For those wondering how this affects the Saudi PIF (Public Investment Fund) deal that was supposed to be signed by Dec. 31, that proposal is not yet finalized. This new entity, PGA Tour Enterprises, reportedly allows for the PIF to invest if it meets regulatory requirements. That has hit a snag in the Senate.
Recently, in a Senate procedure conducted by the Homeland Security Committee, several U.S. companies did not want to produce documents relating to the PIF-PGA Tour deal for reasons of safety of their employees who they feared might be imprisoned abroad. This has made congressional oversight or approval of PIF investment in the PGA Tour difficult to assess, and it has aggravated senators.
In the future, leadership of PGA Tour Enterprises, which reports to PGA Tour Inc., will be a 13-person board comprised of seven PGA Tour players; four people from SSG, an independent director from the PGA Tour Policy Board plus the current commissioner of the PGA Tour.
For those who missed this announcement, PGA Tour players added an additional player representative to the PGA Tour Policy Board and it happens to be Tiger Woods. The addition of Woods gives them a voting majority. In ordinary language, that means no deal can happen without the players’ say so. It also means that the Policy Board, comprised of PGA Tour players and outside business people (independent directors) on the board, have signed off on this new deal with SSG.
According to the Tour’s announcement, the PGA Tour’s Strategic Alliance with the DP World Tour is an important part of the future of this new structure.
Now, everyone wants to know just who are business people on the PGA Tour Policy Board, and who is SSG.
The Policy Board Independent Directors are Ed Herlihy, Policy Board chairman, co-chairman, Wachtell, Lipton, Rosen & Katz Law Firm; Jimmy Dunne, vice chair and senior managing principal, Piper Sandler; Mark Flaherty, former vice chairman, Wellington Management Company; Joe Gorder, executive chairman, Valero; Mary Meeker, partner, Bond Capital.
There is a Policy Board for PGA Tour Champions and for the other Tours.
The SSG investors include:
Additional Fenway Sports Group investors include: Main Street Advisors including LeBron James, Maverick Carter and Paul Wachter; Herb Wagner; Henry McCance; William Alfond; Michael Egan; Tom DiBenedetto; Michael Pucker; Richard Warke; Mitchell Jacobson; Frank Resnek; Laura Trust; and Teddy Werner.
