On June 6 2023 the golf community was shaken when arch rivals The PGA and LIV Golf announced it was going to hug it out and merge. This came after 2 years of constant bickering, harsh words, accusations of sports washing and, on a few occasions, physical interactions between representatives on both sides.
The seismic PGA, LIV Golf merger announcement on June 6th came with a number of clauses and stipulations. One of the most important of these was that the deadline for getting the deal agreed was December 31 2023. With that date now looming we have had a look at the potential consequences of not hitting that deadline.
We have spoken to golf professional managers, agents and sports finance specialists to try to understand what is going on with the PGA and LIV Golf Merger in order to give you a true picture of the likely outcome.
Before we get into the details of the deal, lets refresh our memory on the PGA v LIF Golf battle so far.
The PGA v LIV Golf Story So Far
The ongoing saga between LIV Golf and the PGA Tour is a captivating chapter in the world of professional golf, marked by dramatic turns and intense rivalries. LIV Golf, financed by the Saudi Arabian Public Investment Fund, emerged as a formidable challenger to the long-established PGA Tour. With its inception in 2021, LIV Golf shook the foundations of professional golf, offering staggering prize money and lucrative contracts that lured many top players away from the PGA. This bold move sent ripples through the golfing community, sparking debates on player loyalty, the influence of money in sports, and the ethics of accepting funds from sources with controversial backgrounds.
In response, the PGA Tour found itself in a defensive stance, striving to retain its players and prestige. The PGA implemented significant changes, including increased prize funds and adjustments to its schedule and structure, to make the Tour more appealing and competitive. This battle between the two entities wasn’t just about retaining and attracting top talent; it became a struggle for the soul and future direction of professional golf. Fans and players alike were divided, with some supporting the traditional values and legacy of the PGA, while others were enticed by the revolutionary approach and financial incentives offered by LIV Golf.
As the battle waged on, it wasn’t just the golfing landscape that was affected. Legal disputes, player bans, and intense public scrutiny followed, highlighting the complexities and challenges facing modern sports organisations. This tussle between LIV Golf and the PGA Tour symbolises a broader narrative in sports today: the tension between tradition and innovation, and the increasing role of finance in shaping the future of sports. Whatever the outcome, this chapter in golf’s history is sure to be remembered for its drama, its controversies, and its impact on the sport.
What Does PGA LIV Golf Merger Entail?
Simply put, when the merger announcement was made on June 6 2023 there was a lot of talk but very little detail. There was a framework agreement put in place (now scrapped) and a deadline set that all would be agreed and signed by December 31 2023. In essence, both parties agreed that there would be a new golf holding company (that we will call GolfCo) and that both the PGA and LIV Golf would buy shares of, supposedly equally.
The sports financial experts that we spoke to (off the record) are saying that agreeing the share structure and value is what is causing the delay. LIV Golf and PGA both need to put a value on their current organisations to then understand the share split in GolfCo. This is where the headaches begin for the legal folks trying to tie up the deal.
What is causing the delays in the PGA, LIV Golf Merger so far?
The valuations of the two organisation is the main sticking point. PGA insiders are saying that LIV GOLF is trying to erode the value of its own business via a few strategic moves. In turn, LIV Golf is having to really try and talk up its value against a backdrop of struggling to even give away tickets to some of its events and sponsors remaining wary of jumping into bed with an organisation owned by a Sovereign State with such a controversial (putting it mildly) back story.
Add in to this the slow moving US Government’s Justice Department investigation into the merger and you can see why the December 31 merger deadline is looking unachievable.
What happens if the PGA, LIV Golf merger is not signed by December 31
The six month deadline was always going to be a tough date to hit. Six months is not very long at all, and throw in a government enquiry and you can see why we would question such a short deadline. The reality though is that the deadline is self imposed and this means there are no legal consequences to missing the deadline.
Our sports finance expert explains, “the rules are much more straight forward than those, say, of a hostile company acquisition involving two floated companies. In a hostile acquisition case the deadline is usually set in place by the regulator or financial authorities of the companies involved and if an agreement is not made, then a further approach cannot be made for a set period of time. With the PGA LIV Golf merger though, the deal deadlines are set by both parties with no immediate consequence for failing to meet them”.
What does LIV Golf signing Jon Rahm have to do with the deal deadline being missed?
When LIV Golf announced in early December 2023 that it was signing Jon Rahm for an estimated $450m contract the PGA merger team were livid. When you look at the merger deal negotiations, you can understand why.
As mentioned, both organisations are struggling to assign a $value to their businesses and they need to agree the valuation in order to assign shares in the new GolfCo. By signing Rahm, one of the PGAs best performing and most marketable assets, LIV Golf has wiped a bit of the value off PGA and added it into their asset book. This has angered the PGA deal negotiators.
What can PGA do to increase its own value
The PGA has started looking at alternative funding solutions and game innovations away from GolfCo. Or, at least, it is maybe pretending or threatening to do so in order to show LIV Golf that it has option. It was revealed in mid December 2023 that PGA representatives are in talks with global sports group FSG, based in USA (owners of Boston baseball team and Liverpool FC) about taking a share in the golf group.
This will surely now make LIV Golf sit up and take notice? You would think so, but the PiF has already made it clear that money is not the main aim of the merger. LIV Golf’s backer are in this for the recognition and more importantly, in it for the long game. They won’t be bullied or scared into negotiating, not least when they can always go out and sign up another pig name PGA player if the merger goes wrong.
What are the wider consequences of missing the December 31 LIV Golf PGA merger?
Not hitting the December 31st deadline does not mean the deal dies and both parties walk away. It does carry some financial risks. The highest financial impact will be on the PGA. The PGA has big value sponsorship deals hanging in the balance.
The other risk is on the reputation side. LIF Golf has nothing to lose but the PGA backed itself into a corner pre the merger. It immediately faced criticism for its u-turn and will no doubt face more criticism if it changes its mind again. This will leave the TV rights negotiations in a tricky place. The media companies can use the reputation hit, alongside fan criticism, as a way to drive down the price of the next contract.
Whilst missing the December 31 LIV Golf PGA merger deadline does not mean the deal is immediately gone and merger is off, it will have serious ramifications for both brands. It clearly poses more of a risk to the PGA. Every day that they can’t get a deal agreed means that their value could be further falling. This will affect the eventual shareholding it could expect to command in the new merger company and brand.