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PGA Tour to grant initial $930 million in equity to membership, according to tour memo

February 07, 2024

Alex Slitz

The PGA Tour released a memo to its membership Wednesday informing how equity stakes in the new for-profit PGA Tour Enterprises will work.

Last week the tour came to an agreement with Strategic Sports Group for private investment, which coincided with the launch of PGA Tour Enterprises. The Enterprises division will house the PGA Tour’s commercial businesses and rights, as well as those of the DP World Tour. This will allow the tour to maximize revenue for itself and players while keeping the tour’s non-profit 501(c)(6) classification that carries tax exemptions for “business leagues, chambers of commerce, real estate boards, boards of trade, and professional football leagues” intact. SSG has pledged up to $3 billion to PGA Tour Enterprises with an initial $1.5 billion investment. Players will receive equity into PGA Tour Enterprises; these grants, made over time, will be based on playing accomplishments, future participation and tour status.

In Wednesday’s memo to membership (which has been obtained by Golf Digest), PGA Tour commissioner Jay Monahan laid out a breakdown of $930 million in initial grants.

“As discussed with the PGA Tour Policy Board, the issuance of equity in PGA Tour Enterprises requires that we comply with important legal and regulatory requirements, and it is critical that we listen to and follow the recommendations of subject-matter experts (across legal, regulatory, finance, and tax) on how we roll out the program,” Monahan cautioned. “Until we complete this process, we will not be able to answer certain questions that we know are top of mind for the membership including informing individuals who will receive initial grants and the amounts of those individual awards.”

Despite those constraints, the memo divided the $930 million into four groups:

-Group 1 consists of $750 million in aggregate equity and will be granted to 36 players based on career performance, last 5-year performance, and Player Impact Program results.
-Group 2 consists of $75 million in aggregate equity and will be granted to 64 players based on last 3-year performance.
-Group 3 consists of $30 million in aggregate equity and will be granted to 57 players that have earned certain fully-exempt PGA Tour status categories.
-Group 4 consists of $75 million in aggregate equity and will be granted to 36 players who were instrumental to building the modern PGA Tour, based on career performance.

Additionally, the memo communicated that another $600 million will be distributed through recurring grants. “The recurring player equity grants are incremental to the initial grants, are in the aggregate amount of $600 million, and are planned to be awarded in the amounts of $100 million each year starting with the 2025 PGA Tour season and continuing through the 2030 PGA Tour Season (at a minimum),” the memo reads. “It is important to note that all PGA Tour members are eligible to receive recurring grants—regardless of whether or not they received an initial grant. These recurring grants will reward future top performers and will be based on last 3-year performance, last year performance and Player Impact Program results. Like the initial grants, the recurring grants will require minimum participation and/or service requirements commensurate with the value to the grant.”

Left unsaid was what role, if any, Saudi Arabia’s Public Investment Fund will have in the new for-profit venture. The tour announced in last week’s deal that the SSG partnership will allow for co-investment from PIF in the future, and SSG, sources tell Golf Digest, made the deal with the tour under the belief that PIF involvement will ultimately come to fruition. But there are antitrust regulations that need to be hurdled, and Congress announced this week that its investigation into PIF and its investments in American businesses will continue.

Initially the tour sought supplemental investment to appease government antitrust regulations rather than serving as an alternative to PIF, which is the financial backer to LIV Golf. However, talks have stalled between the PIF and the PGA Tour, and PIF’s renewed recruiting of tour players—highlighted by the December defection of Jon Rahm to LIV—led to hurt feelings on the tour side, sources familiar with the tour proceedings told Golf Digest. PIF, meanwhile, looked at the tour’s solicitation with other private equity deals as a betrayal of sorts to the June 6 framework agreement.

Even if an agreement between the PGA Tour and PIF comes together, there's a chance professional golf will not be unified for another one to two years, sources tell Golf Digest.

The PGA Tour is in Scottsdale this week for the WM Phoenix Open.