Author: Head Nut

In Awarding $1.5 Billion of Grants to Players, the PGA Tour Has Gone Mad With Money

Alex Micelli, SI Golf

The overcompensation of pro golfers reached a new level of absurdity this week, writes Alex Miceli. And the Tour hasn’t revealed how all that cash helps the game.

The money in professional golf has gotten beyond silly.

Remember, we are talking about a niche sport that does not garner many eyeballs when you compare it to the four major sports in this country, especially NFL football.

Of course, nobody can take on the behemoth that is the NFL, so why golfers think they should be paid like professional football players is unimaginable.

PGA Tour players believe they should be compensated at similar levels as a prized linebacker or wide receiver, and clearly the new CEO of PGA Tour Enterprises agrees.

A memo this week from Jay Monahan to his membership outlined a grant program that will initially distribute $930 million to 193 current and former players.

Then, starting in 2025 and going through 2030, $100 million more in grants will be distributed annually to top performers using a three-year formula.

This grant program comes on top of increases in purses across the board and the advent of eight signature events with purses of $20 million.

And that doesn’t include the $25 million purse for the Players, $20 million for the first two playoff events and an increased purse for the playoff finale at East Lake.

Add in a retirement program that’s one of the best in professional sports, and the players are swimming in money.

Oddly enough, when the new Strategic Sports Group investment deal was announced last week during the AT&T Pebble Beach Pro-Am, most players recognized that the initial $1.5 billion investment would put the PGA Tour on a stronger financial footing.

That’s true, but that entire $1.5 billion is now spoken for with these player grants. Maybe the other $1.5 million earmarked for investment by SSG will go toward building the business.

You know, to not only make golf better but grow the game.

But how will the newly created PGA Tour Enterprises build a business that generates enough revenue to give SSG a return on its investment?

Expanding the Tour’s media presence has been suggested by some players to create more fan engagement, but what type of expansion would generate a sufficient return on a $3 billion investment?

Nothing that has been suggested by the players or the PGA Tour grows the game or creates any measurable fan engagement.

At the same time, powers that reside in Ponte Vedra will have to explain to more than 193 players how and why they will or will not get part of the pot of gold financed by SSG.

The majority of the money is focused on “Group 1,” which consists of $750 million in equity grants for only 36 players and is based on a combination of career performance, performance of the last five years and Player Impact Program scores.

It’s unclear what kind of weight will be given to each of the three measures, which makes a massive difference in who will receive a grant and what the size of the grant will be.

Just think of the potential legal action that could crop up from being No. 37 or questioning whether career performance is worth more than the last five years.

Or more precisely, what is the value of 18 majors and 73 PGA Tour wins versus winning 10 times on the PGA Tour in the last five seasons and four career majors?

It’s a road littered with potholes, and all the money in the world is not going to fix it. But everyone is trying to use money to do just that.

PGA Tour Headquarters is looking more like a Government Welfare or Social Security office than the grand old example of free market capitalism it used to be. The chasm between the Tour and its fans keeps getting wider and wider, and is beginning to resemble the Grand Canyon in size.

The Head Nut

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The SSG Equity Deal

Allow me to interpret it for you…

  • The Top 36 players will split $750M. That adds up to a little over $20M each simply for not defecting to LIV.
  • The next 64 players will split $75M. That adds up to just over a million dollars each simply for not defecting to LIV.
  • The third group of 57 players will split $30M. That adds up to a little over half a million dollars each simply for not defecting to LIV.
  • The fourth and last group of 36 players will split $75M, which adds up to just over $2M each simply for not defecting to LIV.

Yes, I realize it’s a bit of an oversimplification, but it also looks a whole lot like SSG is paying either a ransom or a bribe to a group of wealthy golf professionals for doing what they were going to do anyway.

I guess we could look at it as being the same type of equity deals the SSG billionaires have done in other business sectors to incentivize/reward key employee loyalty with stock grants and options, but this whole LIV counterstrategy stinks to high heaven. It can only get worse as the players chase bigger and bigger paydays of various kinds and the fans, like me, become less and less interested in their product.

But maybe it’s just me.

The Head Nut

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So, LIV has hired lobbyists to halt the investigation? Sure looks like it…

Click image for story if you have a Bloomberg account, or read below…

The PIF filed lawsuits against the advisers on Nov. 30. The panel said this was “concerning” and an attempt to “prevent the production of records to this Subcommittee.”

A spokesman for the PIF didn’t respond to requests for comments. Messages to M. Klein, McKinsey, Boston Consulting Group and Teneo also went unanswered.

The LIV tour has upended men’s golf since its launch in 2022. It’s convinced some of the world’s best players to join — including Americans Phil Mickelson and Dustin Johnson — by offering them huge pay deals.

Al-Rumayyan is a big golf fan.

Saudi Lawsuits

The Senate panel had been seeking information on work done for the PIF, particularly related to investments in the US and the establishment of LIV Golf.

They requested the information from PIF’s advisers by Sept 6. after Al-Rumayyan had declined an invitation to testify before the Subcommittee. The Senate’s request would require the PIF’s advisors to violate Saudi law, PIF’s lawyers said in a letter to the Subcommittee. The Senate’s request would require the PIF’s advisors to violate Saudi law, PIF’s lawyers said in a letter to the Senate dated Jan. 12., after the fund filed lawsuits in Saudi courts to block them from providing the information requested.

The fund’s US subsidiary was also subpoenaed on Sept. 13 to compel it to produce documents related to the inquiry.

The $700 billion Saudi wealth fund was the most active fund in the world last year, and has a $36 billion portfolio of US stock investments. It owns stakes in Lucid Group Inc., Activision Blizzard and JPMorgan Chase & Co.

It has become a key vehicle for Crown Prince Mohammed bin Salman, who is also chairman of the fund, to transform Saudi Arabia. He wants to reduce its dependency on oil and turn it into a hub for everything from electric vehicles to semiconductors and tourism.

The PGA and LIV’s shock announcement last year that they were working on a merger put an end to a bitter legal battle in US courts over allegations of antitrust violations.

Still, those talks have not yet resulted in a deal. And while the negotiations continue, LIV has continued to entice players away from the PGA. In December, the world number three player, Spain’s Jon Rahm, joined LIV. He could earn as much as $300 million with the switch, according to a report from ESPN.

On Wednesday, another investor, Strategic Sports Group, agreed to put $3 billion into the PGA, in a deal valuing the owner of the US’s main golf tour at $12 billion.

Strategic Sports is led by John Henry’s Fenway Sports Group, which owns the Boston Red Sox and Liverpool FC.

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When will we all have had enough of the Saudi invasion and send them packing? Block them from investing in U.S. assets and ban them from holding tournaments in the U.S. And no OWGR ranking points until they meet the currently established criteria. It would be game over.

This our country, not theirs. We make the rules for engaging in commerce in the United States, not Saudi Arabia and their “bought” lobbyists.

The Head Nut

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LIV Lives in an Alternate Universe of Stinking Thinking

“If they don’t do what their institutions have always guaranteed – and that is try to gather the greatest players in the world to compete for the most coveted titles – then I think as long as this political stronghold over the world rankings continues to be allowed to be the barometer by which players are entered into the majors, I think they become a little bit lessened to the historical significance of those championships.”

“But it’s not too late. All you’d have to do is create a different category with a fair ranking system and add it to the current system.”

– Jerry Foltz, LIV TV Analyst

Hey, Jerry, here’s an idea: All you have to do is meet the current criteria. You guys view yourselves as special when in reality you are nothing but a ragtag bunch of rebels who demand that the world bend to your will. You’re the Hells Angels of Golf.

The Head Nut

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