Here's why the PGA Tour just merged with LIV Golf
The PGA Tour announced Tuesday it would merge with LIV Golf, a Saudi-backed men's golf organization that formed last year to compete with the PGA.
News of the merger sent shock waves through the sports world and even reached the highest echelons of the U.S. government, after a reporter sought comment from the Biden administration about the Saudi government's taking such a large stake in men's golf. Biden spokeswoman Karine Jean-Pierre declined to comment.
Here's what it all means.
What is LIV Golf?
LIV was created in 2022 by Saudi Arabia's Public Investment Fund (PIF) alongside two of the world's most prominent players, Phil Mickelson and Greg Norman, and others.
Norman was appointed CEO, but it was Mickelson who helped LIV come into existence. Mickelson accused the PGA Tour of not fairly compensating players for things like highlight clips and other media rights, accusing the organization of "obnoxious greed."
Eventually, Mickelson helped persuade 48 players to abandon the PGA Tour for LIV.
The merger has shown that Saudi Arabia and its interests cannot be isolated, veteran U.S. diplomat Richard N. Haass said.
“It's not as big as the Biden visit or agreement with Iran, and it doesn't offset their recent failure to raise oil prices,” said Haass, the president of the Council on Foreign Relations. "But it does send the signal they are a player who cannot be ignored."
Why did the PGA Tour initially bar players from participating in LIV?
The PGA Tour immediately viewed LIV Golf as a direct competitor — and many in the golf world agreed, often referring to it as a “breakaway league.”
So the Tour decided to force players to pick a side, creating harsh divisions in the golf world.
PGA Tour Commissioner Jay Monahan also seemed to disparage the presence of the Saudis in LIV, asking rhetorically in a June 2022 interview, “Have you ever had to apologize for being a member of the PGA Tour?”
And in response to a lawsuit from players who'd joined LIV and said the PGA Tour had retaliated against them, lawyers for the organization condemned LIV as “a strategy by the Saudi government to use sports in an effort to improve its reputation for human rights abuses and other atrocities.”
So why is the PGA Tour merging with LIV?
The two leagues ended up suing each other — but acrimony and lawsuits ultimately proved bad business for the PGA Tour, which made the calculated decision to endure the blowback of turning 180 degrees in exchange for a unified effort with its former rival.
Lawsuits filed by suspended players and a federal probe into possible antitrust actions by the PGA Tour against LIV may also be moot in the wake of Tuesday's announcement.
"We've recognized that together we can have a far greater impact on this game than we can working apart," Monahan told CNBC, seated next to his LIV counterpart, Yasir Al-Rumayyan, the governor of the Saudi sovereign wealth fund. "And I give Yasir great credit for coming to the table, coming to the discussions with an open heart and open mind."
Despite the vast financial resources at its disposal thanks to its Saudi backing, LIV had failed to secure major TV deals to broadcast its events, which were often instead relegated to livestreams on YouTube.
With its commercial viability in doubt, LIV officials may have decided it was better to cut their losses and approach the PGA Tour with an offering of peace — and money.
How much money is involved? What are the financial incentives on both sides?
Terms of the merger haven't been disclosed, but LIV Golf players were reportedly being promised eight- and nine-figure earnings to join the league, thanks to the Saudi Public Investment Fund, which is worth about $676 billion.
CNBC's David Faber, who helped break Tuesday's news with an exclusive interview with Monahan and Al-Rumayyan, said the PIF plans to invest "billions" into the newly formed entity while it retains a minority stake.
How will major golf events be affected?
The Masters, the U.S. Open, the British Open (now known as The Open) and the PGA Championship (which, despite its name, isn't actually owned by the PGA Tour) are all separate entities from the PGA Tour.
Nor does the Tour control the biennial team-based Ryder Cup tournament — though heading into this year's event, there were questions about whether U.S. team captain Zach Johnson would forgo selecting LIV members.
Have there been mergers in professional sports before?
All four of North America's major professional team sports leagues have some kind of merger in their histories, most notably the NFL-AFL union that led to the Super Bowl.
The first World Series in 1903, the 1976 NBA-ABA deal and the NHL's 1979 takeover of the upstart WHA, though, all pale in comparison to the geopolitical stage where the PGA Tour-LIV drama played out.
What are people in golf saying?
As expected, reaction to the stunning deal ran the gamut — from LIV backers' spiking the ball to 9/11 survivors' criticizing the PGA Tour for merging with the Saudi-backed LIV, which they likened to “terrorists,” with others resigned to money's simply ruling the day.
Former President Donald Trump typed in all caps on Truth Social, boasting that he predicted that the PGA Tour would have to come to terms with LIV.
A key Sept. 11 support group, 9/11 Families United, said it was "shocked and deeply offended" and claimed the merger is "bankrolled by billions in sportswashing money from the Kingdom of Saudi Arabia." It added: "Saudi operatives played a key role in the 9/11 terrorist attacks, and now it is bankrolling all of professional golf."
George Washington University sports marketing professor Lisa Delpy Neirotti verbally shrugged her shoulders and said the deal shouldn't have been a shock.