The deal that rocked the golf world: Inside the PGA Tour-LIV Golf alliance

THE MOST UNLIKELY union in skilled golf historical past — the PGA Tour’s beautiful partnership final week with the DP World Tour and Saudi Arabia’s Public Funding Fund — began with a WhatsApp message. The very fact the sender was James Dunne III, a Wall Avenue dealmaker, makes the alliance much more inconceivable.

Saudi Arabia’s sovereign wealth fund, with about $620 billion in belongings, is financing the rival LIV Golf League, which has traded blows with the PGA Tour throughout a bitter two-year battle to topple one another for supremacy within the sport. As the sport’s greatest gamers collect this week at Los Angeles Nation Membership for the 123rd U.S. Open, the fractured sport appears nearer than ever to reuniting.

Dunne, an unbiased director on the PGA Tour’s coverage board, was one of many founders of Sandler O’Neill and Companions, an funding banking agency that misplaced 40% of its workers when hijackers crashed a airplane into the south tower of the World Commerce Middle within the Sept. 11, 2001, terrorist assaults. All however 4 of the 19 hijackers on Sept. 11 have been Saudi residents, and the Saudi kingdom was the birthplace of Osama bin Laden, the top of al-Qaeda and mastermind of the assault.

Dunne would have been within the south tower that day if he hadn’t been on the again 9 of his Wall Avenue profession. As an alternative of going to work, Dunne was making an attempt to qualify for the U.S. Mid-Newbie at Bedford Golf and Tennis Membership, about 40 miles north of Manhattan. A golfer with a formidable 1 handicap on the time, Dunne was 1 below after 4 holes when a United States Golf Affiliation official advised him he wanted to name his workplace as a result of a airplane had crashed into the dual towers. Dunne watched the skyscrapers collapse on TV within the membership’s professional store.

Of the 171 Sandler O’Neill workers who labored on the 104th flooring of the south tower, 66 died that morning, together with two of Dunne’s companions: his greatest pal, Chris Quackenbush, and his mentor, Herman Sandler.

Quackenbush, who Dunne had identified since they have been youngsters rising up on Lengthy Island, had inspired him to play within the U.S. Mid-Newbie qualifier at Bedford Golf and Tennis Membership as an alternative of 1 the day earlier than in Greenwich, Connecticut, as a result of the course higher suited his recreation.

Dunne put his head down and rebuilt Sandler O’Neill. The agency had constructed its basis on mergers and acquisitions involving small and medium-sized banks, however its offers stored getting greater and larger. Dunne was an adviser on TD Ameritrade’s merger with Charles Schwab and dozens of different billion-dollar acquisitions. Sandler O’Neill and Companions grew into the biggest funding banking agency targeted on the monetary companies sector. The corporate was acquired by Wall Avenue funding financial institution Piper Jaffray in 2020. CNBC reported the merger was price about $485 million.

Dunne is president of Seminole Golf Membership in Juno Seashore, Florida, dwelling of essentially the most well-known pro-member event within the sport (LIV Golf gamers weren’t invited this yr). He is a member of a number of golf equipment, together with Augusta Nationwide Golf Membership and Shinnecock Hills in Southampton, New York, the place he set the course file with a 63 in 2010 (Tommy Fleetwood tied the mark within the ultimate spherical of the 2018 U.S. Open). He’s a detailed pal of PGA Tour stars Rory McIlroy, Rickie Fowler and others. When Dunne certified for his first USGA occasion, the 2018 U.S. Senior Newbie Championship, Justin Thomas despatched out a congratulatory tweet. Former NFL quarterback Tom Brady considers Dunne certainly one of his most vital mentors.

“Whenever you’ve been round individuals a very long time, you see the 360,” Brady advised Sports activities Illustrated in 2021. “Jimmy is an incredible chief, an ideal dad, an ideal husband … sincere because the day is lengthy. You do not do wonderful issues by taking three knees and punting, hoping another person decides for you.”

Even earlier than becoming a member of the PGA Tour’s coverage board Jan. 1, 2023, Dunne had been working behind the scenes, speaking to gamers and brokers, in hopes of repairing the fractured sport, which had splintered like by no means earlier than when two-time Open Championship winner Greg Norman launched the Saudi-funded LIV Golf League and poached most of the PGA Tour’s greatest stars with assured contracts reportedly price as a lot as $200 million.

With the Public Funding Fund (PIF) investing greater than $2 billion into the breakaway circuit in its inaugural season in 2022, Norman was capable of lure previous main champions Dustin Johnson, Phil Mickelson, Brooks Koepka, Bryson DeChambeau and others away from the PGA Tour. Commissioner Jay Monahan suspended greater than 30 gamers for competing in LIV Golf tournaments with out conflicting occasion releases.

In August, 11 gamers filed an antitrust lawsuit towards the PGA Tour in federal courtroom, alleging it was utilizing its monopoly energy to quash competitors. The PGA Tour countersued, accusing LIV Golf of interfering with its contracts with gamers. It was a full-blown golf civil battle.

Enter Dunne, who is called Jimmy to his colleagues and mates. His Wall Avenue pedigree in bringing sides collectively and making offers work made him a probable mediator to chill tensions between the edges. However he must put apart his private emotions about 9/11 and Saudi Arabia’s function within the terrorist assaults.

As soon as Dunne joined the PGA Tour’s coverage board, he needed to succeed in out on to not Norman however Yasir Al-Rumayyan, the governor of the sovereign wealth fund. After an arbitration panel in London dominated April 5 that the DP World Tour might impose sanctions on its members for competing in LIV Golf occasions, Monahan gave Dunne permission to contact Al-Rumayyan.

“What I all the time felt is that I did not perceive what the LIV Tour was actually making an attempt to perform,” Dunne advised ESPN. “And so in some unspecified time in the future in time, between the authorized expense and them principally recruiting our gamers, I assumed it was vital that we’d converse to the principle man and to not anyone else. Over time, and after we had gotten some good authorized victories, I used to be capable of persuade Jay that we must always go over and attempt to discover out if there’s a center floor right here. Is there one thing we are able to achieve this that we are able to put the authorized battle and the entire form of battle behind us?”

On the morning of April 18, Dunne despatched Al-Rumayyan a message on WhatsApp. Al-Rumayyan responded a couple of minutes later. They spoke on the phone for some time that day and agreed to fulfill in particular person in London later that month. It was the start of one of the crucial difficult offers in Dunne’s profession.

IN LATE APRIL, Dunne met Al-Rumayyan at a lodge exterior London. That they had dinner and smoked cigars collectively that night time.

“He was approachable,” Dunne stated. “We spoke about golf, his profession and his view of what he needed to develop within the recreation of golf. My impression was that we are able to work collectively. He actually loves the sport of golf. He is very considerate and really calm, and I discovered him to be extraordinarily respectable.”

The following day, Al-Rumayyan, a 12 handicap, and PGA Tour coverage board co-chairman Ed Herlihy beat Dunne, a 5 handicap, and PIF lawyer Brian Gillespie in a spherical of golf at Beaverbrook Golf Membership in Surrey, England.

Human rights teams, together with Amnesty Worldwide and 9/11 Households United, closely criticized the PGA Tour’s determination to do enterprise with the Saudis in statements Tuesday.

Dunne raised eyebrows final week when he advised the Golf Channel that he’s satisfied the Saudis he handled weren’t concerned within the Sept. 11, 2001, terrorist assaults. “I’m fairly sure — and I’ve had conversations with numerous very educated individuals — that the individuals I am coping with had nothing to do with it,” he stated. “If somebody can discover somebody who unequivocally was concerned with it, I will kill them myself.”

Dunne returned to the U.S. and advised Monahan he believed there was an opportunity they might come to some form of compromise with the Saudis. Monahan advised reporters final week that Dunne and Herlihy’s early conversations with Al-Rumayyan and different PIF officers acquired the ball rolling in negotiations.

“The primary dialog that I used to be not part of was what was an important dialog due to the place I have been in and what we have been making an attempt to do with our tour,” Monahan stated. “However once they got here again and stated it was a constructive dialog and that I ought to have a follow-up assembly, I believe that is when issues began to develop.”

In Might, Dunne, Herlihy and Monahan flew to Venice, Italy, the place Al-Rumayyan was attending a marriage. Monahan frolicked with Al-Rumayyan the night time they arrived, and all the group met for a number of hours the following day, hammering out the framework of what a possible alliance may appear to be.

On Might 28, the Sunday of Memorial Day weekend, the lads met once more in San Francisco, the place they finalized a proper plan. The following day, Monahan and Al-Rumayyan signed a two-page framework settlement for a partnership that might stun the golf world.

“I believe there was a want for each side to come back collectively to some sort of peace,” Dunne stated. “It was extraordinarily complicated and troublesome, however individuals actually needed, in my thoughts, to do one thing that was going to be good for the sport of golf.”

ACCORDING TO DUNNE, Monahan will oversee the PGA Tour and the LIV Golf League below the settlement. On the finish of LIV Golf’s season in November, Monahan will consider whether or not the team-focused circuit of 54 holes, shotgun begins and no cuts will proceed or fold. Dunne stated will probably be Monahan’s determination alone.

It is unclear what Norman’s function will probably be going ahead, though he advised workers final week that his circuit is a stand-alone entity and is planning for 2024 and past. A LIV Golf spokesperson stated Norman wasn’t out there for remark.

“Ultimately, it is actually one particular person that can determine, and the PGA Tour won’t ever fund any side of LIV,” Dunne stated.

In keeping with Dunne, the PGA Tour will even management the brand new yet-to-be-named for-profit entity, which “combines PIF’s golf-related business companies and rights (together with LIV Golf) with the business enterprise and rights of the PGA Tour and DP World Tour,” in response to the discharge.

Monahan will function the brand new firm’s CEO; Al-Rumayyan will probably be chairman. Dunne stated the entity will take into account future “strategic alternatives and consider in the event that they’d be helpful for the PGA Tour.” It may be the acquisition of a golf course, one other tour or a media community. PIF would be the preliminary investor and may have the unique proper to additional inject more cash into the corporate.

“The PGA Tour is the controlling companion of the brand new firm,” Dunne stated. “It’s terribly unlikely that [Al-Rumayyan’s] going to be concerned within the day-to-day. No, he wouldn’t be concerned in day-to-day. But when we have been going to search for a strategic alternative, we’d clearly contain him and he’d assist consider it and determine whether or not or not it might be price them investing in it. It might be very attainable that we might go a protracted time period earlier than there’s any funding of any kind.”

The Saudis will probably be a financial institution for the brand new entity, in response to Dunne, however provided that cash is required. Dunne does not understand how a lot the Saudis are keen to speculate; Al-Rumayyan advised CNBC he’s ready to spend “no matter it takes … that is what we’re dedicated for.”

Dunne stated PIF will put money into the brand new firm, however not within the PGA Tour and will not pay its members. The PGA Tour will stay a 501(c)(6) tax-exempt group and retain its personal operations, together with scheduling, sanctioning of occasions, guidelines and competitors.

What’s going to the Saudis get out of the deal? They will earn a living if the brand new for-profit enterprise grows, and so they’ll get a seat on the desk within the new world golf ecosystem. Dunne stated Aramco, Saudi Arabia’s public petroleum and pure gasoline firm, might develop into a PGA Tour sponsor. Al-Rumayyan will be a part of the PGA Tour coverage board. As one particular person aware of Al-Rumayyan advised ESPN, “He needs to be standing below the tree at Augusta Nationwide on Thursday on the Masters.”

ON JUNE 5, officers from the PGA Tour, DP World Tour and PIF gathered at funding banker Michael Klein’s workplace in New York to piece collectively a technique in asserting the partnership. A information launch was written and a media technique was developed. Monahan and Al-Rumayyan would announce the deal collectively on CNBC the following morning, minutes after PGA Tour and DP World Tour gamers can be notified of the alliance in memos.

Dunne texted McIlroy, one of many PGA Tour’s most loyal supporters, on Monday night time, asking if they might speak the following morning. Dunne referred to as McIlroy at 6:15 a.m. ET Tuesday to inform him the information.

“He appeared happy that there can be peace coming,” Dunne stated. “He was happy that there was the potential for peace. He was conscious that there had been some contact forwards and backwards, however had no data, deliberately on each events, the place dialogue was.”

McIlroy stated Dunne advised him, “Rory, typically you bought 280 over water, you simply acquired to go for it.”

“I nonetheless hate LIV,” McIlroy stated. “Like, I hate LIV. I hope it goes away, and I’d absolutely count on that it does. I believe that is the place the excellence right here is. That is the PGA Tour, the DP World Tour and the PIF — very completely different from LIV.”

Gamers have criticized Monahan and DP World Tour CEO Keith Pelley for maintaining them in the dead of night about maybe an important determination within the circuit’s historical past. Dunne stated confidentiality was paramount in such a controversial deal.

“We needed to deal with all of the gamers equally as a result of a deal like this has a lot emotion in it,” Dunne stated. “I did not wish to be within the scenario the place we advised some gamers and never others. In the event you advised 20 or 30, you’d don’t have any confidentiality. Folks had their very own specific pursuits, might do what they’d wish to do, [and] some may attempt to derail the deal. What we tried to do is get what we thought was an excellent deal for the PGA Tour after which current that to the gamers.”

Shortly after the settlement was introduced, Monahan flew to Toronto, the positioning of final week’s RBC Canadian Open. He met with greater than 100 gamers for longer than an hour. Monahan described the assembly as “tense,” and some gamers referred to as for his resignation.

“The explanation why there was a lot backlash in the course of the assembly was we have been simply all sort of in a state of shock,” stated longtime PGA Tour member Brandt Snedeker. “No person knew it was coming. I believe inevitably with these sorts of offers, you by no means know they’re coming, in any other case, they’d by no means get executed.”

Australia’s Geoff Ogilvy stated Monahan solely supplied gamers with “broad strokes” and few particulars as a result of the plan hadn’t been formally accepted. Ogilvy stated he was a “little bit grumpy” with Monahan, however “typically felt for him as a result of he clearly cannot inform us something.”

“He stated, ‘Cling in there. That is really a superb deal,'” Ogilvy stated.

There was a heated trade in the course of the assembly between McIlroy and Grayson Murray, the 232nd-ranked participant on this planet, who shouted for Monahan to resign, saying, “We do not belief you, Jay. You lied to our face.”

Two days after the assembly, Murray advised ESPN that he hadn’t modified his thoughts about Monahan.

“What I stated within the assembly about [how] I hope he resigns and the individuals beneath him [resign], I stand by that,” Murray stated. “I have not talked to Jay. I’ve identified Jay for a very long time, and I believe this entire factor simply has been dealt with the unsuitable means. I believe we simply want a brand new face.

“I believe there are some issues occurring internally that we do not find out about, and I do not assume they’re going to ever come out, which simply appears fishy. It is all occurring so shortly with out the gamers’ data. It is one thing so vital, like the most important factor that is ever occurred to our tour, and we discover out the morning it comes out.”

Murray stated others within the room have been upset in regards to the PGA Tour’s lack of transparency. Gamers do not have the ability to power Monahan out. Solely the coverage board could make that call, and Dunne and Herlihy helped him dealer the take care of the Saudis.

The total coverage board, which consists of three different unbiased administrators, 5 gamers (Patrick Cantlay, Charley Hoffman, Peter Malnati, McIlroy and Webb Simpson) and PGA of America director John Lindert, should nonetheless formally approve the alliance. Al-Rumayyan advised CNBC that the deal needs to be accepted within the coming weeks.

“I believe some individuals agree with me, undoubtedly,” Murray stated. “However you understand, there is not any approach to get on the board and say, ‘Hey, you are fired.’ We do not have that energy. That is why I believe a union can be nice for our sport. I do not know why we’ve not come along with that. I believe every other sport that has a union is doing nice. They’ve energy. They make choices. It is a gamers’ tour. At the very least they preserve saying it is a gamers’ tour.”

Former world No. 1 golfer Justin Rose, an 11-time winner on the PGA Tour, stated Monahan has a “hung jury” or “cut up camp” amongst his membership.

“I believe some gamers possibly perceive the strain that he was below, and possibly the enterprise facet of issues the place some issues simply should transpire the best way they transpire,” Rose stated. “However, you understand, different guys aren’t keen to simply accept the best way it went down. It is just a little muddy proper now for certain.”

Lucas Glover, the 2009 U.S. Open winner, stated many PGA Tour gamers “desire a pound of flesh proper now.”

“I believe [Monahan’s support] might be fairly minimal proper now due to simply the response and it simply hasn’t performed out but,” Glover stated. “By itself head, it appears to be like fairly terrible. However I believe lots of people cooled off after the assembly and acquired some questions answered. I believe the tip outcome must be helpful to the blokes that caught round, and that can go a protracted approach to earn again belief.”

One of many greatest issues amongst most gamers, in response to Ogilvy and Snedeker, is that LIV Golf League gamers will not be allowed to easily rejoin the PGA Tour. Dunne stated a committee of gamers and directors will determine on potential punishment for gamers who left and wish to rejoin. He stated golfers who left additionally will not be allowed to take part in a deliberate fairness sharing within the new entity.

“I believe you’d get a reasonably sturdy consensus amongst the gamers that no one actually needs any of those guys to come back again who went to LIV,” Ogilvy stated. “They might really feel a bit cheated as a result of all of us selected the tour. Those that stayed, we selected the tour and have been advised that that is the proper facet to be on. ‘Do not do that. You will by no means come again. In the event you go, you may by no means have the ability to come again.’ That is the one factor I believe that basically was triggering all of the boys is these guys, they’ve gone off and acquired their piles of cash.”

Snedeker stated some LIV Golf gamers may need a tougher time being accepted again than others.

“Most of these guys left on comparatively good phrases,” Snedeker stated. “I believe there will be some animosity in the direction of the blokes that sued us and drug us by means of the mud and tried to inform us how unhealthy this tour is and the way terrible it’s. I believe there will be some animosity in the direction of them. However the majority of these guys simply made a monetary determination, enterprise determination, so I do not assume there will be a ton of that.”

ALONG WITH EARNING again a few of his gamers’ belief, Monahan has to get the deal throughout the end line. That will not be straightforward, in response to authorized specialists. The settlement may need ended all authorized disputes between the PGA Tour and PIF, however the U.S. Division of Justice was already investigating the PGA Tour’s alleged antitrust habits. Federal regulators will undoubtedly scrutinize the brand new firm as nicely, in response to antitrust specialists. The 1914 Clayton Act prohibits mergers and acquisitions that remove competitors.

Tim Wu, a professor at Columbia Legislation College and former particular assistant to President Joe Biden for expertise and competitors coverage, stated there’s a “100% likelihood” DOJ enforcers take a detailed have a look at the brand new alliance. Wu stated regulators in Europe additionally may take a tough look.

“If PIF had simply invested in PGA once they have been a monopoly, that might be a completely completely different story,” Wu stated. “The problem right here, and this might be any business, is when you have a monopolist and you’ve got a startup, some sort of competitor to it. [The startup] begins to get some traction, or not. Then you definately determine to identical to, ‘Hey, let’s agree to not compete and share the earnings.’ That is what the antitrust legislation bans you from doing.”

The settlement hasn’t been finalized and paperwork hasn’t been submitted to the federal authorities. The deal might be restructured, or PIF and the PGA Tour might merely attempt to ram it by means of. When ESPN requested Dunne if the brand new firm would go the antitrust take a look at, he stated, “I am not a lawyer.”

Wu famous that the Division of Justice not too long ago blocked an introduced merger between American Airways and JetBlue Airways. Final month, a federal choose upheld the ruling and ordered the airways to separate.

“They tried to say it wasn’t a merger,” Wu stated. “The airways stated, ‘Effectively, it isn’t a merger. We’re simply an alliance and mixing.’ However the Justice Division stated, ‘Look, when you cease competing on costs and cease competing for purchasers, you are not competing, and that is what we care about.’ So, the Justice Division cares whether or not you are agreeing to not compete, no matter legal guidelines you wish to placed on it. That is what they care about.”

Northwestern legislation professor Gerald Maatman, one of many nation’s main antitrust legal professionals, stated PIF’s legal professionals may have a troublesome time strolling again their earlier feedback in regards to the PGA Tour being a monopoly and utilizing its energy to quash competitors.

“In essence, it is like, ‘Overlook about all of the allegations we made in our lawsuit. We did not imply it,'” Maatman stated. “From a authorized standpoint, it’s totally onerous to unring the bell once you make these allegations. They’re referred to as judicial admissions by the legislation. Reality isn’t a weathervane that turns when the wind blows in the direction of your self-interest. And once you say one thing in courtroom, it is sort of onerous to weasel out of it down the highway.”

Monahan will even should make clear his remark to reporters final week that the deal was “finally, to take the competitor off of the board — to have them exist as a companion, not an proprietor — and for us to have the ability to management the course going ahead.”

“That is stunning he would say this, that one of many advantages of the deal is eliminating competitors,” stated Craig Seebald, a companion and antitrust knowledgeable at Vinson & Elkins legislation agency. “That is simply the center of it. I most likely talked to 30 or 40 antitrust legal professionals, and all people’s simply scratching their heads saying, ‘Why would you say that?’ I imply, that’d be the very last thing you’d need your consumer to say.”

A number of U.S. politicians, together with Sens. Elizabeth Warren of Massachusetts and Richard Blumenthal of Connecticut, have expressed issues in regards to the proposed alliance and stated they’re going to be watching its construction carefully. In a press release to Time, Warren stated the PGA was “promoting out to the Saudi regime to attract consideration from its atrocious human rights file with a brand new golf monopoly.”

Blumenthal stated in a press release, “The PGA Tour has spent two years lambasting Saudi sports-washing and paying lip service [to] the integrity of the game of golf, which can now be used unabashedly by the Kingdom to distract from its many crimes. The PGA Tour has positioned a worth on human rights and betrayed the lengthy historical past of sports activities and athletes that advocate for social change and progress. I’ll preserve a detailed eye on the construction of this deal and its implications.”

It might be months earlier than the alliance between the PGA Tour, DP World Tour and PIF is finalized, if it is accepted in any respect — handed by the coverage board, signed off on by lawmakers, cleared by the DOJ and naturally, if the phrases are as described. There’s additionally the potential for the Saudis making the most important leverage play of all: a Malicious program and leaving the PGA Tour and DP World Tour alone on the altar.

“I am selecting the bullish facet of this factor,” Ogilvy stated. “Whether it is the way it might be, it might be unimaginable. I really feel like [PIF is] in it for the lengthy haul. I imply, in the event that they cling round with their checkbook, it future-proofs it just a little bit. This arms race of how a lot cash can we pay all these gamers, the PGA Tour was going to lose ultimately. So, to come back collectively, nevertheless that appears in the long run absolutely is healthier than bickering about it and pulling half the nice gamers over there and half the nice gamers over there.

“No person wins when that occurs.”

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