PGA TOUR Announces Investment Agreement with Strategic Sports Group

The PGA Tour and Strategic Sports Group have reached an agreement under which SSG, a consortium of investors and sports franchise owners, will inject up to $3 billion into the tour. The deal creates PGA Tour Enterprises, a commercial venture under the management of the PGA Tour. The players will own stock in the new company, a first in PGA Tour history.

According to the tour, the initial investment will entitle tour players to more than $1.5 billion in equity, with higher-ranked players receiving more equity. Meanwhile, tour officials indicated that a widely anticipated agreement with the Saudi Public Investment Fund, financial backer of breakaway tour LIV Golf, was still under regulatory scrutiny.

The investment in SSG will help address the rapidly increasing costs the PGA Tour has incurred and is expected to incur in the coming years, primarily as a result of trying to keep pace with the challenges to Saudi-backed tour operations. LIV Golf, which is funded by Saudi Arabia’s Public Investment Fund, has been pulling players off the tour for the past two years and forcing the tour to raise its own funds. As a result, the tool was placed on an unsustainable trajectory and became embroiled in a financial arms race using the PIF’s available hundreds of billions in wealth.

SSG’s investment will help address what was becoming a major challenge for the tour. Even though the tour has dramatically increased funding, especially for its “signature” events, longtime sponsors such as Wells Fargo, Honda and Farmers Insurance are cutting ties with the tour.

The agreement will give SSG a seat on the Tour’s board of directors, giving the investment group a say in the future direction of the Tour, whether through Saudi or other investments. “The transaction announced today allows for future co-investments from the Public Investment Fund (PIF), subject to all necessary regulatory approvals,” the Tour said in a news release.

The contract status between the tour and PIF, announced in June last year, remains unresolved. The two organizations had agreed to drop all lawsuits and work together to create a framework for the future of professional golf, but the self-imposed deadline of Dec. 31 is more than a guarantee that the deal is still a work in progress. It passed without incident.

SSG is an outside investment group led by Fenway Sports Group that has invested in several prominent investors, including Red Sox owner John Henry, New York Mets owner Steve Cohen, and Atlanta Falcons owner Arthur Blank. Professional sports owners are participating. The investment from SSG could, in theory, help allay federal concerns that the Tour-PIF deal could violate antitrust laws. SSG’s investment will certainly reduce the Tour’s potential dependence on his PIF and its billions of dollars.

However, this investment does not currently bridge the gap between the Tour and LIV Golf.

The most important problem for the sport as a whole is that, despite its immense popularity among certain demographics, golf remains a niche sport. The final round of last year’s Masters, when Jon Rahm won his first green jacket, drew 12.06 million viewers, the highest viewership for golf in five years, but more than most regular-season NFL games. was significantly less.