PGA Tour regarded European Tour Group as ‘borderline distressed asset’
The PGA Tour regarded the European Tour Group as an “underinvested and borderline distressed asset” during analysis aimed at facilitating a merger between the parties last year.
Through the proposed deal, the PGA Tour had targeted financial benefit from the Ryder Cup, a competition which is the domain of the ETG and the PGA of America. The merger was projected to cost the PGA Tour between $40m (£31.5m) and $60m by way of a “reserve fund” over five years.
Documents presented to the PGA Tour’s policy board from June 2022 have appeared as part of a 357-page legal case filing in Florida. Information enclosed therein is likely to cause embarrassment in golf’s corridors of power, given the state the PGA Tour believed its European counterpart to be in. A key element of the paperwork surrounds detail of a planned merger deal – which never transpired – 18 months after the PGA Tour and ETG, the DP World Tour’s parent organisation, formed a strategic alliance as LIV Golf was in its formative stages.
“We are recommending we pursue a merger with ETG,” an executive summary states. After pages of detailed financial analysis, the report reads: “Generally, we find ETG an underinvested and borderline distressed asset. The event model may be unsustainable, or at a minimum represents an unstable foundation.”
However, the chance to own a piece of the biennial joust between Europe and the US appealed to the PGA Tour. “On the opportunity front, the PGA Tour is now in a position to simplify and streamline the flow of talent through a coordinated global schedule,” read the document. “It is also poised to gain ownership of (and the substantial financial upside related to) the European plays of the Ryder Cup – one of the most prestigious and respected events in all of golf.
“A merger would also afford the opportunity to generate even more financial benefits for both sets of memberships as we monetize global media and sponsorship rights at a scale neither organisation can achieve independently across a truly global footprint.”
The paperwork reveals the ETG, which has always been bullish about the nature of its own future and the strategic alliance, has a substantial financial commitment to IMG, the global sports management company, until 2037.
Why this deal did not materialise remains unclear.
One year on, the PGA Tour and DP World Tours have reached a framework agreement in which they will combine forces with Saudi Arabia’s Public Investment Fund. The PIF has been the main funder of LIV.
Reflecting feeling in 2022, the PGA Tour documentation states: “The competitive threats we face have not diminished but in fact relentlessly threaten to disrupt the memberships of both organisations and confuse fans, sponsors and partner tours around the globe.” The PGA Tour has not responded to request for comment made on Saturday. The ETG said it had no comment to make.
At Valderrama, a birdie-birdie finish earned Talor Gooch his third LIV title of 2023. Gooch, who saw off Bryson DeChambeau by one with a 12 under par total, will collect $4m for his troubles.
Discussion will only now intensify over whether or not Gooch should form part of Zach Johnson’s US team for September’s Ryder Cup. LIV golfers are unable to collect Ryder Cup qualifying points outside of majors.