Saudi financiers have done little more than talk a good game, but with few details, scheme to steal top players is going nowhere fast
KIAWAH ISLAND, S.C. – Hostile takeover.
It’s a term used in business when one company tries to take control of another in an unwanted attempt by the potential acquirer.
That is what Seth Waugh, the CEO of the PGA of America, called the Saudi-backed attempt to create an alternative tour: a hostile takeover.
The initiative is being taken seriously in the game, mainly because of the Saudis’ deep pockets. Delve a little deeper into the proposed rival tour – think basketball’s former ABA and football’s former AFL – and there is little substance beyond the hype. In fact, the new tour doesn’t even have a name as of today.
Yet, with so many unknowns, the one clear fact is that the amount of money being discussed – reportedly more than $1 billion – if true, is hard to ignore at all levels, from individual players to the major tours and other organizations involved in golf.
“Look, I come from a world of disruption, and I think it's inevitable; I actually think it's healthy,” Waugh said. “You either disrupt or you get disrupted. That's what this is.”
When the PGA Tour had to answer the challenge of a world tour proposed by Greg Norman in the 1990s, golf responded with the World Golf Championships.
Many observers point to the PGA Tour’s new Player Impact Program, a $40 million bonus pool designed to compensate players for how they create interest in the PGA Tour, that was established to provide some economic benefit to needle-movers such as Tiger Woods, Rickie Fowler, Jordan Spieth and Rory McIlroy.
The new alliance between the PGA and European tours that provides the U.S. tour with an ownership interest in European Tour Productions plus a seat on the European Tour's board of directors, also is an outgrowth of the Saudi proposal.
Yet, not one player has said that he will jump to the new tour, despite reporting that indicated the Saudis had started to raise the pressure by throwing millions of dollars at players who already have millions of dollars.
“For me at nearly 50, it's a no-brainer, isn't it?” 48-year-old Lee Westwood said. “If somebody stood here and offered me 50 million quid to play golf when I'm 48, it's a no-brainer.”
Which leads us to Phil Mickelson, who will turn 51 next month. He seems to be exactly whom Westwood was thinking about when making his pronouncement.
Of course, there are others who not only would be interested in a big guaranteed payday – $30 million to $50 million, reportedly – but willing to take the plunge.
“I don't think, particularly for younger players that are going to have a 20-year career out here, I just don't think they're going to be better off in that format than they already are,” said Waugh, a former head of banking giant Deutsche Bank Americas. “I've talked to a bunch of them. As you can imagine, you look them in the eye and you just say, Be careful what you wish for, because short-term gain feels good for a little while, but long-term gain is what makes lives.”
The other issue is the money itself. After his news conference Tuesday at the Ocean Course, site of this week’s 103rd PGA Championship, Waugh pointed out some differences in funding. Money coming from a financier such as Warren Buffett, for instance, has no issues. Private-equity funds are tied to how quickly the investors get in and then out of their deal. And then there’s the Saudi money. It’s money with no soul, and its use in this case is unclear except to create an alternative to a product that in 2021 is running on all cylinders.
“Money is money, right?” Waugh said. “And so money needs to have a return and have all those things that are associated with it, but some money is better than other money.”
One thing is clear: If the Saudis continue to propose an alternative tour with few plans, but throw a lot of money at a problem that doesn’t exist, they will be no further along in the next one, three or five years.
Golfers on the PGA Tour lead exceptional lives while playing for millions of dollars. They enjoy a large profit-sharing program, and their tour is built to make them richer than most of them ever dreamed.
Why would they jump? That is the argument that the Saudis must counter. As of today, they have done a very poor job not only in explaining their tour operations but their objectives.
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