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Today At A Glance:

Commissioner Jay Monahan and the PGA Tour shocked the sports world yesterday, announcing a merger with Saudi-backed LIV Golf. So today’s newsletter breaks down everything you need to know, including the secret meetings that led to the finalized deal, what the new entity will look like, who really has the power, and much more.

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Friends,

When the Saudi-backed LIV Golf league broke onto the scene last year, handing out more than $1 billion in signing bonuses to some of the world’s best players, PGA Tour commissioner Jay Monahan made his feelings of discontent very well known.

Monahan referenced Saudi’s involvement in 9/11, chastising players like Phil Mickelson, Dustin Johnson, Brooks Koepka, and Bryson DeChambeau for taking blood money. And Monahan also claimed moral superiority, convincing Tiger Woods ($800M), Rory McIlroy ($500M), Hideki Matsuyama ($300M), and Will Zalatoris ($130M) to turn down hundreds of millions of dollars to stay with the PGA Tour.

I mean, can you blame him? Monahan reportedly gets paid about $15 million annually, including the use of a private jet for personal vacations in California, Montana, Nantucket, St. Lucia, and Turks and Caicos, to run the world’s most powerful golf organization. And with LIV Golf’s bottomless pit of cash threatening Monahan’s lifestyle and career, many golf fans seemed to understand his frustration.

But what we didn’t know, until yesterday, was that PGA Tour Commissioner Jay Monahan had spent the last seven weeks playing both sides — behind closed doors.

He flew to Venice and London, meeting up with Saudi leader Yasir al-Rumayyan for meals and rounds of golf. Additional meetings were then held in the United States, Europe, and the Middle East. And these conversations ultimately came to light yesterday with the announcement of a merger between LIV Golf and the PGA Tour.

Saudi Arabia’s interest in diversifying its economy through sports is no secret.

The country’s state-controlled oil company Aramco produces more than 10 million barrels of crude oil per day, reporting a profit of $161 billion last year alone. That’s $441 million in profit every single day, or $316,000 in profit every single minute, and it was the highest-ever recorded annual profit by a publicly listed company in history.

Saudi Aramco Company Overview

• Controlled by Saudi Arabia

• The world’s largest oil producer

• Record $161 billion in profit last year

• Market cap of $2.1 trillion (3rd largest behind Apple & Microsoft)

But oil is still a tricky business, and Saudi Arabia is highly reliant on fossil fuels.

For example, oil accounts for 42% of Saudi Arabia’s total gross domestic product (GDP), 87% of its budget revenues, and 90% of export earnings. And when Saudi Arabia saw a sharp decline in oil prices throughout the early 1980s, they entered a deep, prolonged recession that took nearly three decades to recover from.

So that’s why Saudi Arabia’s Crown Prince Mohammed bin Salman (MBS) announced the Saudi Vision 2030 plan in April 2016. The plan’s official language talked about “increasing non-oil trade and investment” in Saudi Arabia and “developing public service sectors to promote a more secular image of the nation.”

But, in simple terms, MBS essentially laid out a plan to reduce the Kingdom’s economic dependence on oil by diverting profits (via their $620 billion sovereign wealth fund) into other industries like sports, entertainment, housing, and more.

“We aspire to excel in sport and be among the leaders in selected sports regionally and globally,” the Saudi Vision 2030 plan read.

And that’s precisely what they’re doing, as it’s estimated Saudi Arabia has already invested more than $10 billion in different sports leagues, teams, and events.

Here are a few examples:

• Saudi Arabia bought Newcastle United FC for $408 million in 2021.

• Saudi Arabia has a 10-year, $1 billion deal with WWE that guarantees them at least two events each year.

• Saudi Arabia has a 10-year deal with Formula 1 worth $650 million, which guarantees them the Saudi Arabian Grand Prix yearly. And their state-owned oil company Aramco has a 10-year, $450 million sponsorship deal with F1, too.

• Saudi Arabia has paid at least $150 million to host high-profile boxing events, including fights with Anthony Joshua, Oleksandr Usyk, and Andy Ruiz Jr.

• Saudi Arabia acquired ESL Gaming — one of the largest independent eSport entities in the world — from Modern Times Group for $1.05 billion. They then bought FACEIT — one of the biggest tournament organizers in eSports — for $500 million and merged the two companies to form the ESL FACEIT Group.

But after getting its $20 billion takeover proposal rejected by Formula 1 earlier this year, Saudi Arabia has decided to double down on its investment in golf.

Now, the details of this deal aren’t exactly clear yet. So anyone who tells you they know exactly how this merger will look is either misinformed or guessing.

But here’s what we know so far, according to the PGA Tour’s press release, Jay Monahan’s interview on CNBC, and reports from the player’s only meeting last night.

• The PGA Tour, DP World Tour, and LIV Golf are merging their commercial businesses (and rights) to create a new, collectively owned, for-profit entity.

• The merger will cancel all pending litigation between the PGA Tour and LIV Golf.

• Saudi Arabia (through their $620 billion sovereign wealth fund) is the sole investor and is expected to put about $3 billion into the newly combined entity.

• Saudi Arabia’s sovereign wealth fund (PIF) also has 1) exclusive rights to further invest in the new entity and 2) a right of first refusal on any outside investments.

• The agreement came together over seven weeks, with Monahan and two other PGA Tour board members (no players) negotiating directly with Saudi Arabia.

• LIV Golf athletes can re-apply for membership with the PGA Tour.

• The PGA Tour will remain a 501(c)(6) tax-exempt organization.

So, while there are still many questions to be answered, the PGA Tour essentially agreed to take a ~$3 billion investment from Saudi Arabia to create a new entity that acts as the parent company for all business and commercial interests across golf.

The Board of Directors of the new commercial entity will include Yasir al-Rumayyan as Chairman and Jay Monahan as CEO. And the PGA Tour will appoint a majority of the board, allowing them to maintain a majority voting interest in the company.

So while we sit around and wait for more details from this agreement to be made public, here are a few of the most interesting things that come to mind.

1. Rory & Tiger (and everyone else) should be pissed: Jay Monahan claimed moral superiority for 18 months, making players like Rory McIlroy and Tiger Woods defend the PGA Tour to the media while he was nowhere to be found. But then Monahan negotiates his own deal with Saudi (that the players found out about on Twitter), and the decision cost several players more than $1 billion collectively.

2. The PGA Tour has the votes; Saudi has the money: Jay Monahan is already saying that the PGA Tour will continue to run the PGA Tour. But even with the PGA Tour having majority control of the board, Saudi’s Yasir al-Rumayyan is the chairman. And with Saudi having 100% investment control, it feels a lot more like a golf conglomerate effectively controlled by the Saudis but run by the PGA Tour.

3. The DOJ is still watching: The U.S. Justice Department has been investigating the PGA Tour and LIV Golf for months, looking into allegations about past conduct related to collusion on the Official World Golf Rankings and partnerships with fellow powers that be in the golf industry. But this merger will also invite scrutiny into the monopolization of golf, and many people are already pointing to the antitrust problems that arose during the NBA and ABA merger in the 1970s (because competing businesses can’t conspire to restrict competition).

   “So weird,” Connecticut Senator Chris Murphy said on Twitter yesterday. ” PGA officials were in my office just months ago talking about how the Saudis’ human rights record should disqualify them from having a stake in a major American sport. I guess maybe their concerns weren’t really about human rights?”

4. Saudi Arabia is just getting started in sports: We talked about Saudi’s involvement in Newcastle United, WWE, Formula 1, boxing, esports, and golf, but the oil-rich state also announced this week that they were taking over ownership of the country’s four biggest soccer teams. And with Cristiano Ronaldo and Karim Benzema signing deals collectively worth $1 billion (plus Messi’s outstanding $400 million PER SEASON offer), soccer is clearly Saudi’s next target.

And last but not least, I’ll leave you with this. Just hours after the merger news broke yesterday, Netflix producer Chad Mumm confirmed via Twitter that Full Swing was filming at the RBC Canadian Open when many PGA Tour players received the news.

Now that’s going to be must-watch TV.

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I hope everyone has a great day. We’ll talk on Friday.

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Extra Credit: Meet The New Man In Charge Of Golf Globally

Yasir al-Rumayyan has been named chairman of the newly created PGA/LIV Golf entity — and his resume makes even the biggest LinkedIn influencers jealous.

• Governor of Saudi Arabia’s $620 billion investment fund

• Chairman of $2.1 trillion oil-giant Saudi Aramco

• Chairman of Newcastle United FC (Premier League)

• Board member at Uber and SoftBank

• Right-hand man to Crown Prince Mohammed bin Salman (MBS)

And now, Yasir al-Rumayyan is in charge of the world’s largest professional golf organization.

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Huddle Up is a 3x weekly newsletter that breaks down the business and money behind sports. If you are not already a subscriber, sign up and join 100,000+ others who receive it directly in their inbox each week.