The murky state of pro golf got a little clearer today.

In a statement, the PGA Tour announced that it finalized a deal with investor Strategic Sports Group. Up to $3 billion will be poured into the tour, giving nearly 200 tour players the opportunity to become equity holders in a new for-profit company controlled by the PGA Tour.

Roughly $700 million in equity will go to the top 36 players based on career accomplishments, performance and their overall value to the tour. On top of that, tournament purses will be fully funded for the next five years.

“This is a monumental day for our organization,” PGA Tour CEO Jay Monahan told players during a 30-minute call Wednesday morning.

The short summary: PGA Tour players are getting paid in a major way.

The much-anticipated partnership between the PGA Tour and Saudi Arabia’s Public Investment Fund is still in the works—but regulatory issues and Department of Justice scrutiny remain obstacles for the moment.

How Did We Get Here?

Here is a brief summary of what has happened in professional golf the past few years.

The PGA Tour has traditionally operated as a member-run organization. There are no owners; the players vote on policy that serves the best interest of all their members.

Because of that, making money on the tour has been based on performance rather than value. If two golfers finish tied for fifth in the same tournament, they are paid the same amount regardless if their value to the event was different. More people come to see Rory McIlroy than William McGirt, but they are treated equally.

Enter the Saudis and their Public Investment Fund, one of the largest sovereign wealth funds in the world. They started offering large amounts of guaranteed money and offering secure paths to earn more on LIV Golf, breaking the mold of how professional golf has operated.

The PGA Tour ultimately could not win in an arm’s race against the PIF, so it was forced to change shape and find a way to offer their players guaranteed money that better represents the value they have to the tour.

Initially, the PGA Tour announced a framework agreement to potentially partner with the PIF. They are still publicly stating their intentions of doing just that, and Monahan recently visited Saudi Arabia. On the call with players, he described the negotiations as “frequent” and “active” over the past few months.

However, several reports have confirmed that anti-trust issues and Department of Justice scrutiny are getting in the way of that partnership—the U.S. government is deeming it problematic that the two biggest golf leagues in the world would combine forces. Congress announced this week that its investigation into PIF and its investments in American businesses will continue.

Because of that, the PGA Tour has brought in a new investor, Strategic Sports Group. That decision, coupled with LIV’s continued pursuit of top players, has reportedly caused tension and hurt feelings between the PGA Tour and PIF.

SSG is led by Fenway Sports Group (owners of the MLB’s Boston Red Sox, Premier League’s Liverpool F.C., NHL’s Pittsburgh Penguins, etc.) and includes other prominent sports owners, such as Arthur Blank (NFL’s Atlanta Falcons) and Steve Cohen (MLB’s New York Mets).

SSG’s investment secures the PGA Tour’s future in the short-term, gives the most valuable PGA Tour players direct access to ownership/equity and potentially mitigates anti-trust violations. This was expected since December when the tour announced it was in the late stages of negotiation with SSG.

The investment is not direct cash payment to the players. The players are receiving shares that will have to vest—but the players have skin in the game for the first time ever. The grants, made over time, will be based on playing accomplishments, future participation and tour status.

In many ways, it is an unprecedented model for a pro sports league.

What Does It All Mean?

The PGA Tour has officially changed lanes when it comes to how it pays players.

Prize money will still be based on performance, but player equity in the tour will reward the more valuable players who draw attention and boost TV ratings.

There is still potential for an eventual global tour where the PGA Tour and LIV are combined, but it doesn’t appear to be in the cards for the short-term future.

This investment secures the PGA Tour to continue going down its path of signature events, which gets the best players together more often. Meanwhile, LIV continues to chart its own path as a standalone challenger to the tour.

Will the SSG investment stabilize the PGA Tour, allowing them to keep more talent from escaping? It certainly helps in a pretty massive way.

The news comes at a fitting time: LIV starts its 2024 season this week, while the PGA Tour has a signature event at Pebble Beach.

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