BARBARIANS AT THE GATE
For as long as there have been guys in ties in the world, guys in ties have ruled the world. This story, however, belongs to the ones in keffiyehs.
Now, let’s get caught up...
Why did LIV pay for Rahm if a deal with the PGA was imminent? “It was nothing more than a shot across the bow…It was a f--- you by PIF to the tour that they can grab anyone, even the guy who was adamant about not joining, a source told ESPN. “Three hundred million dollars is a rounding error to the Saudis…Their message was ‘You want to keep talking to everyone and box us out? Good luck with that.’”
The “boxing out” that the ESPN source is talking about refers to Jay Monahan and his private equity friends, who appear eager to do a deal that may or may not include LIV. A gaggle of high rolling sports team owners, called Strategic Sports Group (SSG), is offering to give the PGA more than $3B to create a new for-profit entity called PGA Tour Enterprises. This group includes Tom Werner and John Henry of the Red Sox, who are busy making another $300M play of their own, Arthur Blank of the “28-3 Atlanta Falcons,” Wyc Grousbeck of the NBA-dominating Celtics, and Steve Cohen of the “Hot Mess Mets”. In the current version of the deal, the PGA Tour retains control of the new golf league while the SSG and the PIF are to be minority owners. PGA Tour Enterprises will also be owned in part by the players in the form of equity. “The PGA Tour will be stronger with our players more closely aligned with the commercial success of the business,” Monahan said. This raises a couple of questions. Does the PIF like a deal where they only own a minority share? And how has it come to be that this potentially competing bid is publicly known?
In response to the SSG announcement, 20 PGA Tour players wrote a letter to Monahan, in which they “demanded information regarding the bids from capital partners to invest in the PGA Tour’s new for-profit arm,” according to CBS Sports. The list of signatories is made up of the members of the “Mule” class, the sort-of-derogatory term that has come to describe the Joe-Average PGA players. (The most notable person on the list is Danny Willett, who won the Masters in 2016.) “The PGA Tour is supposed to be a trade organization that acts on the behalf of its’ members and the Mules are finally pissed off enough to demand to know what is happening in the negotiating process and how they are going to be compensated fairly,” xeeted* Bob “Golf” Ball, a real estate developer from Oregon who has made a splash on X for waxing on the PIF/PGA deal. “It looks like they’ve had enough of King Monahan flying around in a Tour jet…while they labor in the mud.” One of the Mules, Chris Stroud, commented to Sports Illustrated earlier this month that “The Tour doesn’t care about you if you’re not in the top 30, and I learned quickly that I needed to take care of myself”. The letter was written on their behalf by law firm Susman Godfrey, LLP, which is known for having represented Dominion Voting Systems when it won a $787M defamation settlement against Fox News in April.
Meanwhile, Rory McIlroy can’t stop/won’t stop spouting off in public. “Jon is going to be in Bethpage in 2025, so… [the DP World Tour] are going to have to rewrite the rules for the Ryder Cup eligibility,” Rory told Sky Sports on December 12. “I certainly want Jon Rahm on the next Ryder Cup team.” This from the guy that had earlier said that no one will miss LIV players like Ian Poulter, Graeme McDowell, and Lee Westwood. He also said, “We need to get everyone back together and try to forget about what happened…let bygones be bygones.” When “Golf Stat Pro” Lou Stagner asked on X, “I wonder if @McIlroyRory also wants to change the rules so Stenson can captain the team?”, McIlroy’s apparent Hyde-to-his-Jekyl hopped online and declared, “The best thing to happen to the 2023 Euro Ryder cup team was Henrik going to LIV!” (Stenson, of course, was bounced as Ryder Cup captain when he left the Tour.) Why was Rory letting “bygones be bygones” one day and then attacking his old friends the next?
Rory is the ultimate insider, and all this high horsing of his seems to indicate that he thinks the PGA Tour is going to come out on top. But the fact that he is doing so in such a public fashion leads me to believe that he might end up with a pie in the face.
“Fuck Rory. I’m so sick of hearing about how he’s some kind of hero who is saving golf,” a LIV golfer and former Ryder Cup teammate is quoted as saying in Alan Shipnuck’s cleverly titled book, LIV and Let Die. “He’s bought and paid for like everybody else, it’s just that his money is coming from the other side…Rory’s fighting so hard for the Tour because he wants to preserve his revenue streams…That he is being held up as some kind of savior on Twitter and by all the fanboys with their shitty podcasts tells you how little people really understand what’s going on.” This all begs the question, does Rory have many friends in golf?
And, finally, in a move that surprised no one, the PGA formally suspended Jon Rahm’s eligibility from the FedEx Cup points list. This was “due to his association with a series of unauthorized tournaments,” Monahan wrote in a memo to the players, using phrasing that seems to indicate that the Spaniard is now consorting with known felons.
Barbarians at the Gate: The Fall of RJR Nabisco by Bryan Burrough and John Helyar was a damn good tome of corporate-intrigue, and the movie version, which ran on HBO in 1993, was pretty good too (and has an impressive cast). I watched it today because the LIV/PGA battle reminds me of that story. It’s basically about the art of the deal, and the perils inherent in doing that dark art.
Following the 1987 stock market crash, the RJR Nabisco stock price is low. RJR is counting on a new cigarette, Premier, to rebound the company. Premier is to be a safe and “smokeless” cigarette, but if the field tests are to be believed, it tastes like shit and smells like farts. So, RJR CEO Ross Johnson decides to do a leveraged buyout (LBO) of the company he runs with the help of Shearson Lehman Hutton, a deal that could earn him and his friends “not just fuck you money but fuck everybody money”. Meanwhile, Henry Kravis of KKR, who Ross stole the idea from, plots to screw Johnson over.
Besides some amazing lines from Johnson (James Garner), which include, All I want from bankers is a new calendar every year and all I care about lawyers is they’re back in their coffins before the sun comes up and We huffed and we puffed and we came up with a filtered Edsel. If I could, I’d burn every last one of them, except you can’t even set fire to the fuckers and I’m not doing this to become a homeless person, or ‘plane-less’ either, B@TG offers the following lessons:
Don’t do deals with things or people you don’t understand.
Confidentiality is critical.
Never undervalue your assets.
Don’t underestimate the value of credibility.
In 2023, Jay Monahan is the Ross Johnson of golf, trying to capitalize on a unique opportunity by sidestepping a potential benefactor with a piss-ton of money. Something tells me Jay is gonna get leveraged out of his own office.
What can (and should but likely won’t) Jay Monahan learn from the lessons of B@TG?
1. Don’t do deals with things or people that you don’t understand.
Much like Johnson pursuing an LBO, a sketchy business transaction he never really wraps his head around, Monahan seems to be playing a game of chicken with a group of megalomaniacs sitting on Smaug-level piles of black gold. Oil that is. Is he banking on the power and panache of his American PE compadres while discounting the wisdom and prudence of his Saudi frenemies?
Confidentiality is critical.
Nobody in B@TG can keep a secret and everything leaks to the press. Jay is doing PE deals on the side, but why is he letting that go public? And why is Rory squawking so much? What does he know?
3. Never undervalue your assets.
Ross seems to get this part right, acknowledging the strength of the working men and women that get up every morning for Nabisco and saying he’s doing the deal to prevent as many people as possible from getting the ax. Jay, on the other hand, seems to be forgetting about his Mules, while generally favoring his most prized stable horses like Rory, Jordan Spieth, Justin Thomas, and Scottie Sheffler. No telling if or how much this will hurt him in the long run.
4. Don’t underestimate the value of credibility.
Kravis says to his wife, when asked if he really needs Nabisco to be happy: “It’s not the company. It’s the credibility. My credibility. I can’t just sit on the bench and let other people play the game.” The Saudis have gone all in on golf. It is evident to me that no matter what happens, with the power and leverage that they have, they are going to win. If they don’t, it will be a stain on their reputation and the value of their money in future investments will take a hit. I just don’t see how this shakes out with them not winning.
In the weeks to come, the terms of all these deals will most likely be finalized. The original date set for a PIF/PGA agreement was December 31st, and despite the SSG’s newly known involvement, Tiger Woods today confirmed that “we are all heading in the right direction”.
* xeeted is a turn of phrase that combines the word “tweet” from legacy Twitter with the name “X”, which the Elon-owned entity is now called. You heard it here first.