PGA Tour Commissioner Owns Botched Announcement of the Deal.
Katie Gilbert ⛳
Speaker, Leadership Coach, OD Consultant helping leaders & organizations achieve their potential.
We all make mistakes. How do you admit it was your fault? Monahan shares why he made the deal, why he blew communicating the deal
What follows is a partial transcript of Jay Monahan, the PGA Tour Commissioner's interview with Andrew Ross Sorkin at the DealBook Summit Nov 2023. The key statements are bolded and in italics.
ARS: I want to welcome Jay Monahan to the stage, of course the PGA Tour commissioner and in this moment he very well may be the most consequential person in the world of sports as we think about things not just in sports, but geopolitically as well. Monahan has of course been at the center of a brewing fight, frankly a geopolitical one over the future of golf. He negotiated the deal for the league to merge with LIV golf backed by the Saudis. It set off a firestorm in Washington and far beyond. Players protested, a board member resigned, Congress held hearings and in the middle of it all Jay took a month-long medical leave of absence. He's back now leading the tour. He's fielding investor interest at the same time that the deal with LIV golf is pending, and a deal is being negotiated ahead of a deadline at the end of this year. We want to welcome them to the stage.
JM: Thank you Andrew. Thanks for having me. It’s great to be here.
ARS: So just take us inside your thinking. We saw such a sort of groundswell around this transaction and the future of golf. I want, if you could, to go back to the night of June 5th, the night before you announced this and I'm so curious what was running through your mind then about how a transaction like this was going to be received by the public by the players by government. What were you thinking then?
JM: Start with a light question. Yes, so I think before I answer what I was thinking about the night of June 5th, it is probably helpful to provide a little context to the timeframe that preceded it. As we approached June 5th it was very clear that the PGA Tour was facing an existential threat
ARS: Did you feel like you were in a box at that point?
JM: No, I didn't feel like I was in a box. I felt for an extended period of time we, and I said this at the Century Tournament of Champions in January 2022, I said that we were in a product versus product. You have two completely different products. One is team-based franchise based. The other is a 56-year, legacy driving, pro competition, rich history organization. Both products needed to play themselves out. The PGA Tour performed exceedingly well over a long period of time as it has done, and we needed to get ourselves to the strongest possible position to be able to put the tour in a position where we retain that control. So on the night of June 5th recognizing as most people in this room do, that a lot of these conversations come down to a very small number of people. I recognized that there would be significant pushback. I recognized that while I firmly believed the decision that we were making and we were announcing that next day was the right decision for the game, bringing the game back together again on both the short and long-term eliminating that division. But I knew in the short term it was going to be difficult because it was something that was going to be a surprise to people. But I firmly believed that the decision that I was making and that I was committing to, as was Yasir, was the right decision for the game.
ARS: Yasir runs PIF in Saudi Arabia.
JM: And I also think it's important to note that what we agreed to that day was ending the litigation winning the litigation and we reached an agreement to try and reach an agreement. And that's what we're working on to this day.
ARS: Let me ask you this, almost immediately people went back and looked at this. For a year, maybe more than that, you had made an argument, not just a monetary argument, but really a moral argument, to your players that they needed to remain at the PGA, that LIV was this other thing. And worse than LIV being this other thing you said the following, you said “I think you'd have to be living under a rock to not know there are significant implications and as it relates to the families of 9/11, I have two families that are close to me that lost loved ones. So my heart goes out them. I would ask any player that has left or any player that would ever consider leaving, have you ever had to apologize for being a member of the PGA tour?” And that pulled on a lot of players heartstrings to say, “you know what, I'm not taking the money. I'm going to stay”. And then all of a sudden the story is reversed on them.
JM: Yes and I think as time went on, again recognizing that they're trying to take control of our sport and our goal is to retain control of our sport. We had to get ourselves to the best strongest position...
ARS: That is why I asked whether you felt you were in a box.
JM: Well...
ARS: At that point, by the way, you might not have felt you were in a box at the earlier point.
JM: I never feel like I'm in a box because all these decisions are fluid as you're going through it. I ultimately believed that the positions I've taken ultimately and the decision we were making on June 6 had the PGA Tour retaining control
ARS: Let me ask you this, Randall Stephens who you know, former head of AT&T, has been on this stage before in the past, he decided that he was going to step down from the board. And he said at the time “this was a deal that is not one that I can objectively evaluate in good conscience support particularly in light of the US intelligence reports concerning Jamal Khashoggi in 2018. What were your conversations like with Randall about this?
JM: Truth be told, I was on leave when Randall made that decision. There are a lot of people that were aware of the conversations we were having and the path that we were going down. Randall was a great board member. He served on our board for nine years and obviously I appreciated and respected his time, but he made the decision to step down from the board and ultimately we're moving forward and it's very clear that we think the best decision for the organization is to complete a deal with PIF.
ARS: There's a there's a big question mark, I think in the business world still, and not among all anymore, but after the murder of Jamal Khashoggi, about whether to do business with Saudi. Is there a penalty box? Is there a statute of limitations? Should we be in business now? Do you look at what President Trump was doing and say that opened or reopened business? Is it the fist bump with Biden and MBS, is that the open door to say go for it? Were you thinking about this issue at all as you were going down this road?
JM: Of course I was.
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ARS: What was it? What was your thinking? How did you sort of process that?
JM: I think as you process it, there are the geopolitical considerations and obviously we don't condone any of those actions. Those actions are reprehensible. But you're also looking at a fundamental change in our industry where you have a sovereign wealth fund and sovereign wealth funds, a new investment class, coming into sport. You look at what's happened to golf, but you also look in English Premier League, you look in other sports.
ARS: And a lot of people are looking at this deal for that very reason.
JM: And we're also looking at some of the other investments for that very reason too, to try and determine where this was all going. For us again being in a position to now have a productive and already investor that is investing in us because of the strength of our business.
ARS: Right.
JM: And I'm just going to take a moment to talk about the strength of our business. Okay. We're sitting here at the end of 2023. We're coming off a year where to 2030 we have five billion in media rights committed through the best Media Partners in the world NBC, Golf Channel, CBS, ESPN plus. Five billion dollars in contracted sponsorship revenue. This year hopefully you all saw Full Swing, we were in the top 10 (Netflix worldwide) with Full Swing. On ESPN plus the PGA tour for the second year in a row was the most viewed live sports programming. Our social platforms, people celebrating the game continuing to grow. And so we put ourselves in the strongest possible position. PIF is an investor and they've invested in golf and their investment isn't working and this was an opportunity to invest in a management team and a tour and a model that is proven and is going to continue to work at a very high level.
ARS: How much do you think that the challenge was created by how this was rolled out? When this was first described to the public it was described as a merger. Actually a lot of people looked at and thought that there was a merger happening. Sports Illustrated said that all this would have been different if the following happened. If you had said to the players “I've some surprising news. I want you all to hear it first. First of all, all of LIV golf's lawsuits have been dismissed. They cannot be brought back. Second, the Saudi Arabian government would like to give us full control over the future of LIV golf, invest billions in our tour instead of our rival. We would of course retain control of the PGA Tour and our business operations as well. All they want is one seat on our Board and a minority stake in our business. Don't worry. I haven't committed to anything. What do you think about that version? Do you think that would have gone over differently?
JM: Listen, I've been pretty direct and honest in owning the fact that the rollout was a failure on my part. I've owned it and I continue to own it. The way it was portrayed was incorrect. I fast forward to today and you look at the way that the players are talking about the possibilities here, the possibilities with the PIF. The fact that the move that we made on June 6th has created an opportunity to invest in a global professional sports league, the first of its kind, has created a lot of other interest. And so there have been some developments since that day and as we've gotten into these discussions, our players who ultimately are going to be responsible for the deciding vote in moving forward, are starting to see what we did on that day has a lot of merits and ultimately is going to be in the best long-term interests of the tour. But going back to your question. If I had come out and said it that way, yeah, I think that…
ARS: Do you think the Saudis would have gone along with it that way or do you think they wanted they wanted the other version?
JM: I think that we were so excited about the deal that we completed and the finalization of that the night before, that we wanted to get that news out there. We wanted to get it communicated to the world at large and ultimately get to a place where you could take a framework agreement and see if we could complete it. If I could do it differently, I was in New York City, I would have flown to Toronto and I would have had that conversation with our players. I didn't do it, but I think we've taken a lot of steps to rectify that, and players understand what it is.
ARS: Tiger Woods, who recently was actually very supportive, just in the past 24 hours made some nice comments about you, but he was asked about the deal and whether the deal would actually get done by December 31st, and he seemed to suggest well maybe we won't get it done by December 31st but we're on the path. How important is that deadline? Is it possible that as long as you're on the path it can get pushed into January to the extent that people care about the timing involved in this?
JM: So we're having conversations with multiple parties. The deadline for our conversations with PIF is a firm target, I'll be with Yasir next week and we continue to advance our conversations and I think it's pretty well known that there's a large number of other interested parties that were also pushing.
ARS: How do you think about the distribution of the money to the players? That's a big issue because a lot of it appears now that the best ten players the most famous 20 players will get paid an extraordinary amount of money and everybody else effectively won't. How do you deal with that? I think our players, our six players that serve on our board, Tiger being one of them, but those players are spending a ton of time helping us work through what that looks like in the future. What's most important to our players is that they go from this model of being an independent contractor to being owners. And so that ownership is going to be based on performance. But I expect…
ARS: They are going to get equity. First time we've ever seen this.
JM: Correct, they will get equity at scale in terms of the broader membership.
ARS: The current players get equity. What about future players, how are you going to deal with that?
JM: We have a mechanism to solve for that as we go into the future. We're going to retain a significant amount of our equity and that's going to give us the ability…
ARS: Final question just for sports broadly, there's been a question about whether actually either Saudi Arabia or you're talking about different Sovereign wealth, ultimately is going to own all sorts of different sports and whether that's a good thing or a bad thing. If major-league baseball this American icon is owned by Saudi Arabia, is that a bad thing? Is that a problem? If China wants to buy something is that a problem? If somebody wants to go pick off some tennis players and start their own league or pick off the best NBA players and start the three-on-three league. I mean, did you see this on the horizon?
JM: I think we're in an era of athlete or talent empowerment. I think the move that we're making to more strongly align our economic interests with our athletes is something that applies to the PGA Tour, I think that logic extends to other sports. There's something about financial inertia. When you've got a new investment class in sovereign wealth funds that are interested in investing in sport. Look at the composition now in the English Premier League, and if you project that forward to the stick and ball sports in the United States and you recognize how decisions are made there by the owners, I do see it. I do see that day coming.
ARS: Jim Monahan, I want to thank you. I want to thank you for your candor today and your courage to talk about something that I think is very, very, difficult. So, thank you very, very much.
JM: Thank you Andrew.