As LIV Golf comes to town, how planned merger with PGA Tour offers lessons for N.J. businesses

Golf might be losing its status as a way to unwind for experts in the heady world of mergers & acquisitions. …

Because, right now, it’s just as much a reminder of how merger agreements can get complicated fast.

Two of the world’s premier professional golf leagues, the long-running PGA Tour and the Saudi Arabia-based LIV Golf, have announced plans to join forces in a blockbuster sports deal. And, as the latter golf league’s star players visit New Jersey this week for a tournament at Bedminster’s Trump National Golf Club, local experts are teeing up their assessments of what would be a historic merger.

Kevin Moyer. (Sax LLP)

Right off the bat (or the club), Kevin Moyer, a partner at Sax LLP and head of the firm’s Transaction Strategy & Transformation group, will admit that those in M&A often think they’ve seen it all. Then, a deal like this comes around.

“I have to admit, this is one of the few mergers that did — and still does — shock me,” he said. “This merger, alliance or unification — there’s a lot of terms for it, depending on who you talk to — is something that came out of left field. … There’s a lot that needs to happen before it gets to final form. But the fact that it has even gone this far is a little baffling and very surprising from my perspective.”

Leaving aside the shared interest in competitive golfing, there are more differences than similarities commentators find between these two sports entities.

The PGA Tour, a billion-dollar organization that holds tournaments each weekend, and has connections to the major events on the competitive stage, operates as a nonprofit entity. Moyer said it hasn’t been established yet whether that status will be dissolved under a combined organization, but the proposed merger with LIV Golf drew enough ire from lawmakers for legislation to be introduced that would strip that nonprofit status.

LIV Golf was founded in 2021 with a cash infusion from a state-owned investment fund run by Saudi Arabia, known as the Public Investment Fund. A merger involving this new golf outfit, which has lured some big-name players, invites concern about transparency, taxation and how money is being audited as it flows back overseas, Moyer said.

“I think, beyond subcommittee investigations, you’re really risking a general public who is not in favor of this,” Moyer added. “That public sentiment has implications in the attendance at events and the financial support of individual golfers in terms of merchandise. … And that’s leaving out corporations’ sponsorship of players and whether those could be pulled.”

The macro concern is whether regulators will be convinced that this M&A deal wouldn’t violate laws meant to prevent formations of monopolies.

“By way of merging two Goliaths of the sport into one that will dominate market share just raises another level, perhaps an unforeseen level, of antitrust concerns,” Moyer said.

Originally, Moyer expected that the deal would ultimately go through, but with heavy scrutiny and restrictions. He expected, at the end of the day, the powers behind this on both sides of the table would find a way to get this done.

Then, the PGA Tour announced at the start of August that it was adding Tiger Woods as a board member. That made it so six of the board’s 12 members would be players.

“That now slants the voting rights (on the LIV deal’s fate) in favor of the players,” Moyer said. “It’s the first time through the entirety of this process that’s been the case. So, what might have been a very certain approval process and transition that’s moved forward on — could very well not be the case.”

At this point, the pact between these leagues is not only incomplete, it’s uncertain. And the still-fuzzy line between speculation and fact makes it hard to get to an understanding of the deal’s structure and the positions of involved parties, Moyer said.

That’s also not out of the ordinary for a deal of this magnitude.

In fact, there’s enough that’s par for the course with this contentious deal that there are some takeaways for businesses in the Garden State.

“What this merger might show larger companies in this state or otherwise is that there is oversight above and beyond your traditional financial diligence that could come into play when you try to roll up an industry,” Moyer said. “While there might be few taking place as we speak on such a scale to be on the radar of the Department of Justice, when you look at hospital systems or other big industries within New Jersey, there has certainly been scenarios where people have drawn conclusions that a monopoly could be formed out of these deals.”