The No. 3 ranked golfer in the world, Jon Rahm, has left the PGA Tour in favor of the Saudi-backed LIV Golf in a deal worth over $300 million.
After what seemed to be a truce when the PGA Tour and LIV Golf announced in June that the two entities would merge to “unite” golf, no official deal has been made, and the Saudis have poached their most high-profile golfer yet.
“I have asked Congress to let the sides reach an agreement without interference. The offer made to Jon Rahm is stunning and reinforces my point that if the PIF wants to take over golf, they can and will,” Wisconsin Sen. Ron Johnson, a lawmaker who grilled PGA executives over the summer in a public hearing, told MarketWatch. “I urge both sides, the PGA Tour and PIF, to reach an agreement to preserve the integrity of the game and golf competition at the highest level.”
Johnson and several other senators were critical of LIV Golf during a heated congressional hearing over the summer.
PIF, Saudi Arabia’s Public Investment Fund, has been luring golfers to join LIV with enormous sums of money, including Dustin Johnson, Phil Mickelson, Bryson DeChambeau, and Patrick Reed. Mickelson was reportedly offered $200 million just to play in the league, and Johnson was reportedly offered $150 million to play. Those amounts were simply for participation, and didn’t include tournament winnings for LIV Golf events.
The proposed new golf entity that would combine the PGA and LIV Golf has still yet to be finalized ahead of the fast approaching Dec. 31 deadline. The merger deadline is merely a self-imposed deadline, and could be moved to a later date, a common practice in the mergers and acquisitions space.
After the June merger was announced, there was a period of several months when LIV stopped poaching players from the PGA, but that appears to be over.
What does Rahm’s signing mean for the future of the merger deal?
Rob Holub, professor at New Haven’s Sport Management Department, thinks Rahm moving to LIV Golf is a clear sign that negotiations on a merger have not been smooth so far.
“If two companies are going to merge, let’s say a tech startup and Google, Google isn’t going to go in and pilfer the tech company they are trying to merge with … it signals not good things underneath the water,” he told MarketWatch.
He added, “if you’re still willing to make offers and accept offers even though you’re technically going to be the same company, how would one be doing this?”
But some in the sports industry see this as a blip, and not a sign the deal isn’t going to happen.
Marty Conway, professor in the Georgetown University Sport Industry Management Program, said he was “not surprised” that LIV poached another high-profile golfer amid merger talks, but still thinks the merger will eventually move ahead within the next year or so.
“There’s no deadline that means anything … ultimately these are high stakes, and I think when you get down in these merger announcements, you see corporate mergers take a year or more for them to come to fruition because of legislative issues, or other issues that are out there,” Conway said. “Sometimes they don’t happen, and there’s a walk-away or break-up fee, and that’s just the way it works.”
The PGA Tour said in a statement that its focus remains on “unifying the game for our fans and our players.” Representatives from LIV Golf did not immediately respond to MarketWatch’s request for comment.
See also: PGA Tour commissioner says LIV Golf merger is on ‘right path,’ but some players remain skeptical
Rahm told a group of assembled media over Zoom on Thursday that he was “comfortable” with his decision, and added, “I had a really good offer in front of me, and it’s one of the reasons why I took it.”
Rahm’s move was seen as a shock in the golf world because he was formerly a staunch public supporter of the PGA Tour.
“Would my lifestyle change if I got $400 million? No. It would not change one bit,” Rahm said about LIV Golf in July 2022. “Truth be told, I could retire now with what I have made and live a very happy life and not play golf again.”
Rahm, 29, has made $77.2 million in golf winnings in his career, according to Spotrac, and has won the U.S. Open and the Masters.
From the archives (August 2022): Trump tells golfers to ‘take the money’ from LIV Golf or ‘pay a big price’
Many have criticized golfers and the PGA Tour for getting involved with LIV because of Saudi Arabia’s human rights record.
According to the U.S. Department of State, Saudi Arabia has been accused in recent years of multiple human rights violations, including: unlawful killings; executions for nonviolent offenses; forced disappearances; torture and cases of cruel, inhuman or degrading treatment of prisoners and detainees by government agents; harsh and life-threatening prison conditions; arbitrary arrest and detention; and taking political prisoners or detainees, among other offenses.
Some U.S. lawmakers have accused the current Saudi regime of “sportswashing,” which is a term used to define entities using popular athletic events to improve a tarnished reputation. Saudi Crown Prince Mohammed bin Salman welcomed those accusations in a recent interview.
“Well, if sportswashing is going to increase my GDP by way of 1%, I will continue doing sportswashing.”
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