So the PGA Tour got $3 billion… | The First Cut Podcast

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ABOUT THE SHOW: The First Cut brings you everything you need to know in the world of professional golf. Nearly every day Rick Gehman, Kyle Porter, Mark Immelman, Greg DuCharme, Sia Nejad and Patrick McDonald bring you the best analysis in the game. From DFS to betting previews, interviews and recaps… everything golf is on the table when you listen to The First Cut.

We have to jump into the new PGA Tour Enterprises announcement this is obviously something that has been in the works for the last couple of months but let’s just lay it out on the table and see where we stand uh yesterday the PGA Tour announced the new PGA Tour

Enterprises that’s a brand new entity uh that is getting a three billion doll investment and partnership through strategic Sports Group SG that’s the Fenway group all these uh you know Sports owners what we’ve been talking about for the last couple of weeks and it became official KP a billion and a

Half in equity for the players making this the first uh Sports organization or at least American or North American Sports organization where players have equity in the league and another one and a half billion in Investments that’s about as much as we know about the details of how that money will will be

Spent but it it is coming in yeah I you know it’s I think this is one of those things that no matter how you analyze or evaluate it right now you’re going to look dumb five years from now right and and I think it’s also you can talk yourself into into kind of

Anything with this I I think that’s how sort of amorphus it is because you look at it and you’re like hey $3 billion um I guess for for the purposes of of the argument I’m about to make it’s really a billion and a half we can

Do some things with that right we can we can improve some things we can go down the list of of ways to make the league more efficient and better and a better product and and all these different things but then the flip side of that

Is is this is this who you trust to to do so right and and I think you could you could probably talk yourself into the Strategic Sports Group being trustworthy because I think their track record in other sports is is really good I mean just legitimately is PJ tour I

Don’t know I mean what are they trustworthy when it comes to product Improvement I I I don’t know that you can say yes with straight face right so I I don’t know I don’t really know how to feel I I don’t I I I’m like cautiously optimistic

And kind of excited but very wary about how all this is gonna gonna play out I absolutely trust that they will make this better unfortunately I’m not sure I agree with what the definition of better is is going to be right or who that’s

Going to be for I think that it is going to be amazing for high-ends professional golfers I think that there are going to be a lot of great corporate outings and sponsorship opportunities and cross over into some of these other sports with owners in the NFL and baseball I think

There’s going to be a lot of stuff like that I have yet to to see or hear one thing that might make this experience better for fans yeah where do you so so I I think I have two questions that are sort of outstanding for you and for myself because you know

A lot of this I think I think some of this you know people they want you to evaluate or analyze it like it’s the Ravens Chiefs game where it’s it’s done and and you’re like well this is what Lamar should have done better or this is

Why Mahomes is going to his fourth Super Bowl or whatever and it’s like I don’t I don’t know I don’t think it works like that I think we have to get three four seven 10 years out before we can legitimately eval but I’m curious about what you see your players having

Equity in a in a in a in in a league in a in the business of the league that’s so you mentioned it off the top that’s so different than anything else right like it it’s so it because it even if like players don’t even have Equity allegedly in the teams

That they’re on right like like Otani doesn’t have Equity allegedly in the Angels right even weirder it would be even more strange if he had equity in Major League Baseball right like as a whole uh sorry Dodgers my bad I I didn’t even catch that that I didn’t even catch

That um where so where do you stand on that because I think there’s I think there’s some interesting arguments to be made there I think on the surface the easy explanation is that well hey now they are more invested in the future of the league right if you own let’s just

Say let’s say Rory mroy owns 1% equity in the PGA Tour uh if if the PGA Tour ceases to exist that is like a lot of lost money for Rory he is incentivized to go out and promote and do things and etc etc I don’t know if that what I also think

That does is I think it siphons a lot of money out of the league uh to fund this program in which there should already be a lot of incentive for these guys to have um their livelihood yeah right the idea if you have a if you are in a very

Desirable position whatever that is in the world you want that position that company that what ever to continue to succeed and grow so there’s more opportunity you can continue to be the best and you can continue to make a lot of money at it I think that half of this

Investment half of it uh going into vesting equity for the players is is basically removing half of the investment from the ecosystem yes I I agree with that um I I think what’s really difficult to measure is and and we don’t know the details of any of this

Yet but how what does that Equity look like 25 years from now right where some you know 7-year-old right now is becomes a PGA Tour player like like I so for example I have equity in CVS as a corporation Paramount I guess now is what the corporation is it’s not a ton

But this is not uncommon when you work at a corporation you get you get shares of their stock right like that’s part of the compensation plan now those shares because there’s so many people and it’s been such a long time they’re not uh they’re they’re it’s difficult to

Maintain the value of them even if you have a lot of them over a long period of time because what has to happen R you have to keep getting bigger you have to keep generating more revenue and it’s like I think there’s kind of a cap on

This m like probably you know and so I just I wonder if those will even be a if the equity will even be valuable when you get 25 years in and all of a sudden 10,000 people have equity in the PGA Tour and the other thing is

Um me well maybe I’m not a good example I well no I am a good example because I do not I I am not part of the the you know stock plan at Paramount but I can go buy a Paramount stock right you know Joe average can go and you know Elon

Musk could buy up a percentage of stock in a company that’s different than what’s happening here unless unless they’re going to open up PGA to our Enterprises and make and have it go public and let other people invest right because you have this this this insulated group of people that again all

I think is going to happen is right it’s going to one remove that investment from the ecos system because these guys are just going to put in their bank accounts and it is also going to be continue and to be diluted over time as more guys get into the program unless they are

Constantly and maybe they plan to keep adding more to it which would require the tpga tour Enterprises to continue to grow more Investments to come in that are being earmarked just for Equity like they’re well that that’s the thing like they’re not getting and we’re sort of

Talking through this as we’re going but they’re not getting pieces of paper like shares right they’re getting actual they’re getting $1.5 billion dollar right that’s my understanding and it says you know these grants will vest over time based on Career achievements uh recent accomplishments future participation services to the PGA Tour

Membership status so it’s kind of like the way that I read that is you know there’s already a you know a retirement plan in place for the J tour that that plays that like you know based on how many Cuts you make and all this stuff

Like money goes into it that’s kind of what it seems like and then after hey maybe after a year you can take out so much of that and after two years more of that vests and after three you know that that’s the way that I read it so at some

Point that again because it’s not shares you can’t just like make more of them that money runs out and you’re like well sorry you should have been around in 2020 24 or unlike shares if you want to sell your shares you need someone to buy

Them the whole thing is just you know I think the the I want to talk about the piff real quick before we get to to to Pebble I think the other part that I just feel wary about man is the players and Sean Zach tweeted this out they

Retained a lot of control in PJ tour Enterprises right and and and I like Jordan spe I I enjoy talking to him um I like web Simpson I really enjoy talking to him I don’t know if it’s good for any League to have its players running the

League right like I I know I know they’re like well SSG is gonna we’re gonna consult with it and it’s like I just like yeah but like you have you have control and power and I I don’t think that’s a good thing I I feel like I’ve been pretty adamant about this for

A a long time now that it’s really and I guess they would argue look we’re aligning incentives because now we have equity in the league growing and getting bigger but growing Revenue isn’t always aligned with the fans incentive right like it seems like it is but it is not

Yeah like I I just I I don’t know I I I I don’t um I I I don’t love that part of it there is a common saying that I think fits this situation uh that the patients are now running the Asylum which is usually it’s usually a warning that’s

Usually not a good thing that is something that has happening right now PGA Tour this does not include the piff yeah okay so this is uh SSG the PGA Tour DP World Tour the new Enterprises the piff in investment fund of Saudi Arabia is not in this now there

Um there’s kind of I don’t want to say conflicting reports but you know the the official the official press releases say those you know those negotiations are still ongoing more investment could be coming kind of if you hear like this negotiations might not be going so great

Obviously with John Rah and Terell haton and live starting their season this week in Maya COA um so there’s still might be this two League system that we have did you see speed’s comments yesterday you know what I did not I saw Rory’s comments I saw that spe was asked

About it but I did not see what he said he he I’m gonna paraphrase we don’t need the exact quote I don’t think but he basically said like we don’t and and this has been a pretty common thing that other guys have said I think I think

Webb might have said it somebody else like essentially we don’t we don’t we’re not operating as if we need the PIP and you’re like maybe hope so you know like I I I just you know I I I threw this question out on Twitter because we talked about

It a little bit on Tuesday but is the does does SSG view the piff as more a bigger risk or threat inside or outside of the of the group like do they want them in or do they want them out where where’s the greater risk

And I think the greater risk is if they are outside of the the moat uh the literal and figurative Moe at the at the global headquarters in in Pon aidra um I I I I think it’s fascinating that SSG has given not given they’ve invested three billion doar into a league that

Has lost what 10% of its top talent something something like that with no real end and sight I I just I the the whole piff thing is like and that’s that’s the part where I kind of look at it and I’m like cool you got3 billion congratulations

Like that’s great I’m I’m very happy that you guys are all going to be a lot richer why don’t you why don’t you come holler at me whenever everybody’s playing together again yeah and um if there is no end in sight and you think3 billion do is going to do it it’s not