DETROIT – Peter Malnati was in a Residence Inn at the Toronto Airport on Tuesday morning, June 6, when his phone rang at 7:36 a.m., informing him of the PGA Tour’s blockbuster agreement with the Saudi Arabian Public Investment Fund.
Malnati, 36, whose lone win came at the 2016 Sanderson Farms Championship, is in his first year on the PGA Tour policy board. On Tuesday, he and the nine other board members met for approximately eight hours in person. (Lunch was served at noon, there were two five-minute breaks and the meeting wrapped around 8 p.m.)
“Entering the Framework Agreement put an end to costly litigation,” the Policy Board said in a statement. “Management, with input from our Player Directors, has now begun a new phase of negotiations to determine if the Tour can reach a definitive agreement that is in the best interests of our players, fans, sponsors, partners, and the game overall.”
On Wednesday, after a lengthy practice session, Malnati spoke to Golfweek about the meeting and shed some new light on the task ahead, including how the Tour must earn back player trust, Commissioner Jay Monahan’s health, the formation of player committees to dole out discipline to LIV defectors and reward loyalty for those who stayed.
The wide-ranging conversation started with a simple question: do you want this deal to be consummated?
“I never wanted this deal to happen,” Malnati said. “But now that we’re apparently in a position where it was needed for some reason, I want to see the PGA Tour succeed and there are smart people that are telling me that this deal is going to set up the PGA Tour for long-term success. It’s still a hard pill to swallow because like I never turned down an offer (from LIV) and never had an offer. They never had any interest in me and that’s perfectly understandable. I’m the 250th-ranked player in the world. But even hypothetically had LIV made me a significant offer, it was never on the table for me to accept that offer because I didn’t want to be associated with the Saudis and the PIF. I never would have accepted an offer there. And people always said, ‘Well, everyone has a number.’ I didn’t have a number. So the fact that unbeknownst to any of us that choice was potentially made for us that we’re going to partner with PIF, that was really hard to swallow, for sure.
“So your question was, do I want this deal to happen?
“I think ultimately now I’m in a place where I’m going to say, ‘Yes.’ I think I understand it more. I think I want the deal to happen. Because I think it’s long-term what’s best for the PGA Tour. I don’t think it’s as much of a merger, I don’t think we’re going to be controlled by LIV. In fact, that’s one of the principal elements that the Board is going to ensure if we go forward, that there will be protections in the agreement that PIF can never be anything more than a minority investor in what we do. With those safeguards in place, I think, yes, I want to see a good deal done for the PGA Tour and its members.”
Here are 10 more questions that Malnati answered:
What were your big takeaways from the board meeting?
PM: One thing that was very clear is that PGA Tour players feel betrayed and feel like they don’t have the ownership or control of the Tour that they should for a member-owned organization. That was extremely clear and both sides understand that – the player directors in the room and the Tour itself and the independent directors on the board. That is very well understood right now and I felt there was some genuine contrition on the part of the Tour, like they understand that the players feel like they have been betrayed, let down and in a position where they have absolutely no control of an organization that they supposedly own.
So that was the first thing. There wasn’t a mood in the boardroom like we’re gonna continue to shove this down your throat. There was very much a mood of we put you all in a bad spot, we have made a unilateral decision that affects every single member and employee of the PGA Tour and we realize that no one feels like they had any say or control in any of it. So that was kind of the starting place, how can we move forward from here? What can we do? I thought that was a good start.
Anything else from a big-picture perspective?
PM: Another thing that was very clear in the board meeting, and this is something that, you know, a lot of my peers don’t want to hear right now, but I think it’s important. Despite so much outrage, so much distrust, and the absence of our commissioner, the PGA Tour, the guts, inside the PGA Tour, the wheels are turning in a really productive way right now, like I’m talking not in terms of negotiating this deal, I’m talking in terms of sponsorship commitments.
The people running the Tour have a big challenge right now to win back the players’ support and if we do as a membership organization, as a group of players, want to move forward with this deal, collectively, they have a lot of work to do to get a good deal for us.
But the day-to-day operations of the PGA Tour, despite all the distractions, and despite the lack of our commissioner, are actually moving along really, really well. And that was something comforting to me, because they even had a really honest conversation about how there are – it’s a number less than 5 percent – but there are sponsors who are very much turned off by the announcement. By and large, more than 95 percent of our sponsors are still enthusiastically committed to the PGA Tour. And that was incredibly comforting to me because I honestly didn’t expect that. Of the ones who are in a precarious spot, no one has suggested they want out, they’ve just suggested they’re very uncomfortable. I was really, really pleased to hear that.
The two definite things from the meeting are that the Tour understands that they have messed up and there’s a huge divide from a trust perspective between them and the membership. The second thing is the Tour’s day-to-day operations are still going really well for the players, despite obviously, the big overarching cloud of doubt, mistrust, all that, and that was very comforting to me.
How did you feel before and after the meeting?
I’ve been uncomfortable for three weeks because I just don’t understand. I don’t even know what I want because 23 days ago, I had eaten up the rhetoric – I had eaten it up. You know, we were on this superior moral high ground, we were in the right, and so to say now, it’s too soon for me to say, ‘Yes, I’m super excited, let’s go do this. It’s gonna be great.’ I had drank the Kool-Aid that you fed me that we’re right, they’re wrong. What I’ve learned since then, what I learned more yesterday, is the fact that what’s been done so far was nothing more than a creative, probably very aggressive, but creative way to stop litigation. That’s all that’s been done so far.
For the first time in its existence, there’s a potential for the PGA Tour underneath the nonprofit business, to have a for-profit business with a minority investor who has a lot of capital. You know, obviously, the two big questions that are on absolutely everyone’s mind or every PGA Tour member’s is what happens to the guys who left and want to come back? And what happens to the guys who stayed and how do we thank them? All I will say is there are committees formed to answer those questions as we move forward and those committees are going to involve players, which is going to be really nice.
It’s in the bylaws that we cannot have a player committee handle disciplinary issues, but the idea around the players who left and went to LIV and now would want to come back potentially, the Tour is treating that as a disciplinary issue. We raised the idea of changing bylaws to allow players to serve on the committee that will determine that and I think that’s something that the players who feel like they’ve been betrayed by this. There’s certainly some guys who are out for blood. They want vengeance, you know, whatever. Especially the ones who sued, that had their name on the lawsuit against the Tour. They set themselves up as adversaries to us. They are the ones who took money directly out of the PGA Tour. There’s a desire to have some feeling of fairness, if guys were to come back onto the Tour.
That’ll be a really complicated thing but I think it’s important to note that we took steps to open up the door for players to be on both those committees, the committees to determine how to reward the loyalty of the players who stayed and to come up with a disciplinary plan that would allow people to come back fairly.
How will player loyalty be rewarded?
PM: One thing that was made pretty clear yesterday was that it’s going to be done creatively, it’s not going to be done, oh, you turned down an offer, here is cash. And some people I think, do want that, but others, including some of our biggest stars and leaders, have said there are other ways that we need to do this to reward guys.
The PIP is not a popular program, I don’t think. There’s been talk of equity shares in the new company that’s being formed, you know, the for-profit entity, which again, all this is still hypothetical. I think guys want to see it done in more creative ways than simply, oh, you had an offer for this much and you turned it down, here’s 50 percent of it back to you. I don’t think that’s necessarily how it’s gonna go.
I won’t attribute this quote, but prior to the board meeting, the majority of the PGA Tour players do feel, if nothing else, a sense of shock and anger over the hypocrisy. But you know, there have been varying speeds at which people have recovered from that initial emotional shock. And there are people on Tour who are really on board with this and think they can see the light and see that it would be good. I heard a great quote from a player who is definitely in that top player group, the Delaware group, and he said, ‘I was shocked, and I was mad but now that I kind of understand what’s going on, we need to get out of the way, let smart people do their jobs, and we’ll all make shitloads.’
There’s certainly truth in that there’s the potential for growth in a big way for the Tour. We just have to wrestle with those questions that our commissioner even asked last year, when he went on CBS and he said, ‘Have you ever had to apologize for being a member of the PGA Tour?’
The answer to that he was implying is no, and also the people who left for LIV do have to apologize. And so now, even if it’s just a minority investment, you’re partnering with those very same people who we were implying were the people that need to apologize. The hypocrisy of that is challenging. Gotta get my head around it still.
But my thought walking out of the boardroom yesterday was there’s a lot of work to do to show the PGA Tour members that this Tour works for them, they do have a say, they do have control, because that certainly hasn’t been the case to this point. But I left the room optimistic because I feel like the best way for the board and the executive team at the PGA Tour to regain the trust of the players is to either A: turn this deal into something that feels morally acceptable and drives tremendous growth to the PGA Tour, or, B: listen to the players, and the players say there’s no way that this can be morally acceptable to us, and we don’t want to do it.
And I think they’re prepared to do both of those things. I think they’re prepared to turn this deal into massive growth for the PGA Tour. I think they’re also prepared to say if there is enough hesitation among the players, we won’t do this.
I left the board meeting still with tons of questions … One way or the other the players are either going to be the ones that put the stop on this deal, or the players are going to benefit greatly from a really, really good deal.
Did you get a sense of Jay Monahan's status?
PM: That was something that the chairman of our board continued to say that the family has asked for a lot of privacy around that. But he did indicate that as our leader, we at least need a statement relatively soon. We either need to know if he is wanting to return and we need to know that relatively soon. I definitely agree with that. So far, the only update we’ve got is that he is stable and improving. I don’t even know what he’s improving from, I don’t know what stable looks like. I know nothing. Stable and improving is what we hear. That’s good.
It is a paradigm-changing, biggest deal since the creation of the PGA Tour, what 55 years ago and nobody knew about it. Like, that’s very frustrating. But Jay’s health is a bigger deal than that. Jay has a wife and two daughters. Obviously, he has 200-plus PGA Tour members, Korn Ferry Tour members and others, a staff of 800 that all are relying on him, but he has a wife and two daughters that he’s a husband and a dad to. Clearly, it doesn’t look awesome that you do the most surprising, shocking, some people would say shady deal in the history of our sport, and then you’re gone.
But it’s real life, like whatever he’s struggling with is an actual real health issue. For the sake of his family, I hope that we’re able to respect that but if his health isn’t improving enough for him to come back and lead relatively soon, we also need to know. We need a strong leader at the Tour and we do have a very capable executive team but at some point, we’re going to need a commissioner who is both skilled within the organization and public facing as well. And we have the team within the organization now to keep the wheels turning really successfully and leading us. But we need a commissioner.
Do players have enough input?
PM: I think it is important to keep the members very informed and to listen to their feedback. But I do not want, I don’t care if it’s Rory, who I think is absolutely brilliant, Tiger, who obviously it’s cliche to say this but he doesn’t move the needle, he is the needle. I don’t want Tiger and Rory to have to run the board. The team that runs the Tour has consistently, even in a post-Tiger playing world, driven growth to the membership. That’s something that I get a little frustrated with when I hear players talk about ‘the Tour let us down, everyone needs to go.’ If we look at the body of work, the PGA Tour has driven value to its members really well for a long time.
Players need to feel like they have more input. Players don’t need to be finding out about policy changes on social media; players need to find out about policy changes that are being discussed in real time better than they have. But we also as a group of players need to trust that we have the right people in place because I think if we look at the body of work, the Tour has grown comprehensive earnings for players to a place right now that I just can’t imagine even in the world where there was an irrational competitor in Liv, I can’t imagine that any player from top to bottom can honestly look at where comprehensive earnings are on the Tour right now and say, ‘This tour is not working for me.’
I think that was true before the Delaware meeting. That was the players taking control of the Tour. It’s possible that those players that were in that meeting likely deserve to play for what they asked for but that may have set the Tour on a path that was unsustainable. When the players have input, it’s good for the players short term but we also need to make decisions that are good for the PGA Tour long term. I’m glad that we have the executive team and the board in place that we do because I think they have shown that they do that. And I hope obviously we’ll continue to do that through this process of figuring out whether we do a deal, don’t do a deal.
Q: Many of the changes that have been or will be implemented were in reaction to LIV. If they are no longer a threat, will the changes be slowed down or revert back to the old system?
PM: I don’t think retracted necessarily, but certainly it’s a conversation that we have to have because we did make reactive changes. I think one thing that’s been really hard for me to get my head around, especially as the guy who ran for the board on the vote and the promise of representing the middle and bottom thirds of our membership, it’s really hard for me to accept this but I’ve done more than accepted it; I actually believe it now. What I always wanted the PGA Tour to do was maximize playing opportunities for the membership.
One thing the Tour has historically done is prioritize playing opportunities over maximum marketability. This new designated event model, which I hated, because it takes opportunities away from players, is going to guarantee that eight times a year, in addition to the majors, nine times with Players, you’re gonna have regular PGA Tour events that are stacked with the top players in the world. And that is a good thing for our product. It takes playing opportunities away from guys because the fields are going to be smaller. There’s a chance that we look back, as much as I hate it, there’s a chance that we look back and say, this was the best thing for our product.
I still honestly believe that the designated event model takes the events like the Rocket Mortgage Classic, the John Deere, and it bumps the quality of their field up, not to an elite level, but it bumps it up from a field where there’s guys getting into this event that haven’t played successfully for two decades, to a level where it’s like, hmm, the top of this field looks really good and the bottom of this field is active Tour players. We have to have the conversation of rolling back some of the changes but ultimately I think we’re going to discover that the changes still make our products better.
Q: Was there any discussion of how KFT grads are going to get enough starts with LIV players possibly returning?
PM: That’s another thing we talked about at the board level, and I do feel like when you look empirically at the LIV guys, we’re probably looking at 15 to 20 players that potentially could want to play on the PGA Tour again. So it’s not a ton, first of all, and one thing that we’ve been very clear about, we haven’t gotten to any specific job, but one thing we’ve been very clear about is if you’re not exempt on the Tour anymore, like if you’re winner’s exemption is over, you’re not going to be handed membership, like you have to earn your membership.
Dustin (Johnson), he had gotten to 20 wins, so he’s a life member. But if you gave up your membership level, you gotta go to Q-school. It’s gonna be difficult, for sure, because there’s going to be a situation where there’s a guy who came back from LIV and he’s in, and someone’s going to be the first alternate, and he’s gonna be mad.
Did board chair Ed Herlihy or board member Jimmy Dunne walk you through how this deal is going to be approved by the DOJ and others?
PM: I don’t understand the mechanics of it at all. The basic sentiment was we’re pretty confident that as we build the deal, we will build it in ways to make sure it is opportunistic for players. They said that the regulators will scrutinize it and give it a hard time because clearly when you are being sued, as under an antitrust case, and then you just acquire the suing company, it’s going to be investigated.
They said that certainly it’s a possibility that the DOJ would shut it down, even if we do the best deal ever, but they’re going to work really hard to construct the deal in a way that they think will survive the scrutiny.
Is there a deal where everyone wins?
PM: We could execute this perfectly and there’s still going to be a handful of members that are like, ‘Well, what about the 911 families?’ And what a great point they’re going to have.
We could do absolutely nothing, we could say, we don’t want to do this deal at all, we want nothing to do with it and 200 people at the PGA Tour office could lose their jobs, and the Tour could shrink. And we could have less members playing for less money and the bottom of the Tour could fall off and then we’re going to be attacked for that. You could look at it as a no-win situation because you’re always going to have people that are disappointed and people can attack.
But you know, I’ve always been thought of as being the most positive guy and all that. So I truly think this is going to be a defining situation for the PGA Tour where the members do get to have the say into whether we’re going to do this or not. And if we decide that it’s palatable, it’s gonna be monumentally great for the Tour, or it’s going to be the moment that the players really do show that they have the power to take this and say, ‘We don’t want this deal, this is not something that we want to do.’ And either way, good is going to come from it. So no matter what we do, there’s going to be a legitimate attack. But no matter what we do good is going to come from it also. So I think there’ll be a hard few months ahead, but it’ll be a productive one.
