Senate Probes Saudi-Backed LIV-PGA Merger—Questioning Its Non-Profit Status

Topline

The Senate’s investigation subcommittee announced Monday it’s probing the PGA Tour’s new alliance with LIV Golf and its financial backer, the Saudi Arabian sovereign wealth fund, seeking information on the “risks posed by a foreign government entity assuming control over a cherished American institution.”

Sen. Richard Blumenthal, (D-Conn.) has taken issue with last week’s announcement that shook the golf … [+] world.

Los Angeles Times via Getty Images

Key Facts

In letters sent separately to PGA Tour commissioner Jay Monahan and LIV commissioner Greg Norman, the panel’s chairman, Sen. Richard Blumenthal (D-Conn.), asked for documents and communications pertaining to the recent surprise merger between the PGA Tour and Saudi Arabia’s Public Investment Fund, which bankrolled LIV.

Blumenthal asked the golf executives to provide records by June 26 for all communications between the rival tours leading up to the deal, as well as further information on the structure of the new golf empire.

Considering several reports indicated the federal government would likely investigate the antitrust grounds of the new golf entity, perhaps the most consequential component of Blumenthal’s communications Monday was his questioning of the PGA Tour’s non-profit status, asking Monahan to provide information on how his organization plans to retain its tax-exempt standing in the U.S. after becoming a nominal offshoot of the Saudi government.

Key Background

The PGA Tour and LIV Golf’s merger came in a stunning announcement last Tuesday, with everyone but the tours and PIF’s top brass apparently left in the dust. The new allies had been bitter enemies for the prior 12 months after LIV’s launch, thanks to the Saudi-backed tour’s earth-shattering signing bonuses and the American circuit’s controversial decision to unilaterally ban its members from playing in LIV tournaments. The rival golf tours were amid a lengthy legal battle stemming from the PGA Tour’s alleged antitrust violations, though accompanying the merger was an announcement that all legal proceedings between the former rivals were over. Monahan told PGA Tour members that the primary reason for the merger was because the organization could not afford to defend itself from further litigation, the Wall Street Journal reported Saturday.

Chief Critic

“The merger is plainly anti-competitive in that it combines three independent golf tours into one,” Craig Wildfang, partner at Robins Kaplan LLP who worked in the Justice Department’s antitrust division during the Clinton Administration, wrote in emailed comments last week (the third tour he references is the European Tour, the PGA-aligned European entity which also will incorporate under the new PGA-LIV umbrella). “It appears that the PIF is set to have effective financial control of the new, for-profit company that will run tournament golf around the world. It looks like the PIF made the PGA Tour ‘an offer they couldn’t refuse,’ to borrow a famous line from The Godfather.”

Contra

“We’ve got a lot of problems, and the Saudi Arabians buying a golf league is not at the top of my list,” Sen. J.D. Vance (R-Ohio) told Politico last week, though he did say he believes there is likely an antitrust “issue” with the deal.

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Key Facts

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Chief Critic

Contra

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