Golf’s Emerging Behemoth Might Be Too Big To Exist And Too Rich To Stop
If this new for-profit venture launched by the PGA Tour and the Saudi Public Investment Fund ever actually gets off the ground—a surprisingly big "if" given the prestige of its principals and the triumphant tenor of its announcement—it will only be after participating in several big grandstanding performances of official governmental scrutiny. It turns out that two powerful and influential bodies that spend most of a year accusing one another of rampant human rights abuses and anticompetitive behavior may wind up creating their own regulatory hurdles when they suddenly propose to form one commercially dominant new body.
At least two hostile investigations have already been initiated in the U.S. Senate: the Permanent Subcommittee on Investigations sent letters on June 12 to PGA Tour commissioner Jay Monahan and LIV Golf CEO Greg Norman, requesting documents charting the formation of the new entity and laying out its proposed structures; the Finance Committee announced in a blustery letter sent June 15 to PGA Tour leadership that it intends to probe the proposed venture's ownership and equity structures, and to examine favorable tax statuses granted to both the PIF and the PGA Tour. Both investigations highlight the kingdom's human rights abuses and express concerns about the PIF's evident goal of using foreign investments to advance the interests of Saudi Arabia's autocratic monarchy. Both announcements note that Monahan himself inveighed against Saudi Arabia's sportswashing operation to anyone who'd listen while spearheading the PGA Tour's case against the LIV Golf incursion.
Meanwhile, in the House, Congressman John Garamendi quickly announced his introduction of the "No Corporate Tax Exemption for Professional Sports Act," which if passed (ha!) would strip professional sports leagues of their cherished tax exemptions. Garamendi's announcement was specifically pegged to what he described as "the Saudi Sovereign Wealth Fund’s surprise takeover" of the PGA Tour, deploying the same concerns about Saudi influence but in the distinctly hysterical rhetorical style preferred by members of the lower chamber. "The notion that the Saudi Sovereign Wealth Fund would pay zero dollars in taxes on their blood money and potentially billions of dollars in profits while countless American families pay their fair share while struggling to make ends meet is ludicrous," wrote Garamendi, who says his bill would close "the loophole" that the PGA Tour and other leagues "exploit" to avoid paying taxes on hundreds of millions of dollars in annual corporate income.
Somewhat more urgently, on Thursday the Wall Street Journal reported that the U.S. Department of Justice has formally initiated a review of the merger over antitrust concerns. This one has some immediate backbone: The new venture cannot be formally consummated until it has cleared this inquiry and been granted approval. The Journal reports that at least one unnamed PGA Tour executive is cautioning employees that it could be another year before the fate of the new venture is sorted out. This is another self-own. It was LIV Golf's antitrust complaint, filed against the PGA Tour in the summer of 2022, that triggered a Justice Department investigation of the promotion's stranglehold on men's professional golf, an investigation that was still ongoing at the time of the announcement of the merger. Worse, in the fumbling first round of media appearances following the announcement, the deal's principals had not yet excised problematic truths from their messaging, and now must eat shit for how they explained the fundamentals of the merger.
“Ultimately, to take the competitor off of the board, to have them exist as a partner, not an owner," said Monahan on June 6, talking up the benefits of the merger for the PGA Tour just hours after news of the deal broke. "And for us to be able to control the direction going forward, put us in a position as the PGA Tour to do and serve our members, and at the same time, again, get to a productive position for the game at large." I am not an antitrust lawyer, but in general it strikes me as a bad idea for the head of an entity accused of anticompetitive behavior to gloat about absorbing its only credible competitor into a venture that will be under your power and control. Monahan will have to answer for this and similar statements; in what I am sure is an unrelated coincidence, Monahan has been temporarily taken out of circulation due to what has been described vaguely as "a medical situation."
Messaging in general is an issue for the secretive masterminds of this proposed behemoth. Jimmy Dunne, the excitable PGA Tour board member who spearheaded negotiations with PIF governor Yasir Al-Rumayyan, told anyone who would listen last week that Monahan, as the new CEO, will have immediate authority to decide the fate of LIV Golf, which would certainly seem like an extraneous appendage now that the PIF can sock its billions of investment dollars into the considerably more established, credible, and popular PGA Tour. Monahan, too, indicated that he "can't see" a scenario where LIV Golf would continue as presently constructed into next year, but said that he wouldn't fully evaluate the nascent promotion's position until after this season. It is the stated expectation of Rory McIlroy, the PGA Tour's loudest loyalist, that LIV Golf will be dissolved at the conclusion of the 2023 season, an impression he gained after direct meetings with PGA Tour honchos.
But that appears to be the opposite of the impression given to LIV Golf's players, some of whom say they were reassured by no less an authority than Al-Rumayyan himself. "Everything I've heard, they're still working on a full schedule for next year," explained Dustin Johnson to ESPN. "The rest of this year and 2024 is going to be the same as far as I know. After that, you know as much as I do." Fellow LIV defector Bryson DeChambeau declined to go into the details of what he described as private conversations with Al-Rumayyan, but confirmed that he and other LIV Golf professionals were told that LIV Golf will continue at least through another season of distractingly noisy tournaments.
Add to all this confusion that no one seems to know whether Greg Norman will have a role in the new company or indeed whether he still has a job at LIV Golf. Norman was reportedly left out of the negotiations entirely, and only learned of the merger in the hours before it was publicly announced. It was apparently Norman's impression, at least initially, that LIV Golf would continue as "a stand-alone entity" that would have its own operations and organizational hierarchy, and would continue indefinitely under his stewardship. As reported by Alan Shipnuck of The Fire Pit Collective, Norman assured LIV Golf employees on a call on June 7 that this information came to him "right from the top." It seems pretty clear that when he made this statement he had not yet been informed that the person given formal authority to decide the fate of his promotion would be Monahan, who'd spent the last year telling the world how much LIV Golf sucked shit.
So, uhh, there's still an awful lot of crossed wires and uncertainty about just what the hell is going on here. Some or all of these hastily constructed regulatory obstacles will turn out to be nothing much beyond empty grandstanding. Don't hold out too much hope that anything will prevent the fundamental, foundational restructuring on order: Yasir Al-Rumayyan and the Saudi PIF are buying their way to the top of men's professional golf, in some form or other. If Al-Rumayyan is the only person who has the full picture of the endgame, it's because the money he controls is really the only essential part of any of this.
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