In order to follow golf in 2023, it’s necessary to be steeped on sovereign wealth funds, the ups and downs of oil prices and, of course, senate subcommittee investigations of multinational mergers. That last one takes the spotlight this week as the PGA Tour and LIV Golf have been called up by the Senate Permanent Subcommittee on Investigations to explain the bombshell framework agreement between the PGA Tour and Saudi Arabia Public Investment Fund that shook the golf world to its core last month.
What a crazy outcome considering the hostile relationship the Tour and LIV have engaged in over the last year, but also one that greatly affects the future of the men’s game at the highest level as the two entities begin to move toward reshaping golf with billions of dollars and all the best players in the world back in the fold.
As you might expect, there are a lot of questions regarding this hearing. Let’s walk through them all to see how we got to the point where a Senate hearing usurps the Scottish Open as the most important event happening the week before the 151st Open Championship at Royal Liverpool.
When is the hearing taking place?
The hearing, officially titled, “PGA-LIV Deal: Implications for the Future of Golf and Saudi Arabia’s Influence in the United States,” will happen at 10 a.m. ET on Tuesday, July 11 at SD-562, Dirksen Senate Office Building. You can stream it at this link here or watch live on Golf Channel.
Who presides over the hearing?
Senator Richard Blumenthal (D-CT) is the chairman of the Senate Permanent Subcommittee on Investigations — a subcommittee of the Committee on Homeland Security and Governmental Affairs. Ron Johnson (R-WI) is the ranking member of the subcommittee. Together, they invited PGA Tour commissioner Jay Monahan, Saudi Arabia Public Investment Fund governor Yasir Al-Rumayyan and LIV Golf CEO Greg Norman to testify. None of the three will be in attendance for a variety of reasons.
Who is representing the PGA Tour?
The PGA Tour is sending Jimmy Dunne, who is not only a PGA Tour policy board member but also one of the three people who spearheaded the agreement on the PGA Tour side, along with policy board member Ed Herlihy as well as Monahan.
Dunne has been involved in the game of golf for a long time. An investment banker by trade, Dunne is a member at various golf clubs including Seminole, Shinnecock and Augusta National. He also has unique ties to the deal. Dunne’s firm had offices in one of the World Trade Center towers that fell in New York on 9/11. Sixty-six of his employees died in the attacks.
He was recently asked about the tie-in to Saudi Arabia and said that though the folks he’s dealing with had nothing to do with 9/11, “If someone can find someone that unequivocally was involved with it, I’ll kill them myself. We don’t have to wait around.”
Price is at least partially filling in for Monahan, who was requested but will not attend as he recovers from an undisclosed health issue. Monahan recently announced he will return to work on Monday, July 17.
“We look forward to appearing before the senate subcommittee to answer their questions about the framework agreement that keeps the PGA Tour as the leader of professional golf’s future and benefits our players, our fans, and our sport,” the Tour said in a statement.
Who is representing LIV Golf?
Well … nobody. Both Al-Rumayyan and Norman declined their invitations. According to the New York Times, LIV did not want to send Norman if Monahan was not present while its request to Price’s counterpart, COO Gary Davidson, was not accepted by the subcommittee.
But when Blumenthal and Johnson wrote to him on June 21, they said the subcommittee “respectfully requests that you appear in-person to testify.” LIV executives said Norman would be traveling abroad at the time, and they privately objected to the commissioner being subjected to congressional inquiry without his PGA Tour counterpart enduring the same scrutiny, which seems likely given Monahan’s medical leave.
What is the framework deal being investigated?
On June 6, the PGA Tour agreed with the DP World Tour and Public Investment Fund of Saudi Arabia to merge its business interests and create a new for-profit entity that would ostensibly be the operational hub for men’s professional golf into the future.
This framework deal would, effectively, move all the operations of the PGA Tour, DP World Tour and LIV Golf (funded by the PIF) under the same roof, though nobody is certain what that is going to look like from any standpoint. Almost no details have emerged since (mostly because they don’t exist), but the deal itself exists for a couple of reasons.
The first is to end all litigation between the PGA Tour and LIV Golf. This has been an expensive endeavor for both parties, and thus one of the talking points post-deal has been that the “binding element to it is the drop of the litigation.” Monahan also said in a call with reporters that one of the goals of the deal was “ultimately to take the competitor off of the board.”
There are obvious antitrust concerns with all of this, so the Department of Justice is looking into them separate from the subcommittee hearing on Tuesday.
Why is the government intervening?
There seems to be two primary concerns this subcommittee has with the framework deal. Blumenthal wrote a letter to Monahan on June 12, just one week after the initial framework deal between the PGA Tour and PIF was announced. In it, he explained that there is concern with a foreign government having its tentacles in “a cherished American institution.” He also raised questions about the Tour’s 501(c)(6) tax-exempt status.
In fact, prior to this agreement, PGA Tour was one of the loudest critics of LIV Golf’s affiliation with Saudi Arabia. PGA Tour has stated that it intends to preserve its tax-exempt status as a Section 501(c)(6) entity after the agreement is executed.
This assertion raises additional questions about the terms of the agreement and whether a foreign government may indirectly benefit from provisions in U.S. tax laws meant to promote not-for-profit business associations.
“Our goal is to uncover the facts about what went into the PGA Tour’s deal with the Saudi Public Investment Fund and what the Saudi takeover means for the future of this cherished American institution and our national interest,” said Blumenthal in a statement. “Americans deserve to know what the structure and governance of this new entity will be. Major actors in the deal are best positioned to provide this information, and they owe Congress — and the American people — answers in a public setting.”
Jay Monahan’s influence
While Monahan will not be in attendance, his influence and opinion still looms large. In a letter on June 9, he criticized the U.S. government for its lack of intervention over the last year as the Tour attempted to fend off LIV and the Public Investment Fund.
During this intense battle, we met with several members of Congress and policy experts to discuss the PIF’s attempt to take over the game of golf in the United States, and suggested ways that Congress could support us in these efforts. While we are grateful for the written declarations of support we received from certain members, we were largely left on our own to fend off the attacks, ostensibly due to the United States complex geopolitical alliance with the Kingdom of Saudi Arabia. This left the very real prospect of another decade of expensive and distracting litigation and the PGA Tour’s long-term existence under threat.
Will we get answers?
Who can say. Dunne is not one to hold back, and it is certainly a risk for the Tour to send him to this hearing. But there cannot possibly be any answers for structures and operations that do not yet exist. So while I imagine we will get interesting speculation about what could happen under this framework agreement, it is unlikely that anything concrete will be staked out for fans (or lawmakers) to hold on to.
What do players think?
This is about the last thing players want to be involved with, but here they are. According to Golf Channel, players have also been sent requests by Blumenthal to engage in discussion with him about the framework deal. Those discussions are unlikely to be part of this hearing, but it appears that players are being dragged into something they had no agency over from the beginning.
Following a meeting during the Rocket Mortgage Classic two weeks ago, policy board member Peter Malnati — one of five players on the policy board, along with five executives — said the Tour seemed open to eventually shutting the deal down if players were not keen on pushing it through.
“And I think they’re prepared to do both of those things,” Malnati told Golfweek. “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.”
“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,” the policy board said in a statement last week.