-
Mark Schlabach, ESPN Senior Writer
LOS ANGELES — Three days before a U.S. Senate subcommittee opened an inquiry into the PGA Tour’s planned alliance with Saudi Arabia’s Public Investment Fund and the DP World Tour, PGA Tour commissioner Jay Monahan told U.S. senators in a letter that the federal government’s inaction caused him to agree to the controversial partnership.
“While we are grateful for the written declarations of support we received from certain [congressional] 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,” Monahan wrote. “This left the very real prospect of another decade of expensive and distracting litigation and the PGA Tour’s long-term existence under threat.”
On June 6, the PGA Tour announced that it was forming a new entity with Saudi Arabia’s sovereign wealth fund (PIF) and the DP World Tour. PIF governor Yasir Al-Rumayyan will serve as chairman of the new company; Monahan will be the CEO. The PGA Tour will continue to operate on its own, although Al-Rumayyan will join the tour’s policy board.
“After a divisive battle spanning two years including extensive ligation that divided our great sport, we have decided on an arrangement that will end the divisiveness and grow the sport of golf, while preserving the PGA Tour as the primary organizing entity for men’s professional tournament golf,” Monahan wrote. “Let me be clear that despite numerous reports, this arrangement is not a merger between the PGA Tour, LIV Golf, and the PIF.”
Monahan described the new company as a subsidiary of the PGA Tour, in which the tour “will at all times hold the majority of the Board seats and be in control of this new company, regardless of the size of PIF’s investment.” Monahan said the PIF would be a minority investor in the new entity, “while the PGA will be the majority equity investor.”
“At its core, the PIF is investing in the PGA Tour as it has invested in other U.S.-based companies,” Monahan wrote in the letter, which was first obtained by Politico. “The PGA Tour and its tournaments will continue to operate as they do today, generating charitable and economic impact in the communities where they are played.”
On Monday, Connecticut Sen. Richard Blumenthal sent a letter to Monahan and LIV Golf CEO and commissioner Greg Norman, notifying them that the U.S. Senate’s Permanent Subcommittee on Investigations has opened a review of the planned alliance. The PIF is financing LIV Golf, which lured several past major champions, including Phil Mickelson and Dustin Johnson, away from the PGA Tour with guaranteed contracts worth as much as $200 million.
“PGA Tour’s agreement with PIF regarding LIV Golf raises concerns about the Saudi government’s role in influencing this effort and the risks posed by a foreign government entity assuming control over a cherished American institution,” Blumenthal wrote in the letters to Monahan and Norman. “PIF has announced that it intends to use investments in sports to further the Saudi government’s strategic objectives.”
Blumenthal also questioned whether the PGA Tour could continue to operate as a tax-exempt, nonprofit organization because of its connection to the Saudis.
The U.S. Department of Justice opened an investigation into the PGA Tour’s alleged monopolistic business practices last year.
The planned partnership would end the golf circuits’ legal action against each other, according to a news release announcing the deal.
Antitrust lawyers and experts contacted by ESPN said they believe the Department of Justice will also closely examine the structure of the PGA Tour’s planned alliance with the PIF and the DP World Tour.
“Rather than a foreign-funded entity taking over an American sport, the end result is that the PIF has agreed to work within the existing golf ecosystem as a minority investor with the PGA Tour in full control,” Monahan wrote. “The PGA Tour is, and will remain, an American institution dedicated to its players and generating charity in the communities where we play.”