Saudi Arabia’s $1 Billion Investment: A Game-Changer for the PGA Tour
According to a tour executive testifying before Congress, if the business agreement between the Saudis and the tour is completed, Greg Norman will be fired as the CEO of LIV Golf and Saudi Arabia’s sovereign wealth fund will invest more than $1 billion in a new company controlled by the PGA Tour.
The agreement between the PGA Tour and the Saudi Public Investment Fund, which is the main source of funding for LIV Golf, shocked the golf community when it was revealed last month. It sparked inquiries from the Permanent Subcommittee on Investigations, which called tour officials to the Capitol to give testimony under oath, and the Justice Department, which is investigating possible antitrust violations.
Representatives of the tour and the Saudis discussed giving Tiger Woods and Rory McIlroy their own LIV Golf teams, according to the subcommittee’s findings, but neither player appears to have heard of the idea.
During the hearing on Tuesday, there was no indication that Congress would forbid the tour from doing business with the Saudis.
Sen. Richard Blumenthal of Connecticut, the chairman of the subcommittee, expressed concern over the geopolitical ramifications of Saudi investment in American sports and the Saudi leader’s attempts to downplay the country’s abuses of human rights.
Republicans on the committee, however, were more sympathetic to the PGA Tour and the existential danger it posed by the PIF, which has assets worth $600 billion, or roughly 500 times as much as the tour.
In Blumenthal’s, words We’re here because we’re concerned about the implications of an authoritarian government appropriating an American institution using its wealth.
On June 6, the PGA Tour and the Saudis declared their agreement to end all legal disputes and merge their business ventures into a new for-organization nation while preserving the tour’s nonprofit status.
Ron Price, the PGA Tour’s chief operating officer, responded in court that the Saudis have committed “north of $1 billion” to the new project when asked by Blumenthal how much money they have pledged.
Price and Jimmy Dunne, a board member of the PGA Tour and a key negotiator of the Saudi agreement, came under intense questioning from Blumenthal on why the tour did not look for alternative funding sources to compete with the PIF.
According to Price and Dunne, partnering with outside investors wouldn’t stop LIV Golf and the PIF from competing with the tour by utilizing its extensive resources to sign top players.
“My entire concern here is to put this divisive period behind us, and for the sake of players, fans, sponsors, and charities, unite the game of golf again,” declared Dunne, an investment banker from New York with strong ties to the sport’s elite.
The killing of journalist Jamal Khashoggi, which U.S. intelligence concluded was probably approved by the crown prince, an allegation he denies, and the kingdom’s subpar record on human rights are among the critical level at the Saudi investment in golf.
The PIF has acquired teams in other sports, such as Formula One racing and football (it owns Newcastle United of the English Premier League).
Blumenobservedation that the pushback that you are experiencing can be attributed to the fact that the course of action that you are taking right now constitutes a surrender and is focused solely on monetary concerns. This is the source of the resistance that you are encountering, Mr. Price.
The Saudis’ stake in the company gives them financial control, says the author. They are in charge of taking care of the money.
Sen. Rand Paul, R-Ky., a vehement opponent of the Saudi government, however, asserted that Congress shouldn’t get in the way of a private company doing business with the Saudis. Instead, he suggested that the US cut back on its arms exports to Saudi Arabia. The committee’s vice chairman, Sen.
Ron Johnson, a Republican from Wisconsin, suggested that Saudi participation in sports might eventually help the country’s human rights situation.
Wouldn’t it be great if golf and other sports helped the kingdom become more modern or give women more rights? Johnson remarked.
Blumenthal pressed Dunne and Price to guarantee that, should the deal go through, PGA Tour athletes would be free to express their disapproval of the Saudi government. Both stated that they would oppose any agreement that includes such speech limitations being approved by the tour’s policy board.
The subcommittee published documents outlining the covert and hurried negotiations that resulted in the framework agreement last before the hearing. Dunne acknowledged that the tour botched the deal’s announcement, which led some people to believe—incorrectly—that the tour and LIV Golf had merged.
Everyone is to blame for the rollout, which was very wrong and confusing. Dunne says that there is no merger. There is only a promise to try to work out a deal instead of going to court.
The documents made public by the subcommittee describe the roles played by individuals on the Saudi side of the negotiations, particularly Roger Devlin, a British businessman, and Amanda Staveley, a British investment banker who helped broker the Newcastle deal and currently serves on the team’s board.
Despite Dunne’s claim on Tuesday that he never met Devlin in person and independently contacted Yasir Al-Rumayyan, the governor of the PIF, the documents reveal that Devlin was the first to approach Dunne about the possibility of a deal between the tour and LIV. The records reveal that Dunne initially communicated with Al-Rumayyan over WhatsApp.
My mentality was that we shouldn’t talk to anyone but the wealthy individual, Dunne said.
It is suggested in a memo from Staveley’s company titled “The Best of Both Worlds” that Woods and McIlroy take control of LIV teams and participate in 10 LIV competitions annually each.
The documents need to mention Woods or McIlroy, who both remained committed to the PGA Tour, ever being made aware of the concept.
Other ideas in the memo include awarding world ranking points to LIV events, including retroactively, and PIF sponsorship of two elevated PGA Tour events, one of which will take place in Saudi Arabia. This mixed-gender team event will qualify in Saudi Arabia and conclude in Dubai.
The framework agreement that Al-Rumayyan and PGA Tour Commissioner Jay Monahan signed excluded all of those ideas. Following the hearing on Tuesday, the PGA Tour wrote to players to inform them that the PIF made “a series of suggestions” that “were rejected immediately.”
A separate agreement that called for Norman to be fired as LIV’s CEO was also discussed by the parties, but it still needs to be signed. Price responded that if the tour and the PIF succeed in their business deal, the time would be controlled LIV, and Norman’s position would be eliminated when Blumenthal questioned whether Norman was out of a job.
We would no longer need that kind of position, according to Price.
Although he has largely been ignored as the public face of LIV since the deal was announced, Norman still serves as CEO. Al-Rumayyan and he were both invited to testify on Tuesday, but neither accepted.
Monahan did not testify either because he is recovering from an undisclosed medical issue that has kept him out of work for a month; he has stated that he intends to resume work next week.