Following a special subcommittee in the US Congress, the US Department of Justice has just issued an investigation order into the PGA Tour's joint venture with the Saudi Public Investment Fund (PIF).
According to the Wall Street Journal on June 15, PGA Tour leaders and administrative staff received a notice of investigation on suspicion of antitrust violations from the Department of Justice.
The move echoes warnings from legal experts as the PGA Tour announced plans to open a joint venture with the DP World Tour and the LIV Golf League, which is owned by the Saudi PIF.
Accordingly, all commercial activities in the three arenas as well as golf-related assets belonging to PIF Saudi will be "under one roof". However, US lawyers say antitrust laws may be an obstacle because it is formed by combining three large organizations into one legal entity with the potential for dominance.
The US government is concerned that the alliance between the PGA Tour and PIF Saudi Arabia could violate antitrust laws. Photo: FT
The PGA Tour insists the partnership is not a “merger,” but it used that term in its initial press release on the morning of June 6. The American golf governing body dropped the word “merge” from the document later that day, while the Saudi website still includes it.
With the Justice Department stepping in, the PGA Tour-DP World Tour-PIF Saudi alliance will be put on hold or at risk of collapse. According to Golf Digest , PGA Tour leaders, in a recent meeting, considered the possibility that the deal would take at least a year to implement.
The US government is concerned about the implications of the deal, especially when the PGA Tour reversed its stance after two years of fierce fighting with PIF Saudi.
Before the Department of Justice, Senator Richard Blumenthal, head of the congressional subcommittee on investigations, launched a "dissection" on June 12, by requesting documents from the PGA Tour and LIV Golf League.
Yesterday, Senator Ron Wyden, R-Ore., sent a 21-item letter of inquiry to PGA Tour Special Envoy Jay Monahan, asking for clarification on the alliance’s impact on national security and interests, particularly the possibility that the Saudis are targeting properties currently managed by the PGA Tour but near U.S. military facilities or sensitive manufacturing sites.
Senator Wyden also questioned Ed Herlihy, chairman of the PGA Tour policy committee. Herlihy participated in the negotiations with PIF Saudi but was a personal partner in the negotiating consultancy.
In addition, Wyden also mentioned the $49 million compensation for PGA Tour senior staff and nearly $14 million for special envoy Monahan, nearly double the amount received in his inaugural year of 2017. According to Wyden, whether that increase in income is for the common good of the PGA Tour and also consistent with the tax-exempt privilege that this organization enjoys when registering as a non-profit.
On June 13, PGA Tour announced that Monahan - the top leader - will be absent for a while to recuperate due to health problems.
Four days earlier, Monahan had sent a letter to the US Congress explaining his plans to open a joint venture with DP World Tour and PIF Saudi. In the letter, he blamed the government for being slow, This has left the PGA Tour in a defensive position, with no choice but to join hands with the Saudi economic organization. However, Monahan asserted that the contract with PIF Saudi is similar to many other investment acquisitions in the US business community, with the PGA Tour retaining strategic control and the Saudi partner taking responsibility for the investment.
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