US Senator Richard Blumenthal has demanded details on how PGA Tour came to its agreement with PIF and how any newly formed entity will be structured and operated, including how the PGA Tour intends to preserve its tax-exempt status
Monday 12 June 2023 18:45, UK
US Senator Richard Blumenthal asked the PGA Tour and Saudi Arabia's Public Investment Fund for communications and records related to their planned merger.
Blumenthal, a Democrat who chairs the Senate Permanent Subcommittee on Investigations (PSI), demanded details on how PGA Tour came to its agreement with PIF and how any newly formed entity will be structured and operated, including how the PGA Tour intends to preserve its tax-exempt status.
The PGA Tour, DP World Tour and PIF, who bankroll the rival LIV Golf circuit, who had been involved in a bitter fight that split the sport, announced an agreement last week to merge and form one unified commercial entity.
"PGA Tours agreement with (Saudi Arabian Public Investment Fund) regarding LIV Golf raises concerns about the Saudi governments role in influencing this effort and the risks posed by a foreign government entity assuming control over a cherished American institution," Blumenthal wrote.
The governor of Saudi Arabia's sovereign wealth fund will join the PGA Tour board of directors and lead a new business venture as its chairman. The PGA Tour itself will remain a tax-exempt entity.
It was a move expected to receive scrutiny from federal regulators and lawmakers, and the launch of a Senate investigation is among the first dominoes to fall.
The agreement announced last week was to combine the golf-related businesses of Saudi's Public Investment Fund - which includes LIV Golf - with those of the PGA Tour and DP World tour. That would be a new for-profit company still to be named.
Among the uncertainties is how LIV Golf goes forward after 2023. PIF's governor, Yasir Al-Rumayyan, is to be chairman of the new venture, with PGA tour commissioner Jay Monahan as CEO and two PGA Tour board members joining them on an executive committee.
In his letters to Monahan and LIV Golf CEO Greg Norman, Blumenthal wrote about the scepticism critics hold over the Saudis' intent "to use investments in sports to further the Saudi government's strategic objectives."
"Critics have cast such Saudi investments in sports as a means of "sportswashing" - an attempt to soften the country's image around the world - given Saudi Arabia's deeply disturbing human rights record at home and abroad," the letter said.
Blumenthal asked for a sweeping set of documents - essentially all communications between LIV and the tour beginning in October 2021 through to the present.
The deal could also be reviewed by the Committee on Foreign Investment in the US (CFIUS), a Treasury-led committee that assesses mergers to determine if they harm national security.
Treasury Secretary Janet Yellen said last week it was not immediately obvious that the PGA merger with LIV was a matter of national security.
Last week, Senator Ron Wyden, chair of the Senate Finance Committee, said US officials should determine whether the deal would give the Saudis "improper control or access to US real estate."
