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    The Titanic PGA and LIV Golf Deal Stokes Anger on Capitol Hill

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    American lawmakers and officials are studying the pact between the PGA Tour and Saudi Arabia’s sovereign wealth fund.One of golf’s greatest tests will unfold starting on Thursday, when the U.S. Open begins at the Los Angeles Country Club. It might be an easier lift — it will assuredly be a shorter one — than the test that is emerging in Washington.The abrupt announcement last week that the PGA Tour will tie itself to Saudi Arabia’s sovereign wealth fund and its LIV Golf league is provoking American officials in ways as predictable as they might be persistent in the months ahead.Antitrust experts are insisting that the Justice Department should consider suing to stop the agreement, which calls for the business operations of LIV and the PGA Tour to be brought into one new company, if the deal closes in the coming months. Lawmakers are complaining that the Florida-based PGA Tour is lurching into business with an arm of the Saudi state that it roundly condemned until last week. Political strategists are scrambling to shape perceptions of an agreement that was forged in secret and, upon its release, promptly criticized as a well-heeled exercise in hypocrisy and whitewashing.Whether the commotion will amount to anything beyond a few news cycles of fussing — a successful assault on the PGA Tour’s tax-exempt status comes to mind — may not be clear for months. But a week into golf’s latest maelstrom, a deal that could eventually prove lucrative for players and executives is already promising a booming era for lawyers, lobbyists and political sound bites, too.Although golf had been under pressure inside the Justice Department, where antitrust regulators were looking at the PGA Tour, the announcement last week brought the tumult to Capitol Hill.In the House, Representative John Garamendi, Democrat of California, swiftly introduced a bill to revoke the PGA Tour’s tax-exempt status. And in the Senate, Senator Richard Blumenthal, Democrat of Connecticut, announced on Monday that a subcommittee he chairs would conduct an inquiry into a deal that he said “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.”At the U.S. Open in Los Angeles this week, PGA Tour golfers like Jon Rahm will be playing with men like Sergio Garcia, who defected to LIV last year.Richard Heathcote/Getty ImagesThat there would be a battle was never much in question. The principal short-term matter to resolve was who, exactly, would be picking which fights.The golf side of the battle features two forces with formidable records across decades in Washington. Even though Saudi Arabia has had plenty of bipartisan tangles, the kingdom’s officials and allies have often enjoyed an uncommon rapport with their American counterparts, as was on display during a visit from Secretary of State Antony J. Blinken last week. And the PGA Tour has usually found the capital to be a wellspring of courtesy, especially when its supporters helped short-circuit a Federal Trade Commission inquiry in the 1990s.The trouble for the wealth fund and the tour is that Washington also has a bipartisan affection for lawmakers imitating sports executives, and browbeating actual ones, in public and in private. It can be good politics to glower at the commissioners who draw more jeers than many elected officials, and headline-making hostility from Congress could complicate the golf industry’s quest to sell the deal to the public — and then move past it.The tour and the wealth fund can take some comfort in history, which suggests a successful congressional effort to thwart the deal directly is unlikely. The Hill, though, could still seek to make the transaction painful beyond a feisty public hearing or two. A change to the tour’s tax status, like the one envisioned in the bill introduced in the House, could cost it millions of dollars a year because it has been structured as a “business league” that is exempt from taxes under section 501(c)(6) of the Internal Revenue Code.Groups like the PGA Tour have combated legislative headaches surrounding their tax-exempt status in the past, with one effort to end the practice for sports leagues vanishing from a 2017 tax bill at the last moment. In the past 18 months, years after the N.F.L. and Major League Baseball surrendered their exempt statuses, public records show that the tour has spent at least $640,000 on lobbying, with much of that work tied to “tax legislation affecting exempt organizations.”As a part of his inquiry, Blumenthal on Monday demanded documents related to the tour’s tax-exempt status and, in his letter to the tour, wondered whether the deal would allow a foreign government to “indirectly benefit from provisions in U.S. tax laws meant to promote not-for-profit business associations.”Senator Ron Wyden, Democrat of Oregon, who is chairman of the Senate Finance Committee, similarly seethed that the tour had “moved itself right to the top of the leaderboard in terms of most questionable tax exemptions in professional sports.”But Wyden has also suggested that the deal should run into resistance before the Committee on Foreign Investment in the United States, a Treasury Department-led committee that examines national security implications of foreign investments in real estate and American companies.Whether there are serious national security concerns about a deal involving golf tours, or whether the committee will even review the agreement at all, is unclear. Janet Yellen, the secretary of the Treasury, said last week that it was “not immediately obvious” to her that the agreement related to national security. But Wyden, who is planning a congressional investigation of his own, has signaled his interest in the department’s exploring whether the deal could give “the Saudi regime inappropriate control or access to U.S. real estate,” most likely through the tour’s Tournament Players Club collection of golf courses.And those are just the spats that have erupted since last Tuesday.The PGA Tour commissioner, Jay Monahan, left, and Jimmy Dunne, a board member, were closely involved in the merger negotiations.Getty ImagesUrged on by LIV’s lawyers, Justice Department regulators have spent months examining whether the PGA Tour’s tactics to discourage players from defecting to the Saudi-backed league were illegal, and whether the tour’s coziness with other leading golf organizations — like Augusta National Golf Club, the organizer of the Masters Tournament — violated federal law. Instead of quieting misgivings about golf, the deal has only intensified them and might have even armed the department with a new lever: suing to stop the pact, which the tour and wealth fund deny amounts to a merger.“Generally, we want to encourage parties to settle their disputes outside of the judicial process, but it doesn’t mean that settlements are immune from antitrust,” said Henry J. Hauser, a former antitrust lawyer at the Justice Department who now practices at Perkins Coie, one of the capital’s best-connected firms. “If companies try to resolve a legitimate dispute by agreeing to common conditions that stifle competition, that could be a problem.”The Justice Department has declined to comment.The tour is moving aggressively to curb Washington’s irritation, going as far to suggest that Congress and other parts of the federal government could have done more to help it rebuff a Saudi challenge.“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,” the PGA Tour commissioner, Jay Monahan, wrote in a letter to lawmakers last week. “This left the very real prospect of another decade of expensive and distracting litigation and the PGA Tour’s long-term existence under threat.”In the penultimate sentence of his letter, Monahan described the tour as “an American institution,” just as Blumenthal would on Monday. But like many executives before him, Monahan is finding that Washington is forever eager to scrutinize American institutions, especially when sports are involved.He may ultimately find that the shouting has only just begun.Lauren Hirsch More

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      CVC Capital Partners Will Invest $150 Million in WTA

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      CVC Capital Partners, the former owner of Formula 1, will take a 20 percent stake in a commercial subsidiary as the tour seeks to expand its marketing of events and players and increase prize money.SAN DIEGO — CVC Capital Partners, a global private equity firm that once owned the Formula 1 racing series and has remained a major sports investor, is joining forces with women’s professional tennis.The WTA announced Tuesday that CVC had become a commercial partner after making a $150 million investment that would give CVC a 20 percent stake in a new commercial subsidiary named WTA Ventures. The subsidiary will focus on generating revenue by managing, for example, sponsorship sales as well as broadcasting and data rights.“Hopefully this partnership will allow us to begin addressing that valley between the commercial rights that we are able to secure and the rights that the men are able to secure,” Steve Simon, the WTA’s chairman and chief executive, said in a telephone interview from Indian Wells, Calif., where the BNP Paribas Open is set to begin this week.Though prize money is equal for men and women at the four Grand Slam events, the gap in prize money for many stand-alone men’s and women’s events has widened in recent years. The chasm reached the highest levels in 20 years in 2022, with the men earning on average about 70 percent more than the women outside the majors.Last year, the ATP Finals, the season-ending championships on the men’s tour, offered $14.75 million in prize money. The equivalent women’s event, the WTA Finals, offered $5 million, with Iga Swiatek, the No. 1 women’s singles player, expressing disappointment at the disparity.The WTA has lost significant revenue because of the lack of tournaments in China. The tour had a major presence there and had signed a lucrative 10-year deal to stage the WTA Finals in Shenzhen, which offered $14 million in prize money in its first year as host in 2019. But China has canceled most professional sports events since the start of the coronavirus pandemic in 2020, and the WTA suspended all Chinese tournaments in late 2021 because of the allegations of sexual assault made by Peng Shuai, a Chinese former player who remains in China.The WTA has said it will not reinstate Chinese tournaments until it can have direct contact with Peng and a full and transparent investigation is conducted by the Chinese authorities into her allegations.Simon said on Monday that neither condition had been met and that the WTA was continuing to explore a multiyear deal to stage the WTA Finals in other cities in case the China window remains closed.“We will make a decision at the end of this month how we are going to proceed,” he said.Simon said he hoped the new CVC partnership would lead to a near-term increase in prize money at tour events. “You certainly will see a plan with respect to that, which will be forthcoming,” he said.But above all, he said, CVC’s investment will allow the tour to invest more in marketing the women’s game and in producing or commissioning media programming that will raise the profiles of players and tournaments.“To tell the story and to build the brand and to get directly to the consumer, which are some of the key things I think we have to do a better job of than we do today to enhance the commercial results,” Simon said. “As we improve the commercial results, things like player compensation become a lot easier discussion.”Simon said most of the WTA’s current rights deals would expire in 2026. He declined to disclose a timetable for when the tour would receive CVC’s $150 million investment.“But it’s certainly not something that is a drip effect,” he said. “We have significant funding coming in that’s going to allow us to invest over the next several years at levels we’ve never been able to before.”Iga Swiatek, the No. 1 player in women’s singles, expressed disappointment in the disparity in the prize money offered at the ATP Finals and the WTA Finals last season.Karim Sahib/Agence France-Presse — Getty ImagesSimon said the CVC deal was not directly linked to the lost Chinese revenue. “This hasn’t been done because of China,” he said. “I have had the concept for many years of bringing in some capital investment into our company, which I felt we needed to go to the next level.”But Simon was only recently able to get support for the move from the WTA board, and he emphasized repeatedly that the WTA still had autonomy despite the CVC deal.“The way we set all this up, WTA Tour Inc. is not touched,” he said. “The WTA still controls 100 percent all of the governance, regulatory and calendar issues.”But he acknowledged that tour and CVC officials would communicate to ensure that WTA decisions did not hurt commercial opportunities.“Absolutely we will,” he said. “But the WTA has complete control of both entities and can make the decisions it feels are in its best interest.”CVC will have no representative on the WTA board, but it will have two of the eight seats on the new WTA Ventures board, which will be chaired by Simon.CVC, based in Luxembourg, was founded in 1981 and has 25 offices worldwide and more than $100 billion under management. The WTA investment is relatively modest compared with the more than $2 billion it spent in 2021 to acquire a 10 percent stake in the commercial arm of La Liga, Spain’s leading soccer league. CVC also paid more than $700 million in 2021 to acquire the Ahmedabad cricket franchise in the Indian Premier League and about $500 million more the same year to take a 14.3 percent stake in the Six Nations rugby union series. CVC agreed to sell its controlling ownership stake in Formula 1 to the American company Liberty Media in 2016.Tennis has had some spectacular misfires with outside investors. In 1999, ISL Worldwide, a Switzerland-based marketing company, signed a 10-year agreement for $1.2 billion with the ATP that fell apart two years later. In 2018, the International Tennis Federation signed a 25-year, $3 billion deal with Kosmos, a Spanish investment group, that led to radical changes in the Davis Cup team event, but the partnership imploded this year.CVC has held talks with the ATP, but its tennis investment is only in the women’s game. For now.Simon continues to favor convergence and has even expressed interest in a merger between the ATP and the WTA at some stage.“If we can ever get to the point where we could bring it all together, this agreement with CVC allows for that to happen,” Simon said. More

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      Inside the Battle to Control, and Fix, Tennis

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      The sport’s hit Netflix series and rising collection of young stars has investors bullish on tennis, which is poised for a once-in-a-generation moment of disruption.Walking the grounds of Melbourne Park, where the Australian Open is in full swing, one could easily believe that all is well and peaceful in professional tennis.Stadiums are packed. Champagne flows. Players are competing for more than $53 million in prize money at a major tournament the Swiss star Roger Federer nicknamed “the happy Slam.”Behind the scenes though, over the past 18 months a coterie of billionaires, deep-pocketed companies and star players has engaged in a high-stakes battle to lead what they view as a once-in-a-generation opportunity for disruption in a sport long known for its dysfunctional management and disparate power structure.The figures include Bill Ackman, the billionaire hedge fund manager and hard-core tennis hobbyist who built a tennis court atop his office tower in Midtown Manhattan. Ackman is funding a fledgling players’ organization led by the Serbian star Novak Djokovic. The group is searching for ways to grow the sport’s financial pie and the size of the players’ slice. In their ideal world, one day there might even be a major player-run event akin to a fifth Grand Slam tournament.Earlier this month, the group announced its core tenets, which include protecting player rights, securing fair compensation and improving work conditions. Players have about had it with matches that start close to midnight, end near dawn and put them at risk of injury, like Andy Murray’s second-round win in Melbourne that ended after 4 a.m. Friday. The group also announced its first eight-player executive committee, which includes some of the top young men and women in the game.There is also CVC Capital Partners, the Luxembourg-based private equity firm that has been working for months to close a $150 million equity investment in the WTA Tour that it views as a first step to becoming a prime player in tennis.Then there is Sinclair Broadcast Group, the American media conglomerate that owns the Tennis Channel, which wants to expand globally and has been trying to entice the people who run tennis to embrace that effort.All of them see tennis as uniquely positioned for growth, as a new generation of stars tries to take up the mantle of the last one, a story Netflix highlights in the new documentary series “Break Point.”“This is definitely the time to go long on tennis, 100 percent,” said Ackman, the noted short-seller best known for betting on a plunging real estate market ahead of the Great Recession. “You look at the global popularity of the sport and revenues and it is totally anomalous.”Through his philanthropic fund, the investor Bill Ackman is essentially bankrolling Novak Djokovic’s Professional Tennis Players Association, a new players’ union, and a player-controlled, for-profit entity.Elsa/Getty ImagesAckman has largely given up his noisy activist approach to investing, but tennis, he and others point out, is one of the few global sports and the only one in which men and women regularly share a tournament. That has helped it attract roughly one billion fans worldwide, with nearly equal numbers of male and female devotees.The 2023 Australian OpenThe year’s first Grand Slam event runs from Jan. 16 to Jan. 29 in Melbourne.No Spotlight, No Problem: In tennis, there is a long history of success and exposure crushing champions or sucking the joy out of them. In this Australian Open, players under the radar have gone far.Victoria Azarenka’s ‘Little Steps’: The Belarusian player took a more process-oriented approach than in the past. The outcomes were strong.Behind the Scenes: A coterie of billionaires, deep-pocketed companies and star players has engaged for months in a high-stakes battle to lead what they view as a once-in-a-generation opportunity to disrupt the sport.Endless Games: As matches stretch into the early-morning hours, players have grown concerned for their health and performance.Tennis executives estimate the sport collects roughly $2.5 billion in total revenues each year. However, it collects far less revenue per fan than other sports. The N.F.L. has a fraction of the number of fans but some $18 billion in revenues. Tennis players also receive a much smaller percentage of those revenues than athletes in other sports receive, and they have to pay for their coaches, training and much of their travel. Aside from a handful of premium events like Grand Slams and some of the Masters 1000 competitions, many tennis tournaments still have the feel of mid-tier minor league baseball.The cash crunch has been especially acute for the WTA Tour ever since it suspended its operations in China in December 2021, retaliating against a government that had seemingly silenced a Chinese player after she accused a former top government official of sexually assaulting her. The move, led by the tour chief executive Steve Simon, represented a rare moment when a major organization prioritized morals and human rights over the bottom line.China, the host country for nine tournaments, including the annual season-ending WTA Finals, had committed hundreds of millions of dollars to women’s tennis for a decade. The WTA has been hunting for new cash ever since the suspension, and with good reason. Some weeks, the disparity with the men’s tour is startling — in Auckland, New Zealand, this month, men competed for more than $700,000 in prize money while the women’s purse was $260,000.The jockeying for power has played out against the backdrop of significant infighting within men’s professional golf prompted by the debut of LIV Golf, the Saudi-backed effort to create a rival to the PGA Tour that has fractured the sport and caused some of its biggest stars to disappear from all events but the four major tournaments.The established cast of power players who run tennis — including Simon, his counterparts on the men’s pro tour, the four Grand Slams and the International Tennis Federation — have watched that unfold and worked to secure their primacy, even as they acknowledge that tennis has to change with the times.“The status quo is not an option,” said Stacey Allaster, the tournament director of the U.S. Open.Allaster, who has previously run everything from second-tier tournaments to the WTA Tour, described tennis as an “insular” sport that does not focus enough on what its fans want. “What is the road map for trial and experimenting?” Allaster asked.From left, Iga Swiatek, Stacey Allaster and Ons Jabeur after Swiatek beat Jabeur in the 2022 U.S. Open final. Allaster, the tournament’s director, said tennis has not focused enough on what fans want.Elsa/Getty ImagesAndrea Gaudenzi, the former player who is the chairman of the men’s tour, the ATP, said all the interest from private investors signaled that the sport was headed in the right direction.At a private players meeting last week in Melbourne, Gaudenzi heralded the ATP’s move to raise prize money by 21 percent, to a record $217.9 million this year. Unfortunately for the players, the ATP represents only about a quarter of the sport’s revenues. The Grand Slams collect most of the rest of the sport’s revenues, with the players’ cut at those events generally far less.Gaudenzi said his organization has had its own discussions with CVC executives but no deals are imminent.“Sometimes you need a catalyst event and someone helping you, and guiding you,” he said.That fallout from that catalyst event — the WTA’s withdrawal from China — is ongoing.The government of China’s leader, Xi Jinping, has given no indication that it will pursue a credible and transparent inquiry into the allegations from the player, Peng Shuai, which were made in November 2021 on her Chinese social media account. In November 2022, Simon called the pending deal with CVC “a very complex business decision and business move we need to work through.”CVC, which wanted to close the deal by the end of last year, has said little publicly about it. People familiar with the deal who were not authorized to discuss confidential financial information said it includes a $150 million payment for a 20 percent ownership stake in the WTA Tour.As CVC and the WTA closed in on the deal during the fall, executives with Sinclair, which acquired the Tennis Channel in 2016, expressed their growing concern that after building an international network and being one of the highest-paying partners in the sport, CVC might try to elbow out the company if it reaches a similar agreement with the ATP, some of the people said.In the short term, the women’s tour is expected to use a significant portion of the money from CVC to increase prize money for players, ensuring that men and women receive equal prize money at all the tour events they play together. That, however, will do little to produce a return for CVC, which is in this to make money.To do that during the next decade, people familiar with CVC’s thinking said, company executives want to increase collaboration with the men’s tour and hold more combined events. Then they could consolidate assets, such as media rights and sponsorships, and sell them together in hopes a combined product would fetch a significantly higher price than what each tour collects separately. That could help CVC gain a foothold within the ATP and flex its muscle.Those plans jibe with some of Gaudenzi’s priorities for the ATP, which include holding as many as nine combined events with the women’s tour, because those are the most popular with fans, creating with the Grand slams close to 200 days of the most desirable competition. The executive committee for the Professional Tennis Players Association includes Djokovic, Jabeur, the rising Spanish player Paula Badosa and Hubert Hurkacz.Alana Holmberg for The New York TimesThe vision may break down, however, when the tours try to figure out how to divide revenue. Men know their tour is more profitable and have long resisted equal partnerships with the women’s tour.Gaudenzi said more men, especially the younger generation, understand the importance of equality and are much more open to the concept of joining forces with the women than they were when he played in the 1990s.“They understand the value, you just have to show them the business case,” he said.He added: “We are in the entertainment business, so we have to entertain people, not ourselves.”Also, the plan de-emphasizes smaller tournaments, where players can collect appearance fees. A few of those are the most successful and popular events on the tour, such as the Estoril Open on the Portuguese Riviera, where players love the packed stadiums, seaside setting and full embrace of some of the region’s wealthiest companies, as well as the country’s president, Marcelo Rebelo de Sousa.Ackman said much of the maneuvering he has seen represents old-world thinking. That is partly why he aligned with the players, who have the most incentive to push for change. They are stars of the show but receive roughly 15 to 25 percent of the revenues — about half of what athletes in other sports receive.“Tennis is an oligopoly, and oligopolies are not innovative, and nonprofit ones are even less innovative,” Ackman said.Through his philanthropic fund, Ackman is helping to bankroll Djokovic’s Professional Tennis Players Association, a new players’ union, and the Winners Alliance, a player-controlled, for-profit entity, though he said he has no designs on profiting from tennis.Ackman made it clear that the P.T.P.A. was not seeking to launch a new tour, though in theory having an event like men’s golf’s annual Players Championship — considered a fifth major in some circles because of its top field and rich purse — would be appealing. He and the P.T.P.A. recently hired Ahmad Nassar, who for years ran the N.F.L. Players Association’s for-profit company, Players Inc.Nassar hopes to convince players and their agents to sign over their group licensing rights, which the Winners Alliance could in turn sell — to a video game company, a luxury hotel chain that could offer both payments and discount deals, or any number of potential corporate investors.Ahmad Nassar, hired as the executive director of the Professional Tennis Players Association, formerly ran the N.F.L. players’ union’s for-profit company.Alana Holmberg for The New York TimesThe P.T.P.A. spent much of the past six months recruiting its executive committee. The group now includes Paula Badosa, the rising Spanish player, and Ons Jabeur of Tunisia, the No. 2 women’s singles player and 2022 Wimbledon finalist who is the sport’s first major star from a Muslim country. Jabeur made it clear the organization doesn’t want any part of a golf-style dispute.“We don’t want to fight with everyone,” Jabeur said last Saturday, while expressing her determination to help the players get their due. “We just want to make our sport great.” More