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    Pressured by U.S., PGA Tour and Saudi Fund Drop Key Part of Golf Deal

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    The two parties had promised not to poach each other’s players. Their decision to abandon that clause removes one of the few binding provisions of the agreement that has rocked golf.The PGA Tour and Saudi Arabia’s sovereign wealth fund, facing pressure from the Justice Department about their ambitions for a new company to shape global golf, have in recent days abandoned a crucial provision of their tentative deal: a promise not to recruit each other’s players.The decision — and the Justice Department’s choice to raise concerns so early in a review that could lead to a government attempt to block the transaction — reflected the fragility, uncertainty and turbulence surrounding the deal.The framework agreement between the tour and the wealth fund included few binding provisions. But one of them was a nonsolicitation clause, which said the tour and wealth fund-backed LIV Golf league would not “enter into any contract, agreement or understanding with” any “players who are members of the other’s tour or organization.”The agreement also said the tour and LIV would not “solicit” or “recruit” players away from each other.Before the deal, LIV used norm-shattering prize funds and guaranteed contracts — some deals promised golfers at least $100 million — to entice some of the world’s top players away from the PGA Tour, which had spent decades as the premier, and largely unchallenged, circuit in men’s professional golf.Dustin Johnson, Brooks Koepka, Phil Mickelson and Cameron Smith were among the players who ultimately joined LIV, depriving the PGA Tour of some of the star power on which it had relied to draw fans and sponsors.The nonsolicitation clause was a short-term way to stop the exodus while the tour and the wealth fund negotiated the final terms for their new company, which would bring the golf business ventures of the PGA Tour, the wealth fund and the DP World Tour, formerly the European Tour, into a single entity.“My fear is if we don’t get to an agreement, they were already putting billions of dollars into golf,” James J. Dunne, a PGA Tour board member, said of the Saudi sovereign wealth fund. Kenny Holston/The New York TimesAfter the text of the agreement emerged late last month, though, antitrust experts warned that the clause could run afoul of federal law because it threatened the integrity of the labor market and promised to stifle competition for players, who have long been independent contractors.In recent days, people familiar with the change said, the tour and the wealth fund decided to abandon the provision in hopes of staving off an extraordinary intervention by the Justice Department. Golf officials disagreed with the department’s misgivings but acquiesced nevertheless.The original language appeared “to be right in the field of vision that the Department of Justice has staked out for its no-poaching enforcement program,” said William E. Kovacic, a former Federal Trade Commission chairman.“They haven’t had a great deal of success in their criminal cases yet,” he said. “But they have said, as a matter of policy, we regard no-poaching agreements as being as being a serious offense worthy of criminal prosecution.”The Justice Department and the wealth fund declined to comment on Thursday. In a statement on Thursday afternoon, the tour said it “chose to remove specific language” from the initial pact after it engaged with the Justice Department.“While we believe the language is lawful, we also consider it unnecessary in the spirit of cooperation and because all parties are negotiating in good faith,” the tour said.The tour formally notified its board of the decision on Thursday, after The New York Times asked the tour to comment on its reporting. A person familiar with the tour’s internal deliberations said the circuit’s leaders had already planned to inform the board on Thursday.Turmoil has enveloped the deal, which has not closed, since it was announced on June 6. On Tuesday, a Senate subcommittee questioned a pair of PGA Tour leaders during a lengthy hearing, part of at least two unfolding congressional inquiries. Tour executives have depicted the framework deal, and the final accord they hope to strike eventually, as necessary.Without some kind of truce, they have said, the wealth fund would assuredly pour more resources into the fight, diminishing the tour one year after another.“My fear is if we don’t get to an agreement, they were already putting billions of dollars into golf,” James J. Dunne III, a tour board member, said of the wealth fund when he addressed lawmakers on Tuesday. “They have a management team wanting to destroy the tour. Even though you can say take five or six players a year, they have an unlimited horizon and an unlimited amount of money.”The reviews on Capitol Hill could lead to damaging public revelations. But Justice Department scrutiny is seen as the more likely path for the government to try to derail the deal, if it chooses to try.Regulators and antitrust scholars have been watching the tour’s public statements with interest, such as when Jay Monahan, the tour’s commissioner, said on June 6 that the deal would let the circuit “take the competitor off of the board.”“Those are sound bites that the Department of Justice would look at and say, ‘Is what occurred promoting competition, or is what occurred stifling competition insofar as an entity with a monopoly grip on the market has eliminated a competitor and solidified their grip on the market?’” said Gerald Maatman Jr., who chairs the workplace class-action group at the law firm Duane Morris.Not every binding provision of the framework agreement has caused such substantial alarm among antitrust regulators. The wealth fund and the tour, for instance, agreed to dismiss acrimonious litigation over their golf pursuits. And although Senator Richard Blumenthal, the Connecticut Democrat who is leading one of the Senate inquiries into the deal, expressed concern this week about a nondisparagement pledge included in the agreement, experts said that kind of restriction was unlikely to draw concern inside the Justice Department. More

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      PGA Tour Wanted Greg Norman Ousted as Part of Saudi Deal

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      The American circuit’s efforts were made public in documents that Congress released on Tuesday.The PGA Tour sought the ouster of Greg Norman, the two-time British Open champion who became the commissioner of the insurgent LIV Golf league, as a condition of its alliance with Saudi Arabia’s sovereign wealth fund, according to records that a Senate subcommittee released on Tuesday.The tour and the wealth fund did not ultimately agree to the proposal — crafted as a so-called side letter to a larger framework agreement — and, for now, Norman remains atop LIV. But the deliberations reflect an enmity forged over decades of hostilities between the tour and Norman, one of the most talented players in professional golf history who often chafed at the sport’s economic structure.And they underscore the tensions that could linger if the deal closes.The glimpse into the negotiations between the tour and the wealth fund came as the Senate’s Permanent Subcommittee on Investigations began its first hearing into the arrangement, which calls for the business ventures of the tour, the wealth fund and the DP World Tour to be brought into a new, for-profit company.The plan is facing significant scrutiny in Washington, where some lawmakers have castigated the tour, once willing to condemn Saudi Arabia’s record of human rights abuses, for abruptly growing cozy with an arm of a coercive government. Beyond any congressional misgivings about the wealth fund’s ties to the Saudi government, Justice Department officials are also interested in whether the deal violates federal antitrust laws and whether they should try to block it.Senator Richard Blumenthal, Democrat of Connecticut, said in his opening statement on Tuesday that his subcommittee’s hearing was about “much more than the game of golf.”“It is about how a brutal, repressive regime can buy influence — indeed even take over — a cherished American institution to cleanse its public image,” Blumenthal, the subcommittee’s chairman, added, citing the kingdom’s record of killing journalists, abusing dissidents and having “supported other terrorist activities, including the 9/11 attack on our nation.”“It is also about hypocrisy, how vast sums of money can induce individuals and institutions to betray their own values and supporters, or perhaps reveal a lack of values from the beginning,” he continued. “It’s about other sports and institutions that could fall prey, if their leaders let it be all about the money.”The proceeding, held in a crowded Capitol Hill room that previously hosted Supreme Court confirmation hearings and meetings of the 9/11 Commission, included two senior PGA Tour leaders: the chief operating officer, Ron Price, and a board member who was intimately involved in the negotiations that led to the tentative deal that was announced on June 6.In an opening statement, Price argued that the tour, faced with the threat of competing with one of the world’s mightiest sovereign wealth funds, had little choice but to seek some measure of coexistence after months of acrimony in court and in jockeying for the allegiances of the world’s best players.“It was very clear to us — and to all who love the PGA Tour and the game of golf as a whole — that the dispute was undermining growth of our sport and was threatening the very survival of the PGA Tour, and it was unsustainable,” Price said. “While we had significant wins in litigation, our players, our fans, our partners, our employees and the charities we support would lose.”Tour leaders have acknowledged that with negotiations for a final agreement still unfolding, board approval is no certainty. Over the weekend, one member of the board, the former AT&T chief executive Randall Stephenson, resigned. In a letter about his exit, Stephenson said “the construct currently being negotiated by management is not one that I can objectively evaluate or in good conscience support.”Tour executives have been eager to show how the agreement leaves them positioned to run professional golf’s day-to-day operations. The tour’s commissioner, Jay Monahan, has been tabbed as the chief executive of the new company, expected to be called PGA Tour Enterprises, and the tour is expected to fill a majority of the company’s board seats.They have been far less keen to discuss how Yasir al-Rumayyan, the wealth fund’s governor, will serve as the chairman of PGA Tour Enterprises and how the framework agreement envisions sweeping investment rights for a Riyadh-based fund whose power and value have swelled in recent years.Neither al-Rumayyan nor Norman agreed to testify at Tuesday’s hearing, citing scheduling conflicts. But documents released by the subcommittee suggest that both will be factors in an inquiry that could last months.The effort to remove Norman was underway by May 24, when the PGA Tour board’s chairman, Edward D. Herlihy, sent a proposed side letter to Michael Klein, a banker working with the wealth fund. The proposal called for Norman, as well as a British outfit central to developing LIV, to “cease” working on LIV within a month of “the management transition to the PGA Tour.”Although Norman’s long-term fate has been uncertain — he was not a part of the negotiations that led to the preliminary deal, stoking questions about his relevance — it was not until Tuesday that it became clear that his future had been a subject of the talks.LIV did not comment on Tuesday, but three people with knowledge of the negotiations, who requested anonymity to discuss private talks, said the wealth fund had rejected the tour’s proposal.The documents that the Senate released also detail the deliberations over when and how to announce the deal; Klein was among the figures who said the tour and the wealth fund should not wait for a final agreement to disclose their newfound peace.And the records show how a British businessman with ties to the wealth fund and its advisers reached out to James J. Dunne III, now a tour board member and one of Tuesday’s witnesses, in December. In an email, the businessman, Roger Devlin, suggested that there could be a pathway to an armistice between the tour and the wealth fund.Dunne, at least at first, declined to engage in a substantive way.Devlin re-emerged in April, warning Dunne that there was “a window of opportunity to unify the game over the next couple of months” before, he thought, “the Saudis will doubledown on their investment and golf will be split asunder in perpetuity.”Although committee investigators told senators in a briefing memorandum that they did not know for certain how Devlin’s April message influenced Dunne, the tour board member contacted al-Rumayyan within days.Dunne, al-Rumayyan and a handful of others met in Britain soon after, starting negotiations that included a number of ideas that did not make it into the five-page text of the framework agreement. Those concepts, outlined in a presentation titled “The Best of Both Worlds,” included Tiger Woods and Rory McIlroy, who had pledged fealty to the tour, owning LIV teams and a “large-scale superstar” team golf event that would feature the world’s top men’s and women’s players.Although the initial deal between the tour and the wealth fund did not include some of those proposals, the final agreement is still being hammered out, a process that could take months.At least as of April, according to documents the Senate released, there was even talk of a deal including memberships for al-Rumayyan at Augusta National Golf Club and the Royal and Ancient Golf Club of St. Andrews — two of the most prestigious golf clubs in the world, but ones that are not controlled by the PGA Tour. More

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      How the PGA Tour and Liv Golf Merger Could Collapse

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      The tentative agreement has been the talk of golf, but there is no guarantee the pact that aims to bring the tour and LIV Golf under one umbrella will overcome every threat.Golf’s big deal — a planned partnership between the PGA Tour and Saudi Arabia’s sovereign wealth fund — is not how big deals are ordinarily done.There were almost no outside bankers or lawyers involved in negotiations that led to a five-page framework agreement, and only so much input from the PGA Tour board. The initial pact had few binding clauses and did not assign values to assets. The plan that would, as the PGA Tour commissioner, Jay Monahan, put it, “take the competitor off of the board” came as the tour faced a Justice Department investigation over antitrust matters.“In some ways, this looks a little more like a settlement to me than an actual M&A deal,” said Suni Sreepada, a partner in the mergers & acquisitions group at Ropes & Gray who said the lack of definitive arrangements complicated the path to closing.“The fact that they were willing to publicly announce it does mean that the parties are pretty committed to doing something,” Sreepada said. “But I guess that leaves us with a question of who holds the leverage at this point? And how does this end up getting fleshed out?”If the agreement closes, it stands to reshape golf’s economic structure profoundly, bringing the business ventures of the PGA Tour, LIV Golf and the DP World Tour, formerly the European Tour, into a new company. The wealth fund is in line to have significant influence over investments in the company, which Monahan is poised to lead as chief executive.Despite the Saudi sway over the new company’s coffers, as well as the plan for the wealth fund’s governor, Yasir al-Rumayyan, to serve as the entity’s chairman, PGA Tour officials have insisted that the tour retains control over the competitions themselves. They also note that the tour, which had previously condemned wealth fund money as tainted and immoral, will control a majority of board seats.“We are confident that once all stakeholders learn more about how the PGA Tour will lead this new venture, they will understand how it benefits our players, fans and sport while protecting the American institution of golf,” the tour said this month.Those assurances have done little to curb outrage over the pact, which could still fall apart.Here are some of the obstacles the tour, whose board is meeting near Detroit on Tuesday, and the wealth fund will have to overcome during a process that could take months. If the deal is not done by Dec. 31, it could potentially collapse, allowing both sides to decide whether they want to “revert to operating their respective businesses.”The PGA Tour’s board could balk.The tour has an 11-member board that includes five players. The board’s chairman, Edward D. Herlihy, and a member, James J. Dunne III, were involved in the talks with the wealth fund, but others had little knowledge of the deal until the day it became public.The board must sign off on the agreement once the outstanding details are negotiated. Although Herlihy and Dunne are expected to vote for the pact they helped create, most other board members have been publicly silent or noncommittal.“I told myself I’m not going to be for it or against it until I know everything, and I still don’t know everything,” Webb Simpson, a board member who won the 2012 U.S. Open, said in a recent interview. And at a news conference on June 13, Patrick Cantlay, another player with a board seat, said “it seems like it’s still too early to have enough information to have a good handle on the situation.”Beyond the anticipated backing from Herlihy and Dunne, Rory McIlroy, who sits on the board, has indicated reluctant support for the deal, saying: “If you’re thinking about one of the biggest sovereign wealth funds in the world, would you rather have them as a partner or an enemy?”Other directors have not responded to messages or could not be reached for comment.With many of the agreement’s details still being negotiated, the board did not vote on the deal on Tuesday.The Justice Department could try to block the deal.The Justice Department was looking at professional golf before the deal was announced, with antitrust investigators examining the tour’s closeness with other leading golf organizations and its efforts to deter players from joining LIV.The proposed partnership did not extinguish the department’s interest. In fact, it appears to have strengthened it.Although the tour and the wealth fund have refused to characterize the transaction as a merger, antitrust experts say semantics may not matter. Even if the deal is structured as more of a partnership than an acquisition, the Justice Department could seek to block it, as it successfully did with JetBlue’s alliance with American Airlines.Monahan stirred more doubts in Washington with his public observation that a leading rival would no longer be a threat. Antitrust lawyers said the department could interpret his remark as evidence that the elimination of competition is the aim of the deal, not, say, improving the sport.But Monahan also said the agreement would help create “a productive position for the game at large.” The tour is expected to focus on this in the coming months, arguing that by combining resources and repairing the rift in professional golf, the proposed venture would offer fans the best of all worlds, including more competitions between the finest players on the planet.A LIV Golf event at the Trump National Golf Club in Washington, D.C., this year.Chris Trotman/LIV Golf, via Associated PressThe end of the tension could help persuade regulators to approve the deal, reasoning that it is good for consumers.“If I were the lifetime czar of antitrust in the United States, I would ban the deal and tell them go back and compete,” said Stephen F. Ross, who teaches sports law at Penn State and worked for the Justice Department and the Federal Trade Commission.But, he said, “the real world is that neither private litigation nor antitrust enforcers have ever been particularly good at policing competition between sporting entities to make sure that consumers’ preferences are respected.”The department could also scrutinize how the arrangement will affect professional golfers, given the Biden administration’s focus on workers. In its successful effort to block Penguin Random House’s takeover bid for Simon & Schuster, the department’s antitrust regulators cited the potential effects on author compensation.Even though professional golfers, who often earn millions of dollars in prize and sponsorship money, may appear to be a less sympathetic group of workers than others affected by corporate transactions, the department could be eager to build case law related to the labor consequences of deals.Congress wants the Committee on Foreign Investment in the United States to study the pact.The deal has been loudly criticized on Capitol Hill, and a Senate subcommittee has scheduled a July hearing. But a Senate hearing cannot stop the deal, and so some lawmakers have asked a Treasury Department-led panel to intervene.The Committee on Foreign Investment in the United States, or CFIUS, is an interagency panel that has broad latitude to scrutinize any transaction that could result in a foreign entity controlling an American business and threatening national interests. Control is interpreted broadly, and can exist even in an investment for a minority stake.A transaction involving golf tours would not immediately seem to trigger a CFIUS review; it does not involve critical technologies and most likely does not involve much sensitive personal data about U.S. citizens. Janet Yellen, the Treasury secretary, said earlier this month that it was “not immediately obvious” the deal involved national security concerns.The demands for a review have not detailed specific concerns besides a generalized distaste for a partnership between an American sports titan and an arm of a government “known for chilling dissent, jailing dissidents and enacting draconian punishments,” as Senator Sherrod Brown, Democrat of Ohio, and Representative Maxine Waters, Democrat of California, put it.But one possible reason to scrutinize the deal involves real estate since CFIUS can review agreements involving property close to sensitive military sites. One of the PGA Tour’s biggest assets that could be controlled by the new for-profit entity is the Tournament Players Club collection of more than 30 golf courses across the United States that are owned, licensed or operated by the PGA Tour. More

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      PGA Tour and LIV Golf Seek to Drop Litigation Against Each Other

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      Although the tour’s deal with the Saudi wealth fund has not closed, the request to a federal judge was a milestone in golf’s surprise détente.The PGA Tour, LIV Golf and Saudi Arabia’s sovereign wealth fund asked a federal judge in California on Friday to dismiss the litigation that catapulted golf’s economic and power structure into the American court system.The request to dismiss the case with prejudice, meaning that it cannot be refiled, came less than two weeks after the tour and the wealth fund, which bankrolled LIV, announced a tentative agreement to form a partnership. Although the deal may not close for months and faces mounting scrutiny in Washington, Friday’s submission in Federal District Court in San Jose, Calif., was a milestone in the abrupt détente between the rival circuits.Judge Beth Labson Freeman, who has been overseeing the case, is expected to approve the request, a cornerstone of the tentative agreement between the tour and the wealth fund. By abandoning the litigation, LIV, the PGA Tour and the wealth fund are limiting the potential for damaging revelations and surging legal bills, as well as closing off one avenue for recourse if the new alliance falls apart.Justice Department officials, who were already conducting an antitrust inquiry into men’s professional golf, are expected to review the deal closely and could even try to block it or compel changes to it. At least two Senate panels are demanding information about the planned transaction and its consequences, and the deal has not even secured the approval of the PGA Tour’s board.Much about the agreement itself also remains in flux, including the valuations of the assets of the tour, LIV and the DP World Tour, formerly the European Tour, that are to be housed inside the new for-profit venture. The tour’s commissioner, Jay Monahan, is expected to serve as the company’s chief executive, and Yasir al-Rumayyan, the wealth fund’s governor, is poised to be its chairman. The PGA Tour expects to hold a majority of the seats on the new company’s board, but the wealth fund will have extensive power over how it is bankrolled, assuring the Saudis of significant influence.Until June 6, when the deal was announced, the PGA Tour had warned against allowing Saudi money and influence to take hold in golf, fueling California litigation that had a costly, complicated life.The acrimonious proceedings began last August, when 11 LIV players, including the major tournament champions Phil Mickelson and Bryson DeChambeau, brought a lawsuit that accused the tour of violating antitrust laws. LIV itself joined the case later that month.The tour also pursued its own claims against LIV, which it said had improperly interfered with existing contracts with players. The tour later received Judge Freeman’s approval to expand its case to include the wealth fund itself and al-Rumayyan, just one of the rulings that placed pressure on the Saudis and their allies, whose superior financial resources put the tour under immense strain.The tour, the wealth fund and LIV waged a ferocious battle over evidence collection in the case, and many filings in the case were redacted, but a federal magistrate judge concluded this year that the wealth fund was “the moving force behind the founding, funding, oversight and operation of LIV,” undercutting its contention that it was a passive investor in golf.A trial had not been expected until at least next year.Hours before Friday’s filing from the tour and LIV, The New York Times filed a motion that asked the court to unseal records in the case. The Times cited a “substantial and legitimate public interest in these proceedings and their outcome” and suggested that the planned partnership could make concerns of competitive harm moot.“To the extent that competitive harm existed at the time of sealing, those justifications may not apply with the same force today — or upon completion of the parties’ anticipated merger,” The Times’s filing said. “Sealing is a decision that can and should be revisited as facts change and circumstances require.”It was not clear when the judge would rule on either of Friday’s motions. More

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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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      Senate Opens Inquiry Into PGA Tour Deal with Saudi-Funded LIV Golf

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      The PGA Tour and LIV have been asked to provide documents and communications tied to the agreement announced last week.The PGA Tour and LIV Golf have not yet closed a stunning partnership agreement announced only last week, but vows from Washington to slow or stop the deal — or at least make it uncomfortable for golf executives — crystallized on Monday, when the Senate opened an inquiry into the arrangement.Senator Richard Blumenthal, Democrat of Connecticut and the chairman of the chamber’s Permanent Subcommittee on Investigations, said Monday that he had demanded that both the PGA Tour and the Saudi Arabian-funded LIV give up a wide array of documents and communications tied to the agreement. Blumenthal also asked for records related to the PGA Tour’s nonprofit status, suggesting an appetite to challenge the tour’s tax-exempt standing.In a statement issued three days before the start of the U.S. Open in Los Angeles, Blumenthal decried Saudi Arabia’s “deeply disturbing human rights record at home and abroad” and said the agreement raised 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.”LIV declined to comment on Monday. In a statement on Monday afternoon, the PGA Tour said it was “confident that once Congress learns more about how the PGA Tour will control this new venture, they will understand the opportunities this will create for our players, our communities and our sport, all while protecting an American golf institution.”Congress cannot block the agreement simply by opening an investigation, and any legislation to derail the deal would almost certainly provoke a court challenge. But congressional scrutiny and, perhaps, public hearings could tarnish the deal and make the months ahead even more unpleasant for the leaders of professional golf.Blumenthal has shown a willingness to spar with sports executives. Lately, he has pressed American universities for information about their sports betting partnerships, and he has lashed the N.C.A.A. leadership for years over conditions for college athletes.Although the planned deal has caused some heartburn and saber-rattling on Capitol Hill, Congress has not shown unanimous interest in haranguing golf leaders over it. Senator Ron Johnson, the Wisconsin Republican who is the ranking minority member on the panel that Blumenthal chairs, said last week that Congress should stay out of sports.The PGA Tour’s agreement with the Saudi Public Investment Fund, whose LIV circuit made its debut last year, would bring the business dealings of the rival tours into a new company. The PGA Tour commissioner, Jay Monahan, is in line to serve as its chief executive, and Yasir al-Rumayyan, the wealth fund’s governor, will be its chairman.Under the terms of the agreement, the Saudi wealth fund will have exclusive rights to invest in the new company, positioning it for significant influence over golf’s financial future. PGA Tour officials have insisted, to widespread doubts, that they will be the ultimate decision makers because their allies will hold a majority of the new company’s board seats.Professional golf attracted the gaze of Washington regulators before last week’s announcement. Antitrust investigators from the Justice Department have spent months asking questions about the tour’s efforts to deter player defections to LIV and examining whether the tour’s top leaders were too close to other prominent golf organizations, like Augusta National Golf Club, the organizer of the Masters Tournament.The department has brought no public allegations of wrongdoing and has not commented on last week’s announcement of a deal. But antitrust experts have warned that the department is virtually certain to study it closely and may even step in to try to block it.Tour executives have expressed confidence that the agreement will withstand any legal challenges. More

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      Phil Mickelson Interviewed in Antitrust Inquiry Into Pro Golf

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      The Justice Department met with PGA Tour lawyers this week, but a timeline for the completion of its review is unclear.PITTSFORD, N.Y. — The Justice Department’s antitrust inquiry into men’s professional golf has included interviews with players, including the major tournament winners Phil Mickelson, Bryson DeChambeau and Sergio García, as the authorities examine whether the PGA Tour sought to manipulate the sport’s labor market.The department, which has been conducting its investigation since at least last summer, has also explored the specter of collusion in the Official World Golf Ranking and the tight-knit relationships between the leaders of the PGA Tour and the distinct organizations that stage the Masters, the P.G.A. Championship and the U.S. Open.Although lawyers for the PGA Tour met with Justice Department officials in Washington this week, a timeline for the review’s completion — much less whether the government will try to force any changes in golf — is not clear. But the inquiry’s scope and persistence has deepened the turbulence in the sport, which has been grappling with the recent rise of LIV Golf, a league that used money from Saudi Arabia’s sovereign wealth fund to lure top players away from the PGA Tour.Eight people with knowledge of the Justice Department’s inquiry described its breadth on the condition of anonymity because the investigation was pending. The department declined to comment.Unlike Major League Baseball, no golf organization has a blanket exemption from federal antitrust laws. A handful of organizations that have close ties to one another have run golf’s top echelon for generations but have withstood some scrutiny in the past.The PGA Tour, the dominant professional circuit in the United States and LIV’s opponent in a pending antitrust lawsuit that the rebel league brought last year, stages tournaments that have often made up the majority of golfers’ competition schedules. But the tour does not run the four so-called major tournaments, which are the sport’s most cherished events and important ways for players to earn prize money and sponsorship-sparking clout.This week’s P.G.A. Championship, for instance, is being overseen by the P.G.A. of America at Oak Hill Country Club, just outside Rochester, N.Y. The U.S. Open is organized by the United States Golf Association, and Augusta National Golf Club administers the Masters Tournament. (The R&A, which organizes the British Open, is based in Britain.)The groups have not moved in lock step since LIV debuted last year — the circuit’s players, for example, have not faced bans from the majors — but professional golf’s establishment has remained a focus of antitrust investigators. Lawyers for LIV have cheered the government’s scrutiny and have regularly communicated with Justice Department officials, who have taken no stance on the league’s lawsuit against the PGA Tour and have not intervened in the case.“If the system is rigged, then consumers are not getting the best product, and if that is the result of an agreement between two or more parties, then that becomes a violation,” said Stephen F. Ross, who teaches sports law at Penn State University and previously worked for the Justice Department and the Federal Trade Commission.The PGA Tour, which declined to comment on Wednesday but has aggressively denied wrongdoing and predicted that the department’s inquiry would fizzle, adopted a hard line last year when LIV emerged. It threatened, and then imposed, suspensions to discourage players from defecting to the Saudi-backed league, which has offered guaranteed contracts sometimes worth $100 million or more and provided some of the richest prizes in golf history.Tour executives have insisted that their strategy was rooted in membership rules designed to protect the collective market power of elite players in matters like television-rights negotiations and tournament sponsorships, and that golfers who breach rules they agreed to can be disciplined. But investigators have shown interest in the possibility that the tour’s punitive approach threatened the integrity of golf’s labor market, which now includes a LIV faction that vocally argues that players are independent contractors who should be free to compete on tours as they choose.The department’s inquiry swiftly moved beyond a superficial glance at LIV’s public complaints and came to include interviews with some of golf’s most recognizable figures.Mickelson, who has won six majors, including the 2021 P.G.A. Championship that at 50 made him the oldest major tournament winner in history, has been a fearsome public critic of the PGA Tour. He accepted a reported $200 million in guaranteed money to join LIV last year, provoked a firestorm when he played down Saudi Arabia’s record of human rights abuses and, last month, all but silenced people who doubted his remaining playing potential when he tied for second at the Masters.DeChambeau was a sensation when he captured the 2020 U.S. Open title, and García, a Masters winner, first starred at a major in the 1990s and has been among the most distinguished European golfers of his generation.LIV golfer Bryson DeChambeau signed autographs for spectators on Wednesday during a practice round ahead of the P.G.A. Championship.Desiree Rios/The New York TimesRepresentatives for Mickelson and DeChambeau declined to comment. A representative for Garcia did not respond to messages requesting comment.LIV declined to comment. But the league’s commissioner, Greg Norman, publicly hinted in March at the circuit’s cooperation with the Justice Department investigation.“The D.O.J. came, trying to understand the antitrust side of things,” Norman said during an appearance in Miami Beach. “So the PGA Tour created this other legal front that they have to fight.”The review of the tour’s labor practices could prove the most consequential element of the investigation, antitrust experts said, if the Justice Department finds fault with the circuit’s approach.“That one goes more to the sort of core of what the PGA is,” said Paul Denis, a retired Justice Department official who later worked on antitrust matters in private practice. “If that’s where they’re headed, that’s much more significant because that really does affect their business model in terms of their relationship with the players.”But American regulators have also become increasingly mindful of the close ties among golf’s most powerful organizations and their executives and administrators.That prong of the investigation is not unique to the golf inquiry. During the Biden administration, the Justice Department’s antitrust division has shown particular concern about people serving in multiple top roles for potential competitors, and its misgivings have sometimes led directors of public companies to surrender board seats.In October, Jonathan Kanter, the assistant attorney general for the antitrust division, said that the prohibition on overlapping service was “an important, but under-enforced, part” of federal law.Whether the Justice Department seeks to compel changes in executive or board leadership in golf may hinge on whether Kanter and his lieutenants believe they can prove that the PGA Tour is a competitor to a major tournament organizer, a notion that tour executives have privately scoffed at and used to cast doubt on the strength of the department’s potential case. The tour and the major tournaments jockey for television-rights fees and sponsorships, but they are far from head-to-head rivals in many senses.They do, however, cooperate.The tour has a stake in the world ranking system, which major tournaments use, in part, to determine their fields. Along with the tour, Augusta National, the P.G.A. of America and the U.S.G.A. also have seats on the ranking system’s governing board, and all of them supply personnel for its technical committee.Player rankings are based on a complex formula that considers performances in accredited tournaments, from PGA Tour events to competitions on circuits that draw little notice. Since administrators have not yet acted on LIV’s application to participate in the system — LIV executives have acknowledged that the league would require special dispensations to be accepted immediately — its golfers have slid downward in the ranking, threatening their future participation in the majors. (Jay Monahan, the tour’s commissioner, has recused himself from deliberations about LIV’s bid to join the system.)Jonathan Kanter, the assistant attorney general for the Justice Department’s antitrust division.Carolyn Kaster/Associated PressThe Justice Department’s inquiry is of substantial importance to LIV Golf, which has faced setbacks in its lawsuit against the PGA Tour. But the league has spent months stoking chatter about the federal investigation, its potential implications for the PGA Tour — and the potential benefits for LIV.The tour has countered that effort by citing its record: an F.T.C. inquiry that lasted years and ended in 1995 without any action against the tour.Shortly beforehand, Norman’s first quest to start a global circuit to rival the PGA Tour collapsed.David McCabe More

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      LIV Golf Threw a Sport Into Chaos. It Also Changed It.

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      The Saudi-backed golf series, which will expand next year, has forced the PGA Tour to redesign its economic model. The drama between the two golf entities seems far from over.DORAL, Fla. — To hear the 52-year-old Phil Mickelson’s account, whatever happened this year in his golf career — a greed-fueled rupture, a simply-business parting of ways, an inevitable estrangement, a lucrative exercise in denial and downplaying — has yielded something close to sublime.“I see LIV Golf trending upward, I see the PGA Tour trending downward and I love the side that I’m on,” Mickelson said this month in Saudi Arabia, the country whose sovereign wealth fund bankrolled the new LIV Golf circuit, including a Mickelson contract believed to be worth about $200 million.As the series closes its first season Sunday, when its team championship event is to be decided at Trump National Doral Golf Club and a $50 million prize fund divided, it can credibly claim that it has disrupted men’s professional golf more than anything else since the late 1960s, when what would become the PGA Tour emerged.It has done so with a checkbook that seems boundless, nearly unchecked brazenness and self-assurance, and the political cover of a former American president who has looked past Saudi Arabia’s record on human rights. It has not, though, been a romp without resistance or an instantaneous and definitive dethroning of the old order.The PGA Tour, now redesigning its economic model so urgently that it is tapping reserve funds, still commands the bigger roster of current stars and the loyalties of the tournaments that matter most to history. The tour, less tainted by geopolitics, has lucrative television deals; LIV Golf is on YouTube. Players earn world ranking points at PGA Tour events; they drop in the rankings the longer they compete in the new series. Dustin Johnson knows this well, as he is now No. 30, down from No. 13 when he signed with LIV in May. (But perhaps Johnson does not mind all that much: He captured LIV’s individual championship and has won at least $30 million on the circuit this year, after accruing about $75 million in career earnings during a PGA Tour tenure that started in 2007.)Dustin Johnson’s world ranking has fallen to No. 30 from No. 13 when he joined LIV Golf in May.Ross Kinnaird/Getty ImagesWhat many golf executives are figuring out, though, is that it is possible to revile much about LIV, from its financial patron to its devotion to 54-hole tournaments to its defiant dispensing of starchy atmospheres, and yet recognize that the PGA Tour had left itself vulnerable to at least a spasm of drama. Tiger Woods and Rory McIlroy, who ascended again to the world’s No. 1 ranking after a tour event last weekend, have been two of LIV Golf’s foremost critics — and two leading architects of a new strategy to fortify and reinvent a PGA Tour that had some popular players feeling undervalued and some younger ones struggling for financial breakthroughs.A Quick Guide to the LIV Golf SeriesCard 1 of 6A new series. More

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      Augusta National and U.S.G.A. Drawn Into Justice Department Antitrust Inquiry

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      The Justice Department is investigating the PGA Tour for anticompetitive behavior in its dealings with LIV Golf, the breakaway Saudi-backed league.DORAL, Fla. — The Justice Department’s antitrust inquiry into men’s professional golf — a sport splintered this year by the emergence of a lucrative circuit financed by Saudi Arabia’s sovereign wealth fund — has in recent months come to include the organizers of some of the most hallowed and influential tournaments in the world, according to people familiar with the matter.The United States Golf Association, which administers the U.S. Open, acknowledged on Wednesday that the Justice Department had contacted it in connection with an investigation. Augusta National Golf Club, which organizes the Masters Tournament, and the P.G.A. of America, which oversees the P.G.A. Championship, have also drawn the gaze of antitrust officials.The federal inquiry is unfolding in parallel with a separate civil suit filed in California by LIV Golf, the new Saudi-backed series, accusing the PGA Tour, which organizes most of the week-to-week events in professional golf, of trying to muscle it out of the marketplace. Moreover, LIV has contended that major tournament administrators, such as Augusta National and the P.G.A. of America, aided in the PGA Tour’s urgent efforts to preserve its long standing as the premier circuit in men’s golf.LIV, for instance, has accused the leaders of the R&A, which runs the British Open, and Augusta National of pressuring the Asian Tour’s chief executive over support for the new series. LIV also said that Fred S. Ridley, the Augusta National chairman, had “personally instructed a number of participants in the 2022 Masters not to play in the LIV Golf Invitational Series” and that the club’s representatives had “threatened to disinvite players from the Masters if they joined LIV Golf.” (A handful of golfers, including Phil Mickelson, joined the lawsuit but later withdrew their names from it, content to let LIV Golf wage the courtroom fight.)LIV executives have also fumed over perceived stalling by Official World Golf Ranking administrators to award ranking points to LIV players, who include Dustin Johnson, Brooks Koepka and Cameron Smith. The ranking system’s governing board includes executives from each of the major tournament organizers, as well as the PGA Tour.A Quick Guide to the LIV Golf SeriesCard 1 of 6A new series. More