More stories

  • in

    PGA Tour Board Meets To Discuss Merger With Saudi-Backed LIV Golf

    The 11-member board did not vote on the surprise pact, whose most significant details are still being negotiated.The PGA Tour’s board, with its members gathered in the same room for the first time since a fraction of them negotiated a deal with Saudi Arabia’s sovereign wealth fund to reshape golf, signaled Tuesday that it intended to move ahead with the agreement and past an outcry that has stretched from clubhouse locker rooms to Capitol Hill.But it also made plain that closing the deal was no certainty.The board, as expected, did not vote on a deal stocked with tentative terms that call for a web of golf businesses — including the tour, the Saudi-backed LIV Golf circuit and the European Tour, now known as the DP World Tour — to be housed in a new company. The entity is expected to be flush with Saudi cash but, for now, under the day-to-day control of PGA Tour leaders. But executives hoped that the regular meeting of the board, which is expected to weigh the pact formally only once final terms are negotiated, would help stabilize the tour’s course during a turbulent run of internal division and global scrutiny.That period, executives and board members know, could last for months.Tour executives, the board said in a carefully worded statement Tuesday night, have “begun a new phase of negotiations to determine if the tour can reach a definitive agreement that is in the best of interests of our players, fans, sponsors, partners, and the game overall.”The board, wary of further alienating the players who make up the tour’s membership, some of whom were infuriated after being blindsided by news of the pact, said it was “committed to the safeguards in the framework agreement that ensure the PGA Tour would lead and maintain control of this potential new commercial entity.”The board’s meeting came three weeks after the surprise announcement of the deal, and one day after the tour gave a Senate subcommittee a copy of the five-page framework agreement. The tentative accord, signed in the early-morning hours of May 30 at a Four Seasons hotel in San Francisco, capped seven weeks of secret negotiations, but it was mostly notable for how few binding commitments it included — and how many consequential details remained to be sorted through.Although the tour and the wealth fund are expected to contribute their golf ventures, like LIV, into the new company, the deal’s architects signed the framework agreement so quickly that no valuations were included or, apparently, even completed in advance. The agreement does not quantify the scale of the wealth fund’s expected investment in the new company, though it offers an outline for its leadership structure and protects the Saudi fund’s investment rights.Its few binding clauses include a nondisparagement pledge covering the tour and the wealth fund (but not the players) and a truce that keeps the rival circuits from recruiting golfers from one another. If a final agreement is not in place by the end of the year, barring a mutual extension, the tour and the wealth fund can “revert” to their businesses without any financial penalty, like a breakup fee.Board approval, if it comes, does not guarantee that the deal will last. The Justice Department’s antitrust regulators are among the government officials examining the accord, and they could ultimately try to block it. The pact is also poised to draw scrutiny next month on Capitol Hill, where a Senate subcommittee has scheduled a hearing for July 11.But Tuesday’s meeting was seen as pivotal to the way forward for the tour and an 11-member board that includes five players and luminaries in business, law and finance. Only two members of the board, Edward D. Herlihy and James J. Dunne III, were involved in the negotiations that led to the deal, and it appears many board members did not know they were underway.The board meeting, held at a Detroit-area hotel, began in the early afternoon and stretched into the evening. A person familiar with the meeting, who spoke on the condition of anonymity to describe a private gathering, said it had not focused entirely on the deal; rather, the person said, the board also spent significant time on more technical matters of the sport, such as competition cuts and eligibility.The majority of the meeting focused on the framework agreement, though, with board members receiving a briefing from the tour’s bankers about how they will try to assign values to the circuit’s varied assets. Jay Monahan, the PGA Tour commissioner, was absent from the meeting in Dearborn; on June 13, the tour announced that he was going on leave as he recuperated from an unspecified “medical situation.”Board members did not comment as they left the meeting, allowing the statement to stand on its own. Only one player who sits on the board, Rory McIlroy, has publicly suggested any measure of support for the deal. In recent weeks, other players have said they wanted to learn more about the accord and what it would mean for the tour.But board members have been told in recent months that the tour could not afford to maintain its duel with LIV, the league founded with billions of dollars from the Saudi wealth fund that enticed some of the game’s biggest stars with guaranteed contracts and enormous prize money. The wealth fund was also facing some pressure as it confronted setbacks in a court battle against the tour, and as LIV struggled to attract audiences and attention in the United States for reasons beyond its financial backer.If the deal collapses, though, both sides have already secured a mutual victory: the dismissal of litigation in California after the tour, the wealth fund and LIV agreed to drop their clashing cases. The dismissals were made with prejudice, meaning that they cannot be refiled, even if the rest of the pact disintegrates.For as guarded as the tour’s statement was on Tuesday night, the dismissal of the litigation was mentioned in its very first sentence. More

  • in

    Washington Spirit’s Michele Kang Wants to Take Women’s Soccer Clubs Global

    “Transforming Spaces” is a series about women driving change in sometimes unexpected places.Y. Michele Kang did not expect to be here.As the founder and chief executive of Cognosante, a health care technology company, she had made a name for herself as a “reasonably successful businesswoman,” she said.At this point in her career, she explained, she thought she might start spending more time on her philanthropic work. Instead, she has become an influential figure in the world of professional women’s soccer.“I don’t think I’ve been as passionate about anything as I am now about women’s soccer,” Ms. Kang said.In March 2022, she purchased the Washington Spirit, becoming the first woman of color to own a controlling stake in a National Women’s Soccer League team. The sale came after a long and contentious battle in which players and fans called for Steve Baldwin, the chief executive at the time, to sell the team to Ms. Kang in the wake of allegations of abuse brought against the team’s former coach.Just a year later, she is now set to become the first woman to own and lead a multiteam soccer organization, which will encompass both the Spirit and the French club Olympique Lyonnais. The all-stock deal, which is expected to close in late June, will create a new independent entity under Ms. Kang as majority owner. She is already talking of adding more teams from around the world.As Ms. Kang’s profile has risen, questions remain about how much she can do in a league and a sport where abuse has been rampant and leaders have failed to protect players. Trust in longtime N.W.S.L. coaches and staff members can be on shaky ground. Who knew of abuse and turned the other way? How do you build a new culture from the ground up?Her response lies in equal parts investment and trust. Players and staff had endured a “horrific situation,” she said of abuse allegations, including accusations that the coach of the team she owned had fostered a toxic workplace culture for female employees.“I don’t want to overplay that I’m a woman, or a person of color, therefore I’m the only one who can understand our players,” she said, speaking of members of the Washington Spirit, “but there is a little bit of a sense of trust and comfort and familiarity that I am very glad to provide so that they feel comfortable coming up to me and talking to me about any issues.” She wishes she could say any of this — her purchase of a N.W.S.L. team, her creation of a multiteam organization, her hopes to help transform the culture around women’s soccer — were all part of a grand vision. But that is not the case.A few years ago, she didn’t know much about the sport. So little, in fact, that friends accused her of not knowing Lionel Messi, one of the world’s most famous players.Her retort? “Well, I did know who Pelé was.”Ms. Kang in 2021, as the Spirit’s co-owner, celebrating after the team won the National Women’s Soccer League championship on Nov. 20 in Louisville, Ky.Tim Nwachukwu/Getty ImagesMs. Kang grew up in Seoul in a home where education was prized. Her mother demanded excellence and her father always told her “there is nothing I couldn’t do that the boy next door could,” a sentiment that was more of a rarity growing up in South Korea in the 1960s.As she began to study business and economics in Seoul, she realized her dreams extended beyond her home country. The center of the business world was in America, she said, so with the eventual blessing of her parents, that’s where she decided to go. It was quite a bold move for a young single Korean woman at the time. She earned a degree in economics from the University of Chicago and went on to earn a master’s degree from the Yale School of Management.And so began not a five-year plan but a 30-year plan. The goal was to build enough experience to become the chief executive of a large company. Her work kept her in motion. Ms. Kang estimates she moved between 20 and 30 times.In the midst of the recession of 2008, around the time she expected to join a major company, she started her own. Like many entrepreneurial stories, what would become Cognosante, a multimillion-dollar company, began in a room above her garage in the Washington, D.C., area.“I had a reasonably successful company,” she said of Cognosante, “I thought that was my business career.”That was until 2019, when Ms. Kang, whose business accomplishments were well-known, was invited to join the Spirit’s ownership group after the U.S. women’s national team won the World Cup that year. Ms. Kang didn’t know much about soccer, and she still had her own company to run, she recalled. But she was curious enough to spend six months getting to know the owners and players. She thought about the mentorship she was already doing. Why not this too?She joined the ownership group in late 2020, walking into a league and a team that would face a public reckoning and an extraordinary upheaval.In the spring of 2021, she was made aware of ongoing accusations of verbal and emotional abuse at the hands of Richie Burke, the Spirit’s former head coach. Ms. Kang said multiple people came to her with their concerns. Mr. Burke was fired from the team in September 2021. The accusations were recounted in a series of published reports, and many employees had quit the team amid reports of a toxic workplace culture.Ms. Kang was working to take majority control of the team as players and fans called for Mr. Baldwin, then the chief executive, to sell the Spirit. The transfer of power did not come easily. Spirit players demanded that Ms. Kang be the new owner, but it would be months before Mr. Baldwin stepped down and Ms. Kang was able to acquire the necessary shares.“Let us be clear,” a letter to Mr. Baldwin from the team’s players stated. “The person we trust is Michele. She continuously puts players’ needs and interests first. She listens. She believes that this can be a profitable business and you have always said you intended to hand the team over to female ownership. That moment is now.”The Spirit deal closed on March 30, 2022.Ms. Kang hugs Spirit goalkeeper Aubrey Kingsbury after a May match against San Diego Wave F.C. at Audi Field.Geoff Burke/USA Today Sports, via ReutersMs. Kang’s influence grew quickly in the midst of a wave of new investment, and interest in, the women’s game.In the summer of 2020, an eclectic group of owners including the actors Natalie Portman and Eva Longoria, the soccer legend Mia Hamm and the tennis great Serena Williams announced the creation of a team in Los Angeles, Angel City F.C., which made its debut in 2022, along with another expansion club, the San Diego Wave. An additional club, Racing Louisville F.C., joined the league in 2021, and the Utah Royals were sold and their assets moved to a new franchise in Kansas City, the Current. The Utah Royals will be added back to the N.W.S.L. in the 2024 season, along with another expansion club, Bay F.C. The league, now in its 11th season, is already looking at further expansion.None of this is a surprise to Ms. Kang, who seems dumbfounded if not frustrated by how anyone could undervalue a women’s professional soccer league, or why there has been a lag in investments.“I give full credit to people who carried the teams,” she continued, speaking of past N.W.S.L. owners. “But it was being viewed as a charity or a nonprofit, and business disciplines were not applied from where I stand.”That attitude signals legitimacy in a unique way, said Natalie L. Smith, an associate professor of sports management at East Tennessee State University who studies women’s soccer.If Angel City signaled legitimacy through celebrity, she said, Ms. Kang signals worth through business investment, which sends a message to other potential investors as well.These moves come in the midst of two transitions in the world of soccer, said Stefan Szymanski, an economist at the University of Michigan and the co-author of “Soccernomics.” “One obviously is the rise of women’s soccer, which is long overdue and which seems to be going places quite rapidly in the moment. The second is the transformation of soccer ownership and the management of clubs generally worldwide.”“We don’t feel that women are small men,” said Ms. Kang, at Audi Field. She added that female athletes should be trained with a specific understanding of their physiology and biology.Lexey Swall for The New York TimesMs. Kang, who turns 64 this month, now speaks like a student of the game. She is eager to listen and to learn, and to navigate the complexities of team ownership, ones that in her current purview are not so complex at all. It’s a trait that has made her popular and trusted among the players and staff on her team.“We don’t feel that women are small men,” she said, echoing a sentiment reflected in the lack of studies done specifically on women’s athletics. “We are not going to borrow a manual from the men’s soccer team. We want to understand women’s physiology and biology and train our athletes according to that.”To that effect, Ms. Kang has hired experts to develop programs for how training may, or should, differ during menstrual cycles. It’s a worthwhile place to put funding, she said, and the experience has helped her realize what her footprint could be in the greater soccer world.“There’s no reason I should only do that for the Spirit,” she said, adding: “And frankly, to do that for one team is a real significant investment.”It’s part of what pushed her to think more globally. Ms. Kang looked to Lyon, a dominant European team that has historically recruited top American players including Aly Wagner, Hope Solo, Megan Rapinoe and Alex Morgan. She spoke excitedly of scouting players internationally, of designing training centers and bigger stadiums, of next steps for expansion.“There is always this push-pull of the greater good when it comes to the women’s football community, which is something that benefits these clubs,” said Ms. Smith, the sports management professor, of Ms. Kang’s expansion. “She does want the game to grow, but she also wants her teams to win.”It will surely not be a straightforward road. There are questions around what could be conflicts of interest in an already dubious labor market. But her biggest test may be with fans outside of the United States.“Americans are little bit docile when it comes to sports and who runs them,” said Mr. Szymanski, the co-author of “Soccernomics.” He added, “In Europe, people just don’t see it like that. They say, ‘This is our sport, not your sport. You may temporarily be here and we’ll give you your due if you put money in, but this is not all about you. This is about the sport.’”Ms. Kang remains undeterred.“It’s not rocket science,” she said with a smile. More

  • in

    For PGA Tour Players, Betrayal and Confusion in Saudi Deal’s Wake

    Members of America’s most famous golf tour thought they had a voice. Then came a surprise pact that could reshape the sport for years to come.The U.S. Open winner Gary Woodland had lately sensed something different in professional golf.Players were empowered and emboldened. Executives were listening. The PGA Tour was changing. With the circuit’s dominance challenged by LIV Golf, an upstart built with billions of dollars from Saudi Arabia’s sovereign wealth fund, the tour felt closer to a cooperative than a dispassionate titan of professional sports.Then came the tour’s surprise announcement on June 6 that, after it had lobbied players to forsake the Saudi money it had associated with human rights abuses, the PGA Tour and the wealth fund would join forces. None of the five players who sit on the tour’s board learned of the deal more than a few hours before it became public.“It was turning toward players being heard over the last year,” Woodland, who became a professional golfer in 2007, said at the Los Angeles Country Club, where the U.S. Open will conclude on Sunday. June 6, he said, showed that the voices of tour players had suddenly been “thrown out the door a little bit.”Woodland is not an outlier. In interviews and during news conferences at the Open, top players described a shaken faith in a PGA Tour they believed had recently offered them more meaningful agency and greater influence. The tour’s ability to ease the restive atmosphere could influence whether the deal, which is facing significant skepticism inside the tour and in Washington, advances in the coming months.Compared to other prominent professional sports leagues in the United States, the PGA Tour, a tax-exempt nonprofit, has an unusual structure.Unlike in, say, the N.B.A. or the N.F.L., there are no team owners, and there is no labor union. Instead, players are independent contractors who earn eligibility for PGA Tour membership. Tour members do not generally have financial guarantees — they may, however, earn money through assorted sponsorships — but receive tour paychecks tied to their on-course performances. (When Viktor Hovland won the Memorial Tournament this month, he earned $3.6 million of the event’s $20 million prize fund. Golfers who did not play well enough to secure places in the final two rounds collected nothing.)In return for access to tour events and purses, players allow the circuit to negotiate television rights deals on their behalf, among other conditions. Even without a labor union, players theoretically have a say in tour operations: The 11-member board includes five seats for players, and there is a 16-player council that “advises and consults” with board members and the tour’s commissioner, Jay Monahan.But when tour leaders negotiated a framework agreement to reshape the sport in the most consequential ways since the modern tour’s founding in the 1960s, players were not in the room. Rory McIlroy, the world’s third-ranked golfer and a member of the tour’s board, learned of the deal a week after it was signed behind closed doors at a Four Seasons hotel in San Francisco.Deepening the turmoil, the tentative deal makes little about the future clear, mostly because lawyers and executives are still haggling over the fine print that stands to determine much about how the sport will be organized, funded and operated.“It’s just not easy as a player that’s been involved, like many others, to wake up one day and see this bombshell,” Jon Rahm said.Marcio J. Sanchez/Associated Press“I think the general feeling is that a lot of people feel a bit of betrayal from management,” said Jon Rahm, the winner of this year’s Masters Tournament.“It’s just not easy as a player that’s been involved, like many others, to wake up one day and see this bombshell,” he added. “That’s why we’re all in a bit of a state of limbo because we don’t know what’s going on and how much is finalized and how much they can talk about, either.”The sense of duplicity, some players suggested, might not be so severe had they not grown confident in the notion that they were increasingly central to developing the tour’s path for the years ahead.As Tiger Woods receded from golf’s spotlight, Woodland observed, players found their sport searching for figures to help set its tone and direction.“When I first started, you just went out and played and who knows what was going on,” said Woodland, who remains close to Woods. “It was pretty much everyone jumped on Tiger’s coattails and we just went.” More recently, Woodland said, “guys are starting to get a little more of their own voice, and you’re starting to see different opinions.”Faced with the rise of LIV Golf, players had helped devise changes to the tour’s format and schedule. During a private meeting in Delaware last summer they tried to hash out adjustments that could help curb an exodus to LIV. Afterward, Monahan declared that the Delaware meeting “represents a remarkable moment for the PGA Tour and showcases the essence of what being a membership organization is all about.”By the middle of last month, though, Monahan was in Venice for secret talks with Yasir al-Rumayyan, the governor of the Saudi wealth fund. Two board members, neither of them players, were on the trip to Italy. The men later gathered in San Francisco over Memorial Day to finish up the framework deal. Afterward, the circle of people who knew about the planned partnership expanded, but did not include any players until June 6, when tour and Saudi officials announced the pact. Some players learned about it on Twitter.The mood inside the tour only worsened as it became apparent that the deal had been constructed in extraordinary secrecy, with players’ representatives on the board shut out of the talks.Joel Dahmen said he recognized that voices of midlevel players like him would receive only so much priority in the tour’s strategic deliberationsEtienne Laurent/EPA, via Shutterstock“We were given the impression that we were being heard,” said Joel Dahmen, a professional player since 2010 whose public profile soared this year when he appeared in the Netflix documentary series “Full Swing.”Dahmen, a self-described “midlevel” guy, said he recognized that voices like his would receive only so much priority in the tour’s strategic deliberations. But many golfers were flabbergasted that even its greatest headliners were kept away from the negotiations, even as some of their colleagues said they understood that it was impractical to expect tour officials to confer with the entire membership in advance.“If you have to consult every player, then probably nothing’s ever going to happen, and that’s the balance for any organization,” said Adam Scott, the 2013 Masters winner and former world No. 1 player who chairs the tour’s Player Advisory Council. “It’s like the golf club at home: They’ve got the members’ committee, and a few on that committee get to influence decisions.”“It’s a player-centric tour,” Scott added, “but it depends where you’re sitting and how you look at things.”PGA Tour officials have rushed to quell the outrage, mindful that frustrations with the organization helped prepare the ground for LIV to entice players away from what is America’s flagship men’s golf circuit. Senior executives have been at the U.S. Open, and Monahan, who began a leave of absence this past week after what the tour described only as “a medical situation,” held a contentious meeting with players hours after the deal’s announcement.Players with some of the closest ties to Monahan and other executives said they had received a barrage of feedback unlike any they recalled. Webb Simpson, a board member who won the 2012 U.S. Open, said, perhaps with a dose of hyperbole, that he had probably heard more from players since June 6 than he had in his 15 years as a tour golfer.“We want to have unity, but we also want to trust our leaders,” said Simpson, who added that he had been calling players to hear out their misgivings and aggravations. “I think as a whole they are struggling with these decisions.”“It’s a player-centric tour,” Adam Scott said, “but it depends where you’re sitting and how you look at things.”Richard Heathcote/Getty ImagesAlthough McIlroy has signaled his support for the deal, other players with board seats have been publicly 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,” Simpson said.He sounded much like Patrick Cantlay, another board member, who said that “it seems like it’s still too early to have enough information to have a good handle on the situation.”The board is scheduled to meet later this month, but it is not clear whether the pact will be ready for a vote by then. At the very least, board members are expecting a briefing that might allow them to answer more detailed questions about the tour’s future.All players can do for now, many said, is to try to imagine what the tour might look like and where they might fit into a changed ecosystem.“Where I think I am — and a lot of other players are — is we’re going to show up at the biggest and best events that we have tee times at, the ones that pay the most money, and we’re going to go play until someone tells us we can’t play in those events anymore, and then we’ll go find other events,” Dahmen said.They are also settling in for a protracted period of uncertainty, grappling with the possibility that the tour could be in turmoil for another year or more. It is an unfamiliar road for many of them, after all of these years in which the tour was the unquestioned destination of choice for many of the world’s top golfers, its business model familiar.“As members or as players,” Scott said, “we haven’t had to deal with anything like this before.” More

  • in

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

    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

  • in

    Michael Jordan to Sell Majority Stake in Charlotte Hornets

    Jordan, the former star of the Chicago Bulls, purchased the team in 2010.Michael Jordan, the owner of the Charlotte Hornets and one of the most storied athletes in sports history, has agreed to sell his majority share in the team to a group led by Gabe Plotkin and Rick Schnall, two private equity investors.The team was valued at $3 billion, according to a person familiar with the details of the agreement but not authorized to discuss them publicly. The team, in its announcement of the sale, did not disclose what percentage of his stake Jordan would sell, but said he would remain a minority investor. Jordan, a North Carolina native, first purchased the team in 2010 for $275 million, when the team was known as the Bobcats.The acquiring group also includes the country music star Eric Church and the rapper J. Cole, both of whom are from North Carolina.Jordan won six championships with the Chicago Bulls in the 1990s and is considered by many to be the greatest basketball player ever. More

  • in

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

    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

  • in

    Matt Fitzpatrick and Cameron Smith Don’t Know What’s Next After The LIV-PGA Tour Merger

    “I just don’t know what’s going on,” Fitzpatrick, the reigning U.S. Open champion, said Monday of the PGA Tour’s merger with LIV Golf. “I don’t think anyone knows what’s going on.”A year ago at the U.S. Open, the field was distracted by an entirely new phenomenon in men’s professional golf: Several players who had turned their backs on the PGA Tour to defect to the insurgent LIV Golf circuit would, for the first time, be competing against their former brethren.Golfers had chosen sides in a sport known for individualism, fueling an unfamiliar team-against-team tension.Twelve months later, and days after the seismic news of the American and European tours forming a partnership with LIV Golf, the disruption at the 2022 U.S. Open now seems like an almost inconsequential diversion. Just ask Matt Fitzpatrick, who won that tournament in Brookline, Mass., for his first victory at a major tournament win and also on the PGA Tour.“I seem to remember last year just thinking about the tournament, just the U.S. Open,” Fitzpatrick said on Monday. “It was easier for me to mentally focus on that and be in a better place than obviously all this confusion that’s going on this week.“The whole thing is confusing.”Asked to elaborate on what he found most confusing, Fitzpatrick could not help but chuckle.“Well, I think I just don’t know what’s going on,” he answered. “I don’t think anyone knows what’s going on.”Fitzpatrick mentioned the Saudi Public Investment Fund, known as PIF, whose staggering riches have backed LIV.“Are we signing with the PIF, are we not signing with the PIF? I have no idea,” he said, adding: “It’s pretty clear that nobody knows what’s going on apart from about four people in the world.”To prove that disorientation was universal across golf, Cameron Smith, who joined LIV not long after winning last year’s British Open, followed Fitzpatrick into the interview room at the Los Angeles Country Club and essentially admitted he was clueless as to what was coming next in his chosen occupation.Smith might rate as something of an insider since he at least received a phone call from Yasir al-Rumayyan, who oversees the PIF and would be the chairman of the new company formed by combining the tours, about the blockbuster deal announced last week.It was a good thing al-Ruymayyan called because Smith said his first reaction to the news was that, “it was kind of a joke.” But al-Rumayyan informed Smith otherwise — without much detail.“He didn’t really explain too much,” Smith said. “I think there’s still a lot of stuff to be worked out, and as time goes on, we’ll get to know more and more. I think he was calling a few different players, so the call was kind of short and sweet.”Despite a lack of clarity about the future of professional golf, both Fitzpatrick and Smith were nonetheless asked about two hot topics since the PGA Tour-LIV deal was announced.For Fitzpatrick, there was the question of whether he thought players, like himself, who were loyal to the PGA Tour should be compensated for turning down the gobs of money LIV was offering.At first, Fitzpatrick appeared ready to address the issue, which is perhaps the most charged and dicey detail to be hammered out in the coming weeks or months. But then Fitzpatrick paused. And paused. He smiled and then exhaled. His eyes roamed the room. Finally, he said with a thin smile: “Yeah, pass.”Fitzpatrick last Friday at the Canadian Open, where he finished eight under for the tournament in a tie for 20th.Minas Panagiotakis/Getty ImagesSmith was asked if he had been given any indication that the LIV tour would continue to exist after this year. He replied: “I really know as much as you guys know, to be honest. I haven’t been told much at all. I guess if anything comes up, I’ll let you guys know.”He refused to answer a question about whether he would want to return to the PGA Tour if LIV was dissolved after this season, calling it “hypothetical.”But he added: “I think I’ve made the right decision anyway. I’m very happy with where I’m at. I obviously made that decision for a few different reasons. Like I said, I know as much as everyone else, and it’s going to be interesting to see how the next few months, maybe even year, kind of plays out.”Smith’s attitude was jovial, which matched the mood of several LIV players who slapped hands with each other and smiled on the practice range on Monday.“I haven’t been told much at all, but I’m just taking it as it goes along,” Smith said. “But there’s definitely a lot of curious players, I think, on both sides as to what the future is going to look like.”Fitzpatrick had an eye on the future and also the past, recalling last year’s U.S. Open fondly.“An amazing week,” he said, hoping to rekindle the magic he discovered.But then, so much has changed in a year. On Monday, there remained one question above all the others. What next for golf?Fitzpatrick shook his head.“I’ll be completely honest, I literally know as much as you,” he said. “I’m sure everyone has gotten questions about it. I found out when everyone else found out. Yeah, honestly, I know literally nothing.” More

  • in

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

    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