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    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

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    Daniel Snyder to Buy Out Other Owners of Washington NFL Team

    The league is expected to approve a measure that will allow Daniel Snyder to buy total control of the team.Seeking to move past a year of tumult over the team’s former name and a sexual harassment investigation of its front office, the owner of the Washington Football Team is close to a deal with fellow league owners that will give him greater control over the organization while he pays a fine for executives’ misconduct.The arrangement effectively resolves two pressing issues: a protracted boardroom fight over ownership that spilled out into the open and an investigation by the N.F.L. into allegations that women who worked for the team were sexually harassed by staff members, a number of whom have already been dismissed.The league owners next week are expected to approve a special waiver that would allow the owner, Daniel Snyder, to take on an additional $450 million in debt in order to buy out minority partners he has been battling, according to a copy of the resolution reviewed by The New York Times. The N.F.L.’s finance committee last week unanimously recommended that the full cohort of owners waive the limit of debt a buyer can take on to buy into a team. Snyder will have to repay the money by March 2028.Support for Snyder’s purchase comes as the N.F.L.’s investigation into sexual harassment claims made against former Washington Football Team executives concludes. In the coming days, Commissioner Roger Goodell may address the findings collected by Beth Wilkinson, a Washington-based lawyer whom Snyder hired last summer to investigate after several Washington Post articles reported widespread sexual harassment of women who worked for the team over a 15-year span. The N.F.L. took over her investigation from Snyder.Snyder’s pending purchase of his partners’ shares and the end of Wilkinson’s investigation into the team’s internal culture come after a chaotic year for the franchise. The team decided to drop its nickname and logo last July after years of criticism from some Native American activists who considered it a racist slur and threats from major corporations that they would end sponsorships if the name stayed. The Washington Football Team is still reviewing possible new names and logos.Since then, Washington sought to rectify its 3-13 record from the 2019 season by firing numerous front office executives and hiring a new coach, Ron Rivera, at the beginning of 2020. In August, Rivera learned he had cancer and began treatments for it, but he coached the full season, leading the team back to the playoffs for the first time in five years.To try to revive the club’s tattered image, Snyder has hired several new executives, including Jason Wright, the N.F.L.’s first Black team president. A coed dance team will perform on game days, replacing the cheerleading program, which had been overseen by one of the since-fired executives who had been accused of sexual harassment.Snyder will pay $875 million for the 40.5 percent of the team owned by Dwight Schar, Robert Rothman and Frederick Smith, ensuring his total control of the franchise he bought a majority stake of in 1999.When the purchase is completed, which is expected shortly, Snyder and his family will hold 100 percent of the club and end a very public fight with Rothman, Schar and Smith, who bought into the team in 2003. Last spring, the three men banded together to try to sell their stakes after Snyder declined to pay them annual dividends as a way to conserve the team’s cash with the 2020 N.F.L. season still in doubt because of the coronavirus pandemic.In August, the private disagreement over distributed dividends turned into corporate warfare that spilled into public view. Snyder all but accused Schar of orchestrating a smear campaign against him by contending in court documents that Schar facilitated the spread of negative information about him to the media with the hope that bad press would ultimately force Snyder to sell his majority stake. In that situation, the trio’s shares would have garnered a higher price if the team was sold as a whole.The three minority owners — Schar, a real estate developer; Rothman, an asset manager; and Smith, the chairman of FedEx — turned against Snyder, accusing him in federal court of bad-faith dealing and malfeasance.Even as Wilkinson was brought in last July to conduct an investigation into team executives’ conduct toward female employees, the N.F.L. had hired in late June former Attorney General Loretta Lynch to untangle the squabble among the Washington Football Team’s owners.The Washington Post reported that two women had accused Snyder, 56, in separate episodes of harassment dating to 2004 — which he denied — and that he reached a financial settlement in 2009 with a female former executive who had accused him of sexual misconduct during a trip on a private jet.Now, with the investigation into his and other team employees’ conduct wrapping up and the conclusion of his boardroom battle in sight, Snyder can focus on another major task: deciding how to rebrand the football team whose future is entirely under his control. 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