One of golf’s biggest tests unfolds Thursday, when the US Open kicks off at the Los Angeles Country Club. It may be an easier lift than the tests being done in Washington – it’s definitely a shorter one.
Last week’s surprise announcement that the PGA Tour would partner with Saudi Arabia’s sovereign wealth fund and its LIV golf league has unpredictably provoked U.S. officials, but it could remain relentless over the coming months.
Antitrust experts say the Justice Department should consider litigation seeking an injunction against the deal that would seek to combine the LIV and PGA Tour business operations into one new company if the deal is completed in the next few months. claims to be. Lawmakers are frustrated by the Florida-based PGA Tour’s attempt to make a deal with the Saudi state’s weapons, which they had blasted until last week. Political strategists are desperate to shape perceptions of the deal, which was secretly signed and criticized as a wealthy act of hypocrisy and deceit as soon as it was announced.
It may not be clear for months whether this ruckus will be more than a few cycles of news hype (the successful attack on the PGA Tour’s tax-exempt status comes to mind). But a week after golf’s latest turmoil, the deal, which could ultimately be lucrative for players and management, already promises booming times for lawyers, lobbyists and political activists alike. ing.
The announcement last week rocked the Capitol after pressure was being put on the golf world within the Justice Department, where antitrust regulators have been eyeing the PGA Tour.
In the House, California Democrat Rep. John Garamendi was quick to speak. submitted a bill Revoke PGA TOUR tax exempt status. And in the Senate, Connecticut Democratic Senator Richard Blumenthal said on Monday that he would investigate the deal, which he chaired, calling the deal “a role for the Saudi government and foreign powers in influencing the effort.” It raises concerns about the risks posed by A government agency assumes control of America’s most important institutions. “
It was never a big question that there would be a battle. The main issue to be resolved in the short term was exactly who would choose which fight.
On the golf side of the battle come two factions with formidable records in Washington for decades. Despite the many bipartisan conflicts in Saudi Arabia, Saudi officials and allies have often enjoyed unusual rapport with the United States, as shown during a visit by Secretary of State Anthony J. Brinken last week. . And the PGA Tour has usually recognized this capital as a source of politeness, especially when his supporters helped him evade a Federal Trade Commission investigation in the 1990s.
The problem for the wealth fund and the tour is that Washington has a bipartisan affection for lawmakers who imitate sports executives or publicly and privately vilify actual executives. It could be good politics to stare at Commissioners who get more jeers than many elected officials, and if hostility from Congress becomes enough to make headlines, the golf industry will push the pact into the public eye. The sales pitch, and then the quest to get past it, can be complicated.
While Tour and the Wealth Fund may historically have some comfort, this suggests that congressional efforts to directly block the deal are unlikely to succeed. But Hill could still try to make the deal painful beyond a heated hearing or two. A change in the tour’s tax status, as envisioned in a bill submitted to the House of Representatives, could cost millions of dollars a year. This is because the tour is organized as a “business league” that is exempt from taxes under the following provisions: Section 501(c)(6) Provisions of the Internal Revenue Code.
Organizations like the PGA Tour have battled legislative woes over tax-exempt status in the past and worked to end the practice of disappearing sports leagues. 2017 tax invoice at the last minute. Public records show that the tour has spent at least $640,000 on lobbying efforts in the past 18 months, many years after the NFL and Major League Baseball waived eligibility for the exemption, citing its activities. Many were related to “tax laws affecting exempt entities.”
Blumenthal asked Monday for documentation of Tour’s tax-exempt status as part of an inquiry, and in a letter to Tour said the deal would allow foreign governments to “benefit indirectly from provisions of U.S. tax law. whether?” he questioned. Promote non-profit business associations. “
Oregon Democrat Sen. Ron Wyden, chairman of the Senate Finance Committee, was similarly enraged, saying the tour “climbed to the top of the leaderboard for the most questionable tax exemptions in professional sports.”
But Wyden also suggested the deal should meet resistance at the Committee on Foreign Investment in the United States, a Treasury Department-led commission that examines the national security implications of foreign investment in real estate and U.S. businesses. .
It is unclear whether the agreement involving the golf tour has serious national security concerns, or whether the commission will review the agreement at all. Treasury Secretary Janet Yellen said last week that it was “not immediately clear” whether the deal was related to national security. But Wyden has planned his own parliamentary inquiry, which will draw the attention of the ministry to look into whether the deal is likely to give the Saudi regime “improper control or access to U.S. real estate.” It shows, likely through the Tournament Players Club collection. golf course.
And these are just the squabbles that have erupted since last Tuesday.
At the request of LIV’s attorneys, Justice Department regulators spent months deliberating whether the PGA Tour’s tactics to prevent players from defecting to the Saudi-backed league were illegal, and whether the Tour could be used by other leading golfers. I have been researching whether they are friendly with groups (such as Augusta National Golf Club). Masters Tournament Organizers – Violated Federal Law. Far from alleviating golf fears, the deal only added to them, and may have given the Department a new weapon in its suit to block a deal that the Tour and Wealth Fund denies equates to a merger. There is even sex.
“In general, we want to encourage parties to resolve their disputes outside of judicial proceedings, but that does not mean that the settlement is exempt from antitrust law,” said the Justice Department’s ex. Henry J. Hauser, an antitrust attorney and now an attorney at the Department of Justice, said. Perkins Coie is one of the capital’s most connected businesses. “When companies try to resolve legitimate disputes by agreeing on common terms that impede competition, it can become problematic.”
The Justice Department declined to comment.
The inspectors have been active in trying to stifle Washington’s irritation, even suggesting that Congress and other parts of the federal government could have done more to reject the Saudi challenge.
“While we appreciate the written statements of support we have received from certain members, ostensibly due to the complex geopolitical alliance between the United States and the Kingdom of Saudi Arabia, it is largely up to us to fend off attacks. “It was a long time ago,” the PGA said. Tour Commissioner Jay Monaghan, wrote in a letter to MPs last week. “This leaves a realistic prospect of another decade of costly and distracting lawsuits threatening the long-term viability of the PGA Tour.”
In the penultimate sentence of the letter, Monaghan described the tour as an “American collective,” as he did Monday’s Blumenthal. But like many executives before him, Monaghan is aware of Washington’s constant scrutiny of American institutions, especially those involving sports.
He may eventually realize that the screaming is just beginning.
Lauren Hirsch contributed to the report.
