PGA Tour executives told Congress on Tuesday that Saudi sovereign wealth funds could invest more than $1 billion in an ambitious partnership to reshape professional golf – scrutiny in Washington and Saudi Arabia (if it can withstand a source of suspicion and anger over its expanding role) in global sport.
Before senators whose questions ranged from indulgence to prosecutors, Tour chief operating officer Ron Price said the size of the planned infusion of money from the wealth fund into the for-profit company was far from final. said no. But he acknowledged “arguments” that could ultimately lead to investments “over $1 billion.”
The approval, at a public hearing at which parliament has occasionally been concerned over the notion of foreign funding in golf, highlights Saudi Arabia’s growing ambitions in international sports, including football and Formula 1 racing. But the proceedings also highlighted the ambiguity of the framework agreement that has roiled professional golf since it was announced on June 6.
The deal was effectively the framework for creating a commercial company that included the operations of the PGA Tour, Wealth Fund and DP World Tour (formerly the European Tour). The agreement has little binding power other than a promise to end the case, and negotiating parties hope to reach a confidential agreement by the end of the year.
“Normally we don’t negotiate a deal in public, but we are determined to try to move from a framework agreement to a final agreement,” Price said in a speech to the Senate Permanent Subcommittee on Tuesday.
Price said progress on the deal is essential to the survival of Tour, which is a fraction of the size of the wealth fund. The Tour estimates that legal fees and ballooning wallets to maintain the loyalty of top players are soaring and will soon become unsustainable.
Tour board member James J. Dunn III, who helped negotiate the initial deal, said the Wealth Fund has “a management team that wants to destroy the Tour” and is “backed by infinite vision and infinite funds.” there is,” he said. ”
At one point during hearings held in the overcrowded Capitol, where Supreme Court confirmation hearings and 9/11 Commission meetings have been held, Dunn said, “A long war is toxic. I knew,” he said.
Tour executives were keen to demonstrate how the agreement, albeit provisional, would ensure that professional golf would be in a position to run its day-to-day operations. Tour Commissioner Jay Monahan has been named chief executive officer of a new company, to be called PGA Tour Enterprises, and the Tour is expected to have a majority of the company’s board seats.
Executives will discuss how wealth fund president Yasir Al Rumayyan will become chairman of PGA Tour Enterprises and how the framework agreement will lay the groundwork for full investment rights in the Riyadh-based fund. We haven’t discussed much about how to build it. The value has soared in recent years.
It is not certain that a final agreement will be reached. Last weekend, former AT&T CEO Randall Stevenson, one of the tour’s board members, resigned. “I cannot objectively evaluate what management is currently negotiating and I cannot conscientiously support it,” Stevenson said in a letter announcing his departure.
If the board ultimately upholds a more binding deal, the deal could put the Department of Justice’s antitrust regulators squarely on the line and seek to block the deal. Mr Price said on Tuesday the ministry had made clear its intention to consider the deal.
The framework, which sits up Pennsylvania Avenue from the Justice Department, has led to two Senate inquiries and a bill to revoke the tour’s tax-exempt status in the House, which heard Tuesday. But the hearings showed how far the congressional opposition could go beyond providing a bullying pulpit for complaints. Because senators couldn’t even agree on whether the hearing was worth it.
Connecticut Democratic Senator Richard Blumenthal has lashed out at the Tour’s reorientation in recent weeks, as the tour went from blaming Saudi money for golf to embracing it.
Subcommittee Chairman Blumenthal criticized Mr. Price and Mr. Dunn, saying, “Money is the reason for surrender.” He has previously said the hearing was “about hypocrisy, how huge sums of money can lead individuals and organizations to betray their own values and allies, or perhaps expose a lack of values from the start.” It’s about letting go,” he said. This is about other sports and organizations that could fall prey to them if their leaders let it all be about money. ”
Other lawmakers were more tolerant. Wisconsin Senator Ron Johnson, a Republican supporter on the committee, said, “There was nothing wrong with the PGA Tour negotiating its survival.”
“Negotiations are often delicate and mostly closed-doors, and I fear there could be negative consequences if Congress gets involved at this stage,” Johnson said. Florida Republican Senator Rick Scott asked about the tour’s charity.
It remains unclear whether the ongoing congressional inquiry will lead to legislation, but Senate investigators have already unearthed internal records revealing secret negotiations.
For example, the Tour called for the ouster of two-time British Open champion Greg Norman, who became commissioner of the rebel LIV Golf League, as a condition of the alliance.
The Tour and Wealth Fund ultimately disagreed with the proposal, leaving Norman at the head of LIV for now. But the deliberations could remain tense if the deal goes through, especially since Price said in a question to Blumenthal on Tuesday that Norman’s role may not be necessary in the future. reflects.
The document that Senate released Clarify the details of the deliberations on how and when to announce the agreement. It also shows how Dunn was contacted by a British businessman with ties to the wealth fund and its advisers in December, just before joining the tour’s board. Businessman Roger Devlin suggested in his email that there may be a path to a truce between the tour and wealth funds.
Mr. Dunn, at least initially, declined to be substantively involved.
Devlin reappeared in April to warn Dunn that “there is a chance to unify the game in the coming months,” before saying, “Saudi Arabia doubles down on investment and golf is split for good.” I thought. ”
Commission investigators told senators in a briefing note they weren’t sure what impact Devlin’s April message had on Dunn, but Tour said it was a few days away. Al Rumayyan was contacted within 24 hours.
Dunn, Al-Rumayyan and a few others met in the UK shortly thereafter to begin negotiations, including many ideas that were not included in the five-page text of the Agreed Framework. Outlined in a presentation titled “Best of Both Worlds,” these concepts include Tour loyalty Tiger Woods and Rory McIlroy joining the LIV team and a “massive superstar” team golf event. included the possibility of owning The world’s top players and female players will perform.
With the final agreement still being worked out, it’s possible that at least some of the discarded proposals will resurface.
Documents released by the Senate show that, as of April at least, the deal will include membership in Al Rumayang’s two most prestigious golf clubs, Augusta National Golf Club and the Royal and Ancient Golf Club in St Andrews. There was even talk of Golf clubs around the world, but not controlled by the PGA TOUR.
But neither Norman nor Al Rumayyan attended Tuesday’s hearing. Both cited schedule conflicts as the reason.