Hearings in the US Senate regarding the merger of the two largest structures in the world of golf

Hearings have been held in the US Senate regarding the merger of the two largest structures in the world of golf – PGA and LIV Golf. The fact that the championships intend to create a joint venture into which more than $1 billion will be poured was announced back in June. In the US, this was perceived by many as the takeover of the entire golf industry by Saudi Arabia, on whose money LIV Golf was created and exists. The actions of both sides have been criticized, and it is possible that completing the unification of the two rounds will be more difficult than it seemed. The US Department of Justice is already reviewing the deal for antitrust violations. The main claim of the opponents of the deal is that there is little democracy in Saudi Arabia and, in general, not everything can be bought for money. At the same time, the PGA management directly stated that it was forced to merge, as it realized that further confrontation with a competitor was no longer possible.

Announced in early June merger the two largest golf structures in the world PGA (Professional Golfers Association) and LIV Golf (LIV – the number 54 is written in Roman numerals – this is the number of strokes to pass the standard par 72 course, provided that the athlete spends less on each hole than expected ) has become the subject of quite a heated debate in the US Congress. The Senate Subcommittee on Investigations called hearings to testify under oath of PGA chief executive Ron Price and association board member Jimmy Dunn (he was preparing the PGA merger deal). In preparation for the hearing, the head of the subcommittee on investigations, Democratic Senator Richard Blumenthal, requested a huge amount of information, including correspondence between the PGA and LIV Golf over the past two years.

Senator Blumenthal explained his zeal by saying that he wants to understand what the result is that “an authoritarian government uses its wealth to capture the American structure.”

The “authoritarian government” refers to the authorities of Saudi Arabia. The head of the government of the kingdom, Crown Prince Mohammed bin Salman, controls the public investment fund Public Investment Fund (PIF), through which LIV Golf was created and exists. Senator Blumenthal said he was concerned about the geopolitical aspects of Saudi Arabia’s expansion into international sports projects, since, in his opinion, it is needed only to correct the image of the Middle Eastern kingdom and divert attention from human rights problems in the country.

Saudi Arabia is really actively investing in sports projects. In particular, the country hosts the most prestigious Dakar rally-raid in the world, PIF owns the English Premier League club Newcastle, which belongs about 17% of the shares of the Formula 1 team Aston Martin, and it is still unclear whether the PIF management abandoned the idea of ​​​​buying the entire Formula 1 altogether. Earlier this year, it was reported that its current owners, Liberty Media, had turned down a $20 billion PIF offer.

Most of the questions addressed to Ron Price and Jimmy Dunn were for them to explain how it happened that a prosperous golf structure merged with a newly created organization. In response, Messrs. Price and Dunn recalled that for two years PGA and LIV Golf (that is, from the very moment the latter was founded) were in confrontation and filed lawsuits against each other. LIV Golf has accused PGA of taking advantage of its dominant position and violating antitrust laws, and PGA has been sued for trying to destroy its business by “strangling” it.

The confrontation between the two structures was really loud. In this war, LIV Golf got the role of the aggressor, PGA – the defending side.

So, almost immediately after the establishment, LIV Golf began to poach top players from the PGA, often without regard to what it costs. For example, one of the most successful golfers in the world, Dustin Johnson, received $150 million for participating in tournaments held under the auspices of LIV Golf. Tiger Woods, perhaps the only golfer in the world who is known even to people who are not interested in this sport, was offered a mind-blowing jackpot of $700 million to $800 million, LIV Golf CEO Greg Norman confirmed this to Fox News. As a result, by the summer of last year, the new structure acquired a dozen of the former first numbers of the rating or the winners of the “major” plus another fifty very strong players.

This tactic put the PGA in a difficult position. Jimmy Dunn said that in the current situation, it would be enough for competitors to simply continue to take five strong players a year to themselves. “In five years they would have got us,” he stated. “There are only a couple of hundred top golfers in the world.” He also said that the PGA began to face financial difficulties, as the lawsuit with LIV Golf required serious legal fees. According to him, during the year the parties spent a total of more than $100 million on lawyers. But for LIV Golf, which is backed by PIF resources (the fund controls about $600 billion in assets), these are insignificant expenses. For PGA – close to the maximum. “They have no money limits, no time limits, their whole point of existence is to take our players,” Mr. Dunn said. “We don’t complain, we just tell how things are.”

Ron Price, for his part, took pains to present the PGA’s agreement to a merger with LIV Golf as the best possible option, while also leaving significant control of the sport in the hands of the US.

“If we had gone the other way, golf would have been under the control of Saudi Arabia,” he said. When asked how much LIV Golf promised to invest in the joint venture with PGA, he replied: “More than $1 billion.”

True, during the hearings it turned out that, contrary to the statements made in June, the Saudis will still have control in the new structure created during the merger (it should be called PGA Tour Enterprises). The press releases announcing the deal were crafted in such a way that one would think that LIV Golf had decided to drop the fight and join the PGA. The key point was that in the new venture, PGA representatives would have more seats on the board of directors. But it turned out in the Senate that not only would the PIF manager, Yasser Al-Rumayan, go to the presidency, he would also have financial control. “The path you have chosen smells bad,” said Senator Blumenthal. “This is capitulation. It’s all for the money. As I understand from the documents, the Saudis will have financial control over the organization. It puts the levers in their hands.” In response, Messrs. Price and Dunn admitted that the first reports of the merger were indeed not very accurate. They also recalled that the deal has not yet been closed, only a framework agreement has been signed, and for the most part it only calls on the parties to negotiate further.

The information released during the hearings in the Senate will most likely be taken into account during the forthcoming review of the transaction by the US Department of Justice, or rather, the Committee on Foreign Investment in the United States related to it. The merger may raise questions regarding its compliance with antimonopoly regulations. So the history of the golf war is not over yet.

Alexander Petrov