Senator Richard Blumenthal is trying to stop the Saudis from taking control of the PGA.

One of the most visible projects in the sports industry – the planned de facto takeover of the “old” and authoritative PGA (Professional Golf Association) tour by the golf structure LIV Golf, backed by Saudi Arabia, could lead to a scandal. Senator Richard Blumenthal, a consistent opponent of Saudi investments in American projects, went on the warpath, initiating an investigation into four consulting companies, including McKinsey, accusing them of failing to provide information about actions in the interests of a foreign government. If the suspicions are found to be justified, the companies face charges of violating the provisions of the US Foreign Agents Registration Act. The punishment for such an act ranges from a large fine to imprisonment.

The stalled project, in which the most respected golf structure in the world, the PGA, is to be absorbed by the much younger, but also incomparably richer organization LIV Golf, which is backed by the whole of Saudi Arabia, seems to have encountered a new obstacle. The head of the US Senate Subcommittee on Investigations, Richard Blumenthal, a long-time and active opponent of Saudi interference in American business, decided to attack the unpleasant project from a new angle. The senator, seeking to prove that the PGA takeover project is not a purely commercial story, initiated an investigation into four top American consulting companies – Boston Consulting Group, McKinsey & Company, M Klein & Company and Teneo. They are suspected of violating the provisions of the US Foreign Agents Registration Act. Violation of the law can result in both a large fine and imprisonment.

Senator Blumenthal’s claims are based on the fact that the above-mentioned companies acted in the interests of the PIF (Saudi Arabia’s state investment fund, whose assets exceed $700 billion), but did not share information with the American authorities. PIF, which is de facto controlled by the real ruler of Saudi Arabia, Prince Mohammed bin Salman, categorically refuses to provide the information required by the Senate subcommittee. Moreover, the Saudi authorities by a separate law prohibited companies working in the interests of the Saudi authorities from disclosing data under threat of accusations of harming national security.

That is, the same consulting companies now face a dilemma: either quarrel with the Saudis and lose lucrative contracts, or face problems with the American authorities.

Apparently, until recently they preferred to remain loyal to the customer. After all, Senator Blumenthal’s statement said that “accepting PIF consultants’ non-cooperation with the Senate would create a dangerous and unacceptable precedent that would allow U.S. companies to hide cooperation with foreign governments that is against U.S. interests by simply invoking contracts governed by foreign law.”

Note that PIF is one of the largest investors in the world. The structure’s portfolio includes significant stakes in companies such as Meta (recognized as extremist and banned in the Russian Federation), JP Morgan Chase, Starbucks, Microsoft, Lucid Motors, Activision Blizzard, Electronic Arts, Live Nation Entertainment, Uber.

However, Senator Blumenthal is obviously only interested in PIF’s involvement in sports projects. The fund does have significant sports assets. They range from football (the Saudi Football League has become one of the most flamboyantly stocked with stars such as Cristiano Ronaldo; PIF owns English football club Newcastle) to cricket (PIF is preparing to acquire a major stake in the Indian league, which has a potential audience of 2 billion people). and tennis (there is a high probability that Saudi Arabia will receive the right to host the Masters 1000 tournament).

All these views, however, are very far from the average American senator. But golf is close.

It is not surprising that Senator Blumenthal reacted extremely nervously from the very beginning to the fact that actual control over the game of the American “elite” would pass to the Saudis. Last summer, it was he who initiated Senate hearings on the merger of the PGA and LIV Golf, explaining that he wanted to understand what the consequences of “an authoritarian government using its wealth to take over the American structure” lead to. PGA executive director Ron Price and association board member Jimmy Dunn (who was preparing the PGA merger deal) were called to the hearing. The most noticeable outcome of the hearings were the words of Mr. Dunn. He admitted that for a PGA competitor to win, all he had to do was continue to take five strong players a year. “In five years they would have gotten us,” he stated. “There are only a couple hundred top golfers in the world.”

Actually, LIV Golf is in charge of transferring top golfers under its wing. Yes, in early February, the PGA received hope for temporarily maintaining independence (Fenway Sports Group, which also owns the English football club Liverpool, agreed to invest $3 billion in the championship), but even this money is nothing compared to the resources of the PIF. Let’s say, at their expense, one of the best golfers in the world, Jon Rahm, received a multi-year contract worth $600 million. The PGA really has nothing to answer.

Alexander Petrov