A PGA Tour executive told Congress on Tuesday that Saudi Arabia’s sovereign wealth fund could invest more than $1 billion in an ambitious alliance poised to reshape professional golf — if it stands up to scrutiny in Washington and a source of suspicion and outrage over the expanding role of the Saudis. in a world sport.
Appearing before senators whose questions ranged from indulgence to prosecution, the tour’s chief operating officer, Ron Price, said the size of an equity fund cash injection into a planned for-profit company was not final. But he acknowledged “discussions” that could ultimately result in an investment “north of $1 billion.”
The admission, at a hearing sometimes fraught with congressional angst over the notion of foreign money sloshing with waves, underlined the scope of Saudi Arabia’s rising ambitions in international sports, including forays into football and Formula 1 racing. However, the proceedings also revealed the haziness of the framework agreement that has been agitating professional golf since its announcement on June 6.
That pact was, in fact, a grand outline to create a for-profit company that would encompass the business ventures of the PGA Tour, the wealth fund, and the DP World Tour, formerly the European Tour. Other than a commitment to end the lawsuit, little in the agreement is binding, and negotiators hope to reach a sealed contract by the end of the year.
Price told the Senate Permanent Subcommittee on Investigations on Tuesday: “Generally speaking, you don’t negotiate a deal publicly, but we are committed to trying to move from a framework agreement to a final agreement.”
According to Price, the progress of the deal is vital to the survival of the tour, which is a fraction of the size of the wealth fund. According to the tour’s estimate, the legal bills, growing purse strings to try and maintain the loyalty of top players and the like were rising so quickly that they would soon be unsustainable.
James J. Dunne III, a member of the tour’s board who helped negotiate the initial deal, said the wealth fund had “a management team that wants to destroy the tour” backed by “an unlimited horizon and an unlimited amount of money .”
“We knew a prolonged fight would be detrimental,” Dunne said at one point during the hearing, which was held in a crowded Capitol Hill room that had previously hosted Supreme Court confirmation hearings and 9/11 Commission meetings.
Tour executives have been eager to demonstrate how the agreement, while tentative, will allow them to run the day-to-day operations of professional golf. Tour commissioner Jay Monahan has been named CEO of the new company, expected to be named PGA Tour Enterprises, and the tour is expected to occupy a majority of the company’s board seats.
The executives were much less eager to discuss how Yasir al-Rumayyan, the wealth fund’s governor, will serve as chairman of PGA Tour Enterprises and how the framework agreement lays the foundation for sweeping investment rights for a Riyadh-based fund whose power and value has increased in recent years.
Reaching a final agreement is not a certainty. Over the weekend, a member of the tour’s board, former AT&T CEO Randall Stephenson, resigned. In a letter about his departure, Stephenson said that “the construction currently being negotiated by management cannot be objectively assessed or that I can conscientiously support.”
If the board ultimately backs a more binding settlement, the deal could run headlong against Justice Department antitrust regulators, who could try to block the transaction. Price said Tuesday the department had made it clear it was investigating the scheme.
On the Justice Department’s Pennsylvania Avenue, the framework has led to two Senate inquiries, a bill in the House to revoke the tour’s tax-exempt status and Tuesday’s hearing. The hearing, however, was a showcase of how the congressional opposition can perhaps only do so much beyond providing a pulpit for grievances, as senators disagreed on whether the proceedings were worth it.
Connecticut Democrat Senator Richard Blumenthal has rocked the tour in recent weeks, as it went from condemning Saudi money in golf to embracing it.
“The money is the reason you surrendered,” Blumenthal, the subcommittee’s chairman, chided Price and Dunne. Earlier he had said the hearing was “about hypocrisy, how huge sums of money can lead individuals and institutions to betray their own values and supporters, or perhaps expose a lack of values from the start. It’s about other sports and institutions that could fall prey if their leaders make it all about the money.”
Other lawmakers were more accommodating. Wisconsin Senator Ron Johnson, the panel’s Republican, said there was “nothing wrong with the PGA Tour negotiating its survival.”
“Negotiations are often delicate, usually private, and I fear Congressional interference at this stage could have negative consequences,” Johnson said. Florida Republican Senator Rick Scott asked about the tour’s charitable work.
It remains unclear whether the unfolding congressional investigation will result in legislation, but Senate investigators have already unearthed internal records that shed light on the negotiations conducted in extraordinary secrecy.
For example, the tour sought the ouster of Greg Norman, the two-time British Open champion who became the commissioner of the rebel Saudi-funded LIV Golf League, as a condition of his alliance.
The tour and endowment fund ultimately disagreed on the proposal, and for now, Norman remains on top of LIV. But the deliberations reflect tensions that could remain if the deal closes, especially as Price, who was questioned by Blumenthal on Tuesday, said Norman’s role may not be needed in the future.
The documents released by the Senate detail deliberations on when and how to announce the deal. They also show how a British businessman with ties to the wealth fund and his advisers reached out to Dunne in December, shortly before he joined the tour’s board. In an email, the businessman, Roger Devlin, suggested there could be a path to a truce between the tour and the wealth fund.
Dunne refused, at least initially, to participate in any substantive manner.
Devlin resurfaced in April, warning Dunne that there was “an opportunity to unify the game in the coming months” before, he believed, “the Saudis will double their investment and golf will be split forever.”
Although investigators on the committee told the senators in a briefing memorandum that they were unsure how Devlin’s message from April had influenced Dunne, the tour’s board member contacted al-Rumayyan within days.
Dunne, al-Rumayyan and a handful of others met in Britain shortly afterwards and began negotiations on a number of ideas that failed to make it into the five-page text of the framework agreement. Those concepts, outlined in a presentation titled “The Best of Both Worlds,” included the possibility that Tiger Woods and Rory McIlroy, who had pledged allegiance to the tour, could own LIV teams and a “massive superstar” team golf event that would feature the world’s top male and female players.
In any case, with the final agreement still being worked out, there is a possibility that some rejected proposals may resurface.
As of at least April, according to documents released by the Senate, there was even talk of a deal that would include memberships for al-Rumayyan at the Augusta National Golf Club and the Royal and Ancient Golf Club of St Andrews – two of the most prestigious golf clubs in the world, but which are not controlled by the PGA Tour.
However, neither Norman nor al-Rumayyan attended Tuesday’s hearing. Both mentioned scheduling conflicts.
