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 that would reshape professional golf — if it stands up to scrutiny in Washington and the wellspring of skepticism and anger over the Saudis’ expanding role. . in a global sport.
In front of senators whose questions ranged from argument to claim, the round’s chief operating officer, Ron Price, said the scale of the cash injection from the wealth fund into a for-profit company was not final. But he acknowledged “discussions” that could eventually lead to an investment “north of a billion dollars.”
The endorsement, during a hearing at times fraught with congressional anxieties about the idea of foreign money flowing around golf, underscored the scope of Saudi Arabia’s growing ambitions in international sports, which have included forays into soccer and Formula 1 racing. However, the proceedings also highlighted The blurring of the framework agreement that has troubled professional golf since its June 6 announcement.
This agreement was a de facto broad scheme to create a for-profit corporation that would include business ventures for the PGA Tour, the Wealth Fund and the DP World Tour, formerly the European Tour. The little in the agreement besides a commitment to end litigation is binding, and negotiators hope to reach a sealed contract by the end of the year.
Addressing the Senate Permanent Subcommittee on Investigations on Tuesday, Price said, “You generally don’t negotiate an agreement 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 essential to the survival of the round, which is a small part of the wealth fund’s size. In the estimation of the tour, the legal bills and bloated wallets of trying to keep the loyalties of top players and the like were rising so quickly that they would soon be unsustainable.
said James J. Dunn III, a tour board member who helped negotiate the initial deal, says the wealth fund has a “management team that wants to destroy the tour,” backed by an unlimited horizon and an unlimited amount of money. “
“We knew a protracted fight would be damaging,” Dunn said at one point during the hearing, which was held in a packed Capitol Hill auditorium that was previously the site of Supreme Court confirmation hearings and 9/11 commission meetings.
The tour directors were keen to show how the agreement, though temporary, put them in a position to manage the day-to-day operations of the golf professionals. Tour commissioner Guy Monahan has been named CEO of the new company, which is expected to be called PGA Tour Enterprises, and the tour is expected to fill a majority of the company’s board seats.
The executives were less keen to discuss how Yasir Al-Rumayyan, the governor of the wealth fund, would serve as chairman of PGA Tour Enterprises and how the framework agreement lays the foundation for sweeping investment rights for an empowered and energetic Riyadh-based fund. The value has ballooned in recent years.
A final agreement is not certain. Over the weekend, one of the tour’s board members, former AT&T CEO Randall Stephenson, resigned. In a letter about his exit, Stephenson said that “the construction currently being negotiated by management is not of a kind that I can assess objectively or support in good conscience.”
If the board eventually backs a more binding arrangement, the deal could go downhill heavily to Justice Department antitrust regulators, who could seek to block the deal. Price said on Tuesday that the department had made clear its intention to study the arrangement.
On Pennsylvania Avenue from the Department of Justice, the framework prompted two Senate inquiries, a House bill to repeal the tax-exempt status of the round and a hearing Tuesday. Still, the hearing was a demonstration of how the congressional opposition could only do so much, other than provide a bullying platform for grievances, since the senators couldn’t even agree on whether the action was worth it.
Sen. Richard Blumenthal, D-Conn., has called the round a turn for the worse in recent weeks, when it shifted from denouncing Saudi money in golf to embracing it.
“Money is the reason you give up,” Blumenthal, the subcommittee’s chairman, rebuked Price and Dunn. Earlier, he said the hearing was “about hypocrisy, and how huge sums of money can drive individuals and organizations to betray their values and their supporters, or perhaps reveal a lack of values from the start. It’s about sports and other organizations that can fall prey, if their leaders allow it.” Leave everything to do with money.”
Other lawmakers were more accommodating. Senator Ron Johnson of Wisconsin, the ranking Republican on the committee, said there was “nothing wrong with the PGA Tour negotiations for their survival.”
“Negotiations are often delicate, often private, and I’m afraid Congress’s involvement at this point could have negative consequences,” Johnson said. Sen. Rick Scott, R-Fla., asked about the tour’s philanthropy.
It remains unclear whether the congressional investigation will result in legislation, but Senate investigators have already uncovered internal records that shed light on negotiations that took place in exceptional secrecy.
The tour, for example, sought to oust Greg Norman, the two-time British Open champion, who became commissioner of the recalcitrant, Saudi-funded LIV golf league, as a condition of its alliance.
The tour and the wealth fund ultimately did not agree on the proposal, and for the time being, Norman remains on top of LIV. But the deliberations reflect tensions that could remain if the deal closes, especially since Price, who was questioned by Blumenthal on Tuesday, said Norman’s role may not be necessary in the future.
documents that Senate passed Details of deliberations on when and how the deal will be announced. It also shows how a British businessman with ties to the wealth fund and its advisors approached Dunn in December, shortly before he joined the round’s board. In an e-mail, the entrepreneur, Roger Devlin, suggested there could be a path to a truce between the round and the wealth fund.
Dunne refused, at least initially, to become involved in an objective manner.
Devlin reappeared in April, warning Dunn that there was “a window of opportunity to unite the game over the next couple of months” before, he believed, “the Saudis will double down on their investment and golf will be divided forever.”
Although committee investigators told the senators in a briefing note that they didn’t know for sure how Devlin’s April letter affected Dunn, Al-Rumayyan was contacted by a tour board member within days.
Dunn, Alrumian, and a handful of others met in Britain soon after, and began negotiations that included a number of ideas that did not make it into the text of the five-page framework agreement. These concepts, articulated in a “Best of Both Worlds” presentation, included the possibility of Tiger Woods and Rory McIlroy, who have pledged allegiance to the tour, owning LIV teams and a “superstar” team golf event that would feature the world’s best male and female players.
As work continues on the final agreement, there is at least the possibility that some discarded proposals could resurface.
At least as of April, according to documents released by the Senate, there has been talk of a deal that would include Al-Romayyan’s memberships to Augusta National Golf Club and the Old Royal Golf Club of St. Andrews — two of the world’s most prestigious golf clubs, but ones not controlled by the PGA Tour. .
But neither Norman nor Al-Rumayyan attended Tuesday’s session. Both indicated a scheduling conflict.
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