US lawmakers investigate PGA-LIV Deal, demanding transparency

The merger between the PGA Tour and DP World Tour with Saudi backers of LIV Golf has caught the attention of US lawmakers, who have initiated an investigation into the deal. Their primary focus is on tax breaks associated with the merger.

Ron Wyden, the Democratic chairman of the US Senate Finance Committee from Oregon, took action by sending a letter to PGA Tour commissioner Jay Monahan and other tour leaders, requesting additional information about the controversial agreement. Similar to many players, Wyden expressed concerns regarding the lack of transparency surrounding the merger and highlighted Saudi Arabia’s human rights issues.

Wyden’s letter addressed the potential implications of the PGA Tour’s association with the Saudi Public Investment Fund (PIF) and questioned whether organizations aligning themselves with an authoritarian regime that undermines the rule of law should continue to enjoy tax-exempt status in the United States. He emphasized the need for lawmakers to understand the risks posed to America’s national interests, particularly in relation to foreign investments in US real estate near military facilities or sensitive manufacturing centers, and urged the tour leaders to provide plans to mitigate those risks.

Coinciding with Wyden’s inquiry, the Wall Street Journal reported that the US Department of Justice has initiated a review of the planned merger between the Saudi Public Investment Fund, PGA, and DP World tours due to concerns related to anti-trust issues.

Furthermore, Richard Blumenthal, chairman of the US Senate Investigations Subcommittee, notified Jay Monahan and LIV’s chief commissioner Greg Norman that his panel has launched an inquiry into the anti-trust aspects of the merger. This inquiry stems from issues that were previously part of a legal dispute between LIV and the PGA, which had been set to go to court in May. However, the merger deal extinguished the dueling lawsuits.

Under the terms of the merger, the PGA Tour would maintain its non-profit status, while the PIF would invest in a connected for-profit group. Players who chose to stay with the PGA instead of joining LIV would reportedly receive equity in the for-profit group, offering potential rewards in contrast to the record purses and guaranteed deals offered by LIV.

Criticism has been directed at Monahan for what some perceive as hypocrisy, as he condemned the Saudis and players who joined LIV only to subsequently partner with them. Monahan defended his decision, stating that it was made in the best interest of the sport to resolve the PGA-LIV feud.

Wyden’s letter also raised concerns about the compensation of PGA officials involved in the deal. He pointed out that Monahan earned nearly $14 million in 2021 according to recent tax filings, while the PGA Tour reportedly spent over $63 million on “top staff.” Wyden expressed serious reservations about compensation arrangements designed to financially benefit highly paid officers and employees of the PGA Tour, questioning their alignment with the tour’s tax-exempt purpose.

Additionally, Wyden scrutinized the role of Ed Herlihy, the chairman of the PGA Tour Board of Directors, who is also a partner at the law firm representing the tour in the merger.

Wyden has requested a response from the tour leaders by June 23, as he continues to emphasize the need for transparency and congressional review of the tax exemption provided to sports leagues, especially in the case of foreign autocracies attempting to acquire substantial influence in US sports institutions for the purpose of improving their public image.