D.C. lawmakers to probe PGA-LIV deal this week
The surprise deal between the PGA Tour and Saudi-backed LIV Golf will be back in focus this week as lawmakers get their chance to probe the agreement.
Why it matters: There is still a lot we don't know about the structure of the deal, as details have been vague. This week should give us some answers.
Driving the news: PGA Tour COO Ron Price and board member Jimmy Dunne will testify in front of the U.S. Senate Permanent Subcommittee on Investigations on Tuesday morning.
- Dunne is widely considered the deal's chief architect as he was the one who brokered the first meeting between PGA Tour commissioner Jay Monahan and Yasir Al-Rumayyan, the governor of Saudi's Public Investment Fund.
- Monahan and Al-Rumayyan will not testify this week; Monahan is recovering from a health scare.
Meanwhile: Former AT&T Chairman Randall Stephenson resigned from the PGA Tour's policy board over concerns about the tour's proposed partnership with Saudi Arabia's national wealth fund, the Washington Post reported.
Of note: Confidential PGA Tour documents accidentally made public over the weekend revealed the Tour previously considered buying out the DP World Tour as recently as last year.
- Owning DP World Tour would give the PGA Tour majority control of Ryder Cup Europe, which has co-stewardship of the lucrative Ryder Cup tournament.
- The PGA Tour wanted access to Ryder Cup profits to help its fight against LIV; one of the key reasons for the deal with the PIF was to prevent them from being bled dry.
The big picture: The pushback in Washington, D.C., since the deal's announcement last month has been swift.
- Outside of fears that the agreement gives the Saudi kingdom too much influence over a U.S. institution such as the PGA Tour, the Justice Department is probing the deal over antitrust concerns.
The other side: The PGA Tour's main defense is that the deal has been misconstrued from the start, when it was referred to as a merger.
- The framework of the merger agreement of the PGA Tour and Saudi-backed LIV Golf says a for-profit subsidiary of the U.S. golfing body will be created to manage commercial investments and assets for all tours, Reuters reported last month.
- Technically, the new entity will act as a subsidiary of the PGA Tour. The PIF is just on board as an investor, an individual familiar with the deal.
- "The PGA Tour will at all times maintain a controlling voting interest in NewCo and PIF will continue to hold a non-controlling voting interest, notwithstanding any incremental investment by PIF or exercise of its right of first refusal," according to excerpts of the agreement obtained by Axios.
- While the PIF has the right to refuse any additional outside investment, the board has to approve any additional funding from the PIF, according to agreement excerpts.
The bottom line: However this deal with the Saudis shakes out will shape the future of golf.