The US Department of Justice is looking into the merger between the Saudi-funded LIV Golf and the PGA Tour, two outlets reported on Thursday, following congressional action against the deal.
The Wall Street Journal reported that the Department of Justice has informed the PGA Tour that it will review the planned merger with the Saudi Public Investment Fund and its LIV Golf league for potential antitrust violations. The Associated Press reported that the Justice Department has already begun looking at the deal for antitrust-related issues.
The Department of Justice did not respond to Al-Monitor’s request for comment.
Background: The PGA Tour announced earlier this month it would form a new entity with the Saudi Public Investment Fund’s golf assets and the Dubai-based DP World Tour. The fund backs the LIV Golf competition that launched last year as a rival to the PGA Tour.
The news sent shockwaves around the world due to the intense rivalry between the PGA and LIV as well as the significance of the Saudi sovereign wealth fund partnering with a major US sports organization.
Why it matters: In addition to the Department of Justice, pressure is building on the PGA Tour over the merger in Congress. Last week, Rep. John Garamendi (D-Calif.) introduced a bill to strip the PGA Tour of its tax-exempt status. Garamendi cited Saudi Arabia’s human rights record, specifically the 2018 murder of writer Jamal Khashoggi.
The bill, formally known as House Resolution 3908, has been referred to the House Committee on Ways and Means, according to congressional records.
The PGA Tour operates as a nonprofit, tax-exempt entity.
On Monday, US Sen. Richard Blumenthal (D-Conn.), who heads the Senate Permanent Subcommittee on Investigations, announced an inquiry into the merger. Blumenthal said he has concerns about “the Saudi government’s role in influencing this effort and the risks posed by a foreign government entity assuming control over a cherished American institution,” as well as the kingdom’s goal to “use investments in sports to further the Saudi government’s strategic objectives,” according to a press release.
Per the investigation, Blumenthal sent letters to both PGA Tour commissioner Jay Monahan and Aussie golf legend Greg Norman, the CEO of LIV Golf, requesting various records related to the merger. This includes records related to the relationship between the PGA Tour and the Public Investment Fund, as well as records relating to any dispute involving the fund’s governor, Yasir Al-Rumayyan, according to the letters.
The senator likewise raised concerns about the PGA Tour, saying it will retain its tax-exempt status following the LIV Golf deal.
“This assertion raises additional questions about the terms of the agreement and whether a foreign government may indirectly benefit from provisions in US tax laws meant to promote not-for-profit business associations,” Blumenthal wrote to Monahan.
Blumenthal asked the two entities to reply by June 26.
Interestingly, the PGA Tour said on Tuesday that Monahan is suffering from an unspecified medical issue and will be stepping away from his role.
The Justice Department investigation could delay the PGA Tour-LIV Golf merger, according to The Wall Street Journal.
If the merger goes through as planned, the ramifications could be huge. One former professional baseball executive recently told Al-Monitor that the PGA Tour-LIV Golf deal is just the “beginning” of Saudi investment in US sports.
