A congressional investigation was initiated on Thursday regarding the unexpected merger between the PGA Tour and DP World Tour, with Saudi backers of LIV Golf, prompting US lawmakers to request more information, particularly concerning tax benefits.
Ron Wyden, the Democratic chairman of the US Senate Finance Committee from Oregon, addressed a letter to PGA Tour commissioner Jay Monahan and other tour leaders, echoing the concerns raised by numerous players, seeking greater clarity regarding the contentious new agreement.
Wyden expressed apprehension about Saudi Arabia’s human rights record, stating, “The PGA Tour’s association with PIF raises significant concerns about whether organizations aligning themselves with an authoritarian regime that consistently undermines the rule of law should continue to enjoy tax-exempt status in the United States.”
He further added, “Additionally, it is crucial for lawmakers to comprehend the potential risks posed by this arrangement to America’s national interests, especially in relation to foreign investments in US real estate, such as locations neighboring military facilities or sensitive manufacturing centers. We need to understand how you plan to mitigate those risks.”
Wyden’s inquiry coincided with the Wall Street Journal’s report that the US Department of Justice had initiated a review due to anti-trust concerns regarding the planned merger between the Saudi Public Investment Fund (PIF) and the PGA and DP World tours.
Richard Blumenthal, chairman of the US Senate Investigations Subcommittee, also informed Monahan and LIV chief commissioner Greg Norman that his panel had also initiated an inquiry into anti-trust issues.
Anti-trust concerns were among the factors contributing to the legal dispute between LIV and the PGA, which was scheduled to go to court in May. However, the merger deal led to the dismissal of the dueling lawsuits.
While the PGA Tour would continue as a non-profit organization, the PIF would be the investors in a connected for-profit group. It was reported that equity in this group would reward players who chose to remain with the PGA rather than joining LIV, which offered substantial purses and guaranteed deals.
Monahan faced criticism for condemning the Saudis and players who joined LIV, only to later form a partnership with them. He stated that he did so for the betterment of the sport and to resolve the PGA-LIV dispute.
“The information revealed about the merger agreement thus far also raises broader concerns about the appropriateness of maintaining the tax exemption for the PGA Tour,” wrote Wyden.
“It is the responsibility of Congress to assess whether the tax exemption provided to sports leagues is appropriate in the case of a foreign autocracy seeking to acquire significant influence in a US sports institution with the clear intention of improving the regime’s public image.”
Wyden, who expects a response by June 23, also sought clarification on the compensation for PGA officials under the merger deal. He highlighted that Monahan earned nearly $14 million in 2021, as per recent tax filings, and that over $63 million was allocated to “top staff” by the PGA Tour.
“I have serious concerns about any compensation arrangements, formal or informal, proposed as part of this merger framework that are intended to personally and financially benefit the already generously remunerated officers and employees of the PGA Tour,” Wyden stated.
“It is difficult to justify any further increases in compensation for tour executives in the best interest of the PGA Tour or in line with the organization’s tax-exempt purpose.”
Wyden also raised questions about Ed Herlihy’s role as the PGA Tour Board of Directors chairman and as a partner in the law firm reportedly representing the tour in the merger deal.
Sources: Agence France-Presse and SGP