Poinbank:U.S. lawmakers open probe into PGA Tour-LIV Golf plan

The PoinbankPGA Tour's plan to create a new professional golf entity with Saudi Arabia-backed LIV Golf is drawing intense scrutiny from Capitol Hill.

Earlier this month, the PGA Tour abruptly announced it was forming a partnership with LIV Golf's parent organization — the Saudi Arabian Public Investment Fund, or PIF. Under the transaction, the PGA Tour and PIF hope to create a for-profit golfing league, with the $620 billion wealth fund providing an undisclosed capital investment. The Saudi funding has sparked concerns that the Gulf nation, known as one of the world's worst human rights abusers, is using the PGA to improve its global public image.

Lawmakers in recent weeks have raised concerns over the proposed deal, with at least three launching investigations. One legal concern is that the deal violates federal antitrust laws as it would create one super league where the world's most talented golfers would compete, thus monopolizing an entire organized sport. 

"A merger also would give the newly formed entity monopsony power over golfers," Democratic Sens. Elizabeth Warren and Ron Wyden wrote in a letter this week to Attorney General Merrick Garland and Assistant Attorney General Jonathan Kanter. 

Lawmakers are also worried about the optics of tournaments from a league bankrolled by Saudi Arabia's uber-rich being played on U.S. soil. 

"We are confident that once all stakeholders learn more about how the PGA TOUR will lead this new venture, they will understand how it benefits our players, fans, and sport while protecting the American institution of golf," the league said in a statement late Thursday. 

Dismal human rights record 

Wyden, Blumenthal and other lawmakers have also pointed out Saudi Arabia's record of human rights violations, which, according to Amnesty International, includes the arbitrary detention and torture of men, women and children.

Human rights activists and members of a group supporting 9/11 families are blasting the PGA Tour for its plan to join forces with LIV Golf, accusing the U.S. golfing group of helping Saudi Arabia "sportswash" its record of human rights abuses.

Wyden, who chairs the Senate Finance Committee, noted that the PGA Tour is a tax-exempt nonprofit under U.S. law but suggested that that status could be in jeopardy. 

"The PGA Tour's involvement with PIF raises significant questions about whether organizations that tie themselves to an authoritarian regime that has continually undermined the rule of law should continue to enjoy tax-exempt status in the United States," Wyden wrote in a letter Thursday to the PGA Tour. 

The senator from Oregon launched an investigation Thursday in search of more details about "the financial and leadership structure of the for-profit entity the deal would create," among other wide-ranging information. Connecticut Democrat Richard Blumenthal said last week he is looking for similar details about the new entity.

• PGA Tour to merge with Saudi-backed LIV Golf, ending "disruption and distraction"
• Not everyone is happy about the abrupt merger of PGA and LIV Golf
• U.S. Open golf tournament underway, first major since PGA-LIV agreement announced

"Not a merger"

The PGA Tour-PIF plan took the golfing world by surprise, in part because both entities were in the midst of an antitrust lawsuit prior to the announcement. While both organizations billed the plan as a merger in their initial unveiling to news media, PGA Tour Commissioner Jay Monahan sent a letter to lawmakers last week insisting that "this arrangement is not a merger."

Merger or not, the deal represents the melding of two colossal competitors. LIV divided professional golf soon after its inception one year ago when it dangled multimillion salaries to lure PGA Tour players to its organization. The PGA quickly responded by banning players who teed off in LIV tournaments from participating in its own events, creating an acrimonious rivalry between the two competing camps. The new arrangement replaces that rivalry in favor of one dominant league.

"The PGA Tour brazenly announced the deal as an agreement to 'merge commercial operations under common ownership,'" Warren and Wyden wrote in their letter to the DOJ. "While the PGA Tour apparently has attempted to backtrack from its initial statement by removing the word 'merge' from the press release announcing the deal, its impacts cannot be erased. It would result in a monopoly over professional golf operations in the U.S. and potentially beyond."

DOJ officials informed the PGA Tour on Thursday that their investigators are also looking into the deal, the Wall Street Journal reported. 

Khristopher J. Brooks

Khristopher J. Brooks is a reporter for CBS MoneyWatch covering business, consumer and financial stories that range from economic inequality and housing issues to bankruptcies and the business of sports.

Twitter