Concerns Include Saudi Ownership, Payments to Officials, Tax Exempt Status, Contribution to Human Rights Abuses, and Sportswashing
(Washington, D.C., July 10, 2023): Senators should demand answers from Professional Golfers' Association (PGA) Tour officials about the national security implications of the proposed acquisition of the PGA Tour by the Saudi government's Public Investment Fund (PIF), chaired by Crown Prince Mohamed bin Salman (MBS), during the July 11 hearing of U.S. Senate Permanent Subcommittee on Investigations, said Democracy for the Arab World Now (DAWN).
These include concerns about the Saudi government's ability to use America's golfing institution not only to sportswash its atrocious human rights record but MBS's ability to funnel money to its favored American politicians and influencers using golfing as a cover.
"People everywhere, including victims of Saudi Arabia's abuses, the human rights community, and sports professionals and fans, have a right to honest and transparent answers to genuine concerns regarding Saudi Arabia's takeover of PGA Tour, though its Saudi owner is dodging scrutiny and refusing to testify at this hearing," said Sarah Leah Whitson, DAWN's Executive Director. "We also need to recognize that Saudi's purchase of U.S. golfing is the tip of the iceberg in its massive campaign to infiltrate and influence vast swaths of America's economic, political, and cultural institutions."
On June 6, PGA Tour and the Saudi government-owned LIV Golf announced they would end their litigation against each other and instead merge into a new entity that would combine the PGA Tour's and LIV Golf's commercial businesses and rights. The new entity has the potential to secure vast global golfing revenues, although PGA Tour has tax-exempt status as an organization that works primarily for the benefit of its members. On June 14, PGA Tour Commissioner Jay Monahan announced a leave of absence "for medical reasons" and is expected to return to his post on July 17. On July 8, PGA Tour board member Randall Stephenson announced he was resigning from the PGA Tour policy board, explaining that the merger "is not one that I can… in good conscience support, particularly in light of the U.S. intelligence report concerning Jamal Khashoggi in 2018." The PGA Tour's policy board will vote on whether to approve the sale.
In light of concerns about the proposed merger, Chairman Richard Blumenthal (D-CT) and ranking member Ron Johnson (R-WI) announced on July 3 that they would hold this hearing to "uncover what went into the PGA Tour's deal with the Saudi PIF and what the Saudi takeover means for the future of this cherished American institution and our national interest." The committee invited officials of PGA Tour, LIV Golf, and the PIF to testify at the hearing but both LIV Golf CEO Greg Norman and PIF Governor and Minister of State Yasir al-Rumayyan said that they would be unable to attend because of "scheduling conflicts." Only two PGA Tour executives, acting Chief Operating Officer Ron Prince and board member Jimmy Dunne, have confirmed their attendance.
DAWN urges senators to raise the following questions:
1- What is the current ownership structure of LIV Golf, and who owns the remaining seven percent not owned by the PIF? How much is PIF paying to acquire PGA Tour? What percentage of the newly created entity (NewCo) will the PIF own?
Leaked information from the LIV Golf-PGA Tour litigation uncovered some information about LIV Golf's secret ownership structure, revealing that the PIF is not merely an investor but owns 93% of LIV Golf. It is still not known who owns the other seven percent, which should be disclosed. While PGA Tour remains a non-profit, a new for-profit organization, NewCo, will own both PGA Tour and LIV Golf, in addition to the commercial rights of DP World Tour. PGA Tour and the PIF have not disclosed how much the PIF is paying for PGA Tour, nor have they disclosed how much of NewCo Saudi Arabia will own.
"The American people deserve to know whether American golf will soon be owned by, and whether American golfing stars will soon be getting their paychecks from, a ruthless dictator who our own intelligence agencies identified as the main culprit behind the murder of journalist Jamal Khashoggi," said Raed Jarrar, DAWN's Advocacy Director.
2- How will you ensure MBS and Saudi Arabia will not use NewCo to pay and influence U.S. government officials and political candidates under the cover of golfing? How will NewCo avoid appearing to launder money from MBS to Trump or other officials?
LIV Golf has been paying former U.S. President Trump's golf resorts unknown millions of dollars to host events. The PIF, which is controlled by the Saudi Crown Prince MBS, invested $2 billion in Jared Kushner's investment fund, despite PIF's advisory panel's objection, which MBS vetoed. It also invested $1 billion in Trump's former Treasury Secretary Steven Mnuchin's fund. Trump has publicly supported MBS and defended him after he ordered Khashoggi's murder. He also publicly supported LIV Golf and the PGA-LIV merger.
"It's scary to contemplate that Saudi Arabia will have a massive American sporting vehicle that it can use to reward compliant political candidates and officials and influential people," said Jarrar. "It's natural to believe that anyone receiving 'golf-related' money from MBS will feel indebted to him."
3- Will PGA Tour maintain its tax-exempt status in the US despite its ownership by a foreign government that will profit from its proceeds?
Major sports leagues, such as the National Football League and Major League Baseball, gave up their non-profit status a longtime ago. The PGA Tour has no plans to follow suit and give up its own historic 501(c)(6) status, which is a non-profit designation commonly reserved for trade associations, business leagues or chambers of commerce promoting a common interest.
4- What specific policies and due diligence steps will PGA Tour and its successor NewCo adopt to identify any risks of contributing to the Saudi government's human rights abuses?
The United Nations Guiding Principles on Business and Human Rights sets out the responsibilities of businesses in respecting human rights, which include not providing reputational benefits that help cover up human rights abuses. The PIF is owned by the Saudi state and controlled by MBS, who has been implicated directly in human rights abuses, including massive state repression and torture domestically and over seven years of indiscriminate bombardment and an unlawful siege of Yemen. It is important to note the blurry lines between MBS and the PIF; for example, PIF owns the two airplanes that transported the Saudi officials who killed and dismembered Khashoggi.
5- Why have PGA Tour officials abandoned their concerns about Saudi Arabia's ownership of golf and its use as a vehicle to sportswash the Saudi government's gross human rights violations?
Prior to the deal, PGA Tour officials accused LIV Golf in court documents of trying "to sportswash the recent history of Saudi atrocities." After the announcement, US Senator Chris Murphy tweeted, "So weird, PGA officials were in my office just months ago talking about how the Saudis' human rights record should disqualify them from having a stake in a major American sport… I guess maybe their concerns weren't really about human rights?"
"It is tragic that greed seems to be far more important for PGA Tour than basic notions of dignity and human rights or even a commitment to the values of integrity and excellence that sports are meant to stand for," said Sevag Kechichian, DAWN's Gulf Researcher. "PGA Tour members, golf fans, and US congress members have the opportunity to do the right thing and ensure that golf does not become one of the many sportswashing tools that MBS is buying with Saudi Arabia's billions of oil money."
