Fore! PGA Tour/LIV Golf Deal Could Face Danger

Capitol Hill is seeking to drive the PGA-LIV merger into the rough due to antitrust and geopolitical concerns. Launching a probe into the deal, Sen. Richard Blumenthal (D-Conn.), chair of the Senate Permanent Subcommittee on Investigations, stated “PGA Tour’s agreement with PIF regarding LIV Golf raises 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.”

PGA Tour shocked the world last week when it issued a press release stating that it would “merge commercial operations under common ownership” with rival LIV Golf, which is controlled via Saudi Arabian Public Investment Fund by Saudi Crown Prince Mohammed bin Salman. The announcement met with such backlash that by the end of the day, PGA Tour took a Mulligan, scrubbing “merge” from the press release and replacing it with “combine.”

In a statement to USA Today Sports, PGA Tour spokeswoman Laura Neal explained, “I know it’s been called a merger as shorthand, but that is not accurate. PGA TOUR Inc. remains intact as it was prior, as a 501c6 (tax-exempt organization). We have created a separate, commercial entity –  underneath that structure.” While the details of the private agreement remain unclear, PGA Tour described a structure where a new entity would be formed to hold PGA Tour’s commercial assets separately from its tax exempt operations, and combine those with LIV Golf and other businesses of Saudi Arabia’s Public Investment Fund.

Criticism of the deal comes from two perspectives: antitrust and geopolitical.  The PGA-LIV deal is particularly stunning because just last year, LIV Golf sued PGA Tour alleging antitrust violations and accused it of being a monopoly. Indeed, the U.S. Department of Justice had probed PGA Tour for its practices related to allegedly punishing players who joined LIV Golf in a bid to quash its rival-turned-partner.

The Biden Administration has vowed more muscular antitrust policies and has launched high profile probes in deals such as Microsoft’s proposed $68.7 billion acquisition of Activision. For all of the Administration’s rhetoric, however, enforcement actions have actually declined. As former FTC Commissioner Noah Phillips describes it, “[a]ntitrust enforcement over the last fifteen months has been anything but vigorous—indeed, it has been sclerotic.”


This data does not paint the full picture, however. Far from an M&A friendly posture, the FTC has engaged in “gratuitously taxing M&A” via tactics outside of the courts. As Covington summarizes, the FTC has largely eschewed enforcement actions for other mechanisms that deter transactions, including:

  • “ Suspending the early termination of the initial Hart-Scott-Rodino Act waiting period for all transactions;
  •   Increasing the number of Second Requests issued and expanding the scope and burden of those full-phase investigations; Adopting a general aversion to consent agreements;
  •   For those consent agreements that the FTC enters, imposing a new requirement that the merged entity must obtain the agency’s prior approval to engage in future transactions in certain specified industries;
  •     Sending a large volume of pre-consummation warning letters.”

U.S. regulators are not the only obstacle to the deal, of course. The European Union has also shown a willingness to sink mergers — such as Broadcom’s proposed $61 billion acquisition of VMware, Inc. — and the deal contemplates that the European DP World Tour will be a part of the new commercial entity.

Sen. Blumenthal focuses on geopolitical concerns regarding Saudi Arabia’s “deeply disturbing human rights record at home and abroad,” as he expressed skepticism about PGA Tour’s “sudden and drastic reversal of position concerning LIV Golf raise serious questions regarding the reasons for and terms behind the announced agreement.” Likewise, Senators Elizabeth Warren and Ron Wyden wrote to Attorney General Merrick Garland, stating that LIV Golf is “prepared to lose billions of dollars to leverage [U.S. golfers] and the sport of golf to ‘sportswash’ the Saudi government’s deplorable reputation for human rights abuses . . . . The PGA-LIV deal would make a U.S. organization complicit—and force American golfers and their fans to join this complicity—in the Saudi regime’s latest attempt to sanitize its abuses by pouring funds into major sports leagues.” It remains to be seen whether this backlash will derail the deal.