Updated February 12th, 2024 at 20:44 IST
PGA political golf drama is Saudi’s Trump card
While the deal with the PGA Tour is in flux, delays could work in the Saudis' favour.
- 2 min read
Par for the course. The scrutiny over Saudi Arabia’s potential investment in golf is intensifying. U.S. lawmakers accused former Citigroup power banker Michael Klein and other consultants to the sovereign’s Public Investment Fund of siding with the Middle East nation. While the deal with the PGA Tour is in flux, delays could work in the Saudis' favor.
Last week, a Senate subcommittee hauled Klein, McKinsey boss Bob Sternfels, Boston Consulting Group Chair Richard Lesser and Teneo Chief Executive Paul Keary in for a hearing on national security. The interrogation was prompted in part by a surprise June agreement by the PGA and former archrival PIF-backed LIV Golf that outlined a potential tie-up between the two groups.
Since then, congressional members have been circling PIF on concerns about outside influence and soft power over the national tour describing it as “sportswashing.” The group was summoned to the Hill because the Saudis issued an injunction preventing the parties from disclosing information.
Klein explained the move was unusual for PIF. Sternfels noted McKinsey is contesting the ruling. Nonetheless, Senator Richard Blumenthal charged they were “bending to the will” of the Saudis.
It may be political dramatics – other topics broached included China and opioids– but the attention could draw in the Committee on Foreign Investment in the United States, chaired by the U.S. Treasury. The agency has widened its mandate and can wedge itself into approval of deals that have non-controlling stakes in companies with critical technology, infrastructure or personal data.
In the meantime, the PGA Tour and LIV-Golf have yet to strike an official deal. In late January, the PGA announced a partnership with Strategic Sports Group, a consortium of team owners that includes the Boston Red Sox’s John Henry and New York Mets’ Steven Cohen, for an investment of up to $3 billion. That group of American investors welcome PIF to the fold too.
Yet the inability to ink a deal with the PGA works to the Saudis' advantage. The United States is gearing up for the presidential election in November which brings with it uncertainty including the possible return of former President Donald Trump. It’s any president’s job to work closely with agencies like CFIUS. Yet a new administration might be less hostile to transactions in general – and foreign ones – than the current regime under President Joe Biden. In such an environment, it’s smart to let political theater buy any deal some time.
Published February 12th, 2024 at 20:44 IST