The Justice Department has begun to examine an agreement between the PGA Tour and Saudi Arabian backers of LIV Golf to determine whether it violates federal antitrust statutes, a person familiar with the matter told The Associated Press.
The inquiry is in its early stages, and it isn’t clear yet whether the Justice Department would take any enforcement action, the person said. The person was not authorized to publicly discuss details of the inquiry and spoke to The Associated Press on condition of anonymity.
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The Wall Street Journal first reported the Justice Department's involvement.
“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 PGA Tour said in a statement.
The PGA Tour, European tour and Saudi Arabia's national wealth fund came together in a partnership that was negotiated so privately over two months that none of the players were aware.
PGA Tour Commissioner Jay Monahan had been critical of LIV Golf since the rival circuit began poaching some of golf's biggest names with signing bonuses of $100 million or more, money provided by the Public Investment Fund.
The PGA Tour suspended players who defected to LIV, such as Phil Mickelson, leading to 11 players and eventually LIV to file an antitrust lawsuit against the PGA Tour last August. The PGA Tour then filed a countersuit, and the case was not expected to go trial until at least 2024.
Part of the agreement is to drop all litigation. One motivation for the PGA Tour joining with the Saudis was the financial drain from legal fees on lawsuits that were nowhere near close to being resolved.
The Justice Department already was looking into antitrust issues since last summer.
Monahan has described the agreement announced June 6 as a “framework” with plenty of details still to be determined.
The agreement was for the PGA Tour, European tour and the PIF to pool commercial business and rights into a separate, for-profit company. The PGA Tour would continue to operate with its tax-exempt 501-c-6 status.
In a letter to various lawmakers sent last week, Monahan said he would be CEO of the new commercial entity, which he described as a subsidiary of the PGA Tour.
Yasir Al-Rumayyan, the governor of PIF, would be chairman. Al-Rumayyan, Monahan and two PGA Tour board members who brokered the deal — New York attorney Ed Herlihy and investment banker Jimmy Dunne III — would form the executive committee.
“The PGA Tour will at all times hold the majority of the Board seats and be in control of this new entity, regardless of the size of PIF’s investment,” Monahan said in the letter. “The PIF will be a minority investor in the new commercial entity, while the PGA Tour will be the majority equity investor. At its core, the PIF is investing in the PGA Tour as it has invested in other U.S.-based companies.”
On Wednesday, U.S. Sens. Elizabeth Warren, D-Mass., and Ron Wyden, D-Ore., asked the Justice Department's antitrust division to scrutinize the agreement.
“Significantly, the deal appears to have a substantial adverse impact on competition, violating several provisions of U.S. antitrust law, regardless of whether the deal is structured as a merger or some sort of joint venture,” the senators wrote.
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Balsamo reported from Washington, Ferguson from Los Angeles.
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