Readers of this blog by now have become all too familiar with greenwashing, a scornful term critics use to paint business interests’ sustainability programs as public-relations ploys. Let us now introduce you to one of its lesser-known cousins, “sportswashing.” The concept has bubbled up in the zeitgeist recently as countries with track records of substantial human-rights violations and corruption – China, Russia, Qatar – have taken a more prominent role in athletics on a global stage.
Saudi Arabia has been especially active in the sports arena. The Persian Gulf monarchy has used its substantial oil wealth and geopolitical clout in recent years to pull off deals such as its takeover of English Premier League soccer club Newcastle United F.C. in 2021. This month, the Saudis appeared to stage their biggest coup yet when, against the grain of a depressed merger market, it made the bombshell announcement that the PGA Tour had agreed to a merger with their upstart venture, LIV Golf, which has the backing of Saudi Arabia’s $600 billion Public Investment Fund.
Under the terms of the deal, which remain sketchy, the PGA and LIV would form a for-profit golf entity in which the PIF maintained significant levels of ownership and control. The PGA came under massive fire for the deal. After all, tour officials spent more than a year demonizing LIV as a crass effort by the Saudis to launder a reputation stained by connections to international terrorism and gruesome atrocities like the killing and dismemberment of Washington Post journalist Jamal Khashoggi in 2018.
While the PGA-LIV deal has generated headlines and outrage, it bears mentioning that the merger faces hurdles going forward.
U.S. antitrust enforcement
We’re talking about a deal that would effectively make an overly concentrated marketplace even more concentrated by creating one mammoth company in control of pro golf. That guarantees rigorous scrutiny from U.S. authorities.
Note that PGA Tour Commissioner Jay Monahan admitted that the merger would serve as a way to take a “competitor off of the board.” Additionally, LIV previously bemoaned the monopoly power already enjoyed by the PGA over golf.
Global antitrust enforcement
The PGA-LIV merger includes ventures outside the United States, too. For instance, it would cover the DP World Tour, the Korn-Ferry Tour that grooms competitors for the PGA circuit, and the Middle East and North Africa Tour. As such, regulators in places like the UK and EU will have a say in the future of the deal.
Outside litigation
Consider the other legal issues arising from this merger. Some PGA sponsors will undoubtedly have qualms doing business with a Saudi-backed entity, especially when people like the family members of 9/11 victims take to public forums to condemn the deal. And what about the possible fallout from high-profile PGA golfers who initially declined big bucks from LIV to stay loyal to the PGA?
Congress
Lastly, operators on Capitol Hill aren’t about to let a political gift pass them by. Ron Wyden, the Oregon Democrat who chairs the Senate Finance Committee, has already called for an investigation into PGA-LIV merger. His allies in the Senate include Massachusetts Democrat Elizabeth Warren. Meanwhile, Rep. John Garamendi (D-California) has introduced legislation to rescind the PGA Tour’s tax-exempt status.
Any of these factors could kill the merger between the PGA and LIV outright. Even if they don’t, they could prolong the period required to finalize the deal interminably. In that case, the additional scrutiny may only add to what is shaping up as a PR lesson for the Saudis about the downsides of sportswashing.
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