PGA Tour-LIV Golf Merger Draws Attention and Ire from Congress

A bill is circulating that, if passed, would revoke the loophole allowing the PGA Tour to not pay federal corporate income tax.

Over the past year, the PGA Tour and commissioner Jay Monahan had taken the LIV Golf, Saudi Arabia and, by extension, the Public Investment Fund of Saudi Arabia to task to anyone who would listen.

And that included Congress.

Given Saudi Arabia's sometimes-tenuous relationship with the U.S. and elected representatives on Capitol Hill, Monahan knew he would find congressional support against a fundamental threat to the PGA Tour.

But after appearing Tuesday morning on a CNBC set with PIF governor Yasir Al-Rumayyan to announce a stunning merger between the PGA Tour and PIF-funded LIV Golf, Monahan has now drawn the ire of some in Washington, D.C.

The first salvo came out of the office of California Rep. John Garamendi (D), a senior member of the House Armed Services Committee.

On Wednesday, the congressman introduced a bill called the “No Corporate Tax Exemption for Professional Sports Act” following what the he called the “Saudi Sovereign Wealth Fund’s surprise takeover of the PGA Tour.”

The legislation would end the tax loophole that the PGA Tour and other professional sports leagues use to avoid paying any federal corporate income tax.

When asked about how the PGA Tour is deemed a charity with revenue of over $1.5 billion in 2021, Garamendi told Sports Illustrated on Thursday that "I found that outrageous, and particularly outrageous with the merger."

"And now Saudi Arabia, who routinely sticks it to the American consumer, most recently by cutting back on the production of petroleum, which has already raised the price of gasoline in the United States,” Garamendi continued. “I find it particularly obnoxious that they would be benefiting from this exemption with this merger, and that's why we're carrying this bill. We're gonna do everything we can to end this last remaining tax loophole for professional sports associations.”

Garamendi has started to circulate the bill amongst his colleagues and is finding bipartisan support to eliminate a loophole that would amend the Internal Revenue Code of 1986.

“We started circulating the bill for co-signers yesterday and we would expect by the end of this day to have a significant number of members of Congress,” Garamendi said. "Next week, we should have a very significant group of people on board. I talked to a couple of senators this morning, who said 'hey, send me a copy of that bill. I'm interested.'”

When asked about any additional legislation or review by Congress, Garamendi was quick to call on the House Judiciary Committee or the Commerce Committee to take up the issue of a monopoly.

“We've just now seen the merger of the three biggest, most prominent leagues, the PGA (Tour), LIV and and then the European Tour," Garamendi said. “So we've seen the elimination of competition, we've now have a monopoly in professional golf. And from the point of view of a wannabe professional golfer, they're going to have no choice. And even monopolies ought to be paying their taxes.”

Garamendi is not alone among voices from up and down the political aisle who are concerned about the proposed linkup of the PGA Tour and the PIF/LIV.

Connecticut Senator Chris Murphy (D) tweeted about how the PGA Tour was in his office just months ago talking about the Saudi human rights record.

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? https://t.co/SQ9HQuBsNT

— Chris Murphy 🟧 (@ChrisMurphyCT) June 6, 2023

Senator Richard Blumenthal (D), also of Connecticut, released a statement saying that “The PGA Tour has spent two years lambasting Saudi sports-washing and paying lip service to the integrity of the sport of golf, which will now be used unabashedly by the Kingdom to distract from its many crimes. The PGA Tour has placed a price on human rights and betrayed the long history of sports and athletes that advocate for social change and progress. I will keep a close eye on the structure of this deal and its implications.”

Senator Tim Kaine of Virginia (D) told Fox News he was sickened by the partnership.

“I was really disappointed because it seems they set aside all the human rights objections that they had and just decided ‘O.K, well, we can make more money if we go a different direction.'"

It also seems inevitable that this link-up between the two entities will receive a review by the Department of Justice and possibly the Federal Trade Commission.

"The real story here is that the PGA engaged in moral preening about Saudi Arabia for a year before eventually getting in bed with them because the money was good," Ohio Senator J.D. Vance said. "They probably cost their own players a lot of money, and they certainly made their brand look completely foolish."