The Saudis dodging a US court, the impact on LIV Golf could be huge

The positives aren’t plentiful in Greg Norman’s world these days, unless you count the commensurate savings in Kool-Aid orders every time one of his hapless executives rushes out. LIV Golf’s schedule remains patchy just weeks before its start, no new player signings materialized, and the offseason program has brought none of the promised commercial frenzy among the teams. And these aren’t even the most pressing issues threatening LIV’s long-term survival.

More severe difficulties include: failure to sign enough quality players; failure to attract corporate sponsors; the failure to muster fan support that wasn’t made on a robot farm; failure to retain senior executives, three of whom unceremoniously resigned; and the fiasco of securing a broadcast deal, which left LIV debating paying The CW to air its action even after Fox Sports passed.

It takes a particularly powerful Kool-Aid to reframe it all as something other than insulting.

For those contemplating thinking outside the boundaries of golf, another LIV hazard—perhaps the most terrifying—is playing in a courtroom in the Northern District of California. This is where LIV filed an antitrust suit against the PGA Tour and where it contested the tour. The proceedings have turned into a curious stalemate as the round seeks to force discovery from Saudi Arabia’s Public Investment Fund, which funds LIV, and the fund’s governor, Yasser Al-Rumayyan.

The round argues that LIV is owned by the Saudi fund and that Al-Rumayyan is the league’s ultimate authority, making discovery from those parties key to his case. The Saudis were frantically trying to evade any discovery. The fund is claiming foreign sovereign immunity as one of the Saudi state agencies, while Al-Rumayyan submitted to the court an affidavit in which he said he would be subject to a 20-year prison sentence under Saudi law if he were to reveal classified information. Somewhere Salma Shehab crying on a river. She is the Saudi student who was sentenced to 34 years in prison in August for tweets critical of Al-Rumayyan’s friends in the regime.

PIF arguments are bevel. Having directed the LIV to sue against the monopoly—initially by 11 upstart players before later joining the lawsuit itself—the Saudis now claim they do not fall under the jurisdiction of the very courts they sought protection. As Professor Judy Balsam of Brooklyn Law School notes, there is an exception for “commercial activities” to sovereign immunity claims that grant court power based on the fund’s control of the LIV. That control is indisputable: At a January 13 hearing, it was revealed that the fund owns 93 percent of LIV and pays 100 percent of the costs associated with its events, making any defense laughable that it’s a mere bystander in the antitrust lawsuit. .

With LIV asking for expedited court action and promising Saudi cooperation, the judge will likely force discovery from Al-Rumayyan and his fund, a ruling that would have unappealing ramifications for LIV players who might hope to avoid making their affairs public to lawyers. The court may also draw negative conclusions from a Saudi refusal to comply – potentially damaging to LIV’s antitrust lawsuit. But cooperation in discovery – even if the court sets strict criteria – is a much worse option for the fund and Al-Rumayyan.

In the American legal system, discovery can be permissive to the point of intrusion, and comes with the risk of a crossfire. Former Raiders coach John Gruden was fired over racist and homophobic emails that were discovered while he was spotted in a workplace suit featuring the Washington captains. In this case, the discovery could expose to unwanted scrutiny both known and hidden investments by the Saudi fund. Even if discovery is limited to a golf ball, pulling strings could reveal the things the Saudis would rather protect.

For example, the LIV has become overtly politicized with its association with Donald Trump, staging events at the former president’s golf courses where he publicly exhorts PGA Tour players to “take money” from his Saudi partners. Scrutiny of the fund’s relationship with Trump would not be welcome in Riyadh and Palm Beach. Federal law prohibits foreign governments from attempting to influence the domestic politics of the United States, and exposes risks that shed light on the political nature of the Saudi fund’s investments.

The Public Investment Fund – which is controlled by Crown Prince Mohammed bin Salman – has invested $2 billion in a private equity firm owned by Jared Kushner, Trump’s son-in-law, despite the objections of his advisers. The fund’s advisers, McKinsey and Company, thought the LIV project unobligable, yet another $2 billion was burned there. If the Saudi fund is making investments that are irrational in economic terms, the discovery may reveal motives based not in profit or mathematical laundry, but in politics.

The concept of “buyer’s remorse” is often overlooked in reference to LIV players who may miss out on legitimate competition or regret the reputational damage done with signing. It may now be more relevant in regards to LIV financiers, who find themselves in a legal quagmire of their own making.

The extent to which Al-Rumayyan and his fund cooperate with the proceedings in the Northern District of California will have an enormous impact on LIV’s lawsuit against the PGA Tour. The degree to which they fear scrutiny can have a critical impact on LIV’s entire existence. Judge Beth Labson Freeman has set a January 2024 trial date for the antitrust case. It has always been a very optimistic schedule, but the Saudis’ delaying tactics — and their intent not to make their wealth fund dealings public — raises the question of what will be left to sue a year from now.

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