The Saudis are avoiding US courts, the impact on LIV Golf could be huge

There aren’t many positives in Greg Norman’s world these days, unless you count the savings accrued on Kool-Aid orders every time a hapless CEO is hired. LIV golf’s schedule remains unclear just weeks before its start, new star player signings haven’t materialized, and the hiatus hasn’t brought any of the promised intersquad trading frenzy. And this is not even the most pressing issue threatening LIV’s long-term survival.

More serious problems include: not signing quality players; failure to attract corporate sponsors; failure to obtain propeller support not produced in robot farms; not retaining senior managers, three of whom unceremoniously retired; and the fiasco of securing a broadcast deal, limiting LIV to discussing paying the CW to air his act even after Fox Sports succeeded.

It takes a little extra Kool-Aid power to reframe all of this as anything other than humiliation.

For those interested in thinking outside the boundaries of golf, another LIV hazard—perhaps the scariest—takes place in a courtroom in the Northern District of California. This is where the LIV filed an antitrust suit against the PGA Tour and where the tour filed a counterclaim. The proceedings turned into a curious stalemate when the round tried to compel the Public Investment Fund of Saudi Arabia, which does the banking for LIV, and the fund’s spokesman, Yasser Al-Rumayyan, to disclose it.

The round alleges that LIV is owned by the Saudi foundation and that Al-Rumayyan is the highest authority in the league, making the disclosure of those parties key to his case. The Saudis tried desperately to avoid any discovery. The fund claims foreign sovereign immunity as one of the Saudi government agencies, while Al-Rumayyan filed a court affidavit saying he faces a possible 20-year prison term under Saudi law if classified disclose information. Somewhere, Salama al-Shihab is crying for him. 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 fresher. After LIV was ordered to sue – first by 11 Patsy players before later joining the lawsuit themselves – the Saudis now claim they are not subject to the jurisdiction of the courts from which they sought protection. As Brooklyn Law School professor Judy Balsam points out, there is a “commercial activity” exception to sovereign immunity claims that gives the court jurisdiction based on the fund’s control of the LIV. That control is indisputable: At a hearing on January 13, it was revealed that the foundation owns 93% of LIV and pays 100% of the costs associated with its events, belying any defense that it is a mere bystander to the antitrust -lawsuit is absurd. .

Since LIV has requested expedited court action and promised to cooperate with Saudi Arabia, the judge is likely to demand disclosure of Al-Rumayyan and his foundation, a ruling that will have unattractive consequences for LIV players who may hope to avoid that their cases be distributed to lawyers. . . The court could also draw opposite conclusions from a Saudi refusal to comply – which could defeat LIV’s antitrust claim. But cooperation in discovery — even if the court sets strict criteria — is a far worse option for the Val-Romayan Foundation.

In the United States legal system, discovery can be permissive to the point of intrusion, and comes with the risk of a shootout. Former Raiders coach Jon Gruden was fired over racist and homophobic emails discovered during his exposure in ‘ a workplace lawsuit involving the Washington Chiefs. . In this case, the disclosure could expose both the known and hidden investments of the Saudi fund to unwelcome scrutiny. Even if the discovery is limited to a round of golf, the tug-of-war could reveal things the Saudis would rather protect.

For example, LIV became openly politicized with its association with Donald Trump, holding events at the former president’s golf courses when he publicly encouraged PGA Tour players to “take money” from its Saudi partners. Scrutiny of the company’s relationship with Trump will not be welcome in Riyadh and Palm Beach. Federal law prohibits foreign governments from trying to influence US domestic politics, and the disclosure could highlight the extent to which the Saudi fund’s investments are political.

The Public Investment Fund – 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 its advisers. The fund’s advisers, McKinsey and Company, thought the LIV project was impossible, but several billion dollars were spent there. If the Saudi fund makes economically irrational investments, disclosure may reveal motives not based on profit or sports laundry, but on politics.

The term “buyer’s remorse” is often thrown around to refer to LIV players who may miss out on legitimate competition or regret the reputational damage done upon signing. Perhaps this is more relevant now in relation to LIV financiers, who find themselves in a legal quagmire of their own.

The degree to which Al-Rumayyan and his foundation cooperate with the proceedings in the Northern District of California will have a significant impact on LIV’s lawsuit against the PGA Tour. The degree of fear of scrutiny can have a critical impact on an LIV’s entire existence. Judge Beth Loveson Freeman set a January 2024 trial date for the antitrust case. It was always a remarkably optimistic timeline, but the Saudis’ stalling tactics — and their determination not to be known about their wealth fund deals — raises the question of what will be left to litigate a year from now.

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