Lynch: The Saudis are dodging a U.S. court, and the impact on LIV Golf could be huge

Lynch: The Saudis are dodging a U.S. court, and the impact on LIV Golf could be huge

Positives aren’t plentiful in Greg Norman’s world these days, unless you count the commensurate savings in Kool-Aid orders every time another of his hapless executives bolts for the exit. The LIV Golf schedule remains incomplete just weeks ahead of its start, no new star player signings have materialized, and the offseason brought none of the promised trading frenzy between teams. And those aren’t even the most pressing issues that imperil LIV’s long-term viability.

More acute difficulties include: the failure to sign enough quality players; the failure to attract corporate sponsors; the failure to garner fan support that isn’t manufactured in a bot farm; the failure to retain senior executives, three of whom have unceremoniously quit; and the crippling failure to secure a broadcast deal, which has reduced LIV to discussing paying The CW to air its events after even Fox Sports passed.

It demands a particularly potent Kool-Aid to recast all of that as something other than humiliating.

For those minded to think beyond the confines of golf, another risk to LIV — perhaps its most formidable — is playing out in a Northern District of California courtroom. That’s where LIV filed an antitrust suit against the PGA Tour and where the Tour countersued. The proceedings have detoured into an intriguing cul-de-sac as the Tour seeks to compel discovery from the Saudi Arabian Public Investment Fund, which is bankrolling LIV, and the Fund’s governor, Yasir Al-Rumayyan.

The Tour 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 its case. The Saudis have been frantically trying to evade any discovery. The Fund is claiming foreign sovereign immunity as an organ of the Saudi state, while Al-Rumayyan submitted to the court an affidavit saying that he would be exposed to a possible 20-year prison term under Saudi law if he were to disclose classified information. Somewhere Salma al-Shehab is crying him a river. She’s the Saudi student given a 34-year sentence in August for tweets critical of Al-Rumayyan’s pals in the regime.

The PIF arguments are piffle. Having directed LIV to file an antitrust suit—initially through 11 patsy players before later joining the litigation itself—the Saudis now claim they’re not subject to the jurisdiction of the very courts whose protection they sought. As noted by Professor Jodi Balsam of Brooklyn Law School, there is a “commercial activities” exception to sovereign immunity claims that grants the court authority based on the Fund’s control of LIV. That control is indisputable: in 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, rendering laughable any defense that it’s a mere bystander to the antitrust litigation.

Since LIV requested an expedited court process and promised Saudi co-operation, it’s likely the judge will compel discovery from Al-Rumayyan and his Fund, a ruling that would have unappetizing implications for LIV players who might hope to avoid having their affairs spreadeagled for lawyers. The court may also draw negative inferences from a Saudi refusal to comply — potentially ruinous for LIV’s antitrust lawsuit. But co-operating with discovery — even if the court sets strict parameters — is a considerably worse option for the Fund and Al-Rumayyan.

In the U.S. legal system, discovery can be permissive to the point of invasive, and comes with crossfire risks. Former Raiders coach Jon Gruden was fired for racist and homophobic emails unearthed during discovery in a workplace suit involving the Washington Commanders. In this case, discovery could expose to unwanted scrutiny both known and stealth investments by the Saudi fund. Even if discovery is confined to the golf sphere, tugging at threads could unravel things the Saudis would much rather protect.

For example, LIV has become explicitly politicized with its attachment to Donald Trump, staging events at the former president’s golf courses as he publicly urged PGA Tour players to “take the money” from his Saudi partners. Scrutiny of the relationship between the Fund and Trump would be unwelcome in Riyadh and Palm Beach. Federal law prohibits foreign governments from attempting to influence U.S. domestic politics, and discovery risks highlighting how inherently political the Saudi fund’s investments are.

The Public Investment Fund — which is ultimately controlled by Crown Prince Mohammed bin Salman — invested $2 billion in a private equity company owned by Trump’s son-in-law, Jared Kushner, over the objections of its own advisors. The LIV project was thought inviable by the Fund’s consultants, McKinsey and Company, yet another couple of billion dollars has been torched there. If the Saudi fund is making investments that are economically irrational, discovery might unearth motives that are grounded not in profit nor sportswashing, but in politics.

The concept of “buyer’s remorse” is often tossed around in reference to LIV players who might miss legitimate competition or regret the reputational damage that came with signing. It might now be more appropriate in relation to LIV’s financiers, who find themselves in a legal quagmire of their own making.

The extent to which Al-Rumayyan and his Fund co-operate with the proceedings in California’s Northern District will have an enormous impact on LIV’s lawsuit against the PGA Tour. The degree to which they fear scrutiny could have a decisive impact on LIV’s entire existence. Judge Beth Labson Freeman set a trial date of January 2024 for the antitrust case. It was always a wildly optimistic schedule, but the delay tactics of the Saudis — and their determination not to have the dealings of their wealth fund made public — raise the question of just what will be left to litigate one year from now.

Source: Golfweek https://ift.tt/B7AKr8o
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