One year ago nearly to the day, LIV Golf CEO Greg Norman issued his now-famous letter to PGA Tour commissioner Jay Monahan stating “surely you jest†about the tour’s threat to ban players who might defect to LIV Golf. Norman continued: “And surely your lawyers are holding their breath.â€
If Monahan’s lawyers ever did hold their breath, which is unlikely, they certainly are breathing easier now after a key ruling last week in federal court in California. They might even be snickering over the Australian-born Norman’s comprehension of the American judicial system, considering that Saudi-backed LIV is on its third set of legal teams in a court venue thought to be friendly to an antitrust claim such as the one brought by LIV.
On Thursday, it was revealed that a judge in the U.S. District Court of Northern California sided Feb. 9 with the PGA Tour’s demand that Saudi Arabia’s Public Investment Fund and its governor, Yasir Al-Rumayyan, fully participate in discovery by testifying and producing documents. This is part of the tour’s effort to demonstrate that LIV unlawfully caused PGA Tour players to break their contracts with the tour. The PIF had argued that it was shielded by sovereign immunity, but the judge agreed that the commercial-activities exemption in the Foreign Sovereign Immunities Act pierced that shield.
The decision comes against the backdrop of two related important issues facing LIV and the PIF.
First, according to a source close to the situation, some LIV players are having second thoughts about playing for the Saudi tour, which begins its second season this week in Mexico.
This case is evolving from a commercial dispute between the PGA Tour and LIV Golf to a geopolitical struggle between the PIF and the American judicial system.
Norman’s “surely you jest†bravado has come back to haunt LIV’s CEO and the league. LIV assured players that it would get quick injunctive relief from the courts and that banned PGA Tour players still would be able to play tour events. This has not proved to be the case.
LIV also has missed the mark with the Official World Golf Ranking. LIV expressed confidence that it would cajole the OWGR board to award ranking points to its events, despite the 54-hole, 48-player, no-cut format falling short of OWGR requirements. This too has not been the case.
That said, returning to the PGA Tour is problematic for any player who wants out of his LIV contract, the biggest of which came with signing bonuses of $100 million or more. Consider the simple issue of money: the players took it. Are they going to give it back and beg for forgiveness from the PGA Tour?
Also, people who have seen the contracts signed by the defectors say that the agreements are ironclad. Escaping the contracts would be a steep uphill climb.
The LIV players might argue that they were misled on many fronts. They were in fact banned indefinitely from PGA Tour events, and their world rankings are plummeting. The CW Network broadcast deal announced last month is far from ideal, there has been little corporate sponsorship, fan attendance has been poor, and the defectors have all but disappeared from the pro golf landscape. Has anyone seen Bryson DeChambeau lately?
The second issue relates to the PGA Tour’s efforts to drag the PIF and Al Rumayyan more deeply into the lawsuit. Currently, Al-Rumayyan and PIF are third parties to the case, but the tour filed a motion to make them defendants. This is a serious issue; should the tour’s motion succeed, the case for the PIF and Al-Rumayyan being required to participate in discovery becomes much stronger.
This case is evolving from a commercial dispute between the PGA Tour and LIV Golf to a geopolitical struggle between the PIF and the American judicial system. The judge’s ruling sets a precedent, one that becomes more precedential should the appeal, filed last week, fail.
The PIF and the kingdom of Saudi Arabia want nothing to do with American jurisprudence. This is not a hill they are willing to die on for a small, non-revenue-producing investment that has largely brought embarrassment to the kingdom over the past 12 months. Intended as a so-called sportswashing exercise, LIV Golf has served otherwise to focus attention on the human-right abuses in the kingdom and the regime’s ties to the gruesome killing of a Saudi journalist working for a prominent American news outlet.
If this ruling is affirmed on appeal, it could spark an effort to settle the lawsuits, or even cause LIV to drop all legal proceedings. It is hard to imagine a scenario by which the PIF would submit to discovery, particularly given how small and relatively insignificant LIV is to an oil-rich fund valued at $600 billion-plus.
It is equally hard to believe how poorly LIV and the PIF have been counseled by what Norman called a team of “noted antitrust lawyers.†The last thing that the PIF and Al-Rumayyan could have contemplated was being deposed in an American law office. The PIF either overestimated its ability to prevail or it underestimated the legal prowess of the PGA Tour.
Either way, the PIF is in a place it could not have imagined possible. If this dispute were match play, the PIF would be 3 down at the turn.
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Top: LIV Golf CEO Greg Norman assured recruits they'd likely be able to play tour events and get OWGR points.
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