PGA Tour Can Depose Saudi Wealth Fund’s Leader, Judge Rules
A federal magistrate judge has ruled that the leader of Saudi Arabia’s sovereign wealth fund, which has bankrolled the new LIV Golf series, must sit for a deposition by lawyers for the PGA Tour who sought his testimony as part of the tangle of litigation involving the sport-splitting circuit.
The decision, released on Thursday night in California after an interim legal skirmish that dealt with questions of sovereign immunity and the reach of Saudi law, could open a rare window into the wealth fund’s operations and the power of its governor, Yasir al-Rumayyan, over its investments abroad.
The wealth fund is expected to ask a Federal District Court judge in San Jose, Calif., to review the decision by the magistrate judge, Susan van Keulen, who is helping oversee the bitter legal clash between the PGA Tour and LIV Golf.
In her 58-page ruling, portions of which were redacted in the version that became public late Thursday as the sides jousted about its confidentiality, van Keulen wrote that it was “plain” that the wealth fund was “not a mere investor in LIV.”
Instead, the judge wrote, the wealth fund was “the moving force behind the founding, funding, oversight and operation of LIV.” Al-Rumayyan, she wrote elsewhere in her order, “was personally involved in and himself carried out many” of the wealth fund’s activities to create and develop LIV.
A Guide to the LIV Golf Series
A new series. The debut of the Saudi-financed LIV Golf series in 2022 resurfaced longstanding questions about athletes’ moral obligations and their desire to compete and earn money. Here’s what to know:
What is LIV Golf? The series is a breakaway professional golf circuit bankrolled by Saudi Arabia’s sovereign wealth fund. Its organizers hope to position it as a player-power-focused alternative to the PGA Tour, which has been the highest level of pro golf for nearly a century.
Why is the new series controversial? The event has created sparks within golf for upending the traditions and strictures of how the game is played. It has also become a lightning rod for human rights campaigners who accuse Saudi Arabia of using sports to launder its reputation.
Who is playing it? Several top players and former major champions have joined LIV Golf, including Phil Mickelson, Dustin Johnson, Henrik Stenson and Cameron Smith. But many of the biggest names in the sport, such as Tiger Woods and Rory McIlroy, have stayed away.
What is attracting the players? The LIV Golf events are the richest tournaments in golf history. The first tournament’s total purse was $25 million, and the winner’s share was $4 million. The last-place finisher at each event was guaranteed $120,000. That is on top of the appearance fees and nine-figure signing-on payouts some players have accepted.
How has the PGA Tour responded? The PGA Tour suspended several members among the LIV Golf players after it denied them releases to participate in other events. The Justice Department later announced that it was investigating the PGA Tour for anticompetitive behavior. The rival tours have also engaged in a winding legal battle of their own.
What’s next? For 2023, the tour has signed a deal with the CW network to broadcast its events and announced a 14-event second season, which includes stops at three of former President Donald J. Trump’s golf courses. Meanwhile, the drama between LIV Golf and the PGA Tour seems far from over.
The wealth fund did not immediately respond to a request for comment but said in a separate court filing that it and al-Rumayyan “respectfully intend to seek review of the order,” which van Keulen initially issued under seal last week.
Over the last year, LIV Golf, backed by billions of dollars from the Saudi wealth fund, has enticed a handful of elite players away from the PGA Tour in exchange for some of the most lucrative contracts in the sport’s history. But the signings of headline players — including Sergio García, Dustin Johnson, Brooks Koepka, Phil Mickelson and Cameron Smith — have revealed only so much about LIV Golf’s ambitions and the wealth fund’s motives for investing billions of dollars in an enterprise that McKinsey & Company consultants warned was nothing close to a sure bet.
LIV Golf and its champions say they are seeking to revive a sport whose professional level, they contend, has grown stale. The PGA Tour, facing perhaps the greatest competitive threat in its history, and its supporters complain that the rebel series is promoting a diluted version of the game and helping Saudi Arabia distract from its record on human rights.
Although much of what it has learned in litigation remains under seal, the PGA Tour has depicted LIV Golf as routinely subservient to the desires and whims of the wealth fund, formally known as the Public Investment Fund, and al-Rumayyan, an avowed golf fan who is close to Saudi Arabia’s de facto ruler, Crown Prince Mohammed bin Salman. Prince Mohammed is the wealth fund’s chairman.
During a hearing before van Keulen in January, Eliot Peters, a lawyer for the tour, relied heavily on a shareholder agreement that he said showed the scope of Saudi influence over LIV Golf, which will begin its second season with a tournament in Mexico next Friday.
The wealth fund, Peters asserted, had to “consent to” the league’s operating budget, player participation agreements, sponsorship deals, certain broadcasting contracts and the commencement of litigation — including the lawsuit in San Jose that gave rise to the subpoenas demanding documents and testimony from the fund and al-Rumayyan.
“They consent to this litigation,” Peters said of the wealth fund, which he said effectively owns 93 percent of LIV Golf. “They knew it was going to be filed in a U.S. court. They knew it was going to be brought by a subsidiary that they fund completely. They knew it was going to involve player agreements, which they control. They knew it was going to involve sponsor issues on the antitrust side, which they control. They knew it was going to involve broadcast agreements, which is central to the antitrust case, which they control and had the ability to either approve or disapprove of.”
Moreover, Peters told the judge that al-Rumayyan had “personally assured golfers” that the wealth fund would back them legally and that al-Rumayyan had been involved in regular meetings about LIV Golf. The wealth fund’s leader, Peters insisted, was so steeped in the operation of the golf series that an email showed that he was “involved in an issue about the delay in golfers’ scores being posted on a TV screen.”
The wealth fund’s lawyers argued that Peters had exaggerated the extent of al-Rumayyan’s role — or at least misinterpreted it — and that compliance with the PGA Tour’s demands would violate Saudi law. John Bash, a lawyer for the wealth fund, told van Keulen that deposing al-Rumayyan would be analogous to the United States Treasury secretary being susceptible to the demands of a Saudi court if a company owned by the American government faced litigation in Riyadh. (“I see a couple of important distinctions between that analogy and the facts,” the judge replied moments later.)
Beyond arguments about the reach of American courts, wealth fund lawyers have also tried to distance the wealth fund and al-Rumayyan from the golf league. In a November filing, the lawyers said the wealth fund “does not control LIV’s day-to-day-operations” and included a sworn statement from al-Rumayyan, who said it provided only “high level oversight” of LIV.
In late January, though, the PGA Tour asked the court for permission to add the wealth fund and al-Rumayyan as defendants in the litigation. Judge Beth Labson Freeman, who will also consider any bid by the wealth fund to overturn van Keulen’s order, has not ruled on the request.
Much of van Keulen’s decision about the subpoenas rebuffed the wealth fund’s legal arguments; she concluded, for instance, that the wealth fund’s work in the United States triggered a commercial activity exception under a law that deals with foreign sovereign immunity. She did, however, narrow the scope of the tour’s subpoenas, which she said “suffer from overbreadth both in scope and number of requests.” And although she ruled in the wealth fund’s favor on a technical matter related to the subpoenas, she said the tour could re-serve them, preserving its potential to depose al-Rumayyan.
The golf litigation, which is not scheduled to go to trial before next year, is not the first time that the wealth fund has balked at al-Rumayyan’s requested participation in American legal proceedings. Lawyers for Elon Musk subpoenaed al-Rumayyan for testimony in a trial involving Musk’s assertion that he would take Tesla private but backed down after the wealth fund’s lawyers resisted.