PGA Tour-LIVE golf deal boosts Saudi Arabia’s global ambitions

Golf becomes a geopolitical trophy

The shock news that the PGA Tour plans to join forces with LIV Golf, the upstart circuit with which it has struggled over the past year, has sent golf’s normally stoic world into lurch. But the effects go far beyond putting greens and 9-irons.

Saudi Arabia, a supporter of LIV, now stands to make a huge impact on golf, as it invests billions to grow its presence in pro sports – and beyond. This is an additional indication of how the kingdom seeks to assert its role as a rising geopolitical and global business power.

Secret jet-setting talks led to the golf deal. Even as the PGA Tour waged a fierce public battle with LIV, the two sides held secret meetings on two continents to reach what is being called a “Framework Agreement”. PGA Tour commissioner Jay Monahan said yesterday that “it was not fair or sustainable to have this tension in our game.”

high-profile advisor Worked on both sides. For the PGA, he enlisted Ed Herlihy of elite law firm Wachtel and Jimmy Dunn of investment bank Piper Sandler (both of whom are on the Tour’s board), as well as investment bank Allen & Company. Those on the Saudi side included banker Michael Klein, a longtime adviser to the kingdom.

This is only the latest sign of Saudi Arabia’s expanding power, as the country spends billions abroad in what it says is an effort to diversify its economy away from oil. (Skeptics say it is trying to cleanse its reputation and shore up high oil prices.) Secretary of State Antony Blinken met mohammed bin salmanThe crown prince of the kingdom, this week in an effort to mend strained relations.

Meanwhile, deal makers say Saudi Arabia has become an emerging presence in M&A. and investment landscape. Private equity and venture capital firms also have came to the stateFor new capital hoping to tap its oil-rich coffers, raising money, especially from China, has been difficult (more on that below).

Sports is one area where Saudi Arabia has bought new prominence. The Kingdom’s Sovereign Wealth Fund – whose governor, Yasir Al-Rumayyan, will be chairman of the joint PGA-LIV organization – bought Newcastle United football club in England’s Premier League, and is involved in Formula 1 racing, boxing and WWE pro wrestling. Just yesterday, the Saudi Football League signed one of the world’s top players, Karim Benzema, in an effort to become a world-class competition.

The golf merger prompted deal makers to speculate whether the Saudis could target even bigger targets, including a team in the NBA, which recently agreed to allow sovereign fund investment, or any other American sports league. Changed its ownership rules.

However, the golf deal is not done yet. PGA officials have been meeting with players, many of whom declined a large payout from LIV to stay in the competition. Antitrust investigators were already scrutinizing the PGA Tour over whether it was undermining the golf labor market. (Its strategy against LIV is a factor in the case, but not central to it.)

It’s also unclear whether the deal will require a sign-off from merger regulators or CFIUS, an interagency panel that reviews transactions for national security concerns.

We have more questions about what comes next:

• Will sponsors stick around? Brands Loved the PGA Tour general lack of political controversyBut the Saudis’ admission may change that: “The PGA and Monahan have become overpaid Saudi shills, taking billions of dollars to cleanse the Saudi reputation,” said Terry Strada of 9/11 Families United.

• What will happen to the Golf TV rights? While the PGA closed multibillion-dollar deals with CBS and NBC, LIV struck only one. Tackle The CW Network after large potential partners allegedly not said,

• Will US regulators move to protect other US sports franchises, arguably some of the country’s most important soft-power assets, from Saudi investment?

What’s going on over here

New reports weigh in on the health of the global economy. The World Bank called it “uncertain” and warned of sluggish growth, while oecd offered muted optimism and foresaw “a long road to recovery”.

China’s exports fell. Worse-than-expected monthly trade data from Beijing today suggested the country’s post-Covid-19 recovery was stalled, The report, which initially sent crude and commodity prices lower, comes as Secretary of State Antony Blinken reportedly ready to travel to China in an effort to ease tensions between the two trading powers.

A top deal maker turns back to the law. Rob Kindler, one of Wall Street’s top M.&A. Bankers will move from Morgan Stanley to the law firm Paul Weiss this fall. It’s a return to roots for Kindler, who began his career at Cravath before making the jump to investment banking, and a chance to reconnect with his protégé Scott Barshe.

Tucker Carlson’s new show has debuted on Twitter. The former Fox News host posted a 10-minute video on the social network that featured no guests but took aim at familiar targets including the mainstream media and Ukraine’s President Volodymyr Zelensky. As of 8 a.m., his post was about 59 million views,

What Sequoia’s divestment says about investing in China

Sequoia stunned the investing world yesterday when it announced it would split itself into three: one US- and Europe-focused business, another targeting China and one to invest in India and Southeast Asia.

The storied venture capital firm insisted it was a logical move as its overseas business had become complex to manage. But the move is also symbolic of a region struggling to handle increasingly difficult US-China relations.

Sequoia said the move came after years of discussion. “The scope of investment activity in China and India has changed significantly since we first opened those businesses,” Roelof Botha, managing partner at Sequoia, told DealBook. Nevertheless, the model worked well for years and was widely seen as a model US-China investment alliance.

Geopolitics has made things difficult for investors. Washington has imposed Tighter restrictions on sensitive Chinese tech sectors Forcing inventors to adjust. The head of goldman sachs private equity business in asia Reportedly has stopped seeking US investment. and large global funds – including apgA Dutch asset manager, two large Canadian pension funds and Singapore’s GIC – have slowed investments in China.

Sequoia did well in China. There the business was established and managed by Neil ShaneOne of the most connected investors in the country in 2005 as a branch of Sequoia Capital. Early winning bets included e-commerce company JD.com and food delivery platform Meituan. china unit Raised billions as recently as last yearincluding from investors in the United States.

TikTok can play a role in this move. Sequoia has a majority stake in ByteDance, the Chinese parent company of the video app. Sequoia may be of the view that Chinese authorities will be more willing to greenlight ByteDance’s eventual Hong Kong listing if the US conglomerate is not on the books as one of its biggest investors. According to Jessica Lessin of The Information, (Sequoia China will be rebranded as Hongshan.)

Could other big investors follow suit? Venture capital and private equity firms with money in China include Blackstone, Carlyle, Bain Capital, Silver Lake, General Atlantic (another investor in ByteDance), and Warburg Pincus. a uniformly designed partition May work for other partner-based firms,

The investigation is expected to be speedy. The White House is weighing more restrictions on investment in China, including in areas such as semiconductors, artificial intelligence and quantum computing.

Where cryptocurrencies could dominate next

SEC has made a deep disclosure Legal action on crypto’s biggest players, accusing publicly listed exchanges Coinbase and Binance, the world’s largest crypto trading exchange, of breaking securities laws. Conflict seemed inevitable for months, and Coinbase is vowing to fight the agency in court. for the good of the industry,

The SEC said yesterday that Coinbase failed to register as a broker. On Monday, it accused Binance of mishandling customer funds and lying to regulators about its operations. Adding to Coinbase’s legal woes, securities regulators in 10 states, including California and New Jersey, filed their own actions to block the exchange from selling securities that are not registered in their states.

The stakes are huge. have two exchange accounts Half of global trade in digital assets, made over usa 80 percent of Coinbase’s revenue Last year. Investors are getting jittery: Coinbase stock is down 18 percent over the past two days, and some of the tokens the SEC targeted in the lawsuit — Cardano, Polygon, and Solana — initially fell in value. However, bitcoin rallied,

“We have been expecting this for a long time,” Paul Grewal, Chief Legal Officer at Coinbase, told DealBook. Nevertheless, the allegations came as something of a surprise; He got the news yesterday morning ahead of his congressional testimony, in which he called for regulatory clarity.

Coinbase has taken the lead in lobbying for the new law To cover the trillion-dollar market in digital asset trading. Last year, the company petitioned the SEC for new rules and sued the agency in April in a bid to speed up the case. Yesterday, a federal court gave the agency seven days to respond to a petition to draft new crypto regulations.

The SEC argues that existing securities rules cover crypto as well, saying that Coinbase is violating them. Coinbase sees the courts as its best place to resolve the matter. Grewal said, “As of today, what the SEC says no longer happens.”

After yesterday’s trial, conservative legislators again agency charged Due to heavy hand in dealing with crypto firms. But, with a divided Congress, few are pinning their hopes on legislative success.

Experts say the enforcement action is no coincidence. “It would make no sense to go after Coinbase while allowing Binance to go unpunished,” said Brett Redfern, former SEC division director and briefly Coinbase executive in 2021.

read speed

deal

• OpenAI CEO Sam Altman said the company behind ChatGPT is planned to be private It may therefore make a decision that stock market investors “may take a very strange look at.” (Bloomberg)

• The Supreme Court of Delaware upheld a ruling that Tesla Fair price paid for SolarCity, despite Elon Musk controlling both companies. (Reuters)

Policy

• Hard-line Republicans took over the floor of the House yesterday in retaliation for Speaker Kevin McCarthy’s work in crafting the debt ceiling deal. (NYT)

• Merck sued the government over a federal law that allows Medicare to negotiate prices directly with drug makers. (NYT)

best rest

We want your feedback! Please email your ideas and suggestions to Dealbook@nytimes.com.