No Laying Up - Golf Podcast - NLU Podcast, Episode 712: Sen. Ron Johnson

Episode Date: July 10, 2023

Ahead of the PGA Tour's hearing in DC on Tuesday, Soly is joined by Senator Ron Johnson of Wisconsin who serves as the ranking member of the Senate's permanent sub-committee on investigations. Senator Johnson gives us his perspective on the proposed agreement between the Tour and the Saudi PIF, the purpose and goals of a public congressional hearing, the trends of sovereign wealth funds investing in pro sports - both domestically and internationally, how professional sports leagues are treated compared to other potential monopoly cases, and more. Learn more about your ad choices. Visit megaphone.fm/adchoices

I'm going to be the right club today. Yes. That is better than most. How about him? That is better than most. Better than most. Ladies and gentlemen, welcome back to a special edition of the No Lang Up podcast, short episode, short interview here. It's only got a shelf life of about a day as I did an interview last week with Senator Ron Johnson from Wisconsin.

We wanted to talk about the Senate hearing that's coming up this Tuesday, July 11th, the with Jimmy Dunn and Ron Price from the PGA tour. Going to be a question by the Senate. I wanted to get a primer with someone involved in this. I reached out as well. We tried to track down Senator Wyden and Senator Blumenthal for a differing perspective on this hearing and on what's going on. We were only able to track down Mr. Johnson did not hear back from anyone else that we reached out to really, obviously trying not to have politics be a big part of this show. I just wanted golf fans to have a glimpse into how the government might approach this or might think about this. And of course, this is only Senator Johnson's viewpoint represented in this. Again, we tried to get differing viewpoints and we're unsuccessful in doing so, but I think

the listeners will learn a thing or two about what to expect tomorrow and Senator Johnson's perspective on it as well. And I tried to speak like a golf fan more so than a politics expert on this to try to get the best information we could out of it. There'll be no interruptions, no ads, but if you'd like to support the show, you can go to nolayingup.com for its last join to become a member of our Nest platform, which gives you special discounts in the shop and the shop can be found at store.nolayingup.com, which is a lot of great strap gear that's up there as well.

And obviously, there's a lot of other benefits you can read about at nolayingup.com, slash join about what you get out of a Nest membership. So without any further delay, here is Senator Ron Johnson. All right, Senator, we thank you for your time. I know a lot of stuff comes across your desk. Why did the framework agreement between the PGA tour, DP World Tour, and the Saudi Arabian public investment fund, Garner attention from the Senate? Well, first of all, it wasn't my choice.

When I was shooting the breeze of the reporter, didn't realize he was actually writing a story on this. And my comment was that Congress ought to stay the hell out of it. And that's still pretty much my attitude. And we've participated or were complicit in driving our national debt over $32 trillion, we're encouraging more than $1 trillion worth of death. Since there's all kinds of problems facing this nation, I'm not going to be a good player. I'm not going to be a good player. I'm not going to be a good player. I'm not going to be a good player.

I'm not going to be a good player. I'm not going to be a good player. I'm not going to be a good player. I'm not going to be a good player. I'm not going to be a good player. I'm not going to be a good player. I'm not going to be a good player. I'm not going to be a good player. I'm not going to be a good player. on a Saturday afternoon and kind of keeping one eye open to see how it all breaks down the last three or four holes.

Probably one of the first terms to remember was when Roberto Cameron divins whatever his last name is, what he signed the wrong the purity of the game and it's got rules and you got to follow those rules no matter how ridiculous it may seem those are rules established and where I love about the game of golf is golfers follow them scrupulously and it's a real meritocracy and and if you want to understand my role in this thing is I want it to be constructive. And I want as best as possible for all the players, I mean, all the entities involved in this to maintain the purity of the competition because to me, the level of perfection and good fortune required engulf at the top levels

is just something extraordinary. And I don't want to see that water down. And when Liv came on scene, all of a sudden you started seeing a fracturing, you've got these great players who I've enjoyed watching. I've enjoyed their integrity and each other's throw. So those, there's a powerful day for me. That's why I haven't felt like there's been a whole lot

of purity, at least at the highest level of professional golf over the last couple of years. That's definitely not the word that comes to mind to me. And I don't, to be honest with you, Senator, I don't know if this agreement restores that or doesn't or makes it worse. I don't know the answer to that. I don't know how I feel about it.

I think it's all complicated for a lot of people that have closely followed the game. But what, I'm curious if you could kind of explain to our audience and to me, honestly, what, even if you don't necessarily think this should garner the attention of the U.S. government, why does it? What are some things that are going to be asked of the folks that are going to be there?

We can get into some of that. But what is the government in the Senate hoping to get out of what's going to happen this next week? Well, sir, meal is a legitimate issue for Congress to take up, because literally the courts have been asking Congress to take up this issue for decades, probably for more than 100 years after the passage of the Clayton Act. That is supposed to prevent monopolistic behavior, is supposed to ensure

commercial competition. But sports competition has always been somewhat different. The goal of sports competition is to maintain competition sports, not necessarily competition from commercial sense. And courts, as they review, case after case after case brought from different plaintiffs, challenging these, whether it's baseball, whether it's, you know, whatever majorly sport

that is being challenged based on Anna Truster, monopoly grounds. The courts have always deferred to protect the sports competition, which I think is interesting, even though they've said that this is clearly a violation of this section of the act, it's necessary violation if we're going to have competitive sports that the fans want,

that the public wants,, the players want. And so it's possible that Congress could rewrite something like the Clayton Act to recognize the different nature of competitive sports. But I think you argue the same thing. We need to take a look at our antitrust laws as relate to social media companies. Because all of our antitrust laws as relate to social media companies. Because all of our antitrust laws are really focused in on consumer harm.

And when social media companies are giving people something for free, there's really no consumer harm other than the fact that they are controlling what content, what kind of news that most of us are getting, you know, censoring content. But anyway, it's a big complex issue. So, you know, the antitrust aspects of this, I think, are legitimate, legitimate inquiry for Congress. But from my standpoint, it would be primarily to exempt appropriately sports from some of the provisions of the Clayton Act.

Again, it's taught me if anything I say is going off on the wrong tangent because I'm working on a probably about 1% of the knowledge that most people that study antitrust have. But from my gathering, the antitrust exemptions that are, you know, enjoyed by the MBA, the NFL, Major League Baseball, there's an element of the collective bargaining agreement within that that I believe gives some leeway to those exemptions. Whereas golfers are independent contractors. And I guess a theory in this would be to say, all right, if there's a monopoly here or an antitrust issue as it

relates to the highest level professional golf, it would be that there's no competition as for players as far as their compensation, right? If there's only one entity that provides the level of high golf, if that ends up being this company at the end of it, what protection do the players have to make sure their wages aren't being squeezed or something? Am I on the right track in terms of what a consideration would be as it comes to this unique area of antitrust that it has it relates to sports? Well, again, I'm not a lawyer myself.

So we're not one specialized nanitrust. I think the only sport that has a true exemption is baseball. The other ones just sort of by tradition have been exempted in case after case after case where the courts will say, yeah, you're violating that, but we're going to let you violate it because that's the only way to maintain competition. I mean, I would argue in terms of protection of the players, and I think this is one of the reasons why players remain loyal to PGA is they all recognize the only way they're going to command this type of compensation from the public is if they have a top tier competitive lead.

It's all some of this thing splinters into, and again, this isn't to denigrate the Corn Ferry Tour or other tourists. They just don't guard the intention. The one that garners all the attention, the garners the sponsorship that brings in as much money as the market will bring in is the absolute top elite men's golf. Okay. Wims golf is doing pretty good, but there's still not the level of men. So you're looking at the absolute, the cream of the crop competing against each other

commands the dollars from the marketplace. The existential threat of the Saudis represented is they have pretty much an unlimited amount of money. You need to put this in perspective. The PGA, if you look at their 990, they're net assets. Their net worth is 1.5 billion dollars. their net assets, their net worth is 1.5 billion dollars. The Saudi public investment fund is, we're somewhere between six and 700 billion, and the individuals that wanted to get involved in sports in particular golf, pretty well made the commitment to spend

whatever it takes to have a seat at the table. It seems like that's what they wanted to obtain, and it seems like that's what they have obtained in this while maintaining the PGs control over the game of golf. And that's where I think we get into a whole nother aspect of this that I'm particularly interested in your perspective on what the again, I recognize your position in that maybe you don't think the government should be involved in this. But what are the bigger geopolitical elements in play in terms of the complicated,

I know we don't have enough time to get into the entire history, the complication of the relationship between the United States and Saudi Arabia, but are there other elements in play here to say, all right, this could be a concern from a national interest perspective or this could be a good way to appease one of our allies in some way. I'm totally dense on a lot of that, but I'm wondering if you could provide any analysis on whether or not something like that might be in play here. Listen, I certainly understand the concerns and sensitivities to the 9-11 family.

So I think it is interesting to note that the individual that reached out to the Saudis, Jimmy Dunn, lost 40% of his colleagues in the World Trade Center terrorist attack. And he was certainly open to reaching out to Saudis when he recognized the reality that the Saudis represent a threat to the game of golf as he honors him. I think the other thing to point out, in general, foreign investment in the US is a good thing. You want people willing to invest in your economy.

That means you've got a strong economy. It means you've got enough freedom and enough protections that people actually want to invest their dollars. The reality is the Saudi Arabia is the world's largest oil producer. We all use oil. We have to use oil. You need energy to power the economy. I guess we're all complicit. If you wanna accuse the PGA of complicity of sports washing,

I guess we all are because we use oil. And we're the ones that are filling the coffers of the public investment fund. So I think we need to recognize that reality. I would much rather have the Saudis investing their money in America than in China or or North Korea or any other of our adversary. So that's the political reality. Like I hate it, I would say that the Biden administration's hostility towards Saudi Arabia has not worked out very well.

It's pushed them into the arms of China. It's a real threat. By the way, when you're $32 trillion in debt for America to no longer be the world's reserve currency. It's not a good thing that now China is purchasing Saudi-Rabin oil using their currency. Now, that is the greatest threat financially to the US, as if we cease to be the world's reserve currency. It's those kinds of actions that threaten that action. What are some questions that you think are likely to be asked in this hearing that we're discussing here?

I know it's going to be Ron Price representing the PGA tour, Jimmy Dunn, as well as a board member. What do you think is, what's a goal of this hearing? What happens at the end of all of this? Again, for my standpoint, the goal would be to give the PGA an opportunity to describe the challenges if faces in managing professional golf at the top levels. Okay. And then also, beyond that, to represent or to describe the challenge that the existential challenge that the PIFs and and live represented to them. So they'll have an opportunity to do that. You know, for my standpoint, a good question would be, you know, how do you fairly compensate

the top players of the game who are largely responsible for attracting the attendance, the viewership that brings all the money into the game for the benefit of all the players? Now, that's not an easy juggling act. I mean, first of all, you don't want players just showing up with appearance fees and not really having the heart and the competition. You want players primarily competing for that trophy, you know, whether it's a trophy of a major tournament or for any tournament.

That's what's such so beautiful about the game of golf. I mean, just look at the individual who won the US Open. I mean, who will come and collect it, making the pots until that final one drops, and you can just see the tension just coming out of it. I mean, that is so much fun to watch. That's what you want professional golfers competing for that moment, you know, having that love of intensity,

that much pressure building up, controlling that pressure in those final shots, coming down the stretch, making the powers, making the birdies. You know what I'm saying? I don't care. I make 10 million bucks either way. That could destroy the game of golf. Well, what is the, again, for people

that aren't familiar with hearings like this, what happens at the end of this, right? Is this, and would you consider this to be an information gathering process? Is there a decision to be made at the end of this? Will you guys get in a room after this and discuss the findings from this and figure out a path forward? Can you kind of play out how, for our audience here, how this will play out over the coming weeks and months?

I mean, the main purpose of a hearing is just that, it's to give an issue a hearing, a one that garners enough public attention. I mean, I've never spoken to you before. Obviously, people are interested in it. And so it'll elevate this issue and more people become aware of it. And hopefully, in the intricacies of the issue,

what is disappointing me, I'm not up this world. I'm Nicole and Diana Plastics Manufacturer for 30 years. You'll play in my club events and enjoy just being one other hat golfer like myself, okay? But when it comes to these types of hearings, you want more people to fully understand the issues. Not just the demagoguery, not just the rhetoric of it, not the simplistic viewpoint, but

really delve into it. And hopefully that's what these hearings can accomplish by having excellent witnesses. It can fully explain their position. And anybody who really wants to tune in for the full couple hours will walk away with a lot more understanding of what it's had issue here is both just the headlines. In case we don't get a chance to speak with Senator Widener, Senator Blumenthal, could you maybe give our listeners a bit of perspective as to maybe what some of their concerns are

or why you think it has reached the level of needing a hearing from their perspective? Yeah, obviously, members of Congress realized when there's an issue that can garner attention. And the public maybe wants to hear more the details about it. And so I think that's the best construction I can put on that. It's something the public wants to hear

wants to consider, again, they're legitimate issues regarding the antitrust provisions of this. The tax exempt nature of it is, for my standpoint, a pretty much a non-issue. It may be true that the PGA's tax exempt, but all of the money it pays out in salaries, that's fully taxable. So it doesn't really make much money anyway. So, this tax exempt status primarily allows it to make much money anyway. So it's tax and Zem status primarily allows it to obtain donations tax free as well. That's probably one of the main benefits of being a tax exempt entity is you can you can solicit the tax free donations.

For those of us that have tried to follow this agreement as closely as possible, we are seeking details. We have not been able to know almost no one has any details. I don't know if there are details of this agreement. So I'm expecting a fair amount of answers this week. And I know you probably don't want to speak of this too much before you actually get those lack of answers. But I'm expecting some that's to be determined. We haven't worked that out yet. How difficult do you anticipate that being

if there's not information ready for you guys by July 11th? How difficult do you see this process to be going forward? Well, again, I don't expect too many answers in terms of what the eventual deal is gonna be because it's so amorphous. It's so difficult. There's so many entities, there's so many people with interest,

there's so many people that are gonna have to prove whatever deal comes up. For my standpoint, the main part of the deal was to get rid of the lawsuits, which represented a serious financial drain in the PGA and faced with, against hundreds of billions of dollars worth of the net worth of the Saudis, they really couldn't compete in the courts. So that's the main issue, but the hearing will lay out what the problem was for the PGA. You know, why live represented such an existential threat? Why after a couple of years, they've felt a need to reach out to the Saudis and figures or some way we can end this madness, at least to the lawsuits.

And that's what they've accomplished so far. And, yeah, I thought it was very interesting that the lawsuits were dismissed with prejudice, which means they can't be reinitiated. So that's off the table. The fact that I'm not sure this is definitive, but the way that the frameworks laid out that the PGA really maintained control over the competition of golf,

I think that's a big win for the PGA as well. I think you guys assessed this in your in your podcast the day of the agreement was met. The Saudis wanted to see the table and they've achieved that. Now they paid a really high dollar for a seat at the table, but if that's all they wanted, they might have been a little bit easier way of doing it, but they probably wasn't. That's the way they got to see the table. For the Saudis, I agree with you guys also, that it opens up a context relationships of other businesses

that sponsor these golf tournaments. There's all kinds of potential benefits for Saudi. I can't really read their mind, but for my standpoint, just the framework of this agreement, this seems like a pretty substantial, I'll call it win for the PGA. They don't face that existential threat

that they've been facing for the last couple of years. And it also, from a standpoint of the players, the PGA has to wake it up to the fact that they've got some players at the very top of the game that aren't real happy with the way it's run right now, and they're going to have to figure out as difficult as it will be, you know, how do you fairly compensate those top players, moldify the the journeyman players, give them the opportunities, so it all works out well. So, so that the top players get along well with the the people trying

to to rise to the top. And yes, the again, the, the people trying to, to rise to the top. And yes, the, again, the beauty about golf is just such a pure meritocracy. It really is when it comes to the competition. You mentioned the seat of the table there. And again, I'm curious. What, what does, is that an issue for US national security interests, right? And I don't even know if I'm using the phrase right to say, you know, is there any worry from a governmental standpoint of, you know, sovereign wealth funds, gaining power in American sports through this, this medium, right? I mean, there's, there's

soccer stars that Saudi Arabia is signing up for huge amounts of money. I believe I've read recently, they're going after tennis soon. And is that a concern, do you think in any way or something that's going to something that's gonna be elevated at any point during the hearing or in the coming months? I don't think it represents the national security concern at all. I think countries whether they're friendly rivals or even adversaries working with each other, investing each other, I've often said,

it's not really a problem that China owes more than a trillion dollars worth of debt. It's that anybody owns a trillion dollars worth of debt. From a standpoint of stability, if I hold, if somebody owes me more than a trillion dollars, I'm not going to want to try and destroy them, try and destroy their family. So there's stability in in related economies. I always felt one of the better ways of preventing nuclear holocaust is to send about a hundred thousand American kids over to Russia and a hundred thousand Russian kids over to America. And you can pretty well take first strike off the table from that standpoint. So we have to stop looking at

the world as black and white. We have to realize there's there is a lot of gray. We don't have to stop looking at the world as black and white. We have to realize there is a lot of gray. We don't have to agree with everybody. We don't have to condone everything everybody does, but it should be nice if we didn't look at every current adversary is irredeemably evil. Whether you believe it or not, it seems like Saudi Arabia is trying to reform, become more modern, offer more rights to women.

For example, that's a good thing. It's something we should encourage. Just cutting them off and saying, we don't want your dirty money. We don't want you investing anything. The fact matters, it's our money that is filled their coffers. So again, anybody that wants to blast the PGA for helping the Saudi sports wash, and by the

way, I don't think there's any way you can wash away the stain of the Shogi murder or some of these other human rights. So they can spend billions, but they're not going to wash away that stain. But anybody who wants to accuse the PGA of sports washing, well, do you drive a car? Do you use oil? Well, you're you you're, you're you're complicating it as well. So I mean, it's just a reality

of the world. I guess on that last point, a part that is a little somewhat concerning to me is the part of the agreement that basically is that the non disparagement clause from the agreement in terms of it.

It certainly seems like this, this money that's going to come in from the Saudis is going to you know, bite the, the players are not going to be able to speak their minds on any of these human rights issues, right? That's going to come in from the Saudis is going to bite the players are not going to be able to speak their minds on any of these human rights issues, right? That's where I, the sports washing part rubs me the wrong way. I know a lot of people kind of have their own dividing line on where they feel in this morally on that spectrum, if you will.

And it's a complicated thought, but that's the part that I don't really know how to answer at this point or I don't know what your job is or your guys job is in this as well. So well, again, I don't know what that anti-dispiragement clause, how it actually be implemented or how it could be enforced. You cannot limit an individual's free speech. So I would expect players, they could rip into Saudi Arabia as much as they want to. It's their choice. Do they want to get any bonus money from the Saudis or not?

I mean, that'll be their choice. And you saw the players that didn't choose to engage in the big payday and the players that did. And you're not gonna put that gene back in the box. So, I'd like to see all the top players compete. We can see that in the majors nowadays. I, you know, again, I, I don't want to expect to in terms of how this all turns out.

All I know is I think it's going to be a difficult road. I don't think there's necessarily any assurance that this is going to be put together and approved by anybody anyways. So all we can do, all this hearing will really account this whole, hopefully layout the facts, allow the PGA to relay their perspective, you know, how they're between a rock and a hard place and they try to figure out some

way to preserve the game of golf. And again, the PGA is for the benefit of the players. It's a player-run organization. I think it's interesting over the weeks to hear a little bit of softening from some of the players realizing, yeah, I didn't like being in the dark, but I don't know how else you could have accomplished something like that and negotiate something when you're telling six privileged players and not the rest of the field. So again, it's a tough situation. I think that's the, the main thing I want to be able to listen to hearing is let the American public understand. This is a really tough thing that the PGA is having to deal with here. And I guess kind of cut them some slack. I guess yeah, that's where it kind of comes down to to me for as far as government intervention

in this is if you, if this is a theory here, I'm going to float again. I mean, fully made my mind up on this. But you know, if you, if the deal does not go through,, I think the PJ tours in a very, very bad spot. And I think the competitive golf structure has a very large possibility of shifting over, maybe not entirely, but very heavily in favor of the Saudis. And is that in the best American interest? And is that, you know, that's that's a that's a question I would have. I got two remaining questions for you. Do you let me just let me just add though, you know, my my concern, I expressed this to Chairman Blumenthal, I don't want us screwing things up. And I think that there's a possibility of us doing that.

I think the PGA's probably made his best of a bad situation as they couldn't. And I just don't want to interfere with them moving forward on this. Would you consider this to be an issue that divides pretty clearly amongst party lines? It shouldn't. It really shouldn't. I don't, again, I'm expressing my belief that we probably are up for the time being stay out of this and give the parties a chance to come up with the final deal. But listen, I think we can play construct constructive role the same time. I mean, if this hearing requires enough attention and we can give the PG and Optu to lay out their perspective, you know, I could be proven wrong. This may have been a really good thing,

Presto Holdis hearing. That's what I'm going to try and accomplish as best I can is to make this constructive hearing in a very informative one. Last question. On June 6th, Jay Monahan was on television. And he said, when talking about the deal, mentioned taking a competitor off the board, it certainly seemed like the wrong thing to say in that moment. Well, those words in any way, play, you come back to Haunt, the PGA tour in any way, or is this something that was obvious

that it was going to be scrutinized from the anti-trust perspective anyways? You know, probably not. The lawyers probably wouldn't like him saying that, but it's honest and it's that trust perspective anyways. You know, probably not the, you know, the lawyers probably wouldn't like him saying that, but it's honest and it's, it's obvious, okay. So, I mean, and again, that that's not, it's just truthful. If you want the top players competing,

the way I want them to competing, there can only be one. Yeah, there can only be one lead Yeah. There can only be one lead. Otherwise, you're gonna have it split. I mean, we've already got to a certain extent, the split with the DP World Tour and Asian Tourist that type of thing, but I don't want them feeling this to the spirit. They are the lesser tours.

The top players, those tours, they come over to America, they get houses in Florida and they compete on the PGA tour. That's what happens because it's the top tour. It's the natural order of things. And I wouldn't want any entity splitting up that natural order that produces, and I'll say it again, you know, maintains the purity of the competition. And again, I just think of any game, the purity of the competition. And again, I just think of any game because you don't have raps making bad calls, you know, golf is as pure a competition as you can get. And it's so individual, you're relying on only yourself. And there's so many aspects to it, there's

so many different shocks. It's just a great game. And I want to see the, you know, from Francis Wemette, the greatest game, you know, greatest, what is the greatest game ever played or whatever the game of that book was. I mean, those moments in golf are just precious and I want to make sure they're preserved. Well, that's certainly what I like about golf. I put in the pieces back together

is going to be very interesting to follow on a daily basis for probably years to come. But, Senator, we greatly appreciate it. I know you're a busy man, but we appreciate you stopping by and giving us perspective when we look forward to learning a bit more about this here in the coming days. Thank you very much. Thanks, Sammi Annam. Have to come back because I really enjoyed your analysis.

I really did. Well, thank you very much. We will gladly take you up on that. So, that's luck next week. Thank you. Take care. Well, thank you very much. We will gladly, gladly take you up on that. That's luck next week. Thank you. Be careful. Be the right club. Be the right club today. That is better than most.

How about him? That is better than most. The most, better than most.