LIV Golf tees up pressing FARA questions for agencies - Weifang Golf Accessories Group Co.,Ltd

News

Firms must precisely define their agreements with foreign-owned clients as geopolitics and sports become increasingly intertwined, say experts.

by Ewan LarkinAdded 19 hours ago

WASHINGTON: PR agency Gitcho Goodwin, a now-former client of Saudi Arabia-backed LIV Golf, recently filed as a foreign agent with the Justice Department, raising questions about when registering is necessary for firms working on behalf of foreign principals.

Gitcho Goodwin's filing contradicted LIV's stance that the tour does not have to register via the Foreign Agents Registration Act because the golf tour is a foreign commercial venture and not an organization advancing Saudi Arabia's political interests.

Boston-based Gitcho Goodwin filed under the Foreign Agents Registration Act on May 25 after learning that the Saudi Public Investment Fund, which finances LIV, "occasionally oversaw [LIV's] public relations activities," the firm said in one of its filings. A Gitcho Goodwin representative could not be reached for comment.

Since February, Gitcho Goodwin and another communications shop, GP3 Partners, have provided PR support for LIV, including drafting press releases, running media training for players and offering advice on the golf venture's corporate social responsibility strategy, according to the former's registration filing. GP3 paid Gitcho Goodwin a monthly retainer fee of $55,000. A representative from GP3 could not be reached for comment.

Gitcho Goodwin's filing has prompted fresh concerns from agencies working for foreign entities, making it difficult to determine whether to register as a foreign agent, says Marc Ross, chief communications strategist at geopolitical business comms firm Caracal.

"Does any sports team or league that has foreign investors need to register?" Ross asks, referencing teams with foreign ownership such as the NBA's Brooklyn Nets or English soccer team Manchester City. "As a communicator or a big PR firm, do I take these clients? There's no guidance. It's kind of the Wild West."

Gitcho Goodwin's registration statement also cited a declaration filed by LIV as part of a lawsuit initiated by its former competitor, the PGA Tour. In the filing, a Saudi attorney acting on behalf of PIF said the fund is "inextricably intertwined with the [Saudi] government such that [the PIF's] objectives may be indistinguishable from the interests of the Saudi government."

Four days after its registration, Gitcho Goodwin filed another statement declaring its partnership with GP3 Partners and LIV had ended. A LIV representative could not be reached to confirm if Gitcho Goodwin was fired for registering or for comment about the topic.

It wasn't the first time a comms agency has clarified its ties with LIV. Edelman subsidiary United Entertainment Group partnered with marketing firm Performance54 to launch LIV in 2021. UEG and Performance54s’ agreement, which concluded in March 2022, was never registered with the DOJ.

In August, an Edelman spokesperson told PRWeek, "Edelman does not have a relationship with LIV Golf. UEG, a subsidiary of DJE Holdings, took on a project a year ago — completed earlier this year — for U.S.-based Performance54, which did not require a [DOJ] filing."

Vendors must recognize geopolitics' increasing place in sports and devote resources to monitoring relevant factors, Ross says.

"Sports is now becoming another battlefield for geopolitics, communications and human rights. It's no longer just about putting the ball in the back of the net, there are new stakeholders involved," he adds.

Organizations including 9/11 Families United took aim at LIV on Tuesday. Terry Strada, the 9/11 Families’ national chair, sent a letter to the DOJ urging an investigation into Saudi Arabian foreign agents for alleged FARA breaches.

Strada's request preceded the PGA Tour and LIV shocking merger announcement, squashing pending litigation between the rivals and establishing a single golf powerhouse.

Strada blasted the deal in a separate statement, labeling the PGA and its commissioner, Jay Monahan, as "paid Saudi shills."

The primary FARA concern for agencies is determining if they’re providing counsel "for or in the interests of" a foreign entity. If so, they would meet the definition of an "agent of a foreign principal" under 22 U.S. Code, says Louis DiLorenzo, an associate at law firm Davis+Gilbert, who specializes in FARA, via email. In that case, registration is required.

Alternatively, if the firm only supported "private and nonpolitical activities in furtherance of the bona fide trade or commerce" or engaged "in other activities not serving predominantly a foreign interest," it would fall within the exception to FARA and the firm would not need to register.

Michael Lasky, founder and chair of Davis+Gilbert's PR law practice, says vendors would do well to have a firm understanding of the aforementioned rules. But since the language of FARA is broad, it's imperative for agencies to set clear expectations at the outset of their relationship with clients.

"I think it's a fair question for PR firms to be asking, ‘who are the decision makers at [companies such as] LIV Golf? What are the sources of its funding?’" Lasky says.

If a prospective client says it functions entirely separately from its foreign owners and investors, it behooves agencies to "memorialize" that representation in client contracts, Lasky adds. If a firm finds that's not the case, they must make clear and fulfill their legal obligations.

"The PR firm has to be frank with the client and say: ‘This is the legal scheme as it exists in the U.S., and we are required to register. There are very significant penalties if we do not register, and it's incumbent on us both to do that and tell you that,’" he says.

LIV's deal with the PGA Tour presents more questions for marketers. Does the PGA Tour need to comply with FARA, for example? DiLorenzo says, post-merger, it's difficult to say if registrations will be required in order to work with the entity that emerges from the deal.

"The merger may make it more likely that work for LIV falls under the trade or commerce exemption, especially if a PR agency is promoting the commercial interests of LIV, such as attempting to increase viewership or sourcing sponsorship deals," DiLorenzo says.

The situation becomes even more complicated if the Saudi government or PIF "remains actively involved in promoting LIV or firms are called upon to engage in activities intended to influence U.S. public opinion regarding the more general interests of Saudi Arabia," DiLorenzo adds.