Golfing in the Gulf
By Ryan Bordner
IN JUNE 2023, the Professional Golf Association agreed to merge with the LIV Golf Tour. LIV was created and financed by the Saudi Arabia Public Investment Fund (PIF) as an upstart rival to the PGA, which had long been seen as the premier professional golf tour in the world. Despite controversy and outspoken criticism from traditionalists within the golf world who believed LIV would hurt the game’s growth and reputation, the upstart league has been successful with many PGA tour members joining the new league. In part, this is because of lucrative contracts made possible by substantial PIF investment.
One such deal was with legendary golfer Phil Mickelson who reportedly received some $200 million USD to leave the PGA Tour for LIV. After a first season that saw significant tension between the rival leagues, including LIV players being barred from playing in PGA events, the two sides agreed to a merger—much to the surprise of those who have followed the sport. While the PDA-LIV merger seemingly came out of nowhere, the Saudi Arabia-backed league has been years in the making and is just a part of a much wider-ranging investment strategy, that includes a global rise to prominence in the sporting world.
Plans for the new league trace back to meetings in October (2020) and was among an assortment of sporting investment projects put forward by the PIF. Like with other countries (including Qatar for hosting the 2022 World Cup) critics argue that such entertainment investments ‘sports-wash’ to deflect attention from other issues.
But Saudi Arabia maintains that these sporting investments are meant to help the country diversify its sources of revenue as the country works at reducing dependence on oil. In early 2022, LIV Golf announced its schedule and the massive prizes for each of its tournaments. The strategy succeeded and some of golf’s biggest names signed with the LIV tour, much to the chagrin of the PGA. Friction between the two rival tours soon led to bans on LIV players at PGA events, and players on both sides publicly criticising each other. This is part of what makes this merger agreement quite surprising.
The Merger
The agreement between the PGA and LIV is not yet complete as they work at finalising what each side will bring to golf’s new global commercial entity. What has been released outlines a general framework for the future of the sport. The PIF will be the primary financial backer, but the nature of the investment remains undisclosed. Based on the amount of money the PIF spent financing the LIV Golf Tour it will likely be very significant and is understood to include all preexisting investments the PIF has made into the sport. Much of the PGA’s leadership will remain in similar positions as before the merger, but the PIF will hold significant influence in the new administration.
This includes the PIF’s governor, Yasir al-Rumayyan, serving as Chairman. The agreement also clearly marks the end of a tense period between the two parties, with prohibitions of ‘any defamatory or disparaging remarks, comments or statements’ among the two sides included in the agreement according to the New York Times. While this merger is surprising from a sporting view it is consistent with other sporting and economic decisions the PIF has made and fits with Saudi Arabia’s economic planning as a whole, as Saudi Arabia and the PIF have invested significant amounts of money into sports, particularly football, as a means of income diversification.
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The merger has a long way to go before it is concluded, with many details still needing finalisation along with possible antitrust law issues and investigations from the United States Justice Department. Nonetheless, it marks a significant development in Saudi Arabia’s efforts to grow and expand its sports industry and investments. As part of “Vision 2030” Saudi Arabia seeks to use sports as a means to generate revenue apart from oil while growing the nation’s presence on the international stage. Further, because sports encompass many economic sectors as well as possessing significant cultural influence, Saudi Arabia sees it as an integral part of its future development, which is outlined in Vision 2030. In addition to its investment in golf, the PIF purchased an 80% share of English Premier League side Newcastle United in 2021.
Further, this summer the Saudi Pro-League, the top level of Saudi Arabian football, was reorganised with the four biggest teams being privatised, coming under the ownership of the PIF (see: Piercamillo Falasca: https://www.egic.info/a-sporting-chance-understanding-saudi-arabia-s-privatisation-of-football-clubs).
Saudi Arabia believes that these developments will help to thrust the nation to wider prominence within the sports spotlight, with hopes that it benefit the entire Kingdom economically into the future. This view is shared among many in the Gulf Cooperation Council who have invested significantly into sports. Bahrain, Saudi Arabia, and the United Arab Emirates each host a Formula 1 Grand Prix every year and Qatar invested billions into infrastructure and more for the most recent World Cup (2022). It is very interesting to monitor how such sports investments across the GCC will result in. But, on initial reflection, the future looks bright!
(28/07/2023)
Sources:
New York Times:
https://www.nytimes.com/2023/06/26/sports/golf/pga-tour-liv-golf-merger-details.html
https://www.nytimes.com/2023/06/07/sports/golf/pga-liv-golf-merger.html
EY:
USA Today:
https://golfweek.usatoday.com/2021/10/27/golf-saudi-private-meeting-news-series-greg-norman/
Saudi Vision 2030: