This week’s announcement of the merger between golf’s PGA Tour and Saudi-backed breakaway competition LIV Golf was about as seismic as they come in sports.
The very fact that Saudi Arabia, under the guise of its sovereign wealth fund, the Public Investment Fund (PIF), can all but buy pro golf raises many questions, both moral and financial. What does the merger mean for players and fans? Who’s next in the PIF’s sights? And are American sports powerless to prevent them muscling in on US franchises?
Launched in October 2021, LIV Golf dropped a financial depth charge that all but blew the PGA Tour out of the water — luring top golfers away with the kind of eye-watering paychecks they could never make on the PGA: Phil Mickelson got $200 million, Brooks Koepka took $150 million, Bryson DeChambeau netted $125 million.
Rory McIlroy, meanwhile, chose to turn down a reported $300 million to jump ship and remain the loyal poster child of the PGA Tour in its ongoing battle with LIV.
For him, the issue was two-fold.
Yes, he wanted to protect the PGA, but he was also concerned about the Saudis’ record on human rights and wanting to do the right thing.
Now, post-merger, it’s likely those players who did quit and cash in are about to be accepted back into the fold as if nothing had happened.
“I still hate LIV and hope it goes away,” McIlroy said this week.
As McIlroy and the PGA Tour have now seen, resistance is futile when it comes to fighting such deep pockets. With assets over $650 billion, the PIF’s pockets are deeper than most.
In 2021, when news broke of PIF’s $415 million bid to buy English Premier League (EPL) club Newcastle United, it was met with widespread resistance from other clubs — not just because state ownership of Premier League clubs is prohibited but also because of Saudi Arabia’s abysmal human rights record and inability to pass the EPL’s “fit and proper persons” ownership test.
According to the Daily Mail, all it took was an intervention from Saudi crown prince Mohammed bin Salman to then British Prime Minister Boris Johnson — threatening economic consequences for the United Kingdom if the takeover was blocked — and the EPL soon signed off on the deal.
Terrence Burns, a sports consultant and Chairman and CEO of T.Burns Sports Group, told The Post that the origin of any investment is, ultimately, irrelevant — and the PGA Tour and LIV Golf merger is living proof of that.
“Sports is, in the end, a business, and money flows to its greatest return,” he said. “Anyone can quibble with whether they approve or not of the buyer or the seller, but no one can really quibble with whether the deal makes business sense.”
And that all comes down to whether or not fans will be outraged by Saudi Arabia’s human rights violations.
Some jubilant Newcastle fans seemingly couldn’t care less as the PIF takeover has increased expenditure on new players and management and led to a dramatic improvement in the team’s fortunes.
This season, Newcastle finished fourth in the EPL — their highest position in 20 years — and qualified for the lucrative pan-European Champions League.
And it’s not just control the Saudis are seeking. International sporting recognition is also key to their ambitions.
It’s why they’ve paid the Spanish and Italian Football Associations big money to play their respective Super Cup events in the country.
It’s also why Cristiano Ronaldo was lured to the kingdom to play for PIF-owned Al-Nassr FC — the second-best team in the Saudi soccer league — on $215 million a year deal (or about $26,600 an hour).
Last week, the Saudi Arabian government announced the PIF now has a 75% ownership in soccer’s Saudi Premier League.
And this week, Karim Benzema, current holder of the Ballon d’Or award for the world’s best soccer player, signed to PIF’s Al-Ittihad for a net salary of $210 million a year — or around 19 times what he was earning at Real Madrid.
Meanwhile, the Saudis and the PIF are getting richer too, as oil revenues show no sign of drying up despite the Saudis recently agreeing to cut their oil output by 1 million barrels a day from next month.
Saudi’s state-owned oil company Aramco, for example, benefited hugely from the spike in fuel prices following Russia’s invasion of Ukraine and last year posted record profits of $161 billion.
The largest annual profit ever recorded by an oil company, it’s triple that of Exxon’s $56 billion and four times that of Shell ($39.9 billion) and Chevron ($36.5 billion).
You may have seen Aramco’s name in motor racing. They have a long-term sponsorship with Formula 1 and a strategic partnership with Aston Martin’s race team. And Aramco’s boss, Yasir Al-Rumayyan, is also the PIF chairman.
The PIF is also a major shareholder in Aston Martin and boasts a 10-year, $650 million deal with Formula 1 to stage a Grand Prix in the kingdom — by far the biggest deal offered by any country hosting a race.
In January, Bloomberg reported that the PIF made a $20 billion bid to buy Formula 1 from its current owners, Liberty Media. While the offer was rejected, it’s not likely to deter the PIF
The Saudis have constructed huge arenas just to host World Heavyweight boxing fights, like the Diriyah Arena, 20 minutes northwest of Riyadh and built to stage Anthony Joshua’s rematch against Andy Ruiz in 2019.
In February, they put up the $13.5 million prize for the bout between YouTuber Jake Paul and boxer Tommy Fury in the same arena.
The PIF also funds the world’s most lucrative horse race, the Saudi Cup, with a prize fund of $35.35 million.
In 2018, the PIF entered into a 10-year arrangement with World Wrestling Entertainment (WWE), paying Vince McMahon’s organization around $50 million for each WWE event staged in Saudi Arabia.
More recently, there was even a rumor that PIF wanted to buy WWE. The price mooted? Around $6.5 billion.
And in a bid to change the public perception of a country known for oppressing females, Saudi Arabia is now promoting women’s sports — with bin Salman’s and the PIF’s blessing.
In August 2022, Saudi Arabia staged its first ever women’s professional boxing match when British-born Ramla Ali beat Dominican boxer Crystal Garcia Nova at Jeddah’s King Abdullah Sports City.
There is now a women’s soccer league and female motor racing drivers. Badminton is one of the fastest-growing sports for women and there were over 1,500 runners in the first all-female road race in Al-Ahsa in 2018.
Until 2018 women were not even permitted to enter sport stadiums, yet alone participate.
Elsewhere, the kingdom has already secured the rights to stage the 2034 Asian Games in Riyadh, as well as soccer’s new FIFA Club World Cup (starting in 2025) and the international Asian Cup in 2027.
A joint bid for the 2030 or 2034 World Cup, with Greece and Egypt, is also in the offing.
Inevitably, the Saudis will turn attention to mainstream US sports, experts believe. “Nations like Saudi Arabia are no longer on the fringes, sitting in the cheap seats,” Burns said. “They can afford to sit in the best seats in the arena.
“It’s a new world politically, economically, and culturally, and global sport is not immune. I think you will see a lot more investment in US and other sport properties from the Saudis.”
In recent years the PIF has spoken with Major League Baseball, Major League Soccer, the NBA and the Los Angeles Olympic Committee to explore strategic partnerships and test the water about potential investments.
Even mere rumors of Saudi investment can send the value sports franchises soaring.
According to Forbes, there are now 32 franchises in the world worth more than $3 billion, while six have doubled in value since 2016, including the NFL’s Las Vegas Raiders and the NBA’s Golden State Warriors.
Regulations governing ownership in MLB and the NHL have relaxed recently, allowing private equity to take minority stakes in clubs, while the NBA now permits sovereign wealth funds to buy a maximum 20% stake in teams.
Only the NFL outlaws governments, religious groups and private equity from owning a team.
But will 20% be enough to tempt Middle East money?
Possibly not, especially when total control of some of the world’s biggest brands can be bought elsewhere.
Qatar, for instance, should find out soon if their $6.8 billion bid to buy Manchester United has been accepted by current owners the Glazers (who also own the Tampa Bay Buccaneers).
“I wonder if, from a Saudi perspective, getting involved in US/North American sports franchises might be more complicated, and less commercially and sports-politically valuable, than, say, bidding to host the World Cup or buying a team like Manchester United,” said Alan McDougall, a professor of history specializing in sport at the University of Guelph, Ontario.
“That said, an interesting testing point would come if a globally renowned North American franchise, like the Yankees or the Lakers, became a target for Saudi money,” McDougall told The Post. “Would that be allowed to go forward and, if it did, would it then have a ripple effect, opening up baseball, hockey, etc., to huge investment from other petro states and beyond — perhaps even from China?”
All of the spending does little to counter the accusation that the PIF, and Saudi Arabia, are “sportswashing” to distract from the regime’s record on human rights.
But, as the PGA Tour would doubtless testify, it’s almost impossible to keep them at bay.
So are some US sports franchises next in Saudi sights?
Not necessarily, said Alan McDougall. “I think it’s open to debate. The Saudi sportswashing model has so far focused primarily on global sports that are followed around the world, like the English Premier League, F1 and, of course, LIV Golf.
“I’m not sure that either baseball or ice hockey has this kind of global reach, so it may be these sports are of less interest to the Saudi government as it looks to continue to launder its international reputation via sport.”
One thing is for sure, Burns added: The more money you have, the bigger a player you will be.
“I think it will be much more diversified and the rise of other sources of financing around the world will coincide with a plateauing of traditional funding from traditional markets,” he says.
“New money means new ideas — some will work out spectacularly and some will fail. The market, in the end, is the grand arbiter of value.”