Saudi-funded LIV Golf merger with PGA Tour changes US sports landscape

The merger between the Saudi-funded LIV Golf and the PGA Tour this week was a historical event, demonstrating the kingdom’s entry into the US sports market as well as the success of its diversification efforts, despite persistent criticism.

One former professional baseball executive said that this is only the start of Saudi investment in US sports.

“I think that people in the United States better get used to the idea that money from Saudi Arabia is going to be infiltrating US sports and it’s starting now,” David Samson, who served as president of the Miami Marlins and Montreal Expos, told Al-Monitor. “This is the beginning of their involvement in US sports, not the end.”

Background

LIV Golf is backed by Saudi Arabia’s Public Investment Fund and launched last year as competitor to the PGA Tour, which is the dominant golf competition in the United States. LIV Golf lured several top golfers away from the PGA by offering staggering amounts of guaranteed money — hundreds of millions of dollars in some cases. LIV Golf also attracted significant blowback due to its Saudi funding source, given the kingdom’s human rights record. The PGA Tour’s own commissioner, Jay Monahan, was among those critics.

On Tuesday, the PGA Tour made the shocking announcement that it would form a new, for-profit entity with the Public Investment Fund’s golf assets, meaning LIV Golf, and the Dubai-based DP World Tour golf tournament.

Saudi investment in professional sports is not new. In 2021, the Public Investment Fund acquired the Newcastle United soccer team in the English Premier League. The sovereign wealth fund also holds significant shares in Amazon, Google and other companies. Other Gulf entities sponsor sports teams as well. Emirates, for example, is a sponsor of Real Madrid.

What will the kingdom buy next?

The LIV Golf-PGA Tour merger could have a lasting impact on the US sports landscape. The news has led to speculation that the Public Investment Fund could buy more American sports assets in the future. Samson, who also hosts the eponymous "Nothing Personal with David Samson" sports podcast, pointed out that the National Basketball Association (NBA) approved a rule change last November to allow sovereign wealth funds to buy stakes in teams. No funds have done so yet, but it is a possibility, according to him.

“Leagues were reticent to allow sovereign funds, but as valuations of teams went into the billions, only a handful of people can write those checks,” said Samson. “I believe that you will see sovereign funds investing in teams.”

Samson pointed to the Washington Wizards and Chicago Bulls as NBA teams that could use a cash infusion due to recent purchases of television networks by their respective owners. In 2022, one of Wizards owner Ted Leonsis’ companies announced it would purchase NBC Sports Washington. Last month, Bulls owner Jerry Reinsdorf reportedly bought a controlling interest in Stadium sports network.

NBA Commissioner Adam Silver addressed the possibility of Saudi investment in an interview on the "Dan Patrick Show" on Thursday. Silver said that he is not aware of the Public Investment Fund seeking to purchase stakes in any NBA teams. He also acknowledged the human rights issue, comparing it to the 2022 World Cup in Qatar, and appeared open to foreign investment, calling basketball a “global sport.”

“When the Saudis invest in sports, it gets outsized attention,” said Silver. “I think people are a little too dismissive these days about the benefits that come from the commonality around sports, with a sport like basketball.”

The NBA’s global popularity has grown considerably this century, including in the Middle East. Basketball players from Israel, Turkey and Iran have played in the league in recent years.

The NBA has already dealt with the issues of foreign money and human rights due to its significant business ties to China. This relationship has been scrutinized, perhaps most notably by Turkish-born retired player Enes Kanter, who has spoken out against human rights abuses towards the Uyghur people and other Muslim minorities in China.

'A more aggressive approach'

LIV Golf has been derided by many observers as an attempt to rehabilitate Saudi Arabia’s image after the murder of Jamal Khashoggi, the history of discrimination against women in the kingdom and other ills.

Sean Yom, an associate political science professor at Temple University in the United States, said that the Public Investment Fund’s golf strategy is about both image and economics.

“It's both diversification and soft power projection,” Yom told Al-Monitor.

Yom, who is also a senior fellow at the Washington-based Project on Middle East Democracy and the Foreign Policy Research Institute in Philadelphia, said that the Saudi investment strategy in this regard has developed from seeking “modest returns as a hedge against volatile oil markets” into something new.

“It is now a more aggressive approach to simultaneously find lucrative, high-margin returns in the intermediate run simultaneous with elevating the image of the Saudi royal family, state emblems and nation in a global era defined by multipolarity,” he said.

Yom noted that the LIV Golf-PGA Tour merger is significant because of what it shows about the Public Investment Fund. The fund remains focused on domestic projects, but now “wears two hats,” according to him.

“It's not just a cash cow and rainy day fund for the Saudi government,” said Yom. “It is an investment arm that directly channels the kingdom's immense oil wealth into strategic spaces that simultaneously generate profit while elevating Saudi Arabia as a stakeholder in global markets, ideas, technology and expansion.”

Opposition

The high-profile nature of the PGA Tour-LIV Golf merger has renewed criticism of Saudi Arabia’s investment in sports, including in US Congress. On Wednesday, Rep. John Garamendi (D-CA) introduced legislation to strip the PGA Tour of its tax-exempt status.

“This merger flies in the face of the PGA Tour players who turned down hundred-million-dollar paydays from the Saudi-backed LIV to align themselves with the right side of history and human decency,” said Garamendi in a statement sent to Al-Monitor.

The PGA Tour is a nonprofit, tax-exempt organization. The tour said it will retain this status in its Tuesday statement.

The following Monday, Sen. Richard Blumenthal (D-CT) announced a probe into the merger. 

"I am demanding information from PGA & LIV on how they came to this agreement with the Saudi Public Investment Fund & how this new entity will be structured & operated," said Blumenthal on Twitter.

The focus on Saudi Arabia could dissipate, just as it seems the NBA-China controversy has. However, the foray into a major US sport could bring renewed pressure, including on LIV’s own golfers. On Tuesday, CNN journalist Kaitlan Collins asked LIV Golf star Bryson DeChambeau about the criticism of the league from families of victims of the Sept. 11 attacks

“I can’t ever know what they feel, but I have a huge amount of respect for their position,” said DeChambeau. “I think as we move forward from that, we have to look toward the pathway to peace and forgiveness, especially if we’re trying to mend the world and make it a better place.”

Whether golf fans stop watching due to the Saudi investment remains to be seen. Samson said that sponsors in the United States have shown a willingness to walk away from teams, pointing to the case of the Washington Commanders in the National Football League. Fans, on the other hand, are likely to forget about all else if their team wins, according to him.

“People tend to forget just about anything if the team is winning on the field,” said Samson. “Any sort of extra capital that can be invested into a team that can lead to more winning is likely to be accepted by fans.”

Editor's note: this article was updated on June 12, 2023 to note an investigation by Sen. Richard Blumenthal into the LIV Golf-PGA Tour merger.