controversial giant PGA Tour merges with Saudi Arabia’s LIV Golf It’s just one step in the kingdom’s ambitious tourism and investment strategy – its pursuit of big-name sport is only just beginning.
“We’re kind of in favor of finding an ‘all of the above’ strategy in sports,” Saudi Investment Minister Khalid al-Falih told CNBC’s Dan Murphy in Riyadh.
“Any movement that has consumers both globally and domestically is an investment opportunity that we are interested in, not only to generate commercial returns for investors, whether it is PIF or private investors, but also to enhance the quality of life in Saudi Arabia, which is what we travel part of the agenda.”
PIF is Saudi Arabia’s Public Investment Fund, the $600 billion sovereign wealth fund controlled by Saudi Crown Prince Mohammed bin Salman. It is being used as an economic tool in Vision 2030, a multi-year project to modernize and diversify the Saudi economy away from oil dependence.
News last week of a tie-up between the PGA Tour and Saudi Arabia’s LIV Golf ended a two-year feud between the arch-rivals.
The agreement includes that DP World Tour — also known as the PGA European Tour — will combine the commercial operations and rights of the PGA Tour and LIV Golf into a new, as yet unnamed, for-profit company.
Founded in 2021 with the aim of becoming the world’s premier professional golf tour, LIV Golf has the backing of the PIF and has lured some of the biggest golf stars from the PGA Tour with big paychecks. This sparked litigation between the two entities until the decision to merge ended all pending litigation.
“The region is well positioned to be part of this global phenomenon, the recent rise of sport as part of the global economy,” Falih said of the Middle East. “Golf is a part of it, a big part of it, and it’s for an important group of people who also play golf and care about golf.”
Brooks Koepka, captain of Smash GC, and Ricky Elliott, caddy, shake hands on the 18th green at the LIV Golf Invitational Tournament – Jeddah, King Abdullah Economic City, Saudi Arabia, October 16, 2022.
Charles LaBerger | LIV Golf | Getty Images
As part of the PGA-LIV merger, the Saudi PIF is now the exclusive investor in the new golf entity and has the right of first refusal on any new investment.
PIF is rapidly expanding into sports, staging Formula 1 grand prix and major boxing matches, and buying English Premier League side Newcastle United.
Saudi Arabia has also attracted football legends Cristiano Ronaldo and Karim Benzema With a contract worth hundreds of millions of dollars to play in the local Saudi league and is expected to bid for the 2030 World Cup.
In the past few years, the huge PIF fund has also Acquired stakes in major blue chip companies include amazon, uber, letter, Microsoft, Boeing, Bank of America, disney and Yuan.
Al-Falih pointed to the power of sport to attract tourism, while also offering something attractive to Saudis already in the country.
“Sport is a huge part of the global economy, consumption, media, digital content, now in our hands and laptops and in individuals, homes and businesses,” he said. “Of course, as investment minister, I welcome it as a We create more opportunities – Formula E, Formula 1, boxing matches, football matches.”
“This is part of keeping our Saudi citizens, global residents who choose Saudi Arabia as their home, staying in Saudi Arabia and consuming this high-demand product,” the minister added, “while also bringing global sports fans to the The kingdom of events and sports that take place here.”
The racing team prepares for the F1 Grand Prix in Saudi Arabia on the grid at the Jeddah Corniche. A missile attack ahead of the game raised fresh questions about the hosts’ approach to decision-making.
Clive Mason | Getty Images
Many human rights groups and lawmakers in other parts of the world have criticized Saudi Arabia’s financial involvement in sports as “sports money laundering,” or an effort to cleanse its image of human rights abuses.
Saudi Arabia has long criticized for its human rights recordwhich included the imprisonment and execution of dissidents, severe punishments including the death penalty for members of the LGBT community, and the high-profile killing of American journalist Jamal Khashoggi by Saudi agents in 2018.
CNBC has reached out to the Saudi foreign ministry for comment.
Portuguese soccer star Cristiano Ronaldo poses with a jersey after signing with Saudi Arabia’s Al-Nassr Football Club in Riyadh, Saudi Arabia, 30 December 2022.
Al Nassr Football Club/Handout/Anadolu Agency via Getty Images
A key part of the crown prince’s vision for 2030 is the kingdom’s aggressive campaign to promote its image as a reforming, socially liberalizing country. It includes expanding women’s freedoms — though many female activists remain behind bars — and allowing things that were previously forbidden, like movie theaters and concerts.
With 70% of the Saudi population under the age of 35, the country’s young people are digitally active and connected, creating a huge market for televised sports and sports events.
“We have one of the highest per capita spending in many sports and … e-sports and digital games,” Al-Falih said. “Having these activities in Saudi Arabia and the ownership of Saudi entities like PIF will channel demand in a positive way and will create commercial returns. I think it will increase the flow of investment from Saudi investors and, like I said, it will It will improve the quality of life and make Saudi Arabia an even more attractive place for international tourists to visit and live.”