With LIV Golf taking the winter off, we thankfully get a break from pro golf’s great civil war. It’s been nice not wondering who’s jumping leagues, who’s staying and how the hell do they figure out Official World Golf Ranking points. (We did look it up. The math will make your hair hurt.)
In Part 1 of this series, we shared the story of Performance54 and how this high-powered – and Saudi-backed – British PR firm is influencing how you get your golf information. In Part 2, we heard from a legendary sports agent and renowned golf coach on LIV, legacies and cash. And we touched on why Saudi Arabia’s Public Investment Fund (PIF) is giving Greg Norman, LIV’s CEO, $2 billion US.
In this edition, we’re going to examine PIF a bit more closely and dive into why the Saudis care so much about golf. Do the Saudis expect LIV to break the PGA TOUR and take over professional golf? Or are they after something different?
True, this series is a tad outside the norm for MyGolfSpy. Sure, the LIV-PGA TOUR kerfuffle is considerably less meaningful to your Saturday foursome than, say, the new Titleist TSR. But it has been the story of the year in professional golf. And our goal is to offer you a uniquely MGS perspective into some of the fascinating layers of this story.
What is PIF?
I’d be willing to bet all of Yasir Al-Rumayyan’s money and most of my own that, prior to this year, most of you had never heard of PIF.
PIF, as we all now know, is Saudi Arabia’s Public Investment Fund. Established in 1971, PIF is a sovereign wealth fund charged with providing loans to develop the Saudi economy. Several nations have sovereign wealth funds, with money made from each country’s natural resources. In the case of Saudi Arabia, that’s oil.
PIF has more than $620 billion in cash on hand annually, with an eye toward $2 trillion by 2030. Currently, Norway has the world’s largest sovereign wealth fund at $1.3 trillion, thanks to North Sea oil deposits. PIF invests $40 billion annually directly in Saudi-based businesses including airlines, defense and high-tech firms, entertainment enterprises, even coffee farms. In fact, if you were to visit Saudi Arabia, it may be impossible to find a business that isn’t linked to PIF.
Recently, PIF has branched out, investing heavily in U.S. blue-chip stocks and securing ownership stakes in businesses such as Uber, Disney, Boeing, Facebook, Bank of America, CitiGroup and BP.
Yasir Al-Rumayyan is the Public Investment Fund governor. The Harvard-educated Al-Rumayyan is a certified big deal in Saudi Arabia. He’s also chairman of the state-owned Saudi Aramco oil company (the largest corporation on the planet) and Sanabil Private Equity Investments, the majority owner of Performance54.
He’s also a golf nut, who carries a 12 handicap and counts Phil Mickelson and Sergio Garcia as golf buddies.
Vision 2030 and The Man Who Would Be King
Crown Prince Mohammed bin Salman is Saudi Arabia’s prime minister as well as the heir to the throne. “MBS” is the de facto ruler of Saudi Arabia and his rule is absolute. In 2016, as one of his first official duties as Crown Prince, MBS unveiled an ambitious, all-encompassing strategic framework for his country called Vision 2030. Simply stated, Vision 2030’s goal is to create a diversified, sustainable and—in their words—progressive economy and society that is not dependent on oil.
And PIF’s bottomless barrels of oil money fund the entire program.
Golf and its close first cousin, tourism, are key pillars of Vision 2030.
“It’s going to be the most welcoming country in the world,” Golf Saudi CEO Majed Al Sorour is quoted as saying. “Our standard of accommodation, our standard of welcoming all different nationalities, will be above and beyond all expectations.”
The Saudis are sinking ridiculous amounts of money into creating tourist attractions. Everything from a Six Flags amusement park to luxury hotels and historical and cultural attractions are on the table. Just this year, Ritz-Carlton, Hyatt and Rosewood signed mega-deals to develop luxury resorts while Hilton and Radisson announced plans to build nearly 80 hotels in The Kingdom.
The reasoning is simple. Saudi Arabia wants to become a global business center. To do that, it needs global businesses to set up shop in the desert. To encourage that, the country needs to provide places to go, sights to see and things to do.
Golf is one of those things.
Golf In the Kingdom
While LIV is the Saudis’ highest-profile golf venture, it’s not the only one. The Aramco Series accounts for more than 40 percent of the prize money on the Ladies’ European Tour. Both ventures, however, are wheels on a much larger bus.
Currently, there are seven golf courses in Saudi Arabia. The newest is the Nicklaus-designed Qiddiya near the capital city of Riyadh. It’s a prototypical resort course with wide fairways, no rough, a par-3 course and a large practice area. The development itself is typical of a Vision 2030 program. The ambitious project features amusement parks, a safari park, a high-end resort and spa and a residential community.
According to the Saudi Golf Federation, at least 14 more courses are slated to open by 2030. The approach is very much Field of Dreams-ish: If we build it, you will come.
“For travelers who are picky about their golf courses, (Saudi Arabia) is fast becoming a destination on par with Pebble Beach and St Andrews.” Visit Saudi Tourism website
Golf Saudi is the action arm of the Saudi Golf Federation. Its strategic plan reads like a Harvard Business School project, filled with corporate buzzwords like mission-vision statements, targets, timelines and strategic objectives and pillars.
Among the objectives:
- Develop a golf ecosystem to drive jobs, create businesses and increase revenue streams
- Provide access to golf via entertainment-based entry-level golf initiatives
- Connect golf tourism by driving interest in new properties and destinations
- Position golf via events that showcase Saudi as an innovative and progressive society
The program takes a corporate approach to developing sport and culture. Targets include enrolling 500 kids per week in golf camps, creating 50,000 golf-related jobs and insuring more than one million people at least try the game.
How Does LIV Golf Fit?
It’s important to put this first season of LIV in perspective. Examine Golf Saudi’s playbook and it’s clear the 2022 season was merely a beta test to prove the concept. In that context, you can say it was a smashing success. In a matter of months, LIV organized and presented eight events, signed dozens of players, created a broadcast platform and upset the game’s status quo so much that the PGA TOUR had to fundamentally alter its model.
Even if you consider LIV to be nothing more than “sportswashing,” it’s clearly done that job as well. Phil himself called the Saudis “scary mother***kers.” But the goal of sportswashing, in this case, isn’t to convince people human rights violations as defined by groups such as Amnesty International don’t exist in Saudi Arabia. Instead, it’s to elevate the narrative that Saudi isn’t any worse than Dubai or China. And if you’re holding tournaments in and doing business with those countries then, hey, why not us?
But don’t for a minute think Golf Saudi and PIF want to destroy the Tour. That may be Norman’s goal but Golf Saudi will do what’s best for Golf Saudi in support of Vision 2030. If that means striking a deal to peacefully coexist with the Tour, then that’s what LIV will do. And if it means dumping Norman and replacing him with someone more amenable to détente with the Tour, then they’ll do that. Don’t think floating Mark King’s name several weeks ago was an accident.
Doesn’t LIV Have To Make Money?
In a word, no.
Two billion dollars over two years is pocket change to the Saudis. In the grand scheme of Vision 2030, LIV is simply overhead. As mentioned, it’s sportswashing, pure and simple, and it’s working. LIV is doing its job and, as long as the rest of Vision 2030 moves forward and Golf Saudi can point to LIV as a net positive on its goals and objective scoresheet, it does not have to make money.
The New York Times recently reported that a consulting firm hired by the Saudis prepared several possible outcomes for LIV. The most optimistic and unrealistic scenario had LIV signing the top 12 golfers in the world, attracting big-money sponsors and landing a huge TV deal, all without retaliation from the PGA TOUR. In that scenario, it predicted LIV would generate $1.4 billion in net revenue by 2028.
The least likely scenario, according to the Times, is “a league mired in start-up status, attracting less than half of the world’s top 12 players, navigating a lack of excitement from fans and reeling from limited sponsorship.” That scenario would result in $355 million in losses in 2028.
If the larger Golf Saudi/Vision 2030 narrative is moving forward, it’s hard to imagine the Saudis batting an eye at $355 million in losses.
Could The Saudis Pull the Plug?
That’s also plausible.
In a recent Washington Post story, Gerald Feierstein, a former U.S. ambassador to Yemen and a diplomacy expert at the Middle East Institute, said the Saudis have a “habit of investing huge amounts of money in building bright, shiny objects. And when they don’t fly, they just walk away.”
The Jeddah Tower, a 167-floor skyscraper project, is a prime example. Construction on what would be the world’s tallest building started in 2013 but was suspended in 2018. Today it sits idle, only one-third complete. Riyadh’s $10-billion financial district is still under construction 16 years later. And the King Abdullah Economic City, where the Royal Green Golf and Country Club sits, is also struggling. It was supposed to be a two-million-resident megacity when it was established 20 years ago. Today it has 7,000 residents and lots of empty buildings.
Even the futuristic megacity Neom is way behind schedule. Only two buildings have been constructed and most of the 10,000-square-mile area remains a bare desert. The Saudis excel at incredible concept drawings and ambitious plans. Their accomplishment scorecard, however, is hit and miss.
So, yes, the Saudis could certainly pull the plug on LIV Golf. Relative profitability, however, won’t have any bearing. They would either lose interest or decide that LIV isn’t helping Vision 2030.
The more likely scenario would be for LIV to play the long game.
That means sticking around long enough to bring about détente with the PGA TOUR. The best thing for the Saudis would be some sort of an arrangement with the Tour that would allow for peaceful coexistence. LIV isn’t done poaching players and, for all his faults and bluster, Norman has done his job in making LIV a reality. But, again, those Mark King rumors didn’t just come out of thin air.
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