by eddie pels
there are billionaires in saudi arabia Pulling the plug on LIV Golf. This wouldn’t be the first mega sports project he has dropped recently.
Over the past several weeks, Saudis have bailed out winter olympic style sports festival and sold one their best football teamsAll this while changing the strategy of their multibillion-dollar investment fund that controls it all.
The Saudi Public Investment Fund, run by Crown Prince Mohammed bin Salman, recently released a new prospectus outlining its strategy for 2026-30. The strategy focuses on “maximizing financial returns, strengthening investment efficiency and increasing private sector participation” as well as greater inward investment.
The ultimate goal is to fulfill the prince’s “Vision 2030”, which seeks to expand and improve Saudi Arabia’s infrastructure and make tourism more central to the oil-based economy.
This follows an era in which the fund poured huge amounts of money into various sports ventures around the world. Soccer has been a focal point – the country is hosting the 2034 World Cup, while PIF has a majority stake in the Premier League’s Newcastle and promotes the Saudi Pro League. The fund has also spent big on men’s and women’s pro tennis, Formula 1, boxing and more.
The LIV Golf, although not the most expensive, has the highest profile of them; The fund has reportedly invested approximately $5 billion in LIV without receiving any returns.
“For the last two years, we have seen the beginning of a tapering off of some of the mega projects that were announced in 2021, 2022,” said Christian Ulrichsen, a Middle East expert at Rice University’s Baker Institute for Public Policy. This was also the time when LIV Golf was also launched.
LIV Golf has new leadership and new business strategy
PIF announced on Thursday that it would withdraw funding for LIV Golf after 2026, ending weeks of speculation and reports that the Saudis were about to cut the cord. PIF Governor Yasser Al-Rumayyan, who was behind the creation of LIV Golf, is no longer listed as chairman of LIV Golf, as reports suggest he has resigned from that role.
Staff and players have known for the past two weeks that PIF will only support LIV Golf until the end of this year. LIV responded with a new board and a plan to diversify its investment model with hopes of finding a long-term partner.
PIF’s deep pockets were integral to LIV in prying some of the game’s best players from the PGA Tour. It spent $1 billion to add guys like Bryson DeChambeau, Brooks Koepka, Phil Mickelson, Cameron Smith and ultimately Jon Rahm, the last big signing due in late 2023.
In an interview with The Wall Street Journal earlier this week, PGA Tour CEO Brian Rolapp said: “We’re interested in the best players that can help our tour. Not every player can do that.”
Already a five-time major winner Koepka is back on tour from LIV, and reigning Masters champion Patrick Reed plans to return later this year.
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FILE – LIV Golf CEO Greg Norman, left, applauds Yasir Al-Rumayyn, governor of Saudi Arabia’s Public Investment Fund, at the LIV Golf Invitational-Chicago tournament on September 18, 2022 in Sugar Hill, Illinois. (AP Photo/Charles Rex Arbogast, File)
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FILE – LIV Golf CEO Greg Norman, left, applauds Yasir Al-Rumayyn, governor of Saudi Arabia’s Public Investment Fund, at the LIV Golf Invitational-Chicago tournament on September 18, 2022 in Sugar Hill, Illinois. (AP Photo/Charles Rex Arbogast, File)
In a sign of the times, Saudis withdraw billion-dollar plans for super-city
About three months ago, Saudi Arabia withdrew plans for a futuristic super-city project called The Line Inside A Big project called “Neom” It was believed that it would stretch for more than 100 miles and run from the Red Sea across the desert mountains.
A feature of the project was a resort called Trozena, which was envisioned as a year-round ski resort. Hosting the 2029 Asian Winter Games (which themselves were transferred instead to Kazakhstan). It could serve as a dress rehearsal for a future Olympics or at least the 2034 World Cup that has already been awarded to the state.
More recently, PIF sold 70% of its Saudi Pro League soccer club Al-Hilal to a company owned by Saudi royalty, a move that sent shock waves through that sport – that is, raising questions about whether the fund was still committed to English Premier League side Newcastle, of which it owns about 85%.
“Whether because of the war or reasons related to economic feasibility, we constantly reevaluate our priorities,” al-Rumayyan told the state-owned Al Arabiya news channel shortly after the Al-Hilal sale.
“Saudi Arabia is constantly reevaluating its priorities, and its investment strategy will change accordingly,” Mohammed Soliman, a senior fellow at the Washington-based Middle East Institute, told The Associated Press.
“PIF has always been a vehicle for national transformation first, global sports deals were part of that story, but in time it is drawing capital closer to home,” Soliman said.
War’s impact raises questions about Saudi’s sporting future
There is a healthy debate going on about what impact this will have American war in Iran Saudi is busy taking decisions.
Some of these decisions – such as scaling back the Neom project – were being made early in the year when a barrel of oil was selling for $60 – a low price that could cause the country to face a budget deficit that might have to be financed by cutting into the profits of Aramco, the country’s national oil producer.
Meanwhile, the war increased oil prices Above $100, but the Saudis’ ability to sell it has been reduced while Iran and the US battle for control of the Strait of Hormuz, a key chokepoint through which 25% of the world’s oil passes.
“The irony is that the Saudis have still been able to export two-thirds of their oil at very high prices over the past six weeks, which may actually mean that their revenues have gone up,” Ulrichsen said. “But it won’t last forever. The war has certainly increased the element of uncertainty, and the closer it gets to 2030, the more they’ll want to deliver one or two major things, rather than maybe the usual six or seven.”
Golf grabs headlines, but football and World Cup loom over Saudi decisions
The Saudis have made major inroads into sports other than golf and football.
They are in the final stages of a three-year contract to host a $15 million season-end tournament at the Women’s Tennis Association. PIF holds naming rights to both the WTA and men’s ATP tours.
Saudi Arabia has hosted the Dakar Rally and an F1 event came to the country in 2021. (It was canceled this year due to the war.)
It has expressed interest in hosting the Summer Olympics, perhaps as early as 2036.
All this pales in comparison to its biggest sporting undertaking – hosting the World Cup in 2034. That project calls for building 10 or 11 new stadiums across the country, including one in Neom, which is planned to be a quarter-mile above ground.
All those stadiums and all that investment make LIV’s $5 billion budget look small. Yet, it has not gone unnoticed that the vision with which LIV started – as a league that would create teams, then sell them to make the endeavor profitable – has not been realized.
“This spending is not on the scale of spending on The Line or the (Asian) Winter Games,” Ulrichsen said. “But it is significant, and I don’t think there’s any chance the losses will continue for at least the next five or 10 years.”
AP Golf Writer Doug Ferguson contributed to this report.
AP Golf: https://apnews.com/hub/golf