Behind the amazing news When news broke this week that the PGA Tour was looking to merge with a rival, the Saudi-backed burgeoning league called LIV Golf, it was one company that had to spend billions to make it happen: Saudi Arabia’s sovereign wealth fund.
Although the fund has long been known in financial circles, the deal is not yet finalized has amazed the golfing world Klieg shed light on a company that has been described as one of the most opaque in the world.
Here’s what we know about the Saudi fund.
What is the Saudi sovereign wealth fund?
Known as the public investment fundor PIF, is an investment pool that manages more than $700 billion in government funds.
With these funds, the company invests in companies, real estate and other ventures both domestically and internationally to generate profits, ostensibly to benefit the Saudi economy.
Established by royal decree in 1971, the company is headquartered in Riyadh, Saudi Arabia, but also has offices in Hong Kong, London and New York. PIF has grown rapidly in recent years, funding ambitious tourism and commercial ventures it calls “Giga Projects”.
How does the Saudi fund rank globally?
It’s not the biggest in the world: that would be Norway’s, which it says currently has $1.4 trillion under management Institute for Sovereign Wealth Funds.
Who manages the Saudi fund?
The public investment fund is headed by Governor Yasir al-Rumayyan, a former banker and chairman of Saudi Aramco, the country’s national oil company. He also hosts the annual Davos in the Desert conference in Riyadh, which attracts thousands of attendees.
But the real power behind the purses, according to analysts, is Crown Prince Mohammed bin Salman, Saudi Arabia’s de facto leader and chairman of the board of the Public Investment Fund.
Prince Mohammed has made the sovereign wealth fund a cornerstone of his Vision 2030 economic growth plan, a blueprint that aims to free Saudi Arabia from its reliance on Petrowealth and expand its economy into technology, healthcare and other areas.
The 37-year-old crown prince has also set a goal of increasing public investment fund assets to $3 trillion by 2030.
What investments does the fund include?
Under Prince Mohammed, the fund has invested in a number of international companies, including Uber, private equity firm Blackstone, Japanese conglomerate SoftBank and sports franchises like the English Premier League football team Newcastle United.
It supports a futuristic city in the Saudi desert named neomaannounced a new airline this year, Riyadh Air, with the purchase of 72 Boeing Dreamliners and says it is committed to a “green” strategy.
On Tuesday, the Public Investment Fund announced that LIV Golf is merging with the PGA Tour and the DP World Tour, a European golf club, in hopes of creating a global giant in the sport.
How was the reaction?
The word “shock” is used frequently.
On the one hand, some key people were excluded from the secret negotiations. Golf fans certainly didn’t expect it either.
But many in Saudi circles were amazed, as he sees it as a counter-narrative to a torrent of negative press. “I will not lie: this is a moment that many of us are enjoying,” Prince Talal Al Faisal, a Saudi businessman and member of the royal family, said in an interview.
When the LIV tour started in 2021, financed by the state fundit signaled a sharp break with the traditional mores of golf – and immediately divided the world of professional men’s golf.
It was seen that way a breakaway league and a threat to the PGA Tour. It lured golf stars like Phil Mickelson (with a reported $200 million) to become frontmen. The PGA Tour struggled to catch up by increasing its payouts.
Bigger stars like Tiger Woods had harsh words for the new league and for Greg Norman, who as commissioner became the western face of LIV. With LIV poaching some of the most well-known players on the established PGA Tour, the PGA banned them.
In secret meetings, presumably sweetened by promised riches.
Mr al-Rumayyan, a close confidant of Prince Mohammed, has been leading talks with PGA Tour commissioner Jay Monahan for the past month and a half.
“I realize people are going to call me a hypocrite,” Mr Monahan said after the announcement. “But circumstances are changing.”
But what about the grudges and controversies?
The new league, the sovereign wealth fund, the Saudi government and the royal family have all at some point covered a patina of scandal.
The birth of LIV sparked a legal battle with the PGA Tour, and it came under the watch of Department of Justice antitrust investigatorswhich investigated whether the Tour’s efforts to block LIV had undermined golf’s job market.
The Saudi investment fund has caused a stir by entrusting billions of dollars to former Trump administration officials. including an investment firm led by Jared Kushner, son-in-law of former President Donald J. Trump; and another headed by former Treasury Secretary Steven Mnuchin.
It has invested in Russian infrastructure. And it has been accused of being involved in buying the plane that took the assassins of Saudi dissident Jamal Khashoggi to Turkey, where he was assassinated his body was cut into pieces, according to Turkish security officials. According to a US intelligence report, the Saudi crown prince later said had authorized the assassination.
Saudi Arabia has also played a proxy role in devastating conflicts in countries like Yemen, where a Saudi-led coalition has been fighting Iran-backed Houthi rebels since 2015.
What’s happening now?
Most terms of the deal have not been disclosed, and it could still fall through as it faces scrutiny from international regulators and the PGA Tour Board of Directors, which must approve it.
Experts say if the deal goes through, it has the potential to reshape golf as we know it.
According to the agreement announced on Tuesday, the acrimonious legal battle between the former rivals is expected to disappear like a golf ball in the long grass. The fate of the antitrust investigation is not so clear.
It is planned that Mr. al-Rumayyan will head the board of the new for-profit company. (He was previously a board member at Uber and SoftBank Group.)
In an interview on the Saudi Arabian podcast Socrates late last year, Mr al-Rumayyan expressed his love for golf – “it’s a really enjoyable sport, one of the best sports” – and praised the crown prince’s goals for the public investment fund.
“We have a full plan from here to 2030, where we first get to trillion and then from two to three trillion,” he said. “The Crown Prince insists on $3 trillion.”
Kristian Coates Ulrichsen, a Middle East fellow at Rice University’s Baker Institute for Public Policy, called the deal “highly strategic” on Prince Mohammed’s part. He said it “reaches part of Central America, even beyond the Beltway, and really interacts with them to tell the story of a changing Saudi Arabia.”
The message, he added? “This is not the Saudi Arabia you thought you knew because of 911, Khashoggi or Yemen.”
