Saudi Arabia’s $2 billion swing in golf rocks the global game

Phil Mickelson strolled to the opening tee of an exclusive private golf course outside of London earlier this week to be cheered on by his fans. But despite his status as one of football’s most experienced and marketable players, he no longer wore his sponsors’ logos.

Today he has bigger sponsors. Lefty, as he is known, is taking part in the new tournament hosted by LIV Golf Investments, a breakaway league that threatens to upend the golf status quo. It was funded by at least $2 billion from Saudi Arabia’s $620 billion sovereign wealth fund. The total prize money is $250 million, the most valuable reward in the game.

The $200 million fee rumored The payment to Mickelson, who brings his global army of fans and credibility to this week’s event at a private club in Hertfordshire, will be paid from the UK’s public investment fund. He has declined to comment on his contract and the number has not been confirmed.

Players have been criticized by activists for their high fees because the new league is backed by a country that has faced Western criticism for its poor human rights record, the 2018 assassination of journalist Jamal Khashoggi by Saudi agents and its military operations in Yemen.

Mickelson himself has previously described the Saudis as “creepy motherfuckers to get involved with”. “We know they killed [Jamal] Khashoggi and have a terrible human rights record. They execute people there because they are gay. Knowing all this, why should I even consider it? Because this is a unique opportunity to reshape the way the PGA Tour works.” Mickelson’s participation was so controversial that he only confirmed his attendance last week.

The controversy is the latest indication that Saudi Arabia’s oil wealth is shaking global sport, after PIF bought English Premier League football club Newcastle United for €305m in October last year from Formula 1 sponsorship by the racing team and state-owned oil company Aramco, which is now being held in Jeddah.

PIF’s investments aim to reduce the Saudi economy’s dependence on oil and support Riyadh’s plan to modernize the conservative kingdom. It’s not the only high-energy Middle East nation investing in the sport. Qatar is hosting this year’s FIFA World Cup, Qatar Sports Investments bought French soccer champions Paris Saint-Germain and Abu Dhabi’s Royal Sheikh Mansour owns English soccer champions Manchester City.

But some activists have accused Saudi Arabia of “sports washing” to boost the country’s image. “Saudi Arabia is trying to use the reputation of the world’s most popular sports stars to cover up a human rights record of brutality, torture and murder,” said Lucy Rae, a spokeswoman for human rights organization Grant Liberty.

Simon Chadwick, Professor of Eurasian Sports at Emlyon Business School in Paris, recognizes the “reputational and image benefits that can come from working with the world’s best golfers” but points to wider reasons for Saudi’s investment in LIV.

“The country is encouraging people to play golf, especially women, as the government seeks to bring about positive social change,” he said. “There are also tourist destinations; Government in Riyadh wants to lure tourist dollars to the growing number of golf courses in Saudi Arabia.”

Before his election, US President Joe Biden vowed to treat the kingdom as a “pariah”. But Russia’s invasion of Ukraine and the ensuing energy crisis have prompted a rethink in Washington as the Biden administration urges the world’s largest oil exporter to increase crude production.

At a pre-launch press conference on Thursday, some players gave awkward answers to justify their participation. “I do not condone human rights abuses at all,” Mickelson said. Others struggled to say if they would be attending a tournament organized by Russian President Vladimir Putin.

Players practice ahead of the LIV tournament at Britain’s Centurion Club. Participating golfers were suspended from the established PGA Tour © Adrian Dennis/AFP/Getty Images

Aside from concerns about Saudi involvement, the new league also poses a serious challenge to the US PGA Tour, the main home of most top-tier players. Irish golfer Rory McIlroy said this week that LIV was “breaking the game” and that “boatloads of cash” were the motive for many players to flee.

The PGA Tour, which had warned golfers that playing in breakaway competitions without a permit could result in bans, has suspended Mickelson and 16 other LIV participants. LIV called the ban “vindictive”. Of the 17 players, 10 had already canceled their PGA membership.

Meanwhile, the baseball caps and shirts for sale at Centurion Club hinted at LIV’s commercial goals. They bore names like the Fireballs, Crushers and Iron Heads – denoting the newly formed teams or franchises that are at the heart of the plans.

There are already events in golf where players play in teams rather than individuals, such as the men’s Ryder Cup and the women’s Solheim Cup.

But LIV aims to create teams similar to those in F1 car racing, holding a championship to crown not only the best driver but also the top team. It has said it also hopes to emulate the Indian Premier League cricket tournament, which has attracted institutional investors.

Unencumbered by long-running television contracts, analysts say, LIV is also free to exploit its media rights. The opening tournament was streamed live on YouTube and Facebook for free.

Still, the lack of sponsorship combined with the high payouts to players mean it could be a long time before the PIF will see a return on its investment, analysts say.

Other players follow Mickelson. “Ultimately the money [ for players] there’s too much here to discount,” said a senior sports executive. “A lot more players will go over the picket line when they see what these guys are doing.”

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