Behind the staggering news this week that the PGA Tour is looking to merge with a rival upstart Saudi Arabian-backed league called LIV Golf was one entity spending billions to make it happen: Saudi Arabia’s Sovereign Wealth Fund.
While the fund has long been a well-known presence in financial circles, the deal that stunned the golf world has shed a Klieg 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 Fund?
Known as the Public Investment Fund, or PIF, it is an investment pool that manages more than $700 billion in public money.
It uses those funds to invest in businesses, real estate and other ventures at home and abroad to generate profits, supposedly for the benefit of the Saudi economy.
Founded in 1971 by Royal Decree, it is headquartered in Riyadh, Saudi Arabia, but it also has offices in Hong Kong, London and New York. PIF has grown rapidly in recent years and finances ambitious tourism and commercial ventures it calls ‘giga-projects’.
How does the Saudi fund rank globally?
It’s not the largest in the world: That would belong to Norway, which currently manages $1.4 trillion, according to the Sovereign Wealth Fund Institute.
Who manages the Saudi fund?
The Public Investment Fund is headed by a governor, Yasir al-Rumayyan, a former banker and chairman of Saudi Aramco, the country’s national oil company. He also hosts ‘Davos in the Desert’, the annual conference in Riyadh that attracts thousands of visitors.
But the real power behind the wallet, analysts say, is Crown Prince Mohammed bin Salman, the de facto leader of Saudi Arabia, who chairs the board of directors of the Public Investment Fund.
Prince Mohammed has made the sovereign fund a cornerstone of his economic growth plan, Vision 2030, a blueprint that aims to free Saudi Arabia from its dependence on petrowealth and expand its economy into technology, healthcare and other areas.
The 37-year-old Crown Prince has also set a goal of growing Public Investment Fund assets to $3 trillion by 2030.
What are some of the fund’s investments?
Under Prince Mohammed, the fund has invested in a range of global companies, including Uber, private equity firm Blackstone, Japanese conglomerate SoftBank and sports franchises such as England’s Premier League football team Newcastle United.
It backs a futuristic city in the Saudi desert called Neom, announced 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 said LIV Golf was merging with the PGA Tour and DP World Tour, a European golf circuit, in hopes of creating a global behemoth in the sport.
What was the response?
The word ‘shock’ is often used.
To begin with, some key figures were kept out of the negotiations, which were secret. Golf fans certainly didn’t see it coming either.
But many in Saudi circles were ecstatic, seeing it as a counterweight to a flood of negative press. “I’m not going to lie: this is a moment enjoyed by many of us,” Prince Talal Al Faisal, a Saudi businessman and member of the royal family, said in an interview.
When the LIV tour launched in 2021, funded by the sovereign wealth fund, it marked a sharp break from the traditional mores of golf – and immediately divided the world of men’s professional golf.
It was seen as a breakaway group and a threat to the PGA Tour. It lured golf stars like Phil Mickelson (with a reported $200 million) to front it. The PGA Tour raced to catch up by increasing payouts.
Bigger stars like Tiger Woods had harsh words for the new league and for Greg Norman, who became LIV’s western face as commissioner. Now that LIV has snatched some of the most well-known players from the established PGA Tour, the PGA has banned them.
How did the deal come about?
In silent encounters, 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 recognize that people are going to call me a hypocrite,” Mr Monahan said after the announcement. “But circumstances are changing.”
But what about the grudges and the controversies?
The new league, the state fund, the Saudi government and the royal family have all been stained with a patina of scandal at some point.
The birth of LIV sparked a lawsuit with the PGA Tour, and the latter was investigated by Justice Department antitrust investigators, who investigated whether the tour’s efforts to block LIV had undermined golf’s job market.
The Saudi investment fund has raised eyebrows by entrusting billions of dollars to former Trump administration officials, including an investment firm led by Jared Kushner, the son-in-law of former President Donald J. Trump; and another led by former Treasury Secretary Steven Mnuchin.
It has invested in Russian infrastructure. And it was accused of playing a role in purchasing the plane that transported the killers of dissident Saudi writer Jamal Khashoggi to Turkey, where he was killed and his body dismembered, Turkish security officials said. A US intelligence report later said the Saudi crown prince had approved the assassination.
Saudi Arabia has also played a vicarious role in devastating conflicts in places like Yemen, where a Saudi Arabian-led coalition has been fighting Iran-backed Houthi rebels since 2015.
What happens now?
Most terms of the deal have not been disclosed, and it could still fall through amid scrutiny from international regulators and the PGA Tour board, which must approve it.
Experts say if the deal goes through, it has the potential to reshape golf as we know it.
Under the agreement announced Tuesday, the bitter court battle between the former rivals is expected to vanish like a golf ball in tall grass. The fate of the antitrust investigation is not so clear.
The plan is that Mr. al-Rumayyan will lead the board of the new for-profit entity. (He previously served as 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 is really an enjoyable sport, one of the best sports” – and praised the crown prince’s goals for the public investment company. Fund.
“We have a full plan from here to 2030, how we get to the trillion first, and then how we get from two to three” trillion, he said. “The Crown Prince is pushing for $3 trillion.”
Kristian Coates Ulrichsen, a Middle East fellow at Rice University’s Baker Institute for Public Policy, called the deal “very strategic” on Prince Mohammed’s part. He said it “reaches some of Central America, including beyond the Beltway, really working 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 based on 911 or Khashoggi or Yemen.”
