Double bogey or a hole in one

Summary: the abrupt ending of a bitter fight in the professional golfing world has astonished observers and raised questions about who has come out the winner.

We thank Kristian Coates Ulrichsen for today’s newsletter. Kristian is a regular contributor to the Arab Digest podcast and a Middle East fellow at Rice University’s Baker Institute for Public Policy in Houston. His most recent book, published by Hurst is Qatar and the Gulf Crisis. You can find his latest podcast here.

A year of legal skirmishing and increasingly bitter tensions within the world of men’s professional golf came to a sudden and quite astonishing end on June 6 with the announcement that the PGA Tour and the Saudi-backed LIV Golf Tour were to merge, along with the DP World (formerly European) Tour. The announcement that the PGA Tour was combining commercial operations with the DP World Tour as well as the golf-related businesses of Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF), came out of nowhere and stunned the normally staid golf world. While many of the details still need to be worked out, a new for-profit entity will be created, with PIF Governor Yasir al-Rumayyan as chairman, PGA Tour commissioner Jay Monahan as chief executive, and PIF becoming an exclusive investor with a right of first refusal on any new capital.

Yasir Al Rumayyan Golf announcement

A neat twist in the saga is that DP World, the sponsor of the PGA’s European tour, is an Emirati multinational port terminal operations company based in Dubai. Contestation between Riyadh and Dubai has been growing as the Saudi crown prince Mohammed bin Salman challenges Dubai’s clout on the business and tourism fronts.

LIV Golf burst onto the scene in June 2022 when Phil Mickelson, a six-time major winner and the reigning PGA Championship holder, announced that he would participate in the inaugural LIV invitational tournament at the Centurion Club near London. More than a dozen other current and former professional golfers joined Mickelson in taking part in the opening season of LIV tournaments, defying the PGA Tour which had threatened to suspend them (and did) for participating in conflicting events without permission. Over the following months, eye-watering amounts of money were reportedly offered to star golfers to jump ship from the PGA to LIV, with Tiger Woods said to have turned down more than US$700 million. In August 2022, Mickelson and ten other LIV golfers filed an antitrust suit against the PGA Tour challenging their suspension and accusing the PGA Tour of acting in an anti-competitive manner.

The legal equivalent of trench warfare then threatened to consume professional golf as the PGA Tour filed a countersuit in September which accused LIV Golf of tortious interference with the contracts of Tour members who decamped to LIV. One by one the eleven players dropped out and LIV Golf was added to the antitrust suit, meaning that by the time Bryson DeChambeau withdrew his name in mid-May 2023, the litigation had evolved into a very different battle. This occurred as a district judge in California ruled in February 2023 that the PGA Tour could add the PIF and its governor, al-Rumayyan, as a defendant in the suit against LIV Golf. Also in February, a federal judge in California determined that neither the PIF nor al-Rumayyan were entitled to sovereign immunity as their conduct was deemed to fall under a commercial activity exemption of the Foreign Sovereign Immunity Act.

For different reasons, both sides – PIF and the PGA Tour – likely came to recognize that the costs of continuing the legal standoff risked outweighing the benefits, thereby opening the way for a compromise which Monahan suggested was seven weeks in the making. For the PIF, court demands for discovery of documents and an attempt to subpoena al-Rumayyan raised the prospect of having to disclose sensitive material that could show the inner workings of the fund; lawyers even submitted an affidavit to the court that under Saudi law al-Rumayyan risked a 20-year prison sentence for disclosing classified information. This led one golf commentator to note that “Somewhere Salma al-Shehab is crying him a river. She’s the Saudi student given a 34-year sentence in August for tweets critical of al-Rumayyan’s pals in the regime.”

Court filings by the PIF in support of its claim for sovereign immunity also threatened to cause difficulties for another of their flagship sporting assets, Newcastle United, the Premier League club in which the PIF acquired an 80% stake after a long and at times contentious takeover process in 2021. The Premier League approved the takeover after receiving “legally binding assurances” (which it did not disclose) that the Saudi state would not control the club. However, the notion of any separation of PIF from the Saudi state, blurred in any case by the fact that Mohammed bin Salman is the chairman of its board, was called into question by a submission in March (by lawyers for LIV Golf) that described the PIF as a ‘sovereign instrumentality of the Kingdom of Saudi Arabia’ and al-Rumayyan as ‘a sitting member of the Saudi government.’ The filing prompted calls in Britain for the Newcastle ‘assurances’ to be re-examined, but under questioning by MPs in a Digital, Culture, Media and Sport select committee meeting, the Premier League’s CEO, Richard Masters, refused to comment on the filing but did say that “Obviously, we are completely aware.”

If the ongoing litigation in the U.S. threatened to open up a can of worms for the PIF, it also represented a sustained drain on resources for the PGA Tour, especially as the January 2024 trial date was vacated and it began to look as if the case would stretch years into the future. As court submissions uncovered the extent of the PIF’s 93% ownership of LIV’s holding company, the stakes of continuing litigation against a defendant with such deep pockets likely caused the PGA Tour to explore a deal. The fact that Greg Norman, the champion former golfer who was the public face and CEO of LIV Golf, was kept out of the PGA Tour-PIF negotiations and only told by al-Rumayyan of the deal minutes before it was publicly announced, was indicative of the prominent role the Saudi fund played behind the scenes, and is now expected to exercise in world golf going forward.

Regardless of the future for LIV Golf, the Public Investment Fund was seen by many to have emerged with the upper hand in the deal with the PGA Tour, and to have cemented its emergence as a major new participant in global sport. For Saudi Arabia, the strategic importance of being seen to be accepted at the top table of a sport that reaches firmly into ‘middle America’ cannot be understated, especially after the reputational challenges the Kingdom and Mohammed bin Salman faced in the aftermath of the killing of Jamal Khashoggi in 2018. It is these intangible benefits that are likely to be more valuable, in the short-term at least, in signifying a breakout moment on the world sporting stage, especially with a decision on the hosting rights for the 2030 FIFA World Cup, which Saudi Arabia is widely expected to bid for, only a year away. Not since MbS was feted by American business leaders during his six-week trip across the country in March 2018 has Saudi Arabia enjoyed such an image-defining success in the U.S.

For critics of what has come to be called ‘sports-washing’ by autocratic nations, many of which are based in the Gulf, this week was already going to be pivotal ahead of Manchester City’s appearance in the Champions League final. Neither of the two ‘petro-clubs’ owned by Qatar (Paris Saint-Germain) and Abu Dhabi ( Manchester City) has yet won football’s ultimate club prize, each team falling short in the final in 2020 and 2021, respectively. A City victory in Istanbul would represent a shattering of men’s club football’s highest ceiling, in the same season that the World Cup took place in Qatar, and yet the talk all week has been of Saudi Arabia, not the UAE. In light of suggestions of growing competitive rivalry between Saudi Arabia and the UAE, where the PIF’s emergence as golf’s new force leaves DP World’s own sponsorship of the European Tour is another guess.

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