Freakonomics Radio - Extra: What Is Sportswashing — and Does It Work? (Update)

Episode Date: March 4, 2024

In ancient Rome, it was bread and circuses. Today, it’s a World Cup, an Olympics, and a new Saudi-backed golf league that’s challenging the PGA Tour. Can a sporting event really repair a country��s reputation — or will it trigger the dreaded Streisand Effect? Also: why the major U.S. sports leagues are warming up to the idea of foreign investment. SOURCES:Jodi Balsam, professor of clinical law at Brooklyn Law School.Brandel Chamblee, Golf Channel analyst.Karen Crouse, sports journalist.Bomani Jones, sports journalist.Victor Matheson, professor of economics at the College of the Holy Cross.Alan Shipnuck, sports journalist. RESOURCES:"The New N.F.L. Owners?" by Lauren Hirsch, Kevin Draper, Michael J. de la Merced and Sarah Kessler (The New York Times, 2024)."PGA Tour Raises $1.5 Billion From Group of U.S. Investors," by Lauren Hirsch (The New York Times, 2024)."PGA Tour, LIV Golf Agree to Merge," by Andrew Beaton and Louise Radnofsky (The Wall Street Journal, 2023).Phil: The Rip-Roaring (and Unauthorized!) Biography of Golf's Most Colorful Superstar, by Alan Shipnuck (2022)."Dustin Johnson Paid £100m to Perform Late U-Turn and Join Saudi-Backed Rebel Series," by By James Corrigan and Tom Morgan (The Telegraph, 2022)."Russia Was the Hottest Place in Sports. Now It’s Frozen Out," by Joshua Robinson, Ben Cohen, and Louise Radnofsky (The Wall Street Journal, 2022)."Could This Be the Year ‘Sportwashing’ Backfires?" by Andrés Martinez (The Los Angeles Times, 2022)."The Truth About Phil and Saudi Arabia," by Alan Shipnuck (The Fire Pit Collective, 2022).The New Yale Book of Quotations, by Fred Shapiro (2021)."The Surprising Reason That There Are So Many Thai Restaurants in America," by Myles Karp (Vice, 2018). EXTRAS:"Greg Norman Takes On the P.G.A. Tour," by People I (Mostly) Admire (2023).

Hey there, it's Stephen Dubner. Back in 2022, we published an episode called What is Sportswashing and Does It Work? The episode was primarily about a controversial new golf league called Live Golf, L-I-V, that was financed by the Sovereign Wealth Fund of Saudi Arabia. When we put out the episode, Live was just about to hold its first event. Since then, there has been a lot of news, lawsuits, Senate hearing, copious name-calling. So we have decided to update that episode for you.

We have also added a new interview with a sports lawyer who puts the controversy in context and tells us whether foreign investors may soon be flooding the NFL and NBA. That's the final part of the episode. I'd love to hear what you think. Our email is radio at Freakonomics.com. As always, thanks for listening. Hi, this is Victor Matheson. I'm a professor of economics at the College of the Holy Cross. When I say the word sports washing, you say what? So that's a pretty new term. Basically, it means using some sort of sporting event to try to cover over any problems a country has had in the past.

And how is that different from any sort of reputation laundering? Let's say I'm Andrew Carnegie, and I know a lot of people think I've been a brutal capitalist. So I decide to open libraries in many, many, many places around the country. Or Leland Stanford, the robber baron, decided to open what would become one of the most esteemed universities in the world. Is this any different? Really, it's not much different. The idea of using politics to curry favor is centuries old.

I actually think all the way back to ancient Rome. And I think to this famous poet, Juvenal, and he coins the term bread and circuses. And the term bread and circuses refers to this. If a government can at least provide enough food to make their citizens survive, that's the bread part, and enough circuses, things like gladiatorial contests and chariot racing, if they can provide those, they can distract the populace from any other failings of the government.

Okay. Getting back to today, what are some good, pure examples of sports washing? We've had countries like Russia, very active in mega events like the World Cup and the Olympics. Same thing with China hosting now two Olympics in the last couple of decades, or the Middle East getting into big sporting events recently. Now, Victor, you're listing of the nations that have engaged in what we're calling sports washing, Russia, China, the Gulf states, there's an assumption in labeling this as sports washing that these countries are bad countries and that they are dirty and have a reputation to wash. But they probably think the same thing about us. So how is that fair?

Mind you, I'm coming from an American standpoint, but the fact that these are countries without functioning democracies, where you have no freedom of the press or at least limited freedom of the press by any sort of democracy or openness index, all of these countries rank very, very low to the bottom. And so they're trying to rehabilitate some sort of worldwide image just because Putin is going to be president for life. We're not so bad. Look how much fun you had during the Winter Olympics in Sochi. Now, if I think about sports washing, it falls into the category of what I think a lot of political scientists call soft power, right? You're not rolling tanks up to someone's border,

you're sending sprinters or pole vaulters or football players. Why does sport have so much impact? So this is an unanswered question. And one of the things that sports economists just find so fascinating is how interested people are in sports, despite the fact that it's actually not a very big business. All of spectator sports globally, all put together, is roughly the same size as Johnson & Johnson Corporation. The biggest sports league in the world, the NFL, has annual revenues less than Sherwin-Williams paint stores. But there's not an entire section of the newspaper dedicated to paint stores or pharmaceutical products. My personal favorite example of soft power is actually Thailand.

Thailand, by some measures of U.S. opinion, is the third most favorably looked on country in all of Asia. Behind Japan and South Korea, which of course are these big, long-standing democracies, Thailand's none of that. They are a fairly oppressive society. They do not have any sort of free and fair elections. They have military coups on a regular basis. So why in the world is this country so popular in the United States? I don't know. Do they have a really good soccer team or pop stars or movies or something? No, they have an extremely successful soft power run by the government of putting Thai restaurants on every corner of every city in the country.

No, you're kidding me. And they've taken over the United States from a place where 30 years ago there were almost no Thai restaurants. To this point, we have 5,000 Thai restaurants. And why do we love Thailand? It's not because of their somewhat oppressive government. It's because of Pad Thai. This Thai initiative that Victor Matheson is telling us about falls under what's been called gastro diplomacy. That may be an effective type of soft power, but let's be honest, it's hard to compete with the thrill of sport. And a better start the host nation couldn't have wished for.

And this time around, it's Max Verstappen that wins out. He takes victory in the Saudi Arabian Grand Prix. Berlin's great day dawns with the arrival of the Olympic flame. Flag-draped cheering streets greet Chancellor Hitler on his way to perform the opening ceremony. Today on Freakonomics Radio, why are sports so useful in trying to burnish a reputation? They need to believe that sports are pure meritocracy because honestly, they don't believe there's a meritocracy anywhere else. We focus on the latest case of sports washing in the usually boring precinct of professional golf. Even though they're in the middle of a desert and there's almost no golf courses in the country, they want to get into the business of professional golf.

Although it does go beyond golf. Do we need to hold our politicians as accountable? Do our politicians have blood on their hands? And we try to figure out if sports washing actually works. All that, coming up right after this. This is Freakonomics Radio, the podcast that explores the hidden side of everything, with your host, Stephen Dubner. According to Fred Shapiro, editor of the new Yale Book of Quotations, the term whitewashing, a deliberate attempt to cover up some dark matter, this dates back to at least 1703. Greenwashing, that's when you try to appear more environmentally friendly

than you are, this goes back to at least 1989. And Shapiro says the first use of sports washing was likely in 2015. It described Azerbaijan's hosting of the European Games despite a troublesome human rights record. Sports and politics are in a relationship. They're having an affair, so to speak, and their illegitimate child is sports washing. That's Brandel Shambly. I'm an analyst for Golf Channel and NBC.

Before that, Shambly was a professional golfer. Look, I was by no means a superstar. I wouldn't even say I was a star on the PGA Tour. He did earn more than $4 million over a 15-year career. I won one time on the PGA Tour, lost a few playoffs, but, you know, I loved every minute of it. And how's your game these days? It's not bad.

I mean, I'm pretty good for a commentator. Let's get to the topic that we really want to get to here, which is a brand new golf tour called Live Golf. Why don't you just take it from the beginning? They market themselves as a rival tour to the PGA Tour, and they are trying to recruit, with massive sums of money, superstar players to compete with the PGA Tour. For people who don't know or care about golf, describe the PGA Tour. It is not a league like the NFL with teams and owners. It's essentially

a series of tournaments held in a different place every week. So who is the PGA Tour exactly? And what's the relationship of the average golfer with the tour? Well, to state the obvious, it's the major professional golf men's tour. It's a member driven philanthropic nonprofit organization. The money that is brought into the PGA Tour goes to three different places. It goes to the players through purses and pension funds. It goes to charities. And it goes to run the future tournaments through administrative costs. Traditionally, the PGA Tour has offered no salaries and no guaranteed payouts.

But if you play well, you can make a lot of money. The top three career earners in PGA Tour history are Tiger Woods with $121 million, Phil Mickelson with $95 million, and Rory McIlroy with $80 million. For every dollar earned on the course, a top golfer might earn two, three, even 10 times that amount in corporate sponsorships. So the best golfers from around the world flock to the U.S.-based PGA Tour to partake in its riches. It operates pretty much as a monopoly, and there have been attempts over the years to break this monopoly. The most recent one comes from an outfit called LIV or Live Golf. LIV being the Roman numerals for 54, which is the score a golfer would shoot if he or she birdied every hole. This has never happened in the history of competitive golf, so the name is plainly aspirational. But that's not why Brandel Chambly and many others

in the golf world hate the Live Golf Tour. They hate Live Golf because of who's bankrolling it. Live Golf is a Saudi-backed attempt to get the world to not pay attention to their atrocious record on human rights. The CEO of this new league is Greg Norman, the Hall of Fame Australian golfer. But the money comes from the sovereign wealth fund of oil-rich Saudi Arabia. It is, at least in my view, an attempt to manipulate the market with an economy of corruption where they pay lavish sums of money to get the world to look at what they're doing as reform, all the while Saudi Arabia is experiencing the worst period of repression in modern history.

Saudi Arabia is an authoritarian regime where women are treated as second-class citizens and dissidents are harshly punished. Crown Prince Mohammed bin Salman, or MBS, has made noises about reforming. He says he wants to make Saudi Arabia, quote, a country of moderate Islam that is open to all religions and to the world. But he has been linked to a long string of abuses, most prominently the 2018 assassination of Jamal Khashoggi, a U.S.-based Saudi journalist who had been critical of MBS. The fact is, the reform that he's promising is just a U.S.-based Saudi journalist who had been critical of MBS. The fact is, the reform that he's promising is just a facade.

So how are you supposed to put a positive spin on that? The Saudis have been engaged in sports washing for a very long time. And that is Alan Shipnuck, a longtime golf journalist. Formula One, snooker tournaments, pretty much any sport they can get their hands on. And what's particularly attractive about golf is they don't have to woo an entire league. It's just one player at a time. The Saudi golf initiative has been going on for some time. Saudi Arabia has decided that even though they're in the middle of a desert and there's

almost no golf courses in the country and a desert and there's almost no golf courses in the country and a tiny, tiny percentage of the population has ever touched a golf club, they want to get into the business of professional golf. So as part of dipping its toe into the water's professional golf, the Saudi Golf Federation joined forces with the European PGA Tour and created this new event called the Saudi International. The American PGA Tour does not allow tournaments to pay appearance fees to golfers. Because then it would create this arms race where half the tournaments couldn't compete. So golfers on the PGA Tour can only earn tournament money by playing well, not by appearance fees. But on the European Tour, they're allowed. So Phil Mickelson,

Dustin Johnson, Bryson DeChambeau, a lot of top stars have been getting paid seven-figure appearance fees to go over and play in this new tournament in Saudi Arabia. DJ does it again. Dustin Johnson has won his second Saudi international. He is king of the course. There's been an outcry about it because we all know about the Saudi atrocities and the assassination of Jamal Khashoggi. And they supplied 15 of the 19 9-11 hijackers. And when the players go over there, there's a very standard script they stick to, which says, I'm not a politician. I'm just a golfer or I'm just here to try and grow the game. But that was just one tournament per year in Saudi Arabia.

Live Golf is a whole tour. In 2022, its first season, it held eight tournaments. This year, it has 14 tournaments on the schedule all over the world, including one at a course owned by Donald Trump. I mean, Trump is not unlike the Saudis. He's trying to buy his way into the golf world. He's always been an outcast. The reason he's built all of these private clubs is that he couldn't get into any of the great East Coast citadels. He couldn't get into Pine Valley or Augusta. This new Saudi tour promises to, quote, supercharge the game of golf. And the money's much bigger because let's face it, nobody can compete with Saudi money. Their first event in London, that person, $20 million. And the PGA tour event that's happening

at the same time is $7 million. It's also a much smaller field, right? How many players will be playing in a Saudi event? 48. Versus like 144, right? Exactly. And there's no cut. So when you get on the plane, you know, you're going to make at least say $250,000 just for showing up. From the perspective of a professional golfer, these are some huge differences between the Saudi tour and the PGA tour. Professional golf is the ultimate meritocracy. There are no guaranteed contracts. The players are independent contractors. They pick their schedule and they have to pay their own way. They're a private jet and or Southwest airlines, your hotel, all of it. And tournaments are four rounds. You play the first

two and they make a cut for basically the low 70 scores. If you miss the cut, you get $0 and 0 cents and you're losing a lot of money that week. How much you're paid is strictly a reflection of where you finished on the leaderboard. You can play your way into job security, but for those on the margins, it's extremely stressful. And there are a lot more players on the margins, or if you want a better visual, on the bottom of the pyramid than there are near the top. There's about 200 players who have some playing status on the PGA Tour. That's the big leagues.

Of those 200 players, maybe 30 to 50 of them have some job security, and the other 150 are just trying to hang on. And that's not counting the thousands of professional golfers outside the top 200 trying to work their way up. Those golfers would, of course, find the guaranteed Saudi money very attractive. But would the Saudis find them attractive? Not likely. They want big names, and they have pitched all the big names with one simple, compelling argument against the PGA Tour. Too much money is getting siphoned off that should be going to the players. That's a constant critique from the players about the tour. What share of revenues from the PGA Tour

are going to the players? And how does that compare to, let's say, the NBA or the NFL? That's one of Phil Mickelson's arguments that he's been making for a very long time. The players have always felt like they needed a higher percentage. In the NFL or any of those leagues, all you have to do is look at the collective bargaining agreement. You can see this share of overall dollars will be spent on player salaries. In the NFL, I think it's around 48%. Do you have any sense of what that percent would be for the PGA Tour revenues? I do not. And I'm not sure anybody does. The tour, they don't like to open their books.

That's another longtime complaint amongst the players is a lack of transparency. The PGA Tour is theoretically run by the players. They have an advisory council. They have a board of directors, but there is a commissioner who is the ultimate shot caller. So it sounds like what the best professional golfers in the world need is some rival to come along and offer better terms to the players that would either exert some leverage on the

PGA Tour or could take over as the dominant tour in a way that would benefit the players more. Wouldn't it be wonderful, theoretically, if some rival league that was based perhaps on the other side of the globe could do something like that? Yes, indeed. And this is an old idea because in the 1990s, Greg Norman tried to form a world tour that would be a rival to the PGA Tour. Even though the PGA Tour is not a league like the NFL, and even though the golfers are independent contractors, this does not mean the PGA Tour gave its golfers their blessing

to go play in the new Saudi league. In fact, they suspended players who chose to participate in live events. But that did not stop a lot of golfers from joining the live tour. Several weeks before the first live tournament, I asked Brandel Chambly who he thought would play. Well, it seems like Lee Westwood's going to be there. Sergio Garcia, Martin Keimer, Ian Poulter. Pretty sure Phil Mickelson will be there. Other than Mickelson, the golfers Shambly named are older European players, great golfers, major championship winners,

but also well on the downside of their earnings arc. But that's about it. Tiger Woods has said no. Rory McIlroy has said no. Scotty Scheffler, Jordan Spieth, Justin Thomas, it's Andrew Shoffley, Colin Morikawa. Theyroy has said no. Scotty Scheffler, Jordan Spieth, Justin Thomas, it's Andrew Shoffley, Colin Morikawa. They have all said no. And then right before the first live event,

one very prominent U.S. golfer did say yes. Dustin Johnson. Remember him? Dustin Johnson has won his second Saudi international. Dustin Johnson had recently been the number one ranked golfer in the world. He won the Masters in 2020, the U.S. Open in 2016, and he has many more wins on the PGA Tour. So he is not remotely a has-been.

And yet he resigned from the PGA Tour and joined the Saudi League. Why? Well, it was reported that Dustin Johnson received $150 million for headlining the live golf series. That's double his career earnings to date. Phil Mickelson, meanwhile, who for years was the second most famous golfer in the world after Tiger Woods, he reportedly signed a contract with the Saudis for $200 million. Mickelson, by the way, is the reason this whole story turned from a golf world controversy

into a global referendum on sports washing. He was quite candid about his feelings towards the Saudis. He called them scary motherf***ers. Coming up after the break, Phil Mickelson, Alan Shipnuck, and the interview that went around the world. Also, the super slippery slope of moral outrage and whether sports washing can trigger the Streisand effect.

So I feel a little weird as the economist talking about Barbara Streisand. I'm Stephen Dubner. This is Freakonomics Radio. We'll be right back. In 2021, Phil Mickelson set a golfing record that may never be broken. At 50, he became the oldest golfer to ever win one of the four major championships, in this case, the PGA Championship. It was his sixth major victory in a long and phenomenally successful career. Mickelson has always been incredibly popular with golf fans, most of them at least, but this victory was something special. Here it is, biggest moment of a legendary career.

Phil defeats Father Time. At the next year's PGA Championship, Mickelson was expected to defend his title and continue to bask in the glory. But he didn't even show up. Why not? Had the PGA Tour banned or suspended him? Not clear. He wasn't injured. He didn't have an urgent family matter. He had issued a statement a couple months earlier saying he needed some time away to work on being the man I want to be. What he really needed apparently was a break from public

scrutiny. Pretty much the entire golfing world had turned against him because of something he said in an interview with Alan Shipnuck, who was writing a biography on Mickelson. It has since been published. It's called Phil, the rip-roaring and unauthorized biography of golf's most colorful superstar. I approached Phil face-to-face three times, asked him to sit for interviews, and he ultimately said no, which is his prerogative. I didn't really need him. Shipnuk had been covering Mickelson closely for a couple decades. I thought it would benefit him to tell his side of every story, and it would have been fun, but that wasn't his decision, and that was fine. So I just kept working on the book. All this Saudi stuff was churning in the background. This Saudi stuff, meaning the rival golf league, now called Live Golf, which

is backed by Saudi Arabia's massive public investment fund. Everyone knew Phil was involved. Not sure exactly the level. No one knew what his ultimate goals were, but he was clearly a player in all of this. Mickelson being a player in a rival league didn't surprise anyone. Even though he'd earned $95 million on the PGA Tour and much more in endorsements, he had openly criticized the tour as greedy in how it distributes funds. Plus, Mickelson had turned 50 years old, well past the earning prime of any athlete, even a golfer. But also, he loves to gamble and is apparently not as good at that as he is at golf. In his Mickelson biography, Alan Shipnuck writes about a forensic accounting of Mickelson's

finances that was related to an insider trading case. In the four years that was scrutinized, 2010 to 14, Phil claimed $40 million in gambling losses. When you add all this up, you can see why Phil Mickelson might have been interested in a startup golf tour funded by an uber-wealthy Petrostate. So now out of the blue, Phil texts me and asks if we can speak. And of course, I'm thrilled because I'm putting the finishing touches on my book. I've been trying to get this guy for a year. He calls me up and he just opens a vein about his grievances with the PGA Tour,

all the battles he's fighting, trying to win concessions for himself and the other players. We segue into the Saudis. And this is where it got interesting because he was incredibly blunt. He basically said, I'm not even sure I want this league to succeed, but it's a once in a lifetime opportunity to reshape the business of a once in a lifetime opportunity to reshape the business of professional golf. And I have to take it. And he was quite candid about his feelings towards the Saudis. He called them scary mother and he admitted that it's just sports washing and that we know they killed Jamal Khashoggi and we know they execute people for being gay over there, but nevertheless, it's just too good an opportunity to pass up.

And was it on tape? Our conversation? No, I was just taking notes on my computer as we spoke. What were you feeling as he's talking? On one hand, I was deeply impressed by his candor and it was so refreshing because he was straying from the script about we're going over there to grow the game,

which we all know is total BS. Again, athletes have been in bed with the Saudis for a long time. That wasn't news, but there was a couple of things I think that made this so explosive. One was how callous Phil was in just disregarding the Saudi atrocities. There was also the sneakiness that he was actually helping this rival league get started in a way that could harm his home circuit and all the players who rely on that. When you say sneakiness, I just want to clarify, did he and other golfers that he enlisted actually hire the lawyers to write up the documents that became the

league charter? Yeah, that's what Phil told me. So there was that. And really, he said the quiet parts out loud, as Shipnuck puts it. But he didn't. The moment Shipnuck published these comments, Mickelson was vilified by most of the golf world. That includes golf channel analyst, Brandel Shambly. He spoke with seeming amusement about the atrocities and acted as if he was only interested in the atrocities to the extent that they provided him with leverage so that he could get everything he needed with the PGA Tour. When you take all that in in its totality, it was reprehensible. The way Chambly sees it, no amount of money can paper over the decision that Mickelson, Dustin Johnson, and the other golfers have made. The minute they take that money from Live Golf, they are now dependent upon and subservient to

MBS and his thugs. They lose their image, their legacy, because their talents and fame are now being exploited by a government seeking to hide their atrocities. And to whatever extent this country, Saudi Arabia, can hide and euphemize its atrocities, you are in some way ensuring that those atrocities will continue its blood money all the way. When golfers say that this is not political, they couldn't be more wrong. So you're saying Phil Mickelson, Greg Norman, Lee Westwood, whoever plays in these events, they're on the wrong side of history. They're on the wrong side of history. The money's coming from the wrong place. Are they on the wrong side of history? Is it truly blood money?

Before you give an answer, here's something to consider. The Saudi Investment Fund backing this new golf tour is the very same fund that invested billions of dollars in Uber before it went public. It's the same fund that has since bought huge batches of stock in Boeing, Facebook, Disney, Starbucks, and more. Do you and I have blood on our hands when we take an Uber or buy a coffee? It's worth a really deep conversation, but people aren't trying to find the nuances. That is Karen Krause, who covered golf for years at the New York Times. I'm not condoning the Saudi regime. There's no defending it. But any rogue tour poses an existential threat to the PGA Tour, which has basically a monopoly. The cynic in me thinks

that the PGA Tour is making a big deal about where this money is coming from to deflect attention from the fact that this is a really interesting idea that if it was being funded in any other way, people would be quite excited. It's smaller fields, no cut, so you can go to a tournament and don't have to worry about your favorite player not being around on the final day. This kind of creativity poses an existential threat to this very staid tour, which still debates uncolored polo shirts as being sort of renegade. Were you surprised at how thoroughly Mickelson was vilified? Yes. And the fact that none of us have an understanding of why Phil has not played since those comments were made public, the fact that we don't know, was he suspended by the PGA Tour? Is this his decision? Tells you everything you need to know about how the PGA

Tour operates. It is notoriously private. It's a not-for-profit organization where the CEO makes more than $4 million a year. It really hangs its hat on its charity. But people in the world of charity say the percentage of money that the PGA Tour directly gives to charity is low, 16%, where I think 65% is the benchmark. But what's making people speak out in this case is the source of the money for this rival league, the Saudi Public Investment Fund, even though that fund is invested in a lot of American assets. So why do you think this is the case that's caught fire? Because it poses a threat to the status quo. The PGA Tour is the gold standard. I might also add the ladies European tour has five Saudi sponsored events.

It's a struggling tour. The PJ tour is not struggling. So is that our moral calculus? If you're a sports league, but you're struggling, it's okay to take the money. Again, it's a complicated issue. Does that mean we can't fly a Boeing airplane or get an Uber car at the airport? Or do we need to hold our politicians as accountable? Do our politicians have blood on their hands? Krause's point is well taken. The U.S. government has a long and complicated relationship with Saudi Arabia, built primarily around our reliance on their oil. When Joe Biden was running for president in 2020, he promised to make Saudi Arabia a pariah for its assassination of Jamal Khashoggi. But as president, Biden visited Saudi Arabia to talk oil and politics. To Karen

Krause, the Saudi Gulf League is by comparison a very minor matter. It's interesting that we are dissecting this in a way that we don't dissect matters far more important, like what is happening in Yemen right now. So can we please give the same oxygen that we're giving this topic to some other areas in which there is Saudi money floating around? It's so easy to make this a black and white issue as people have. The crown prince and the Saudis are bad. Golf is good. But the world is so much more complicated than that. Newcastle United, a Premier League team, 80% of it is controlled by the exact same group that is behind this new league. Newcastle is far from the only prominent soccer club to have politically complicated ownership.

The big ones that have been of interest here recently, of course, is Chelsea. That, again, is the sports economist Victor Matheson. Chelsea is owned by Roman Abramovich, or at least was a prominent Russian oligarch, close ties to Putin. Abramovich was forced to divest the Chelsea football Club in the wake of Russia's invasion of Ukraine. We also have Man City that's owned by one of the Emirates. Man City as in Manchester City. Like Chelsea, another very successful team in England's Premier League.

And Paris Saint-Germain, the biggest team in France, owned by Qatar, their big sovereign wealth fund. Qatar also hosted the World Cup in 2022. Ever wonder how that happened? So there's a million reasons. And of course, the million reasons are the millions of dollars of bribe money that ended up in the FIFA pockets. FIFA being the perennially corrupt ruling body of international soccer. We know that there was bribery involved because many of the people involved with the bribery ended up indicted and in jail. Let's say that there are some legitimate state-building reasons for a place like Qatar

to hold an event like the World Cup. Let's just assume that there's no sports watching at all going on. How do we feel about the World Cup being held in Qatar with the underlying fact that the event was actually obtained through corruption? Qatar is a country that is the size of Connecticut, but with about a tenth the amount of infrastructure. And yet you're going to, I mean, think how crazy that would be. It's like, oh, yeah, we're going to host the World Cup in the United States, but it's going to all be in Connecticut.

When the United States hosted games back in 1994, they were spread out from L.A. over to New York, down to Orlando. So all over the country. But there's really no place to spread out games in Qatar. So the World Cup is always played in the summer in Qatar. The summer is too hot to play outdoor football or soccer, and therefore the Cutter World Cup had to be moved to December, correct? Right. Let me also point out that the reason that they have the World Cup in the summer is not the nice weather. It's not because people want to travel. It's because all of these players have real jobs during the rest of the year playing for their clubs.

The English Premier League, the Bundesliga in Germany, all the top players are playing for these leagues, and they're actually playing games during November, December. So all these leagues have now been asked, or I guess required really, to adjust their schedules to accommodate a winter World Cup in Qatar. Is that the case? That's exactly right. It'd be like having a World Cup of American football that's going to be held in Paraguay and telling the NFL, oh, cancel all of your games in December and November so that we

can have this event down there. So if I'm on the FIFA selection committee and I'm listening to Victor Matheson, I'm saying, OK, Cutter is not the best candidate, plainly. It's not that Cutter's not the best candidate. Cutter's not even a practical candidate in any way. I mean, Cutter's not even the 420th best candidate out there. So the message I'm hearing from you is that sports washing may not necessarily be very

effective, sometimes a little bit, sometimes not. But bribery is fantastic. That's my takeaway. Again, I've been telling you that sports washing has been going on for centuries. Guess what? Bribery has as well. But here's the thing about sports. It's supposed to be fun. It's entertainment. This produces a strange pattern. When there is a World Cup or an Olympics held in a place like Russia or China, most of the U.S. media coverage ahead of the event is somber with a lot of hand-wringing. The Olympic Winter Games are being held again in an authoritarian state, raising questions for human rights groups.

But once the games begin... Nice slow rotation. Give it to him. Sue Yiming, 17 years old, representing China. And he is your Olympic gold medalist out here today. Once they start going, television executives made the conclusion that the audience doesn't want to hear about that other stuff. That is Bomani Jones, a sports writer and host of the podcast The Right Time with Bomani Jones.

It's real easy for them to forget about any of the larger stuff because now they have games to talk about. So what do you say to the sports fan who's like, you know, I just want to watch the game. I don't want to make sports political. It's like sports is the one place I have that's not political. Well, I mean, for one, that fan is usually a white male because sports can be apolitical to you as a member of the majority group. We start with that part. The issue for me is there are all these other hours of the day when that game isn't on and those people still don't want to talk about the stuff that matters and sports gives the impression that it is always on the right side of the moral imperative and so it allows viewers also to ascribe their perceived

goodness of sports onto themselves and then when you say that the sports themselves are a little bit rotten i think it can get to people's self-concept and then they don't really want to get to it. They need to believe that all these things in sports are pure meritocracy because honestly, they don't believe there's a meritocracy that exists anywhere else. The LA Times recently published an op-ed saying that this might be the year that sports washing backfires. The idea is that between the World Cup in Qatar and the recent Olympics in Beijing, that the downside just becomes too obvious to too many people. Do you think that's actually going to be the case? No, because especially with those major events, there's so much corruption

in getting those events in the first place. Who's going to be the people most likely to engage in that level of corruption? The answer is people with stuff to cover up. Now, will it be effective? I don't know. But a lot of people are still going to get paid off of building those stadiums that will never get used. So the incentive is still going to be there for them to do it. But again, I don't think there's a single person in the United States who, between the 2008 Olympics and the 2022 Olympics has changed their opinion of China based on what they've seen on television. As we've been talking about sports washing today, we have focused on how outsiders look at the place that's holding the sporting events. We are assuming that the main goal is external propaganda, but let's not forget the bread and circus's goal as well,

making your own citizenry happy and proud. Victor Matheson again. It's just like advertising, right? You can target different groups. And in the case of Rome, the emperors there were trying to target their own citizens so that their citizens don't rise up against them. I think that's actually a little bit more what's happening in Russia than trying to influence the rest of the world. I think with the Middle East, though, they're definitely trying to tell the world, hey, we're open for business and we're not such a bad place. Remember how much fun we had at the World Cup? Here's a piece that recently appeared in The Wall Street Journal. Quote, when the invasion of Ukraine began, the era of Russian sports washing abruptly ended, at least for the foreseeable future.

You agree with that? I quite honestly don't believe that because I think it ended a month after they hosted the Winter Olympics in Sochi. This was an extremely expensive event that they put on. Fifty one billion dollars, the most expensive Olympics ever done. And rather than basking in the glow of soft power of showing, hey, what a great place Russia is, after the closing ceremonies, they invaded Ukraine for the first time. I think sports washing at best works at the margins. It's not going to erase tanks rolling across the border. Talk to me for a moment about the 1936 Olympics, which Hitler meant to be a showcase for Aryan dominance and for his ideology. So what happened there?

It's not that Germany was trying to say, hey, this Nazism, it's not that bad. What they're trying to do there is they're saying the new German way is most powerful, and we're going to project power to the rest of the world through this great event. So how much did Jesse Owens ruin Hitler's Olympic party? Certainly some. If this is a big show of Aryan dominance, it didn't go so well when the great Jesse Owens, the African-American track star, wins four gold medals, putting a bit of a nail into that coffin. But do you think that throwing that kind of party in Berlin in 1936 did anything to allow Hitler to continue to strengthen what would turn out to be this Europe-wide and then global aggression? Do you think it did anything to build the movement that Germany was a force to be reckoned with. And to the extent that a big spectacle was popular among his own people,

it gives him some ability to solidify his standing with his own people. Because if you're going to engage in a half-decade-long world war, you at least have to have your own people behind you, which, of course, he did for a while there. Are you familiar with an idea known as the Streisand effect? Yes. So I feel a little weird as a economist talking about Barbara Streisand, but the Streisand effect basically comes from the idea that if you advertise things, people actually come and say, oh, we're going to look more deeply into this. So if you have things to hide, maybe you don't want to draw attention to yourself. Yeah, I think what happened is that a photograph of her house on the cliffs above the beach in Malibu was made public, and she felt her privacy was invaded, and she sued, which ended

up calling even more attention to the situation, and now everybody knew where Barbra Streisand's house was. Along those lines, do you think that when a country like Russia or China or Saudi Arabia or Qatar engages in what we consider sports washing, do you think it backfires that they're pulling a strice hand and focusing attention where they'd rather it not go? I think we can look at two potential things where this is the case. If we go back to the Winter Olympics in Sochi, a huge amount of attention was placed upon the fact that this was by far the most expensive

games that have ever taken place, which got a lot of people thinking, well, why in the world would someone spend $51 billion putting on this event? And how in the world can this event be $51 billion? Is this just all corruption? And what do the people think about their money in a moderately poor place like Russia being spent on a three-week party? I think even more so when we're looking at the World Cup in Qatar. This is a place where I think 95% of Americans couldn't have identified Qatar on a map a decade ago. A lot more of them probably can now. But it also means that we're learning a lot about Qatar. And what have we been learning? Well, some things are good, right? Al Jazeera, as much as it sounds scary and foreign to Americans,

it's actually a pretty good news organization, and that's in Doha in the capital of Qatar. But we also know that they've imported a huge number of foreign workers and placed these workers under terrible, terrible working conditions, confiscated their passports, not allowed them to leave. By some estimates, I've seen that thousands of guest workers have died while they have been in Qatar, and also treatment of their own citizens. Qatar is a very conservative country. The ability of women to have full participation in the workforce and in society, that's not to say anything about people like LGBTQ community. And even beyond sports, if you're a pop singer, Victor, and I want to hire you to come perform at my daughter's 13th birthday.

And I happen to be an Emirati prince and I offer you $2 million. I don't hear people getting too distressed about that. We're doing it. So you'd certainly do see some people turn that money down. But again, $2 million to play a birthday party. It doesn't matter if you're Britney Spears or not, that's still $2 million. And that's hard to turn down. You're saying if someone asked you to come sing, you'd do it for $2 million? Yes, I certainly would. And I'll send you my standard contract after we get off this call. Can I hear the demo tape first, though? Absolutely.

Does that mean you actually do sing? Yes. Yes, I was a singer in college at a fairly good choir. I did not know that. So what should we do? You never close your eyes anymore when I kiss your lips. I think that's what we'll end with. Okay, that is where we ended our original 2022 episode. But since then, Saudi Arabia's Live Golf League has not only held many events, but they've peeled off many more golfers from the PGA Tour, including one of the world's best and most popular golfers, the Spaniard John Rahm. But that's only the beginning of the new story. Coming up after the break, the very messy state of professional golf and whether that mess comes to the rest of American sports. I'm Stephen Dubner. This is

Freakonomics Radio. We will be right back. We first published our episode on sports washing one day before Live Golf's first tournament in England. Since then, a lot has happened. The PGA Tour tried to hang on to its golfers by reconfiguring its schedule, increasing prize money, even guaranteeing some payments. But Liv continued to steal away some of the best players in the world, including Jon Rahm and Bryson DeChambeau. And both sides spent a lot of money on lawyers fighting for dominance. The result thus far has been two separate professional golf circuits. Many people familiar with the PGA Tour are unhappy with this situation.

Live golf has been bad for the game of golf. It has atomized the golf world. We don't see all the great golfers competing against each other in one tournament anymore. That is Jodi Balsam. She is a law professor at Brooklyn Law School with a concentration on sports law. For more than a decade, she worked for the National Football League. I asked Balsam to bring us up to date on the launch of Live Golf and the ensuing chaos. So Live Golf plays its first event. It had induced PGA Tour golfers to participate with huge signing bonuses, at which point the PGA Tour exercises its right

under a bunch of interlocking contracts it has with the golfers to suspend them from the PGA Tour. Eleven live golf defectors bring an antitrust lawsuit saying that the exclusivity provisions the PGA Tour is trying to enforce are anti-competitive and restrain illegally the market for the services of professional golfers. They seek a preliminary injunction from the California court where the suit was brought, and the court declines to award them preliminary injunctive relief, saying that they have not suffered irreparable damage, meaning damage that could not be satisfied or remedied with a monetary award because they were receiving tens of millions, hundreds of millions of dollars from Live Golf. What's the injury?

You then have a period of about 10 months of scorched earth litigation in which there were so many interesting little side stories, like the attempt to subpoena Saudi entities who refused to testify claiming foreign sovereign immunity. All this is bubbling up. And then in a shocking development in June of 2023, when we're on the brink of sort of hardcore deposition with 80 witnesses lined up to testify, the PGA Tour and Live Golf settled the litigation. That's right. The sworn enemies were suddenly frenemies. Not only did they settle their litigation, but the PGA Tour and Live Golf decided to

create some kind of merger with All Details TBD. This agreement to stop disagreeing was done in secret and came as a surprise to nearly everyone, even the PGA Tour players who are supposed to be masters of their domain. But PGA Tour leadership agreed to pursue a Saudi agreement without players' knowledge or approval. The proposed merger even caught the attention of members of the U.S. Senate, who held a hearing a few weeks after the announcement. Most of the Senate questioning was the concern that Saudi investment in professional golf was being used to sportswash its human rights abuses and attempt to influence or control an American cultural institution. And so a solution proposed implicitly, at least during the course of those Senate

hearings, was P.J. Torr, why don't you seek U.S. investment partners? What's happened since the Senate hearings is that U.S. investors have stepped up. Strategic Sports Group, which is a collection of owners in baseball, football, a diehard. And if numbers are to be believed, almost certainly not a golf fan, just because golf is not the most popular sport by a long shot. How much should that person care about this issue of the Saudi public investment fund, first trying to compete with and now trying to merge or perhaps even take over the PGA Tour? Well, to maybe use a perhaps apt analogy for a Gulf state investor, it's a nose under the tent, right? It is access to the broader sports capital market. And the fact that Strategic Sports Group has now made this investment arguably makes the deal by the Saudis that much more appealing to the Saudis. Why? Because this group of American investors includes other sports property owners with expertise in

promoting and maximizing the value of professional sports properties. The Saudis are going to want to cozy up to them because that's the next step. When I said nose under the tent, that's what I'm talking about. I'm talking about their interests, not just the Saudis, but other Gulf state sovereign wealth funds to invest in U.S. sports. And it's happening already. Most recently, Qatar's sovereign wealth fund invested in the parent company of the NBA's Washington Wizards, NHL Washington Capitals, and WNBA Washington Mystics. It is the first time that a Gulf State sovereign wealth fund has made such an investment.

What if it had been a different sovereign wealth fund? Norway has a gigantic sovereign wealth fund from all their oil. And what if Norway had decided that they wanted to compete, start a rival league, and started poaching PGA Tour players? What would we be talking about today instead? Well, it depends on how Norway executed that plan. The issue with the Saudi public investment fund is that they were not acting in an economically rational way. They were pouring far more money into starting up LiveGolf than they will ever make back in direct revenues. They can't get a TV deal. Nobody's interested in attending or watching these events. So if that was Norway's plan, but Norway wouldn't have that plan because they wouldn't need what the Saudis think they're getting in

return. What they think they're getting in return is, it sounds like you're saying, are two things, cleansing the reputation and getting a foot in the door for other sports investments, yes? It's a foreign influence operation. And, you know, some would argue that progress has been made, despite the recent abuses associated, for example, with the 2022 World Cup in Qatar, despite the Saudis' abuse of human rights and especially the horrible assassination of that journalist. Some people are able to point to greater freedoms, loosening up of some restrictions. But, you know, frankly, it's hard for me to understand how so many elite athletes are now signing up for domestic leagues in these countries, right? That's sort of the flip side of sports washing. For example, Cristiano Ronaldo signed

up with the Saudi Pro Soccer League. There's now a new baseball league in the UAE in Dubai. And they have drafted notable Major League Baseball retired legends. Robinson Cano is going to be playing in the UAE. And I wonder, what do their wives and daughters say about this? Point very much taken. On the other hand, there are many, many, many American and other Western business people, venture capitalists and private equity investors and investment bankers and I'm sure lawyers going in and out of the UAE and Saudi every day doing all kinds of other business, including working with these countries directly to further their economic plans. Why is sport different? I agree that you could ask those same questions to anybody who does business in those countries, but sports is different for the reasons that your podcasts have pointed out, that they are such a central aspect of our identity. They are a civic institution. They create affinities and community. They are more than an entertainment product.

But on the other hand, if one believes in free markets and relatively open borders and stuff, and I'm Robinson Cano, and I'm 42 or something, let's say, why shouldn't he be able to go take anybody's money who's willing to pay an older baseball player to go play in a place whose regime he may not like, may not care much about? What's stopping him from doing that? Nothing. And nothing should stop him. I'm one of the biggest advocates of free markets. But we all make choices. We all make personal choices. And you wonder what they are factoring into those choices.

Can you just describe from a 30,000-foot view the level of foreign investment in American sports? It's far less than Europe, although it's heading in that direction. One of the reasons that the American leagues are increasingly open to that kind of investment is because franchise values have just exploded over the last 10, 15 years. The average NFL team, for example, is now valued by one reliable source, Forbes, as $6 billion. If your values are that great and you're an owner of one of these U.S. major sports teams and maybe you're aging and you need an exit strategy and you want to protect the asset from estate taxes, you have to think about, league-wide,

what you want your ownership policy to look like. And in fact, at this moment, the NFL has convened a committee to revisit its ownership policies, and they're holding a league meeting in a couple of weeks that will feature a presentation on whether the league should relax some of its more restrictive policies. So, for example, the NFL alone among our major leagues in the U.S. prohibits investment by publicly traded corporate entities and private equity funds. So they would not have allowed the Qatar investment because it was done through the vehicle of a private equity fund. The NFL simply doesn't allow that vehicle of investment.

The NFL separately prohibits foreign investment. They're revisiting that as well. One policy that is particularly restrictive, you must be able to present a single individual capable of coming forward with 30% of the value of the purchase price. Two billion dollars. So as many billionaires as we have in this country, we don't have quite enough to own all the sports teams that are getting so much more valuable. Yep. Do you like the notion of a league like the NFL or any American sports league having these restrictive clauses? Do you think there's something inherently valuable or pro-social for the country to have local ownership? Yeah, I mean, sports teams in the U.S., and frankly, in many parts of the world,

are civic institutions where we, as fans and consumers of these entertainment products, develop strong affinities for them, and they're part of our identities. And to the extent that sports teams partner in significant ways with their local communities through municipal investment in infrastructure and stadiums, philanthropic activity, I think it is helpful, it's important that there be a truly local face of the team, but I'm not convinced it requires banning altogether foreign investment. I think the issue here is not should we ban all foreign investment, but if you are going to partner closely with investment from countries where there are significant human rights issues, then you have to figure out best practices for that partnership.

And other industries have done so. Well, let's talk about other industries. Why is investment in the PGA Tour or why would the ownership of an NFL or NBA team buy, let's say, a sovereign wealth fund from Saudi Arabia or Qatar, why would that be different than those exact same funds investing heavily in U.S. firms like Uber and Meta and many, many more? They are civic institutions in the way that Uber or Boeing may not be considered to be. One avenue for restricting or monitoring foreign investment is when that investment might present a national security concern. I'm not saying that investment in sports teams rises to that level, but sports teams need to tread carefully not to betray their fans in whoever they partner with. One thing that I have been thinking about is how

the current Middle East crisis might affect sovereign wealth sports deals. And there is evidence that it has slowed some of them down. So, for example, there was an offer by Qadr Sheikh Hamad Al Thani. He had a multi-billion dollar offer to buy an interest in Manchester United on the table, and he withdrew it right after the Hamas attack. In the wake of that attack, every major U.S. sports league and many of its teams made public statements on all their social media feeds. They stand with the people of Israel. At the same time, the Qatari government puts out a statement holding Israel responsible. This to me is an example of a direct conflict of values and visions that highlight the issue of sports washing. Here you have your business partner, the Qatari government, making the exact opposite statement that you have made about an important

geopolitical issue. How do you reconcile that? Considering what you just told us and considering the statements made by the NFL and NFL teams, where do you think the upcoming NFL meetings will land in terms of loosening ownership rules? I think it'll be part of the conversation. I think there's no avoiding that, addressing that very problem that these are unreliable and unpredictable partners. If we decide to accept foreign investment, especially from Gulf state sovereign wealth funds, we have to have a plan. How are we going to deal with the next crisis? Because there's always going to be one. Let me ask you one last question. As

hard as it may have been to conceive that the NFL would allow foreign investment maybe even yesterday, but especially 10 or 20 years ago. I also think how the NFL used to be so anti-gambling that they wouldn't even say the word Vegas. And now we've just had a Super Bowl. Right. We've had a team in Vegas. The Super Bowl was in Vegas. And the NFL is very much in partnership with sports betting firms. So what do you think that change says about the direction of pro sports generally?

In sports, it's always about balancing the integrity and authenticity of the product, the unique connection they have with their consumers against the financial constraints and incentives. It's never going to be static. There's never going to be a point in time where they say, OK, we've hit equilibrium, we've got the balance right. They're always going to be adjusting. And this is just a new phase of adjusting to market realities.

The market realities of professional sport can seem unreal sometimes. That is a topic we will keep exploring on this show. I would love to know what you think about sports washing, about live golf, about the future of professional sports. Our email is radio at Freakonomics.com. We will be back soon with a regular episode of Freakonomics Radio. Until then, take care of yourself and if you can,

someone else too. Freakonomics Radio is produced by Stitcher and Renbud Radio. This episode was produced by Ryan Kelly. Our staff also includes Alina Kullman,

Eleanor Osborne, Elsa Hernandez, Gabriel Roth, Greg Rippin, Jasmine Klinger, Jeremy Johnston, Julie Kanfer, Lyric Bowditch,

Morgan Levy, Neil Carruth, Rebecca Lee Douglas, Sarah Lilly, and Zach Lipinski. Our theme song Thank you. Network on any podcast app for free. As always, thanks for listening. All the top players said, I have no interest in going to Saudi Arabia 10 times a year. There's no alcohol. There's no women. It doesn't sound like much fun. Forget it.

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